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APPROVE THE COOPERATIVE PRICING AGREEMENT WITH E-Z GO TEXTRON FOR GOLF CARTS LEASED THROUGH WELLS FARGO FINANCIAL LEASING, INC.
recommended action
RECOMMENDATION
It is recommended that the City Council adopt a motion approving findings that support an exception to the competitive bidding process and authorize the City Manager to utilize a national cooperative agreement issued by the city of Tucson Arizona, and administered by the National Intergovernmental Purchasing Alliance Company (NIPA), to lease 100 E-Z Go Textron electric golf carts for 36 months in the amount of $357,123 using the E-Z Go lease agent, and approve an agreement with Wells Fargo Financial Leasing, Inc., and to take appropriate actions necessary to carry out the purpose and intent of the motion.
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SUMMARY
The City of Stockton owns two municipal golf courses which are managed and operated by Kemper Sports Management, Inc. (KSM) in accordance with an agreement entered into in June 2011 (Resolution No 11-0153). The existing fleet of golf carts is over six years old and past the industry standard of four to six years of useful life.
The City has entered into long term leases for golf carts on a consistent basis for many years, the most recent leases were executed in 2009 with Yamaha Corporation for each municipal course. Those leases expired in 2014. New long term leases were not considered at that time due to the uncertainties related to the bankruptcy and more importantly, because the golf courses were included as collateral for specific bond debt in litigation. Instead, the City requested, and Yamaha agreed, to allow the City to retain the same golf carts and pay monthly rent.
With the end of bankruptcy proceedings, including the specific litigation involving the golf courses, and with the carts being well beyond their useful lives, the City needs to provide new golf carts to the two municipal courses. Community Services Department staff recommends an exception to the competitive bidding process as described in Stockton Municipal Code 3.48.070 based on the existence of a cooperative pricing agreement developed by the city of Tucson, Arizona (Attachment A) and administered by the National Intergovernmental Purchasing Alliance Company (NIPA), resulting in the selection of E-Z Go Textron as the preferred vendor. Staff further recommends that the City lease 100 EZ-Go Textron golf carts through a three-year agreement in the amount of $357,123, administered by Wells Fargo Financial Leasing, Inc.
DISCUSSION
Background
Championship 18-hole golf courses, such as those owned by the City, offer golf carts to rent for individual and tournament use. Swenson and Van Buskirk golf courses have inventories of 60 and 45 golf carts, respectively. The City of Stockton has leased many fleets of golf carts, most recently in 2009, entering into a five year operating lease with Yamaha Corporation for each course.
Those leases and any warranties on the equipment expired in 2014, at which time, the golf course properties and operations were included as collateral for bond debt subject to litigation between the City and a bond creditor. The City requested, and Yamaha agreed, that the City could pay monthly rent on the existing fleet of carts. In January, 2016, the litigation related to the golf courses ended. With this matter settled, the City and KSM can address replacement of the golf carts. The existing carts are over six years old, have exceeded the industry standard for useful life, and have become unreliable.
The City has two alternatives for selecting new equipment such as golf carts. It can either issue a bid for the equipment or, in accordance with Stockton Municipal Code 3.68.070(A), it can approve an exception to the bidding process based on specific criteria. One of those specific criterion allows the City to adopt the process and findings of another public agency that has already performed the bidding process. Staff is requesting an exception based on this criterion.
Findings.
• Stockton Municipal Code Section 3.68.070(A) 5 provides an exception to the competitive bidding process in cases where the City Council has authorized a cooperative agreement of another governmental jurisdiction or public agency.
• The City of Tucson, Arizona prepared a competitive solicitation for golf carts, incorporating language to make its resultant agreement with E-Z-Go Textron accessible nationally to agencies in states that allow intergovernmental cooperative purchasing and leasing.
• A Master Supplier Agreement has been made available by Tucson through the National Intergovernmental Purchasing Alliance Company, to public agencies that register with NIPA to participate in cooperative leasing.
• The City of Stockton has registered with NIPA to participate in cooperative leasing (Attachment B), and may therefore enter into an agreement with E-Z-Go Textron to lease equipment and related supplies at the terms and conditions secured by Tucson.
Staff from the City Administrative Services Department-Procurement Unit and Community Services have reviewed the procurement process and findings of Tucson Arizona’s recent competitive bid for golf carts and are of the opinion that both the Tucson competitive process, and the cooperative agreement administered by NIPA are commensurate in all material respects with the City procurement and competitive bidding requirements.
City staff have also received favorable replies from KSM related to its regional and national dealings with E-Z-Go Textron. KSM confirmed that E-Z-Go Textron is one of the leading golf cart industry manufacturers, and its carts would be suitable for the City of Stockton courses.
Present Situation.
The condition and reliability of a golf cart has a direct impact on a golfer’s experience, the reputation of the golf course, and course revenue. The golf cart fleet at the Stockton municipal courses has exceeded the industry standard useful economic life, is subject to significant down-time, and is therefore in need of replacement.
Staff recommends the City Council authorize the acquisition of 100 E-Z Go Textron golf carts using an exception to the competitive bidding process by utilizing pricing available through a cooperative agreement administered by NIPA, and procured by the City of Tucson Arizona (Attachment C). Furthermore, staff recommends the City pay for the golf carts using a 36 month fair market value lease through the vendor’s industry partner, Wells Fargo Financial Leasing, Inc. (Attachment D), for a total cost, including tax and processing of $357,123.
FINANCIAL SUMMARY
Lease financing will be provided by Wells Fargo Financial Leasing, Inc. payments will be budgeted and paid by the golf course contractor, KSM, in the normal course of business similarly to how golf cart lease payments are made currently. Existing monthly payments are $5,480, based on the advanced age of the carts and a six year term due to the extension necessitated by the City’s bankruptcy proceedings. Now that the City has exited the bankruptcy process monthly payments under the new arrangement will be $9,916 but are spread out over a three-year period more in line with standard lease terms. The appropriation for this activity is included as part of the FY 2016-17 Proposed Budget 481 Golf Fund, which is partially subsidized by the General Fund. No additional general fund appropriation is required to execute this agreement.
Attachment A - Cooperative leasing agreement developed by the City of Tucson, Arizona and administered by the National Intergovernmental Purchasing Alliance Company (NIPA)
Attachment B - City of Stockton NIPA Registration
Attachment C - E-Z-Go TEXTRON Electric Fleet Golf Cart Quote
Attachment D - Wells Fargo Lease Documents Packet