08.01 - Approve Lease-Lakes State Bank-Police Vehicles

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SAI�IDELIN 30849 FIRST STREET P.O. BOX 298 PAUL J. SANDELIN PEQUOT LAims, MINNESOTA 56472 ATTORNEY AT LAw www.sandefinL-tw.com May 4, 2010 VIA EMAIL speine(&yeauotlakes- mn.LYov Sandy Peine City of Pequot Lakes 4638 County Road 11 Pequot Lakes, MN 56472 Re: Police Department Squad Car Financing Our File No. 25000.038 Dear Sandy: TELEPHONE (218) 568 -8481 FAX (218) 568 -8444 I am writing this letter regarding City Council Agenda Item No. 8.1 relating to financing the purchase of vehicles for the Police Department. It is my understanding that the City has or will purchase four vehicles (three new and one used) for the Police Department. The financing alternatives available to the City when the city purchases capital equipment, including public safety vehicles, are either a lease - purchase agreement or the issuance of a general obligation equipment certificate which is also referred to as a certificate of indebtedness. The City has utilized the lease - purchase method in the past. The financing method to be utilized for the purchase of the Police Department vehicles described above is the certificate of indebtedness under Minn. Stat. Sec. 412.301. This method is typically utilized when the City is working with a local lender as opposed to financing for example through Ford Motor Credit in which case a lease purchase agreement would normally be utilized. There will be a Resolution presented to the City Council for approval tonight authorizing the issuance of the general obligation equipment certificate. Subsequent to tonight's meeting a General Obligation Equipment Certificate (the "Certificate ") will be executed by the City, reciting the financing terms with the Lender. Lakes State Bank, the Lender will be purchasing the Certificate, with a closing to take place next week. In addition Ehlers will be providing a cash flow analysis /debt service schedule today that outlines the sale details and bond payment schedule. To recap, the action item tonight for the City Council will be adoption of the Resolution authorizing the issuance of the Certificate. If you have any questions please contact me. Thank you.