Unique Characteristics of Project: NHA managed a competitive RFP process for a vehicle financing, which resulted in interest rates almost 50% lower than the rates on the unsolicited financing proposals the City had received before engaging NHA.
Executive Summary: NHA assisted the City of Yuba City in 2021 on an equipment financing for fire pumper and ladder vehicles, a Vac-Con sewer and storm drain cleaning truck, and a dump truck. Total cost of the vehicles and necessary upfitting was $2.7 million. Before engaging NHA to assist with the financing, the city had received an unsolicited offer from for a bank-financed 10-year term loan for the fire vehicles at 2.99% and an offer from the Vac-Con truck vendor for a 5-year term loan at 2.90%.
NHA managed a competitive bank RFP process for the City, receiving 8 bids – all of which had lower interest rates than the pre-bid financing proposals. The lowest bid provided a fixed, 10-year financing for all vehicles at 1.44%. This low rate also came with a 2-month rate lock to allow for time to close the loan and minimize the City’s interest rate risk.
The difference in interest rates between the lowest bid and the original bids saved the City approximately $195,000 in interest costs, cutting the interest costs on the vehicle financing almost in half.
The equipment financing was structured in two separate series to simplify the process of allocating the financing costs and debt service to the respective city funds.