Report Prepared by: Venus Rodriguez, Finance Officer
Title
SUBJECT: Approving a Professional Services Agreement for Municipal Advisor Services with Fieldman, Rolapp & Associates
REPORT IN BRIEF
Considers approving the Professional Services Agreement with Fieldman, Rolapp & Associates to provide municipal advisory services for Equipment Lease/Purchase and future services.
RECOMMENDATION
City Council - Adopt a motion:
A. Approving the Professional Services Agreement with Fieldman, Rolapp & Associates (FRA) for municipal advisory services; and,
B. Authorizing the City Manager to execute the necessary documents; and,
C. Approving a supplemental appropriation in the amount of $30,000 from the unencumbered, unreserved balance in Fund 2001-Measure C.
Body
ALTERNATIVES
1. Adopt the motion as recommended by staff; or
2. Modify the action (specify in motion); or
3. Deny the action.
AUTHORITY
Merced City Charter Section 200. Merced Municipal Code section 3.04.210 (exemption from competitive bidding).
CITY COUNCIL PRIORITIES
As provided for in the 2024-25 Adopted Budget.
DISCUSSION
The Merced Fire Department (MFD) apparatus are in urgent need of replacement due to the fleet’s age, high cost of ownership, and frequency of out-of-service periods. The current build time for new apparatus ranges between 45-48 months, further emphasizing the critical need for fleet updates.
Currently the MFD has 8 Type 1 engines (5 front line and 3 reserve), one Type 3, and two trucks (1 front line and 1 reserve). If additional apparatus were purchased or financed and by the time they arrive, MFD will have four engines and one ladder truck that exceed 20 years of service. The industry standards and NFPA recommendations advocate for replacing such equipment every 10-15 years. MFD is pursuing a sustainable approach with a conservative 20-year apparatus replacement schedule.
MFD Apparatus Age Breakdown
|
Apparatus |
Type |
Purchase Year |
Current Age |
Age At Replacement (48 month build time) |
|
F909 |
Engine |
2001 |
23 |
27 |
|
F1052 |
Engine |
2006 |
18 |
22 |
|
F1212 |
Engine |
2008 |
16 |
20 |
|
F1213 |
Engine |
2008 |
16 |
20 |
|
F888 |
Truck |
2001 |
23 |
27 |
The current need is four engines at an estimated cost of $1.2 million each and one truck estimated at $2.5 million, totaling $7.3 million. In addition, when Station 56 is constructed, it would need an engine and a truck to operate efficiently which could add an additional $3.7 million.
Since funding between $7.5 and $11.3 million in apparatus using a pay as you go method, financing would be the alternative. During the budget adoption process staff had informed City Council that we would be coming to them with these options. This is the first step in completing this process. FRA will help us analyze financing alternatives while computing size and structures of debt issue, conduct market analysis, and provide pre-closing and closing assistance.
Although the current request is focused on evaluating financing options for Fire Apparatus, the agreement allows the city to work with FRA on future financing endeavors based on City Council direction. The fees for FRA are determined by the type of transaction which are listed in Exhibit B of the agreement. For instance, Bonds issuances, lease and purchase agreements, or refundings, have a capped fee of $47,500 if less than $50 million or $62.500 if over $50 million plus expenses. Payments of compensation shall be contingent on, and payable at the closing of the debt issue. Any work which does not result in a debt issue structure will be billed based on hourly rate.
The City of Merced has worked with FRA as a municipal advisor since 2002. FRA assisted in developing the cities Land Secured Financing Policy and the newly adopted Debt Policy. They also served as municipal advisors for the following bond issues:
CFD 2003-1 Bellevue Ranch East
CFD 2005-1 Bellevue Ranch West
CFD 2006-1 Moraga
CFD 2003-1 Bellevue Ranch East Refunding
CFD 2005-1 Bellevue Ranch West Refunding
In 2018, the City also utilized FRA to evaluate and provide projections on a general obligation (GO) bond measure to build a new police station. Although City Council chose not to move forward with a GO Bond measure, FRA provided exceptional support in the evaluation process.
FRA is very familiar with the City of Merced and we have established a great rapport. FRA has served the City of Merced well in the past and staff has no reservation that they will continue to do well for us in this endeavor.
FRA is a California corporation that has been a leader in independent financial advising services serving public agencies since 1966. They are based out of Irvine, California and are advisors to several cities, counties, special districts, school districts and non-profit agencies.
IMPACT ON CITY RESOURCES
The cost of the municipal advisor can be rolled into the debt issue if a financing option is approved and finalized. If the city chooses not to move forward with any of the proposed financing options for the fire apparatus it is estimated the cost of work done by FRA will not exceed $30,000. Therefore, staff is requesting a supplemental appropriation of $30,000 from Fund 2001-Measure C.
This supplemental appropriation will require an affirmative vote of 5 Council Members to pass.
ATTACHMENTS
1. Professional Service Agreement