R-17-41RESOLUTION NO. R-17-41
RESOLUTION AUTHORIZING THE CITY OF FAIRFAX,
VIRGINIA, TO ENTER INTO A LEASE/PURCHASE
FINANCING FOR A FIRE TRUCK AND RELATED
EQUIPMENT IN THE MAXIMUM PRINCIPAL AMOUNT OF
$1,000,000, AUTHORIZING THE CITY TO ENTER INTO A
SUBLEASE OF SUCH EQUIPMENT WITH THE FAIRFAX
VOLUNTEER FIRE DEPARTMENT, AND AUTHORIZING
THE EXECUTION AND DELIVERY OF SUCH
AGREEMENTS
WHEREAS, the Council (the "Council") of the City of Fairfax, Virginia (the "City"), desires to
undertake the lease/purchase financing of a new fire truck (body type — pumper) and related
equipment (collectively, the "Equipment") for use by the City and the Fairfax Volunteer Fire
Department (the "Volunteer Department");
WHEREAS, the City's administration, in collaboration with Davenport & Company LLC, the
City's financial advisor, has solicited bids from commercial banks and leasing entities to enter
into a lease/purchase financing arrangement with the City for the Equipment in the maximum
principal amount of $1,000,000, and 10 bids have been received;
WHEREAS, the Council has reviewed the bids received and has determined to proceed with the
lease/purchase financing offered by U.S. Bancorp Government Leasing and Finance, Inc. (the
"Lessor"); and
WHEREAS, the City and the Lessor have previously entered into a Master Tax -Exempt
Lease/Purchase Agreement dated December 14, 2012 (the "Master Lease Agreement"), pursuant
to which the City and the Lessor will execute a Property Schedule (as defined in the Master Lease
Agreement and, together with the Master Lease Agreement, the "Lease Agreement") to provide
for the lease/purchase of the Equipment;
NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF
FAIRFAX, VIRGINIA, THIS 10th DAY OF OCTOBER, 2017, THAT:
1. The Council has determined that it is in the best interests of the City and the
taxpayers to proceed with the lease/purchase financing of the Equipment with the Lessor and
authorizes the acquisition of the Equipment through the execution of a Property Schedule with the
Lessor in accordance with the terms of the Master Lease Agreement, the bid of the Lessor dated
September 22, 2017 (attached hereto as Exhibit A , and this Resolution.
2. The City Manager (such term to include the Assistant City Manager) is authorized
to negotiate with the Lessor and to accept such pricing terms as the City Manager shall determine
to be in the best interests of the City; provided however, that (a) the aggregate amount of principal
components of basic rent (the "Basic Rent") payable under the Lease Agreement shall not exceed
$1,000,000, (b) the Lease Agreement shall terminate not later than December 31, 2025, and (c) the
interest components of Basic Rent payable under the Lease Agreement shall bear interest at an
annual rate not to exceed 2.00% (exclusive of any interest penalties and subject to adjustment as set
forth in the Lease Agreement). The City Manager is further authorized to determine the payment
dates and installment amounts of Basic Rent (comprising both principal and interest components)
due under the Lease Agreement and the provisions relating to any prepayment of such Basic Rent
(including any make -whole prepayment price).
3. The City Manager is authorized to execute a Property Schedule with the Lessor in
accordance with the terms of the Master Lease Agreement and this Resolution. Further, the City
Manager is authorized to execute a sublease agreement (the "Sublease") for the lease of the
Equipment to the Volunteer Department upon such terms as the City Manager shall determine to be
in the best interests of the City, subject to the terms and provisions of the Lease Agreement. The
form of the Sublease shall be approved by the City Attorney and the City Manager. The execution
by the City Manager of the Property Schedule and the Sublease and the delivery thereof to the other
parties shall constitute conclusive evidence of the City Manager's approval of the final forms of
such agreements and any related completions, omissions, insertions, and changes. The officers of
the City are authorized and directed to execute and deliver all certificates and instruments and to
take all actions necessary or desirable in connection with the execution and delivery of the Property
Schedule and the Sublease.
4. The City is authorized to grant a security interest in the Equipment acquired with
the proceeds under the Lease Agreement as security for the prompt payment when due of amounts
payable and the performance by the City of its other obligations under the Lease Agreement.
5. The Council determines that the acquisition and continuing use of the Equipment
and the financing of the same through the Lease Agreement are necessary and proper to the efficient
operation of the City and will continue to be necessary and proper to efficient operation of the City
through the fiscal year ending June 30, 2026.
6. The undertaking by the City to make payments under the Lease Agreement shall be
a limited obligation payable solely from funds to be appropriated from time to time by the Council
for such purpose and shall not constitute a debt of the City within the meaning of any constitutional
or statutory limitation or a pledge of the faith and credit or the taxing power of the City beyond any
fiscal year for which the City has appropriated funds for such purpose.
7. The City believes that funds sufficient to make payment of all amounts payable
under the Lease Agreement can be obtained. While recognizing that it is not empowered to make
any binding commitment to make such payments beyond the current fiscal year, the Council states
its intent to make annual appropriations for future fiscal years in amounts sufficient to make all such
payments and recommends that future councils do likewise during the term of the Lease Agreement.
The Council directs the City Manager, or such other officer as may be charged with the
responsibility for preparing the City's annual budget, to include in the budget for each fiscal year
during the term of the Lease Agreement an amount sufficient to make all rental payments payable
under the Lease Agreement during such fiscal year.
8. The City covenants that it will not take or omit to take any action the taking or
omission of which will cause the Lease Agreement to be an "arbitrage bond" within the meaning
of Section 148 of the Internal Revenue Code of 1986, as amended (the "Code"), and regulations
issued pursuant thereto, or otherwise cause interest on the proceeds under the Lease Agreement to
be includable in the gross income of the Lessor, and its successors and assigns, under current law.
Without limiting the generality of the foregoing, the City shall comply with any provision of law
that may require the City at any time to rebate to the United States any part of the earnings derived
from the investment of the gross proceeds under the Lease Agreement, unless the City receives an
opinion of nationally recognized bond counsel that such compliance is not required to prevent
interest on the proceeds under the Lease Agreement from being includable in the gross income for
federal income tax purposes of the Lessor, and its successors and assigns, under existing law.
9. Such officers of the City as may be requested by the City's special tax counsel are
authorized and directed to execute an appropriate certificate setting forth (a) the expected use and
investment of the proceeds under the Lease Agreement to show that such expected use and
investment will not violate the provisions of Section 148 of the Code and (b) any elections such
officers deem desirable regarding rebate of earnings to the United States for purposes of complying
with Section 148 of the Code. Such certificate shall be prepared in consultation with the City's
special tax counsel, and such elections shall be made after consultation with such special tax
counsel.
10. All other actions of the City in conformity with the purposes and intent of this
Resolution and in furtherance of entering into the Lease Agreement are approved and confirmed.
11. All resolutions or parts of resolutions in conflict herewith are repealed.
12. This Resolution shall take effect immediately.
ADOPTED this 10th day of October, 2017.
Mayor
Attest:
The vote on the motion to approve was recorded as follows:
VOTE:
Councilmember DeMarco
Aye
Councilman Greenfield
Aye
Councilmember Miller
Aye
Councilmember Passey
Aye
Councilmember Schmidt
Aye
Councilmember Stehle
Aye