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DISCUSSION Vendor Selection Process Sourcewell (formerly known as NJPA) was established with the statutory purpose of assisting public agencies in meeting specific needs which are more efficiently delivered cooperatively than by an entity individually. The City has an established account with Sourcewell, and Pierce Manufacturing, Inc. has a contract with Sourcewell. Jurisdiction clients can utilize cooperative purchasing contracts through similar joint powers, intergovernmental cooperation, or cooperative purchasing laws in their respective jurisdictions. Participating agencies include all eligible government, education, and nonprofit agencies nationwide and in Canada. Staff researched the types and styles of engines exhaustively. While there are many engine types, their purpose differs. The National Fire Protection Association (NFPA) classifies engines by type and function. The Type 1 Fire Truck is the most common type of Engine in use today. A Type 1 Fire Truck is a structural firefighting truck designed to carry 3-4 firefighters and all the required NFPA firefighting equipment. Financing Structure The City's fire vehicles are funded through the Fire Apparatus Replacement Fund, and the annual contribution from the General Fund and projected interest income is budgeted at $440,000 for the 2023-25 budget cycle. The fund balance at the beginning of FY2023/24 is projected at $1.7 million, excluding vehicles that have been ordered but not paid due to supply chain challenges. Based on the replacement schedule, there are other fire vehicles that are due for replacement in the current budget cycle amounting to over $2.1 million, including an air and light truck that is estimated to cost more than $1.5 million. Funds also need to be set aside for replacements in the out years and emergency purchases. For the purchase of this engine, lease/purchase financing is the optimal solution and is a method that is widely used by agencies to purchase fire trucks. The projected annual revenue to the Fire Apparatus Replacement Fund will be sufficient to cover the proposed annual debt service payment of$277,833, leaving approximately $162,000 to fund future replacements. The City contacted six financial institutions for proposals and five responded to the RFP; the proposals were evaluated based on interest rates, business terms, and experience. The proposal submitted by JPMorgan Chase Bank, N.A. is competitive and advantageous to the City (Attachment 3). The proposal (Option B) offers annual interest rates at 4.305%, 4.186%, and 4.136% for 5-, 7-, and 10-year terms. Semi-annual lease payments are being proposed with the first payment due in March 2024. JPMorgan Chase Bank, N.A. also offers another option (Option A) to defer the first payment until March 2025, but the total interest cost is higher even though the interest rates are slightly lower than Option B. The fire engine will serve as the collateral for the lease, and JPMorgan Chase Bank, N.A. requires a performance bond adding the institution as an additional obligee. The cost of the performance bond is included in the quote provided by GSFA. Page 3 of 4