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TO: |
Board of Trustees |
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THROUGH: |
Jay Fox, Executive Director |
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FROM: |
William Greene, Chief Financial Officer |
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PRESENTER(S): |
Troy Bingham, Comptroller |
TITLE:
title
R2023-04-07 - Resolution Declaring Official Intent of the Utah Transit Authority to Reimburse Itself for Certain Capital Expenditures Through Lease Financing
end
AGENDA ITEM TYPE:
Resolution
RECOMMENDATION:
Adopt Resolution R2023-04-07
BACKGROUND:
When issuing a lease, federal law permits an eligible recipient to include capital items in the financing which have been purchased up to 60 days prior to the lease closing date. Federal law does allow an eligible recipient to declare an intent to reimburse and establish an expanded period for including capital items in a lease financing.
UTA began leasing revenue service vehicles in 2015. Through 2018, the Board of Trustees adopted a resolution each year which authorized the Chief Financial Officer to enter that year’s leases if lease maturities, interest rates, and lease amounts were within the parameters identified in the resolution.
Beginning in 2019, the process changed to have the Board of Trustees approve an Intent to Reimburse Resolution early in the year and a lease financing resolution later in the year which included the specific lease maturities, interest rates and lease amounts resulting from a lease financing RFP.
DISCUSSION:
The 2023 capital budget and unused 2022 budget authority (carryforward) anticipated lease financing for the replacement of the following items:
|
Vehicle/Equipment Replacement |
Amount |
|
Buses |
$32,500,000 |
|
Paratransit |
$8,000,000 |
|
Comet Car Replacement |
$4,000,000 |
|
Vanpool vans |
$2,500,000 |
|
Non-Revenue Service Vehicles |
$1,500,000 |
|
Totals |
$48,500,000 |
These capital items will be delivered throughout the year. Rather than arranging for financing as capital items are delivered, it is much more efficient to arrange for lease financing near the time of the largest dollar amount of deliveries.
The resolution enacts the intent to reimburse provisions of federal law and will allow UTA to arrange for lease financing for these budgeted capital items at one time. The anticipated timing for issuing the lease financing RFP is late third quarter.
ALTERNATIVES:
UTA could conduct the lease financing solicitation and award the lease financing as soon as possible in 2023. The 2023 budget was prepared assuming the lease financing would take place in September. Lease financing could be put in place approximately every 60 days.
FISCAL IMPACT:
The Authority anticipates that the maximum principal amount of the Leases executed to finance the Project will not exceed $48,500,000. The budget assumed lease financing would take place in September. This action supports 2023 budget planning.
ATTACHMENTS:
1) Resolution R2023-04-07