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MINUTES
WELD COUNTY COUNCIL
July 7, 1976
The Weld County Council met in regular session in full conformity
with the Weld County Home Rule Charter at 401 N. 15th Avenue,
Greeley, Colorado, on Wednesday, July 7, at the hour of 2 o'clock.
ROLL CALL: The meeting began with an invocation by Mr. John Martin, President.
On roll call the following members were present:
President, John T. Martin
Vice President, Nancy Clark
Councilman Floyd Oliver
Councilman Lacy Wilkinson
Councilman Bob E. White
Also present: Secretary, Bonnie Hickman; Sue Cross and Robert
Flowers, UNC Intern Students; and six members of the press.
MINUTES: Floyd Oliver made a motion, seconded by Bob White, to accept the
minutes of June 16, 1976 as written. Motion carri.ed.
WORK SESSION - 1:00 P.M. "Lease Equipment Report"
Previous to the regular meeting, UNC Sumner Intern Students,
Sue Cross and Bob Flowers,presented a "Lease Equipment Report"
on the fifteen current lease-purchase agreements on automobiles
for the county. Their investigation showed that none of the fifteen
pending lease contracts meet the requirements of a lease-purchase.
At the end of the lease period there was no transfer of title and
any payments made were merely rental costs. It was also noted that
resolutions relating to lease-purchase action state the business
action as a lease-purchase, whereas the lease agreements state
lease or purchase prices.
Three suggestions were given by the students - 1) Actual value of
the vehicles should be stated in the leases; 2) Mileage charge be
taken into consideration when choosing a particular bid; and 3)
The word "Purchases" should be changed to "expenditures".
The students were commended for their fine work. As to the next
area of investigation in lease-purchasing of heavy equipment,
council members suggested considering mileage considerations,
lease-purchasing variations, specific ownership tax, insurance,
cost to buy and operate for three years versus cost to trade-in
and purchase new, and salvage price at end of three years.
(Lease. Equipment Report attached.)
760683
County Council Minuted Page 2
'July 7, 1976
REPORTS
PURCHASING: Lacy Wilkinson reported that Bette Rhoden has been appointed
as purchasing agent.
Bob White questioned the necessity of numerous signatures (or
initials) on county purchase orders. He felt that closer
attention should be given to the purchase orders by fewer people.
Discussion followed. Nancy Clark stated that she felt satisfied
that if there is a better way to handle purchase order procedures
that she is confident that Barton Buss and Bette. Rhoden will find
a better way.
ENGINEER: Nancy Clark requested inviting the engineer to cane to the next
meeting of July 21. Mr. Oliver will notify the council if Mr.
Smith can be present.
COUNTY ATTORNEY: Mr. Martin reported that the new county attorney, Mr. Thomas 0.
David has begun his work beginning the first of July.
RESOLUTION: Discussion ensued on a resolution presented that morning at the
commissioners' meeting which would rescind all past commitments
to special legal counsel.
Bob White read a section from the commissioners' minutes of
December 31, 1976 in which they appointed Mr. Sam-Telep and firm
as special legal counsel for 1976 to represent the county in
specific legal cases. Mr. White then read Norman Carlson's
resolution which would rescind the above mentioned and hasten the
transition from special legal counsel to the newly employed
county attorneys.
Floyd Oliver very strongly urged the council to take a stand on
the issue and made a motion that the council, by letter, recommend
that the commissioners immediately adopt the resolution and proceed
accordingly. Motion carried and seconded.
OLD BUSINESS
BUDGET PROCEEDINGS: Nancy Clark reported that Mr. Billings would be contacting
her as to a special meeting with the council in which to discuss
suggestions for the budgetary process. Nancy Clark intends to
recommend they 1) develop a regular budget format, 2) set up a
calendar for all budget steps for the next three months, and 3)
plan a meeting where public opinion can be heard and also prepare
an agenda for that meeting.
Bob White mentioned that the council needs to be informed as to
statutory mil levy limitations in regard to their role in budget
review. He also added that the council should contact all
elected officials as to any expected increases in their budgets
for 1977.
• , County Council Minuted Page 3
July 7, 1976
MISCELLANEOUS: Nancy Clark reported that Pitkin County is going through the •
petition drawing of placing the election of the charter commission
on the ballot for November. They have invited her and Mr. Robert
Miller to talk to then about the legal background involved on
July 20th in Aspen.
The meeting was adjourned to an executive session of ten minutes.
There being no further business, the meeting was adjourned by the president,
Mr. John Martin.
Respectfully submitted,
men;A.( .- iVCiamrg,•c./ APPROVED T,
Bonnie Hickman, Secretary
WELD COUNTY COUNCIL
LEASE EQUIPMENT REPORT
July 7, 1976
The initial purpose of this report was to examine the current lease-
purchase agreements for Weld County vehicles, excluding heavy machinery.
During the course of the examination, we discovered that none of the fifteen
pending lease contracts falling in this category meet the requirements of a
lease-purchase agreement. For example, the most important criteria to be
met in order for a lease to be classified as a lease-purchase agreement
pertains to the transfer of the title of the vehicle. In order to qualify
as a lease-purchase contract, title must transfer to the lessee at some
point in time; in this case, to Weld County. Many times this transfer of
title occurs with the last payment. However, at the expiration date of
the leases in question, the title remains with the lessor and the county
is obligated to return the vehicle to the lessor in every case.
Each of the fifteen leases examined outlines these terms very clearly.
The fact that the title remains with the lessor and that any payments made
were merely rental charges and were not to be considered as being applied
toward the purchase of the vehicle were explicitly stated in' the contract.
(An example of this is item H on the lease agreements from Edwards Chevrolet
Company. ) Thus, it can be seen that the payments made on the existing lease
agreements are merely rental expense and the vehicles never become assets
of Weld County. Once we determined that these lease contracts were not,
in fact, lease-purchase agreements, we decided to direct attention to an
analysis of the costs involved in these contracts.
All of the agreements require monthly payments. In ten of the leases,
the total amounts are broken down into equal monthly payments. Two of them,
(#476 and #485), require a smaller payment the first month, and equal pay-
ments of a larger amount for the remaining months. Three of the contracts
call for equal payments of a given amount for the first twelve months, equal
payments of a smaller amount the following twelve months, and equal monthly
payments of an even smaller amount for the third year. In most of the contracts,
this monthly charge is entirely rental expense. The two exceptions, (#476 and
#336), break the monthly payments down into rental fee and a maintenance-
repair charge. If the actual maintenance or repair costs for any month are
ten percent above or below this maintenance charge, the lessor is to make
additional payments or be refunded for the overpayments accordingly.
Other costs involved in the agreements besides the monthly payments
are security deposits, insurance expense, and mileage charges. Although there
are provisions in each of the contracts for some sort of security deposit,
none were required. By contrast, each of the leases entails some insurance
expense, since the lessee is responsible for insurance in all of the leases.
In each case, definite amounts have been set pertaining to the insurance
coverage and the deductibles allowed. Though these requirements may be
- Lease Equipment Report--‘,
July 7, 1976 Page 2
viewed by some as restrictive, it should be kept in mind that insurance
expense of some sort will, in all probability, be incurred regardless of
whether the vehicle is leased or purchased. The mileage charge is the only
additional expense actually specified in these lease agreements. (This
additional expense only occurs in rentals, not in purchases.) Out of the
ten leases requiring this additional payment, all ten had some amount of
free mileage ranging from a low per year of 20,000 miles (Greeley Leasing
Company) to a high per year of 28,333 miles (Edwards Chevrolet Company).
The rates charged after the free mileage also varies with a low of 2¢ per
mile (Edwards Chevrolet Company) to a high of 5¢ per mile (Greeley Leasing
Company).
One last area we examined in this report is that of bidding on the
leases. Although fourteen out of the fifteen leases studied had a total
cost of over $2,000, the Board of Commissioners is not required to have
bids made on the lease agreements. This is due to the wording of the charter
which states that "The Board of County Commissioners shall adopt bidding
procedures for county purchases..." (p.55) and that "All purchases of $2,000
or more shall be by written, sealed bid... (p.55) (Emphasis added by authors
of report.) Since it has been pointed out in a previous section of this
report that the leases in question are not purchases, it can be seen that
the Board is not obligated to practice the bidding procedure. In spite of
this, we discovered that bids were accepted for all the leases which could
be traced back to the minutes. One of the specifications of these bids was
that they show the total cost for a given period of time, for example, one
year. The specifications further stipulated that this total be broken down,
into monthly payments. This enabled the Commissioners to compare the costs
of the bids and choose the lowest one. In most of the bids examined, the
Commissioners chose the lowest monthly payment, which also had the lowest
total cost due to the specifications described.
As a result of this study, we have developed three recommendations.
The first one is in regards to the information presented on the lease agree-
ments. We believe that the actual value of the vehicles should be stated
in the lease. This would enable a comparison between the total rental
expense to be paid over the life of the lease and the cost of an outright
purchase. An example of this is shown by lease agreement #476 which had a
total lease expense of $4,714 plus mileage compared to an actual value of
$2,809 resulting in an additional cost of at least $1905. (See worksheet
for analysis.)
The second recommendation is that the mileage charge be taken into
consideration by the Board of County Commissioners when choosing a particular
bid. It is possible that the lowest bid could be higher in cost than another
one due to a larger mileage charge. For example, Bid A could be $10 lower in
total payment, but could have a mileage charge five cents higher than Bid B.
Thus, if the vehicle was run 250 miles over the free mileage allowed, Bid A
would be more expensive than Bid B. The amounts could become much more
significant when there is a difference in the free mileage allowed.
Lease Equipment Repo^
July 7, 1976 Page 3
The final recommendation pertains to the wording of the charter.
Although the Commissioners are accepting bids for the lease agreements, it
appears this is not required by the charter, as was previously explained
in this report. We believe that the word "purchases" should be changed to
"expenditures". This would guarantee that the present procedure of bidding
will be followed in the future.
The primary conclusion we drew from our research was that`the::current
lease agreements are not lease-purchases but merely a tempory rental of the
vehicle. We hope this report has made that distinction clear as well as the
fact that the county is not acquiring the vehicles through these leases. It
is our belief that the Commissioners are doing an adequate job in the bidding
procedure and it appears that (except with the possibility of mileage affecting
total cost) they are flaking the right decisions with these lease agreements.
Report prepared by _-; 2n ///rc and /1/0 f„/` J/i7-e“ ;`
Susan Cross Robert Flowers
Lease Equipment Report/", Page 4
• • ' July 7, 1976
DEALER AVAILABILITY ADDITIONAL NOTES
ABC Truck Company no Trucks only
Bender Auto Sales yes 2 or 3 year leases
Weld County Garage yes
Neiters-Ted Motors Co. yes
Stevens Chevrolet no
Purifoy Chevrolet no
Kennedy Chevrolet no
Edwards Chevrolet yes
DeBrown Chrysler-Plymouth yes full program
Hitt-Graham Dodge yes full program
Garnsey & Wheeler yes
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