Department: Parks & Recreation
Staff Contact: Michael Meadors/Amy Tharnish
Subject: Consideration of renewal of contract with Commerce Bank for the finance lease of cardio fitness equipment for the Community Center.
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Item Description:
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Consideration of renewal of contract with Commerce Bank for the finance lease of cardio fitness equipment for the Community Center..
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Summary:
The contract for the equipment has been awarded through Sourcewell Contract #120215-LFF to Life Fitness provided by Advanced Exercise Equipment (AEE).
On January 21, 2014, two (2) bids were received for a 3-year term finance lease of cardio fitness equipment for the Community Center. Council approved award to Commerce Bank on February 4, 2014. Staff recommends renewal of the contract for a 3-year term. Payments on the lease will be $6,214.72 per month with a 4.10% interest rate. At the end of the lease, AEE agrees to pay the final balloon payment of $25,200, assuming the City enters a new lease or purchase with AEE for new equipment. AEE will take ownership of the old equipment after making the balloon payment.
The total cost to the City for the leased equipment is anticipated to be $217,515.20 (total lease payments of $242,715.20 less balloon payment made by AEE of $25,200), if the City leases or purchases from AEE at the end of the lease term.
There are several advantages of leasing the cardio equipment versus purchasing the equipment.
• Equipment design and technology changes each year, and it’s important to stay current.
• The equipment has a three-year warranty to go along with the three-year lease term. If the equipment goes down, it’s replaced in a timely fashion. If purchased, after year three, the City is responsible for repair costs or replacement.
• Very little risk in leasing the equipment, as when the equipment is up for renewal, the vendor handles all arrangements to remove and replace the equipment.
• Assists with up-front cash flow and the rewards are a lesser long-term expense.
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Financial Impact:
$242,715.20. Expenditures will be charged to the Community Center’s operating budget.
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Action Needed:
Renewal of contract with Commerce Bank for the finance lease of cardio fitness equipment for the Community Center.
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