The City Manager and Director of Finance are each hereby authorized to sign and deliver, in the name of and on behalf of the City, the schedules ("Schedules") and Addendum ("Addendum") to the Master Lease-Purchase Agreement dated November 17, 2000 between Chase Equipment Leasing, Inc. as successor to Banc One Leasing Corporation, as Lessor, and the City, as Lessee (the "Master Lease" and together with all schedules and addenda thereto, the "Lease") substantially in the form attached as Exhibits A and B to this Ordinance. The form of Schedules and Addendum are approved with such changes therein that are not materially inconsistent with this Ordinance and not substantially adverse to the City and that are permitted by law and shall be approved by the officer signing the Schedules and Addendum, provided that the aggregate principal components of the Basic Rent (as defined in the Schedules) payable during all Lease Terms under the Schedules shall not exceed $8,023,623, the interest component of the Basic Rent shall accrue at an annual rate not in excess of 5.00% and the term of the Lease for the water meter equipment shall not exceed 11 years and one month. The approval of such changes, and that such changes are not materially inconsistent with this Ordinance and not substantially adverse to the City, shall be conclusively evidenced by the signing of the Schedules and Addendum by such officer. The City Manager and Director of Finance and the Clerk of Council are each further authorized to sign an escrow agreement, in substantially the form attached as Exhibit C to this Ordinance, and such certifications, financing statements, or other documents or instruments and to take such other actions as are desirable, advisable, necessary or appropriate to consummate the transactions contemplated by this Ordinance and the Lease.

This Council finds and determines that all formal actions of this Council or of any of its committees concerning and relating to the passage of this Ordinance were taken in an open meeting of this Council and of any of its committees, and that all deliberations of this Council and of any committees that resulted in those formal actions were in meetings open to the public in compliance with the law.

This Ordinance is declared to be an emergency measure necessary for the immediate preservation of the public peace, health, safety or property of the inhabitants of the City, and for the further reason that this Ordinance is required to be immediately effective to enable the City to fund its existing contract with Johnson Controls on favorable terms for the acquisition and installation of water meters and related equipment which is necessary for the efficient operations of the water system of the City; wherefore this Ordinance shall be in full force and effect immediately upon its passage.

For the Business Meeting of February 7, 2006

February 3, 2006

TO: Bill Becker, City Manager

FROM: John Lyons, Finance Director

The purpose of this staff report is to explain the ordinance authorizing a lease purchase agreement with Chase Equipment Leasing, Inc.

Ordinance No. 02005-125 authorized a ten year, $9,475,147 contract with Johnson Controls, Inc. for a water meter replacement project. The cost of this contract included $8,203,623 for the purchase and installation of water meters and other equipment and $1,451,524 for Johnson Controls, Inc. consulting services on this project for a ten year period.

The cost of this contract will be evenly divided between the City Water and Sewer funds.

The proposed ten year lease agreement with Chase Equipment Leasing is for the purchase and installation of water meters and other equipment connected with this meter change-out project.

The Finance Department requested quotations from Chase Equipment Leasing, Inc., Citicapital Leasing, Inc. and Fifth-Third Bank. Chase Equipment Leasing, Inc. submitted the lowest bid.

The monthly lease payments will be paid from the operating earnings of the Water and Sewer funds over the next ten years. The interest rate of this lease is expected to be around 4%. The exact rate will be fixed on the loan closing date in mid-February.

This is an emergency ordinance because the funds are needed as soon as possible. The Johnson Controls contract approved last November calls for a substantial payment to Johnson Controls by the end of February.

November 21, 2005

TO: Bill Becker, City Manager

FROM: David J. Duritsch Jr., Environmental Services Director

To authorize the City Manager to enter into a contract with Johnson Controls, Inc. to replace the City’s water meters, and install a new automatic meter reading system and fixed base wireless communication system: and appropriate the necessary funds.

As was discussed with City Council at our last meeting, the City of Middletown has been working with Johnson Controls over the past year to evaluate the potential for performance contracting opportunities in our water meter reading system.

The current billing system protocol requires quarterly meter readings and monthly bills, creating the need for estimated bills during the non-read months. This process is very inefficient and has been confusing for residents and cumbersome for water billing staff. In addition, the City has been working towards a drive-by radio read system over the past 10 years whereby vehicles could drive down the street and capture meter readings each month. This technology is very dated and will take well over 50 years to implement at the current rate of change out.

Under the proposed performance contract, Johnson Controls will install 20,155 new meters and guarantees their accuracy for 10 years. This guarantee will require annual testing of meters to verify accuracy as well as training on the new automatic meter reading system and wireless communication system during the same 10 year timeframe.

This project can be financed through traditional borrowing or using HB 300.

The total cost of the project, including water meters, automatic meter reading system, wireless communication platform, and annual consultation and verification, is $9,475,147.00. This fee is broken down into $8,023,683 for the infrastructure improvements to be made over a 14 month period (through February 2007) and $1,451,464 for the annual consultation and verification services over the next 10 years. The additional revenues estimated from the improved meter accuracy will pay for the total project cost in just over 11 years. This project will require a supplemental appropriation, half of which will come from each of the Water and Sewer Funds.

Conforms.

None.

Emergency. As interest rates rise, sooner implementation should result in more favorable financing terms.

Staff recommends award of a contract with Johnson Controls, Inc. in an amount not-to-exceed $9, 475,147 to install more than 20,000 water meters, automatic meter reading system, and fixed base wireless communication system.

Cash Flow Analysis
DJD/dd
cc: Ginger Smith, Public Works Director
John Lyons, Finance Director
Russ Carolus, Assistant Finance Director
Leslie S. Landen, Law Director
Betsy Parr, Clerk of City Council
File