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R94-10 not adopted *Note: This item was con- RESOLUTION NO. R94-10 sidered at the 2-14-94 Council meeting; however, the resolution was not A RESOLUTION AUTHORIZING A LEASE-PURCHASE AGREEMENT TO adopted as FINANCE A COMPUTER SYSTEM. Council voted to purchase the equipment with available funds rather than a lease- purchase. WHEREAS, contingent upon the approval of the City Attorney of the City of Pearland, Texas (the "Lessee" ) , the City desires to enter into that certain Lease-Purchase Agreement dated as of February 15, 1994, by and between the City of Pearland and Government Capital Corporation, Lessor, for- the purpose of financing a computer system. The City desires to designate this Agreement as a "qualified tax exempt obligation" of the City for the purposes of Section 265 (b) (3) of the Internal Revenue Code of 1986, as amended. The City desires to levy, for each year in which "Lease Payments" (as defined in the Lease-Purchase Agreement) come due, an ad valorem tax within the limits prescribed by law that is sufficient (together with other funds lawfully available to the City and applied to the purpose) to provide timely payment of the Lease Payments payable during such year. The City desires to designate City Manager Paul Grohman and Finance Director Janet Eastburn as authorized signers of the Agreement. NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF PEARLAND, TEXAS: Section 1. That the City will enter into a Lease-Purchase Agreement with Government Capital Corporation for the purchase of financing a computer system. Section 2. That the Lease-Purchase Agreement dated as of February 15, 1994, by and between the City and Government Capital Corporation is designated by the City as a "qualified tax exempt obligation" for the purposes of Section 265 (b) (3 ) of the Internal Revenue Code of 1986, as amended. Section 3. That, for each year in which Lease Payments come due, there is hereby levied an ad valorem tax within the limits prescribed by law that is sufficient (together with other funds lawfully available to the City and applied to the purpose) to ., provide timely payment of the Lease Payments payable during such year. (414 Section 4. That the City will designate City Manager Paul Grohman and Finance Director Janet Eastburn as authorized signers of the Lease-Purchase Agreement dated as of February 15, 1994, by and between the City and Government Capital Corporation. PASSED, APPROVED, and ADOPTED this day of , A. D. , 1994. C. V. Coppinger Mayor ATTEST: Pat Jones, TRMC City Secretary APPROVED AS TO FORM: Dick Gregg, Jr. City Attorney PEAR �� (� Cii1 4 ©F1 p@agion© yc 3519 liberty Drive • Pearland, Texas 77581-5416 'EX (713) 485-2411 • Fax (713) 485-8764 • AGENDA ITEM To: Mayor and City Council Through: Paul Grohman, City Manager From: Richard Burdine, Division Director - Planning, Public Works and Parks Subject: Consideration and Possible Action - Resolution R94-10, a. Resolution Authorizing a Lease-Purchase Agreement to Finance a Computer System Date: February 9, 1994 We have reached the "bottom line" in our negotiations for computer system hardware and software. The costs and how they apply to the General Fund (GF) and Utility Fund (UF) are as follows: Item GF% Amount UF% Amount Total IBM System Hardware 50% $ 45,571 50% $ 45,571 $ 91,142 IBM 5 Year Warranty 50% 8,390 50% 8 ,390 16,780 IBM System Software 50% 14, 273 50% 14,273 28 ,546 Other System Hardware 50% 22,003 50% 22 ,003 44,006 Cash Registers 50% 5,025 50% 5,025 10 ,050 Itron Handheld Meter Reading Hardware 0% 0 100%_ 21 ,879 21,879 Contingency (wiring, modems, miscellaneous) 50% 5,000 50% 5,000 10 ,000 Subtotal 45% $100 , 262 55% $122 ,141 $222,403 Application Software Utility Billing 0% 0 100% 25,000 25,000 Work Orders & Facility Mgmt 50% 10,000 50% 10,000 20,000 Cash Receipts N/C Payroll/Personnel 70% 8,750 30% 3,750 12,500 Purchasing 70% 12, 250 30% 5,250 17 ,500 Govt . Management/ Budgetary Accting 70% 12,250 30% 5, 250 17 ,500 Accts Receivable 70% 7 ,000 30% 3,000 10 ,000 Asset Management 70% 3,500 30% 1 ,500 5,000 Subtotal 50% $ 53,750 50% $ 53,750 $107 ,500 0 Printed on Recycled Paper . _ r - c• . . . . . . . :.. • .. _ _ _ . . . . ._ 3 . . . . ' . I . •. . . . 2 • .•. •. „ . „ • • • ; . .• . . . . . . : ". - t• - . . _ . - . • . . . . . . • . . _ • . . • . : _ '• •. --• . I: . • • : . . .. . : . . : . . " • . ., . - -. . . . „. . . • . . . • . (16 Agenda Item, February 9, 1994 Page 2 . . I 1 ; Item GF% Amount UF% Amount Total HTE On-site Training for 45 days 50% 15,750 50% 15,750 31,500 HTE Trainer Travel 50% 7,500 50% 7 ,500 15 ,000 Subtotal 50% $ 23,250 50% $ 23,250 $ 46,500 * Consulting Fee & Travel for Selection of Police System 100% $ 15,000 0% $ 0 $ 15,000 Total 50% $202, 262 50% $199,141 $391,403 -Less Designated Funds - $ 83, 600 - $ 41,400 $125,000 Funding Required $108, 662 $157 ,741 $266,403 * Note that $15,000 has been "earmarked" to begin the selection process this year for a computer system for the Police Department. I see two basic options for the additional funding required. The first is to appropriate undesignated fund balances from the General Fund and the Utility Fund; a pay-as-you-go approach. The second option is a lease/purchase; a pay-as-you-use approach. Lease/purchase financing is available for three years at 5. 5% interest from Government Capital Corporation (see attached proposal ) . Also, IBM has lease/purchase financing available at 5 .58% for IBM hardware, 6. 16% for IBM software and 6. 48% for non- IBM items . I spoke with Bob Stephens of Lairson Stephens Reimer, P.C. , the City's auditors . Considering the proposed 5 .5% interest rate, the 3 .5% interest the City is earning on investments and prospects for major capital projects in the near future, his recommendation was to go the lease/purchase route. Staff recommends that the City Council approve Resolution R94-10, authorizing a lease-purchase agreement to finance a computer system, in an amount not to exceed $275,000. Action: -' - � ... .. ._ .. � _. '1'. �� 1.�.. -.._ .ter'_ -. .- - �.�� .._... P. 02 Government Capital Corporation CORP.OFFICE—Crestwood Center 1200 Walnut Hill L•n. Suite 3400 !ruing,TX 75038 Phone: 14-518.1199 ® Fax:214-518-2525 Wednesday, February 09, 1994 Glen Erwin City of Pearland F.U. Box 2068 Pearland,TX 7'7588 • Dear Glen: Thank you for, the opportunity to present proposed financing for City of Pearland. I • understand your city is considering the acquisition of a computer system And is interested in possibly utilizing leaselpurchase financing. I am submitting for your review the following proposed Financing structure. 1..EUK: Government Capital Corp. LESSEE: City of Pearland FINANCING STRUCTURE: Lease/Purchase as Authorized by the Public Property Finance A.v.A. APPROX. FINANCED AMOUNT: $ 265,000.00 TERM: 3 Annual Payments • . INTEREST RATE: 5.4954v% PAYMENT FACTOR: .37062 PAYMENT AMOUNT: $ 98,214.19 First payment due November 1,. 1994 and annually thereafter. The above proposal is subject to bank qualification, documentation, audit analysis and reflects current market conditions. If closing occurs after March 15,1994, we reserve the right to index to current market, if you have any questions regarding other payment terms or conditions, please feel free to call Inc. With Be t Regar'�, • evin D. Lerner Public Finance Consultant KDL/ar AUSTIN OFFICE—3914 Roekiedge Dr, e Austin,TX 78731-2022 Phone:512-346-9980 s Fax: 512-346-6565