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APPROVE FINDINGS AND PURCHASE OF TWO FIRE ENGINES AND ONE LADDER TRUCK
recommended action
RECOMMENDATION
It is recommended that the City Council adopt a resolution to:
1. Approve findings pursuant to Stockton Municipal Code (SMC) section 3.68.070 in support of an exception to the competitive bidding process.
2. Approve the purchase of two fire engines and one ladder truck through a National Joint Powers Alliance (NJPA) contract with Rosenbauer America of Lyons, South Dakota and Wyoming, Minnesota in the amount of $2,313,640.16.
3. Approve a down payment in the amount of $462,740.16 from the Fleet Internal Service Fund (ISF).
4. Approve execution of a Master Lease-Purchase Agreement with Western Alliance Business Trust in an amount not to exceed $1,900,000 for the balance of the purchase price.
5. Authorize legal fees in an amount not to exceed $10,000 to be paid to Orrick, Herrington & Sutcliffe, LLP.
6. Authorize a budget amendment to the Fiscal Year 2016-17 Fleet ISF Annual Budget for the associated lease revenues and expenditures.
It is also recommended that the City Manager be authorized to take appropriate and necessary actions to carry out the purpose and intent of this resolution.
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Summary
Public Works and Fire Department staff reviewed the City’s inventory of heavy fire equipment and is recommending the replacement purchase of two fire engines and one ladder truck. Each of these units is at least 17 years old and exceeds the recommended 15-year replacement cycle. The recommended replacement vehicles will be purchased through a NJPA contract with Rosenbauer America. The total purchase cost of the equipment is $2,313,640.16 (Attachment A - Quote from Rosenbauer America). Primary funding for this purchase will be from a lease with Western Alliance Business Trust for an amount not to exceed $1,900,000. Currently, the lease agreement is not in final form pending City Council approval of the purchase and financing arrangements. Once approved, the interest rate for the lease financing will be finalized and secured. The lease will eventually be placed in final and substantially the same form for full execution of the Agreement.
DISCUSSION
Background
The City’s fleet of heavy fire equipment consists of 17 fire engines and four ladder trucks. The equipment is maintained by the Fleet Section of the Public Works Department. The Fire Department operates the equipment and responds daily with 12 of the 17 fire engines and three of the four ladder trucks. The remaining units are in reserve status, to be used when any of the daily response units are out of service. The oldest engine is a 2000 model; the newest is a 2016 model. The oldest ladder truck is a 1991 model, and the newest is a 2016 model.
The City utilizes a 15-Year Heavy Fire Vehicle Replacement Plan to provide a sustainable, reliable, and cost effective fleet of heavy fire equipment in alignment with industry standards. The National Fire Protection Association Standards for Fire Department Apparatus (NFPA 1901) suggests that replacement cycles for busy fire fleets be evaluated based on call load, maintenance costs, and needed technology updates. The industry standard is between 12 to 20 years for first line response units depending on local condition, community demand, engine hours, miles driven, and maintenance costs. Fire departments that are similar to the City of Stockton in size and call load have replacement cycles ranging from 10 to 15 years. The City’s 15-year replacement cycle is at the outer edge of this industry standard range.
Fire Department and Fleet staff identified two engines and one ladder truck that exceed 15 years of service life and are recommended for replacement. The recommended units are Engine 22 (Unit No. 2633) and Engine 13 (Unit No. 2634), and Ladder Truck T-4 (Unit No. 2244). Both engines are 2000 models, and the truck is a 1991 model. The pumper trucks are two years overdue for replacement, and the ladder truck is more than ten years overdue. Staff recommends replacement of Unit Nos. 2633, 2634, and 2244 with new units. The vehicles being replaced will be decommissioned, useable equipment will be removed, and the vehicles will be disposed of in accordance with SMC requirements.
Commencing in 2014, Public Works and Fire Department staff comprehensively revised the City’s fire equipment specifications and subsequently evaluated proposals from fire equipment vendors. This process resulted in a recommendation that the City acquire heavy fire equipment from Rosenbauer America, based on Rosenbauer America’s ability to satisfy all of the City’s requirements with cost effective pricing. On May 19, 2015, Council approved the purchase of three fire engines and one fire truck from Rosenbauer America. The City has since acquired one additional fire engine from Rosenbauer America.
Present Situation
Staff proposes to purchase the replacement units from Rosenbauer America through a cooperative purchasing agreement with the NJPA. The NJPA is a public agency based in Minnesota that serves as a municipal contracting agency. All NJPA contracts have been competitively solicited nationally, reviewed, evaluated by a committee, and then recommended to the NJPA Board of Directors for award in accordance with Minnesota public purchasing rules and regulations applicable to NJPA (Attachment B). The use of these contracts is optional and is available to California State and local government agencies.
The specifications for the three fire trucks available through the NJPA contract meets the City’s requirements for these types of equipment. By accessing this type of cooperative purchasing agreement, administrative costs are reduced because the NJPA obtains low bids for volume purchasing and local agencies avoid the expense associated with conducting the bid process. Staff time and associated costs to develop specifications and prepare documents are minimized.
Rosenbauer Fire Apparatus was selected by City staff as the preferred manufacturer of heavy fire equipment. The standardization achieved by acquiring the same brand of vehicle allows for reduced vehicle set up costs, and reduced training for City repair technicians.
The recommended resolution authorizes the replacement purchase of two fire engines and one ladder truck from Rosenbauer America at a total cost of $2,313,640.16 (Attachment A).
Findings
In accordance with SMC section 3.68.070 (B), the following findings were provided in support of using a cooperative purchasing agreement for the purchase of these fire vehicles:
1. Rosenbauer Fire Apparatus has been selected by City staff as the preferred manufacturer of heavy fire equipment. The purchase of this brand of truck provides for standardization of parts and equipment and minimizes training requirements.
2. The NJPA has established a cooperative purchasing agreement for the purchase of two fire engines and one ladder truck from Rosenbauer America.
3. The NJPA established this cooperative purchasing agreement pursuant to a competitive bidding process.
4. The bid specification used by the NJPA has been assessed as compatible to the City’s standards.
Staff recommends replacement of these units through the above-mentioned cooperative purchasing agreement.
FINANCIAL SUMMARY
The total purchase price of the two fire engines with chassis and one ladder truck with chassis are shown below.
Two Fire Engines $ 989,974.00
One Ladder Truck $ 1,120,050.00
Subtotal $ 2,110,024.00
Sales Tax (9%) $ 189,902.16
Delivery $ 13,714.00
Total Purchase Price $ 2,313,640.16
The acquisition will be financed through a combination of:
• Proceeds from a capital lease agreement in the amount estimated at $1,850,900 (not to exceed $1,900,000) with Western Alliance Business Trust for a term of 10 years at a rate not to exceed 5.00 percent, and
• Use of $462,740.16 from the Fleet ISF Balance.
• An additional $10,000 will also be needed from the Fleet ISF balance for legal fees associated with the Master Lease-Purchase Agreement.
|
ITEM |
ACCOUNT NO. |
AMOUNT |
|
Fleet ISF Replacements |
501-5060-670 |
$2,313,640.16 |
The FY 2016-17 Budget amendment to the Fleet ISF budget is recommended as follows:
Sources - Increase Other Financing Sources 501-5060-411 $1,850,900
Fleet Fund Balance $ 472,741
Uses - Increase Replacement Equipment 501-5060-670 $2,313,641
Increase Legal Fees 501-5060-571 $ 10,000
The lease/purchase annual payments for the 10-year lease are estimated at $232,000, with an option to prepay the lease, as financial conditions permit, without penalty. The Replacement Plan for the fire fleet incorporate the lease/purchase payment schedule and provide annual charges to the Fire Department to accumulate funds for replacement of these vehicles in 15 years.
The lease payment amounts reflected above are estimates. The lease agreement is not in full and final form pending City Council approval of the purchase and financing arrangements. Once approved, the interest rate for the lease financing will be finalized and secured. The Agreement will then be fully executed in substantially the same form to include the appropriate Internal Revenue Service form.
The Fleet ISF charges the Fire Department an annual rental fee for maintenance and replacement of fire vehicles. Funding for the down-payment and lease repayment for these two fire engines and one ladder truck originates from the General Fund. Future fleet charges to the Fire Department General Fund budget may need to be adjusted based on the lease repayment schedule and the replacement value of the fire vehicles. Any adjustments will be incorporated in the development of annual budgets.
Attachment A - Quote from Rosenbauer America
Attachment B - Rosenbauer America NJPA Contract Award