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payment). The first payment is due in March 2024, and the final payment is due in September 2028. There are sufficient funds in the FY 2023/24 budget to cover the first lease payment (Fire Apparatus Replacement Fund 513), and future lease payments will be appropriated through budget adoption. The estimated true interest cost of the Lease/Purchase Agreement is approximately 4.305%, with no associated finance charge. The estimated amount of proceeds expected to be received by the City is approximately $1,237,932; the estimated total payment amount is approximately $1,389,166. There are no reserve funds or capitalized interest being paid or funded with this Agreement. BACKGROUND The standard useful lifespan of a Type 1 Fire Engine is 10-15 years, such that agencies similarly replace Type 1 Fire Engines every 10-15 years. After 15 years, engines are often placed on a reserve status for an additional five years, for an approximate 20-year service life. The current vehicle is a 12-year-old 2012 Pierce Quantum Type 1 Fire Engine with 94,316 miles, and 9,606 hours of use, with $209,269 spent on parts and labor to maintain and repair the vehicle. Given the estimated 3.5-to-4-year delivery timeline and the current vehicle age and mileage, it is recommended to proceed with the lease/purchase in order to maintain service needs. Reserve engines are maintained as a backup to fill in for a front-line apparatus that is out of service for maintenance, repair, or assigned to an emergency for an extended period. Once replaced, the current E91 2012 Pierce Quantum Fire Engine will be placed into a reserve status for the subsequent 10 years, replacing the current 2004 model year Engine 593 as the reserve engine for LPFD. To select a vendor, staff researched all potential manufacturers. Pierce Manufacturing, Inc. was found to be the only vendor with any stock engines available for purchase, which speeds up fire engine delivery. LPFD personnel reviewed the apparatus specifications and procurement documents from Pierce Manufacturing, Inc. and determined that the Pierce Enforcer 1500 GPM Pumper Type 1 Fire Engine met the general specifications. Pierce Manufacturing, Inc. verified with the LPFD staff that it has the capacity to build the apparatus to City specifications. Pierce Manufacturing, Inc. quoted the City a price of$1,237,932 (Attachment 2 — Option A) for the engine which includes a 10 percent contingency ($1,125,392 plus $112,540 contingency). Staff established Pierce Manufacturing, Inc.'s bid as fair and reasonable. Notably, by pre- purchasing the vehicle, the City can take advantage of a discount of$176,763, reflecting a reduction in the purchase price, sales tax, and performance bond amounts ($160,004 pre-pay discount, $16,401 sales tax difference, and $358 performance bond savings.) Due to ongoing supply chain delays, purchasing and delivery of fire apparatus has become difficult, and new fire apparatus deliveries can take 43-47 months from the order date until delivery. At the same time, the cost of a new apparatus is steadily increasing. Staff recommends ordering the Type-1 Fire Engine during FY 2023/24 for a target delivery date in 2027. Page 2 of 4