Council Report: 2019 Heavy Rescue Fire Apparatus – Award of Contract and Loan Authorization

2019 Heavy Rescue Fire Apparatus – Award of Contract and Loan Authorization

RECOMMENDATION:

THAT the contract for construction and delivery of one ULC, NFPA compliant heavy rescue fire apparatus (SPARTAN/SVI brand) be awarded to Safetek Fire Apparatus of Abbotsford, BC in the amount of $814,600, excluding taxes;

AND THAT the Council of the Town of View Royal authorizes up to $800,000 be borrowed, under Section 175 of the Community Charter, from the Municipal Finance Authority, for the purpose of the acquisition of one heavy rescue fire apparatus;

AND FURTHER THAT the loan be repaid within 5 years, with no rights of renewal.

CHIEF ADMINISTRATIVE OFFICER’S COMMENTS:

I concur with the recommendation.

DIRECTOR OF FINANCE’S COMMENTS:

I concur with the recommendation.

PURPOSE OF REPORT:

To seek Council support for contract award for a new, replacement heavy rescue fire apparatus and to authorize debt financing for this purchase.

TIME CRITICAL:

To ensure construction and payment in 2019/20 (build and delivery is 420-450 days from order), it is anticipated that with a December 2018 order, delivery will take place within the approved timeline and in the spring of 2020.

BACKGROUND:

In November 2016, Council was presented with a five year vehicle fleet replacement plan that included the replacement of this particular aging apparatus. It was anticipated that drafting the proposal and review could take at least one year. As part of the adoption of the plan, it was anticipated that with a 2018 RFP, a 2019 or 2020 delivery would be realistic. Further, the Town realized payout in 2017 of the loan associated with the 2012 purchase of a fire engine.

In September 2018, a request for proposals was posted on BC Bid. As a result, one proposal was received and evaluated, not only for compliance to specific needs, but also reflecting existing View Royal fleet specifications and budget considerations. A detailed evaluation was conducted which reviewed the proposal. Based on the review, it was concluded that SAFETEK/SVI met all aspects of the proposal.

PROJECT INFORMATION:

As part of View Royal’s commitment to ensuring modern fire apparatus and under recommendation by the Fire Underwriters Survey, this purchase is to replace a previously used, twenty-seven year old rescue truck.

Construction of fire apparatus is a specialized function, and although only one proposal was received, the proposal and subsequent recommendation satisfied and exceeded our requirements. In comparing our needs with the ability to deliver on the proposal, I am not concerned with the receipt of only one bid. Construction of fire apparatus is highly competitive and pricing is generally consistent between manufacturers. Currently, and based on the proposed delivery date, it is safe to assume that the current market and workload of manufacturers is high, resulting in one proposal and a subsequent estimate of delivery of 420-450 days.

Loose rescue equipment not specific to the apparatus will be acquired, through a separate RFP, and as part of a 2020 capital budget request.

FINANCIAL IMPLICATIONS:

Council approved an expenditure of up to $900,000 CDN in the 2016 Five Year Financial Plan for the tender and delivery of one heavy rescue fire apparatus in the year 2019. Within this approved amount, it is expected that all net taxes and delivery will be realized. Loose equipment specific to the apparatus will be concluded at the pre-construction meetings and will not exceed the approved $900,000 budget.

The 2018-2022 Financial Plan includes funding for this project from the recovery of $100,000 from the sale of the existing heavy rescue fire apparatus and debt proceeds up to $800,000 over a five-year period under the Municipal Finance Authority’s Equipment Financing program.

The vendor’s proposal includes options for pre-payments associated with the chassis, receipt of a purchase order and within a prescribed period after delivery to View Royal. These discounts total $14,577. If the prescribed terms are met, the price of the apparatus is $800,023.

In an effort to reduce costs associated with the proposal, the Town specified that all factory visits (3 in total during construction and completion) would be managed by the Town. Previous RFP awards for apparatus in View Royal have included factory and inspection visits which add approximately $18,000 to $20,000 ($6,000 per visit for 2 Town employees) to the cost of the vehicle.

The 2018-2022 Financial Plan projects an annual payment (principal and interest) of $174,684 for five years, based on a total loan of $800,000 at 3% annual interest. Debt service costs are funded from tax revenue. Total estimated interest costs are $73,420 over the five-year term.

This acquisition is eligible for the Municipal Finance Authority’s equipment financing program that provides financing under a loan agreement for up to five years at a variable interest rate based on the monthly Canadian Dollar Offered Rate (CDOR), currently at 2.62%. Payments of principal and interest are withdrawn monthly, and there is no documentation, asset fees or taxes associated with this financing. There are no penalties or fees for paying out the loan early or increasing the principal payments. View Royal has sufficient room in its liability servicing limit for this debt.

The estimated debt service costs for this acquisition are within the current financial plan, provided interest rates don’t exceed 3%. Council has the option to pay out the loan early at any time in the term should other funding become available.

In order to access MFA’s equipment financing program, Council must pass a resolution to authorize the debt and that stipulates a five-year repayment term with no rights of renewal. The staff recommendation includes the required wording to this effect.

STAFF RECOMMENDATION: