Alleghany MELP 2024 RFP.docx

REQUEST FOR PROPOSALS

FOR

MASTER EQUIPMENT LEASE FINANCING FOR

ALLEGHANY COUNTY, VIRGINIA

Introduction: Alleghany County, Virginia (the “County”) is seeking proposals from firms having specific experience and qualifications in local government equipment lease financing. The County seeks to establish a master equipment lease agreement to provide funding for public safety equipment and, potentially, other equipment needs of the County and its schools.

The financing arrangement will take the form of a Master Lease Agreement (the "Lease Agreement") between the successful offeror (the "Lessor") and the County (the "Lessee") providing for, among other things, (i) entering into a Master Lease Agreement for the lease purchase of equipment by the County and (ii) the payment by the County of lease payments pursuant to appendices as defined and executed under the Lease Agreement.

The County seeks the maximum amount to be disbursed by the Lessor for purchase of equipment by the Lessee to be a total $2,000,000 while the Lease Agreement is in effect.

Tentative Schedule: Proposals are due Wednesday, September 18, 2024 by 5:00 pm Eastern Standard Time. The County plans to negotiate final terms with the selected firm in September, seek approval from the County’s Board of Supervisors at the October 1, 2024 Meeting, and close on the Lease Agreement as soon as all paperwork can be executed. The County plans to draw funding for fire and rescue equipment replacement at the time of final inspection, which is projected to be the last quarter of 2025/the first quarter of 2026 (see also “Use of Proceeds” below). This schedule is tentative and subject to change.

Background: Alleghany County, Virginia’s Western Gateway, is located in the far Western edge of the Commonwealth of Virginia. The County is 452 square miles in land area and had an estimated population of 15,223 in 2020. The County surrounds one city, Covington, which forms the principal center of population.

Use of Proceeds: The County intends to utilize the proceeds of the Lease Agreement primarily on public safety equipment to fund the acquisition of public safety equipment including, but not limited to, pumper trucks, tankers, mini-pumpers, equipment, rescue and crash trucks and to pay for certain costs of issuance related to the financing. Currently, the estimated cost of the equipment to be financed is $1.8 million.

The County also requests the flexibility to fund additional equipment needs, such as ambulances or school buses, as they arise. Currently, the County does not have immediate plans to fund additional equipment.

The financed equipment would consist of various types of new or reconditioned personal property or other such items as may be permitted by the Code of Virginia, all subject to the Lessor’s approval.

Transaction Size: The maximum amount to be distributed under the Lease Agreement will not exceed $2,000,000, unless mutually agreed by the County and the Lessor.

Tax Status: Tax-Exempt: Interest payments will be exempt from Federal and Virginia income taxation. If the County provides a single tax opinion and tax certificate for all financings under the Lease Agreement, interest would not be designated as bank-qualified for the purposes of Section 265(b) (3) of the Internal Revenue Code of 1986, as amended, relating to the deductibility by financial institutions of interest expense allocable to tax-exempt interest. If the County treats each financing under the Lease Agreement as a separate financing for tax purposes, for certain appendices under the Lease Agreement, the County anticipates interest would be designated as bank-qualified. As such, the County requests proposals that include both bank-qualified and non-bank qualified rates. The County will evaluate the estimated cost-savings from the bank-qualified status relative to the increased time and expense associated with separate appendices for tax purposes.

Exclusivity: The Lease Agreement will not, in any way, convey exclusive financing rights to the Contractor and will permit the County to enter into other financing arrangements, including vendor financing, in addition to the financing to be provided under the Lease Agreement. The County will pursue such financing outside the Lease Agreement in its discretion to the extent it can obtain more favorable terms and conditions.

Security: A security interest in the equipment will be granted, although title will vest with the County. Subject to the security interest in favor of Lessor, the County may transfer certain public safety equipment to one or more firefighting and emergency medical organizations in the County. The Lease Agreement will provide for cross-collateralization of financed equipment. The County’s obligations under the Lease Agreement will be subject to annual appropriation by the Alleghany County Board of Supervisors. Neither the County’s full faith and credit nor its taxing power will be pledged to the Lease Agreement, and this obligation will not constitute a general obligation debt of the County.

Plan of Finance: This financing will function as a master lease facility, with the County financing equipment at different times over the term of the Lease Agreement. The County expects to draw approximately $1.8 million by January 2026 for public safety equipment. Future draws are subject to the timing of and the need for various projects.

Each financing will be made pursuant to an appendix to the Lease Agreement. Financing requests by the County should be paid by the Lessor within ten (10) business days of the County’s written request.

Each financing under the Lease Agreement will be unrated and carry fixed interest rates with equal payments on a semi-annual basis in arrears.

Ratings: The County is not rated by any of the rating agencies.

Term of Agreement: The County desires a long term agreement with the provider during which the County would be able to draw funds. Pricing and credit subject to annual review.

Term of Each Financing: The term of each financing under the Lease Agreement will be based on the useful life of the equipment being financed.

Interest Rate: The County will make lease payments based on a fixed interest rate using a percentage of an index. Each respondent is requested to propose a percentage of the index for seven (7), ten (10), and fifteen (15) year lease terms. Respondents should provide proposals that are based on a percent of the (1) annualized interest rate on the appropriate seven (7), ten (10) year, or fifteen (15) year ICE SWAP Rate as published on the report date on the Intercontinental Exchange, Inc. website under ICE Benchmark Administration Market on a weekly average basis for the week preceding the acceptance date or (2) such other index as proposed.

The County anticipates the Federal Reserve will cut the federal funds rate in the upcoming year and anticipates the borrowing rate at the time of drawdown would reflect updated rates.

The County will select the proposal it deems to be in its best interests. Interest will be paid on an annual basis and calculated on a 30/360 day count basis.

Repayment Structure: The County requests annual lease payments with the first payment due approximately six (6) months from closing and annually thereafter. The County has a strong preference to simplify administration of the Lease Agreement. As part of this goal, the County prefers to make each lease payment on the same annual dates, regardless of timing for each piece of equipment.

Prepayment: The County is interested in receiving proposals both with and without prepayment options. If the County selects a proposal with a prepayment option, the County prefers that prepayments be permitted without penalty, but will consider proposals with prepayment penalties.

Title: Title for the equipment shall remain with the County and/or Schools throughout the term of the Lease Agreement, subject to the rights of the Lessor under the Lease Agreement. Subject to the security interest in favor of Lessor, the County may transfer certain public safety equipment to one or more firefighting and emergency medical organizations in the County.

Reoffering: The County will not prepare an offering statement or provide continuing disclosure of any kind in conjunction with the Lease Agreement. No offering is allowed without the County’s prior written consent.

Documentation: The Lessor will provide the draft Lease Agreement. The County reserves the right to review and comment upon all terms and conditions in the draft agreement.

SUBMISSION REQUIREMENTS AND ADDITIONAL TERMS:

Firms interested in providing the Lease Agreement should submit the following information:

1) Please describe your firm’s experience in providing similar offerings.

2) Please complete the attached Official Proposal Form describing the interest rates and prepayment provisions on fundings.

3) Please describe whether your firm can comply with the County’s desired repayment terms, as described under “Repayment Structure.”

4) State whether your firm can comply with the requested terms of the Lease Agreement, as described under “Term of Agreement.”

5) Assuming the Master Lease structure with the Lessor’s ability for annual pricing and credit review, what would be the maximum term the Lessor would be allowed to pursue?

6) Please indicate whether you plan to use internal or external counsel. If external, please identify one or more firms capable of acting as your counsel and describe all related fees. Any additional charges should be documented in detail in the offeror’s response. All costs to the County will be taken into account in evaluation of the proposals.

7) If your firm has any additional covenants, requirements, or exceptions that differ from those stated within this Informal Request for Proposals, please describe those.

PROPOSAL EVALUATION:

Evaluation of Proposals: The County intends to make an award to the offeror submitting a proposal deemed to be most advantageous to the County with respect to price, structure, and terms of the Lease Agreement.

Additional Information: Contractors are encouraged to ask questions which may be directed to Suzanne Adcock-Nicely (see contact info below).

Proposal Submission: In order to be considered for selection, proposals must be submitted by e-mail no later than 5:00 pm EST on Wednesday, September 18, 2024:

Suzanne Adcock-Nicely Email: sadcock@co.alleghany.va.us Telephone: (540) 863-6600

Late submissions will be deemed non-responsive and will not be accepted or evaluated under any circumstances.

County Rights: The County reserves the right to reject any proposal or all proposals and to waive informalities and to accept such proposals as are best suited to the interests of the County. The County reserves the right to negotiate final terms with the selected Lessor.

OFFICIAL PROPOSAL FORM

MASTER EQUIPMENT LEASE FINANCING

FOR

ALLEGHANY COUNTY, VIRGINIA

Each offeror should indicate the percentage of each index for each of the lease terms stated below.

Offerors are not required to submit proposals for all lease terms.

TAX-EXEMPT: NO PREPAYMENT OPTION:

Lease Term

7 Years (no prepayment option)

10 Years

15 Years

TAX-EXEMPT: WITH PREPAYMENT OPTION:

Lease Term

7 Years (pre-payable)

10 Years

15 Years

1) If the index is based on an index other than the ICE SWAP Rate as published on the report date on the Intercontinental Exchange, Inc. website under ICE Benchmark Administration Market on a weekly average basis for the week preceding the acceptance date, please describe the alternate index.

2) Round to no more than four (4) decimal places.

3) Specify penalty amount and timeframe, e.g., pre-payable at 101% on or after first interest payment date, 100.5% on or after second interest payment date, etc.