Title
AUTHORIZATION TO PAY THE REMAINING BALANCE AND EXECUTE ALL DOCUMENTS NECESSARY TO END A LEASE PURCHASE-BACK AGREEMENT OF CITY PROPERTY WITH BANC OF AMERICA LEASING
Staff Contact: Tom Duensing, Director, Finance and Technology
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Purpose and Recommended Action
Recommendation
This is a request for the City Council to waive reading beyond the title and adopt a resolution authorizing the City Manager or his designee to pay the remaining balance and execute all documents necessary to end a lease purchase-back agreement of City property with Banc of America Leasing and authorize a budget appropriation transfer in an amount not to exceed $9,250,000 for the lease payoff. Approval of this item is contingent upon approval of the Council agenda item Authorization to Reclassify Inter-Fund Advance to Inter-Fund Transfer (File ID 15-247).
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Background
On May 24, 2011, the City Council adopted a resolution granting authority to the Finance Director to enter into a lease purchase back agreement of City property with Banc of America Leasing. As a result of the agreement, the City received $11,503,100 which was used to pay off an outstanding lease, two outstanding notes payable, and costs of issuance of the financing. The interest rate on lease purchase back agreement is 5.4%
On March 17, 2015 at the Budget Workshop, staff presented information to the City Council on a plan to reduce future interest costs on this lease purchase back agreement by prepayment of the balance. The consensus of the Council was for staff to bring forward a resolution authorizing the City Manager or his designee to prepay the loan during this fiscal year.
Analysis
The outstanding principal currently owed on the lease is $9,042,100. The terms of the lease require an additional one-percent of the principal which is $90,421 plus any accrued interest. The terms of the agreement also require the City to provide the bank a fifteen (15) day notice of any prepayment. ...
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