TITLE
Recommendation to authorize City Manager to execute a Master Lease Agreement and all related documents with SunTrust Leasing Corporation for a term of three years for a notional amount not to exceed $10,000,000 with an option to extend the initial term for two years, for any remaining notional amount. (Citywide)
DISCUSSION
Historically the City prepares Requests for Proposals ("RFP") as each department or entity of the City requests lease financing for equipment, software or other eligible assets. The process requires the preparation of an RFP, and sometimes multiple Council letters for approval of the original purchase and financing. This process is inefficient not only because it requires significant staff resources, but also because separate and therefore smaller lease transactions receive less market attention and less advantageous pricing. There is a more efficient financing model known as a Master Lease Agreement. Examples of City purchases that are lease finances include computers, core software systems, and higher cost equipment purchases such as fire trucks.
Under a Master Lease Agreement, the City enters into multiple individual lease agreements whose terms will be governed by the Master Lease Agreement. The individual leases will range in terms from two years to ten years depending on the life of the asset. Pricing can occur up to five business days before funding is needed, thereby providing the ultimate in flexibility for pricing new financing requirements. The pricing formula provides for a fixed interest rate spread over the U.S. Treasury curve of like terms, adjusted to a tax-exempt rate.
The Master Lease Agreement will improve the implementation of future City Council approved leasing activities, provide more flexibility in pricing, and streamline the internal administrative burden for leases, especially those less than $500,000. Each purchase and resultant individual lease executed using the Master Lease Agreement must be approved b...
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