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May 4, 2004 TO FROM I CONSENT AGENDA COUNTY ADMINISTRATOR 1 Richard T Crotty, Orange County Chairman Board of County Commissioners Fred Winterkamp, Manager, Fiscal and Business Services CONTACT PERSON PHONE NUMBER: Fred Winterkamp, Manager, Fiscal and Business Services (407) 836-5442 SUBJECT Approval of a resolution of the Board of County Commissioners of Orange County, Florida to make the required declaration under the tax code to reimburse the cost of equipment to be leased by the County, and approval of a resolution approving the lease purchase financing of vehicles and equipment for the Fire Rescue Division on lease schedules created under the terms of the Master Lease Purchase Agreement with SunTrust Leasing Corporation in a principal amount not to exceed $4,750,000 Master Lease Background At the November 11, 2003 meeting of the Board of County Commissioners ("Board"), the Orange County Master Lease Purchase Program ("Master Lease") was authorized with SunTrust Leasing Corporation ("SunTrust") as lease provider This program allows the County to acquire vehicles and equipment and make payments over time at favorable fixed interest rates The equipment to be leased is recorded and identified on a schedule to the Master Lease A schedule is a single leasing event like drawing down a loan from a line of credit There can be many schedules to the Master Lease, but each schedule must be approved by the Board Each schedule to the Master Lease operates under the terms of the Master Lease and the fixed interest rate is determined by applying a standard interest rate formula at the closing of each schedule The favorable interest rate formula was a major criteria in the RFP process The alternative to leasing can be waiting to buy equipment to serve growth, or using vendor leasing firms with widely ranging terms and rates, which is inefficient for a large organization with good credit like Orange County The Master Lease is a reimbursement lease A reimbursement lease provides that the County will initially pay for the equipment to be leased under normal procurement procedures Once the equipment invoice has been paid, the County prepares and executes a lease schedule under the Master Lease and SunTrust reimburses the County for the exact purchase price The County then makes the appropriate payments to SunTrust over time There are benefits to the reimbursement lease structure Reimbursement leasing removes the tax problems and accountability problems associated with drawing down funds for future lease purchases into an escrow account A reimbursement lease allows the County to obtain the best purchase price possible, without trying to separate the equipment cost from the leasing costs in a vendor driven combined "purchase with lease" offer The vendor provides the best cash price through normal procurement procedures, and our Master Lease provides the best competitively bid lease rates available nationally, all with very favorable legal terms Benefits of Leasing 1 Allows the immediate acquisition of assets that might be scheduled for pay-as-you-go in subsequent years solely due to budgetary constraints The assets are then serving the public sooner which improves customer service The low interest cost in the lease is further offset by avoiding the inflation in the cost of the assets in subsequent years 2 Leasing matches the payment for assets to their useful life Particularly when acquiring assets to address growth, leasing allows the growth in revenues from new citizens to help pay for the assets used to serve them Pay-as-you-go has the unfortunate feature of using current revenues from existing residents to fund growth for future residents 3 Leasing has other hidden benefits when it accelerates asset acquisition and avoids waiting to acquire replacement equipment Reduces maintenance when older equipment can be replaced with newer more efficient equipment (reduced repairs and better fuel usage, etc ) 15

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