To: Honorable Mayor and Members of Town Council
From: Jeff Brauer, Director of Parks & Recreation
Jon Holland, Golf Course Superintendent
Title
Ordinance Approving a Lease-Purchase Agreement between the Town of Castle Rock and Wells Fargo Financial Leasing Inc. for Golf Course Equipment (Second Reading)
Body
________________________________________________________________________________
Executive Summary
The First Reading was approved with no changes by a vote of 6 to 0 at the February 16, 2016
Council Meeting.
The purpose of this memorandum is to present to Council for approval a lease-purchase agreement for golf course maintenance equipment to be used at Red Hawk Ridge Golf Course.
The current lease for Red Hawk Ridge's golf course maintenance equipment expired at the end of 2015. Many pieces of equipment are now in need of replacement; therefore, staff is requesting the lease-purchase of new equipment beginning in 2016. In lieu of trading in the existing equipment, staff will repurpose or sell the equipment as the value of doing so exceeds the trade-in value.
Staff has elected to utilize National IPA pricing from L.L. Johnson Distributing Company (Toro). The use of the 2016 National IPA Contract Pricing (Contract #120535) from Toro is consistent with the Town of Castle Rock’s purchasing policy and ensures that the pricing for all of the equipment has been competitively bid.
Staff reviewed financing options from Toro as well as Wells Fargo Equipment Finance and found that Wells Fargo Equipment Finance offered the most attractive rate and terms. Staff is requesting a lease-purchase in the amount of $300,148.38, financed over 5 years. This purchase will include all of the items listed on Addendum A.
Notification and Outreach Efforts
Staff prefers purchasing Toro equipment and as such has elected to utilize 2016 National IPA Contract Pricing from L.L. Johnson Distributing Company. Additional notification and outreach efforts are not required.
History of Past Town Council, Boards & Commissions, or Other Discussions
Town Council approved the most recent equipment lease-purchase from L.L. Johnson Distributing Company with financing from Wells Fargo in 2011. The total amount financed was $286,443.20 over 5 years, giving the course semi-annual payments of $28,644.32. The equipment under this purchase consisted of the following:
• Two fairway mowers
• Two riding bunker rakes
• One utility trim mower
• Two greens mowers
• One fairway core cultivator
• One rough mower
• Five walking greens mowers
• One pull behind turbine blower
Discussion
Under the proposed lease-purchase, staff would like to acquire the following pieces of equipment in 2016:
• One fairway mower - the replaced unit will be repurposed for the range tee
• One spray unit - the replaced unit will be repurposed for the native areas
• Two greens mowers - the replaced units will be repurposed for the tees (the replaced tee units will be sold)
• One aerator - the replaced unit will continue to be used until disposal
• One rough mower - the replaced unit will continue to be used until disposal
• One utility vehicle - the replaced unit will be repurposed for general hauling needs
• One roller - this is an added unit necessary to maintain expected greens surface quality
• One pro sweep unit - this is an added unit to eliminate the need to borrow from other golf courses
• One pull-behind turbine blower - the replaced unit will be used until disposal
With the addition of the proposed new equipment and the repurposing of the majority of the existing equipment, the maintenance team will have the necessary tools and resources to continue to provide the first class playing conditions that customers have come to expect.
Toro & L.L. Johnson Distributing Company:
As a leading worldwide provider of innovative turf, landscape, rental and construction equipment, and irrigation and outdoor lighting solutions, Toro helps customers care for golf courses, sports fields, public green spaces, commercial and residential properties, and agricultural fields. We value the trust customers place in our people and our products, and are proud to partner with many sites and events around the world. This includes St. Andrews Links in Scotland, the Wimbledon Championships, the Super Bowl Stadium, Rose Bowl, and Walt Disney World Resort, along with many other professional and collegiate venues.
L.L. Johnson Distributing Company has been serving the Colorado market as a family-owned company since 1976 and is celebrating its 40th anniversary this year. The sales, service and parts divisions have proven to be the leader in Colorado for many years. The employees at L.L. Johnson possess years of experience that provide a solid foundation of knowledge leading to consistent scores of 9 out of 10 on independent blind customer satisfaction surveys.
Financing:
Staff received proposals from Toro and Wells Fargo Financial Leasing Inc. After comparing the options, staff found that Wells Fargo Financial Leasing Inc. offered the best semi-annual payments, rates and fees to fit the needs of the golf course. The finance rate from Wells Fargo is 2.87% whereas the finance rate from Toro came in at 3.59%. The monthly payments from Wells Fargo will be $5,375.95 versus $5,457.00 from Toro - a total savings of $4,863.00 over the 5-year term with a $1.00 buyout at the end.
The $300,148.38 purchase price will be financed over 5 years with semi-annual payments of $32,255.70.
Budget Impact
The annual principal (214-5380-453.88-29) and interest (214-5380-453.88-30) payments are detailed below.
|
Pmt |
Date |
Total Due |
Interest |
Principal |
|
1 |
2016 |
$48,383.55 |
$6,074.71 |
$42,308.84 |
|
2 |
2017 |
$64,511.40 |
$6,635.25 |
$57,876.15 |
|
3 |
2018 |
$64,511.40 |
$4,954.08 |
$59,557.32 |
|
4 |
2019 |
$64,511.40 |
$3,224.05 |
$61,287.35 |
|
5 |
2020 |
$64,511.40 |
$1,443.79 |
$63,067.61 |
|
6 |
2021 |
$16,127.85 |
$76.74 |
$16,051.11 |
Staff Recommendation
Staff recommends that Council support the lease-purchase of the L.L. Johnson Distributing Company (Toro) golf course maintenance equipment with financing from Wells Fargo Financial Leasing Inc. for Red Hawk Ridge Golf Course in 2016.
Proposed Motion
“I move to approve An Ordinance Approving a Lease-Purchase Agreement between The Town of Castle Rock and Wells Fargo Financial Leasing Inc. for Golf Course Equipment.”
Attachments
Attachment A Ordinance
Attachment B Bid