AGENDA REPORT. For the Agenda of June 18, 2018

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1 AGENDA REPORT TO: Mayor Pat Humphrey & City Commission FROM: Ken Hibl, City Manager DATE: June 14, 2018 RE: Act 99 Financing Proposals Street Sweeper Purchase For the Agenda of June 18, 2018 Background. The City s approved 2018/2019 Capital Improvement Program Schedule includes the purchase of a used 2017 model street sweeper. To facilitate the purchase of this item of equipment, the City solicited proposals from its local banking community; three quotations (copies att d) were received. The Commission is asked to approve the proposals and designate the financial institution to allow completion of the loan transaction under the provisions of Act 99 and facilitate the presentation of the required loan documents to the City Commission for approval at its scheduled July 2 nd meeting (see att d copy of Steve s ). Issues & Questions Specified. Should the City Commission approve the Act 99 financing proposals and select the financial institution for the loan? Alternatives. 1. Approve the proposals and select the financial institution for the loan. 2. Direct that additional proposals be solicited. 3. Reject all the proposals and direct that this purchase not be made this Fiscal Year. 4. Defer decision regarding the matter to a subsequently scheduled meeting. Financial Impact. The cost of the sweeper is $215,100. Our approved budget includes the cost of annual payments for this purchase. Recommendation. I recommend that the City Commission approve the submitted proposals and select Mercantile Bank to finance this purchase by adoption of Resolution (copy att d). Attachments. 1. Proposals of Chemical, Isabella, & Mercantile Banks. 2. of Steven Kingsbury. 3. Resolution

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4 June 12, 2018 Steven J. Kingsbury City of Clare 202 West Fifth Street Clare, Michigan Dear Mr. Kingsbury: Thank you for the invitation to make a proposal on an installment purchase agreement in the amount not to exceed $215,100 for the purchase of a new street sweeper. The loan would be repaid in fifteen (15) years, with annual installments of principal and interest, commencing one year from closing. Chemical Bank will make the loan as outlined in the Request for Proposals and as noted below at a fixed rate of 3.94% per annum for 15 years. This bid is subject to the following conditions: That the loan be exempt from federal and state income tax and further be declared to be a Qualified Tax-Exempt Obligation for the purpose of deduction of interest expense by financial institutions; That the loan be a general obligation of the City of Clare; That the loan be structured in accordance with Michigan statutes pertaining to the authority of Cities to borrow; That the City s counsel prepares loan documents and a legal opinion; and That the City files the required IRS report and provides a copy of the completed form to the bank. This rate commitment will expire on July 12, 2018 unless extended by the bank in writing. No bank fees are associated with this issue. The issue will be subject to prepayment without penalty. In the event that bond counsel is not retained by the issuer, Chemical Bank will select a bond counsel to prepare the required documents and any fees associated with the bond counsel shall be at the expense of the issuer. Sincerely yours, L. Kyle Fahrner Vice President Corporate Investment Officer

5 file:///p:/common/city%20commission%20meeting%20packets/2018/061818/stevenkin... Page 1 of 1 6/14/2018 From: Sent: To: Subject: Attachments: Steven Kingsbury Wednesday, June 13, :12 PM Ken Hibl 2017 Elgin Street Sweeper Purchase Chemical Bank 2017 Elgin Financing Proposal pdf; Isabella Bank 2017 Elgin Financing Proposal pdf; Mercantile Bank 2017 Elgin Financing Proposal pdf Ken, We received the following financing offers from local financial institutions for the purchase of the 2017 Elgin Street Sweeper (copies attached and also placed in the City Commission's electronic folder. Mercantile Bank 3.60% Chemical Bank 3.94% Isabella Bank 3.97% All other terms are identical and are in agreement with our request. I've also sent the proposals to our bonding attorney for his review to insure that I haven't missed anything. Based upon the interest rates and terms offered it is my recommendation that we accept the offer from Mercantile Bank. For next Monday's meeting we only need to present to the City Commission the three financing proposals that we received so that the Commission can approve the bids and then select which one to accept. Following the Commission's selection of the financing offer Attorney Steve Frank will prepare all of the Act 99 documents including the borrowing resolution which he will send to us for the City Commission to act upon during their scheduled July 2, 2018 meeting. This is a little different than what we have done in the past, since we have time before we need to close the loan I just wanted to keep Steve from having to work in the evening to get the documents to us basically overnight. Let me know if you have any questions. Thanks, Steve Steven J. Kingsbury, MBA, CPFA, MiCPT Treasurer, Finance and Technology Director skingsbury@cityofclare.org City of Clare , extension 107

6 RESOLUTION A RESOLUTION OF THE CLARE CITY COMMISSION APPROVING ACT 99 FINANCING PROPOSALS AND SELECTING A FINANCIAL INSTITUTION FOR THE LOAN OF FUNDS TO PURCHASE A 2017 ELGIN STREET SWEEPER. WHEREAS, The City s approved 2018/2019 Capital Improvement Program Schedule includes the purchase of a used 2017 model Elgin street sweeper; and WHEREAS, to facilitate the purchase of said equipment, the City solicited proposals from its local banking community to finance the sweeper under the provisions of Act 99; and WHEREAS, three quotations were received; and WHEREAS, the City Staff has reviewed said proposals and determined all three are qualified and meet the specifications requested by the City; and WHEREAS, the City Staff has recommended that the proposals be approved and that Mercantile Bank be selected as the financial institution for the Act 99 financing; and WHEREAS, the City Commission has reviewed and considered said proposals and the recommendation of its Staff in making its decision to approve the payment request. NOW THEREFORE BE IT RESOLVED THAT the Clare City Commission hereby approves the proposals received from the local banking community for Act 99 financing of a 2017 street sweeper for a cost of $215,100 and selects Mercantile Bank to be the financial institution to provide said Act 99 financing to consummate said equipment purchase. ALL RESOLUTIONS AND PARTS OF RESOLUTIONS INSOFAR AS THEY CONFLICT WITH THE PROVISIONS OF THIS RESOLUTION BE AND THE SAME ARE HEREBY RESCINDED. The Resolution was introduced by Commissioner and supported by Commissioner. The Resolution declared adopted by the following roll call vote: YEAS: NAYS: ABSENT: Resolution approved for adoption on this 18 th day of June Diane Lyon, City Clerk