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TO: |
Board of Trustees |
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THROUGH: |
Jay Fox, Executive Director |
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FROM: |
Viola Miller, CFO |
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PRESENTER(S): |
Rob Lamph, Assistant Treasurer Randall Larsen, Bond Counsel |
TITLE:
title
R2024-04-04 - Resolution Authorizing the Financing of Transit Vehicles through a Master Equipment Lease-Purchase Agreements, and Related Matters
end
AGENDA ITEM TYPE:
Resolution
RECOMMENDATION:
Approve resolution R2024-04-04 authorizing and approving a Master Equipment Lease-Purchase Agreement (the “Master Lease”) with JP Morgan Chase, as lessor including the 2024 Payment Schedule which is an attachment to the Master Lease.
BACKGROUND:
Staff introduced the idea of a 5-Year contract for lease financing for all buses, cutaways, vanpool vans and non-revenue vehicle fleet at the September 14, 2022, Board of Trustee meeting as a pre-procurement item. UTA has been leasing various equipment since 2015.
This 5-year Master Lease will allow UTA to acquire non-revenue vehicles and additional heavy rail cars as per the 5-year Capital Plan, by securing the lease rates based on an index plus an agreed to percentage for 2024-2028.
DISCUSSION:
Staff reviewed three proposers for the request for proposal (RFP). JP Morgan Chase’s plans and rates were the most advantageous to UTA. Their proposal would allow the 5 individual yearly tranches of lease funds to be held in escrow funds as follows:
• 2024 - $3,602,000
• 2025 - $5,500,000
• 2026 - $3,500,000
• 2027 - $3,500,000
• 2028 - $3,500,000
Total - $19,602,000
JP Morgan Chase’s lease rates were based on 79 percent of the Tax Exempt Secured Overnight Financing Rate (SOFR) Swaps Based Index rate plus the following spread:
• 8-years .6739%
• 10-years .7236%
Through this resolution the Board is being asked to approve the Master Equipment Lease Purchase Agreement, and the 2024 Schedule to the Master Lease. We will return to the board annually for approval of future year tranches of lease funds.
CONTRACT SUMMARY:
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Contractor Name: |
JP Morgan Chase |
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Contract Number: |
24-03824CG |
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Base Contract Effective Dates: |
04/17/2024-04/17/2028 |
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Extended Contract Dates: |
N/A |
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Existing Contract Value: |
NTE $4,406,416 for 2024. NTE for 5 years is $23,966,921 |
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Amendment Amount: |
N/A |
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New/Total Contract Value: |
N/A |
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Procurement Method: |
RFP |
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Budget Authority: |
Approved 2024 Operating Budget |
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ALTERNATIVES:
Reject the RFP results and repropose. This would result in UTA losing the rate lock currently agreed upon. This could also drive the choice to not lease vehicles but instead paying cash for all purchases which would affect the 5-year financial plan.
FISCAL IMPACT:
The fiscal impact of the 5-year Leases using a rate not to exceed 5.0%. All interest payments will be funded out of the Debt Service budget.
Total 5-year Lease max interest $4,364,920.80, max cost $23,966,921.
2024 Lease portion max interest $804,416, max cost $4,406,416.
ATTACHMENTS:
Resolution R2024-04-04, including exhibits and Lease Agreement