To: Honorable Mayor and Members of Town Council
From: Jeff Brauer, Director of Parks and Recreation
Title
Ordinance Approving a Governmental Lease-purchase Agreement Between the Town of Castle Rock and Wells Fargo Financial Leasing, Inc. for Golf Course Equipment; And Providing for Its Emergency Adoption on Second and Final Reading (Second Reading - First Reading Approved January 22, 2019 by a vote of 7-0)
Body
________________________________________________________________________________
Executive Summary
The purpose of this memorandum is to seek Town Council approval of a lease-purchase agreement for golf carts, utility vehicles, beverage carts and a range picker for Red Hawk Ridge Golf Course. The existing lease for the current fleet will expire in spring 2019 and the vehicles are now in need of replacement.
A Request for Proposals (RFP) was posted on the Town's bidding website from September 13 through October 15, 2018 to purchase new vehicles. Colorado Golf & Turf, Masek Golf Cars of Colorado and Potestio Brothers Equipment all delivered bids to the specified address in response. Staff then compared the financing options from each of the bidders, as well as with Wells Fargo Equipment Finance, and found that Wells Fargo Equipment Finance offered the most competitive lease terms.
Staff is now requesting approval of a purchase of the Colorado Golf & Turf vehicles with financing from Wells Fargo Equipment Finance in the amount of $366,228.40. Staff is also requesting the additional purchase of the Tempo i3 Hardware Package to enable GPS capabilities for the new golf carts for $58,000, bringing the total principal lease agreement amount up to $424,228.40. This package will provide yardage services to the golfers (a customer expectation for courses at Red Hawk Ridge’s price point), and allow for improved staff cart control and tracking capabilities to better manage the fleet on a daily basis.
The total purchase will be financed over a four-year period and will include:
• 80 new electric Club Car golf carts with GPS capability via the Tempo i3 Hardware Package
• 4 new electric marshal carts
• 2 new gas beverage carts
• 1 new gas range picker
• 5 new gas utility vehicles
The purchase price reflected above does include a trade-in allowance of $139,500 for all of the existing leased equipment (with the exception of 10 Carryall utility vehicles), in addition to three Carryall utility vehicles not contained within the current lease.
Discussion
The replacement of Red Hawk Ridge’s golf cart fleet was included as a priority in the Parks and Recreation 2018-2020 Strategic Plan, which was approved by Town Council in June 2018.
The bids for the RFP were as follows:
|
Company |
Total |
Trade-in Allowance |
Net Cost |
|
Colorado Golf & Turf |
$505,728.40 |
$139,500 |
$366,228.40 |
|
Masek Golf Cars of Colorado |
$491,771 |
$134,300 |
$357,471 |
|
Potestio Brothers |
Unable to provide golf carts |
NA |
NA |
Colorado Golf & Turf (who sells Club Car brand golf carts) and Masek Golf Cars of Colorado (who sells Yamaha golf carts) both offered an unlimited 4-year battery warranty for all vehicles.
Despite the fact that Colorado Golf & Turf’s bid came in slightly higher than Masek Golf Cars of Colorado’s bid, staff believes that the proven track record for customer service and product quality from Colorado Golf & Turf carries significant value and, in effect, is a better choice.
Red Hawk Ridge has had ten positive years of experience using Club Car golf carts and the cart is widely considered the best on the market by course operators. Club Car does not show a record of any recalls on its golf carts, whereas Yamaha experienced two recalls in 2018 alone (faulty brake cable and faulty accelerator spring) which raises concerns regarding safety, reliability and dependability. A recent survey of current golf courses using Yamaha golf carts confirms issues with dependability and product quality.
In addition, Colorado Golf & Turf has a proven track record of providing outstanding customer service to all of their Club Car accounts and falls in line with the Town values of integrity, honesty and professionalism. In addition, Colorado Golf & Turf has more technicians, a larger inventory of parts and faster response times than any local competitor has and was recently awarded the 2018 Club Car Golf Distributor Service award.
Because of the proven quality of Club Car and unparalleled local service from Colorado Golf & Turf, staff is recommending to lease-purchase the vehicles from Colorado Golf & Turf.
Budget Impact
The purchase of new vehicles for the golf course was included in the Town of Castle Rock’s 2019 Operating and Capital Improvement Budget, adopted by Town Council in 2018.
The $424,228.40 principal purchase price will be financed over 4 years with semi-annual payments. Staff has elected to pay upfront tax on the golf cart purchase in lieu of collecting sales tax when the carts are rented. The upfront tax will be paid from the Golf Fund and will not be part of the financing. Based on current cart rental trends, the golf course will save approximately $90,000 in taxes over the course of the 4-year lease-purchase by paying sales tax on the front-end. Emergency adoption of this item is requested in order to lock in the beneficial interest rate for the Town.
The annual principal (214-5380-453-88.29) and interest (214-5380-453-88.30) payments are detailed below:
|
Payment |
Date |
Total Due |
Interest |
Principal |
|
1 |
2019 |
$115,202.04 |
$12,539.64 |
$102,662.40 |
|
2 |
2020 |
$115,202.04 |
$12,777.05 |
$102,424.99 |
|
3 |
2021 |
$115,202.04 |
$8,085.02 |
$107,117.02 |
|
4 |
2022 |
$115,202.04 |
$3,178.01 |
$112,024.03 |
Staff Recommendation
Staff recommends that Council approve the lease-purchase of the Colorado Golf & Turf (Club Car) vehicles with financing from Wells Fargo Equipment Finance for Red Hawk Ridge Golf Course in 2019.
Proposed Motion
“I move to approve the Ordinance as introduced by Title, Second Reading.”
Attachments
Attachment A Ordinance
Exhibit 1 Governmental Lease-Purchase Agreement
Attachment B Colorado Golf & Turf Bid