Laserfiche WebLink
MEMORANDUM <br /> <br />Item 5. II. <br /> <br />TO: <br /> <br />FROM: <br /> <br />DATE: <br /> <br />SUBJECT: <br /> <br />Mayor and City Council <br /> <br />Lori Johnson, Finance Director <br /> <br />June 7, 2004 <br /> <br />Financing for Fire Pumper <br /> <br />The Fire Department is requesting authorization to purchase a pumper from Pierce <br />Manufacturing, Inc. at a cost of $374,975.00. Although this purchase was discussed with the <br />Council previously, the final financing method and source of funds have not been <br />determined. The main decision to be made is whether this purchase is funded through a tax <br />levy, reserve funds, or a combination of both. Reserve funds could be used for initial <br />payment or to fund debt repayment. <br /> <br />As in the past, the manufacturer is offering financing for all or part of the pumper. <br />Additionally, equipment certificates may be issued for this purchase. The advantage of <br />equipment certificates is that the repayment may be funded through a special tax levy. This <br />is important when levy limits are imposed on cities, but, as you know, when there are no levy <br />limits in place, the Council may levy what it feels appropriate so either financing method <br />could be repaid through a tax levy during years with no levy limits. One advantage of <br />financing through the manufacture is that the term may be extended to ten years; equipment <br />certificates may only be issued for a term of five years or less. The interest rate is another <br />consideration. In this case, the manufacture is offering five year financing at 4.49 percent. If <br />equipment certificates are issued, they will not be issued until November or December so it <br />is difficult to make an exact comparison of interest rates at this time. Typically, the interest <br />rate on an equipment certificate is lower than the rate offered by the manufacturer. <br /> <br />In addition to financing, Pierce is again offering a discount for prepaying the chassis which <br />the City would take advantage of to save $5,900. Pierce is offering something new on this <br />purchase which is paying the City 4 - 4.25 percent interest on funds deposited with Pierce to <br />be used to make payments on the pumper. This option will be discussed in more detail at <br />the meeting. <br /> <br />Finally, additional information on reserve fund balances and the estimated annual tax levy <br />for an equipment certificate xvill be provided at the meeting. If the Council does not ~vant to <br /> <br /> <br />