HomeMy WebLinkAboutStaff Report 4.A 10/01/2012 l� �v4a'IteAvw #4M
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1856
DATE: Oct. 1, 2012
TO: Honorable Mayor and Members of the City Council through City Manager
FROM Tim Williamson, IT Manager .jr4 A/
SUBJECT: Resolution, Authorizing the City Manager to Enter Into a Lease Purchase with
Key Government Finance, Inc.on Behalf of Cisco Systems Capital Corporation in
the amount of$117,025.09 Including Maintenance.Agreement and Execute All
Other Documents Necessary to Purchase the Equipment, Software, Installation
and Maintenance;Services from AMS.Net and Complete the Voice System Server
Replacement.
RECOMMENDATION
It is recommended that the.CityCouncil approve the attached Resolution, Authorizing the City
Manager to Enter Into a Lease Purchase with Key Government,Finance, Inc. on Behalf of Cisco
Systems Capital Corporation inthe amount of$117,025:09 Including Maintenance Agreement
and Execute All Other Documents,Necessary to Purchase the Equipment, Software, Installation
and Maintenance Services from AMS.Net and Complete the Voice System Server Replacement
Project.
BACKGROUND
The telephone system in use by City staff was installed in 2006. Prior to 2006 the City had used
an ATT-specific system called "Centrex." The old system lacked features found in more modern
systems such as voicemail indicators and forwarding, conferencing; multi-line capability,
number directory, email integration with voicemail and call history.
Call trees in the old system were only possible,with expensive additional, specially programmed
appliances. A"s.well,<some desksets were special digital models("EBS" sets) which required
being;sent out for repairs and were not compatible with common building telephone wiring.
Additionally, features such as callerlD, hold, transfer, call forwarding and conferencing were not
available without additional cost per line.
Maintenance was problematic, causing users to.wait for''sometimes over 5 days for ATT repair
personnel to„be dispatched and repair problems,andthe:system was largely reliant on aging in-
ground copper lines,causing additional maintenance, especially during rainy seasons.
AgendaReview: '
City Attorney( ) Finance Director City:Manager
The phone system was upgraded in 2006 to a system utilizing Cisco's Voice Over IP (Vo1P)
technology. The system utilizes'the already-in place data network which is used for computers.
The necessary equipment,,software, and installation services were acquired under a 5 year lease.
A substantial savings in operational ongoing expense was realized, even with the lease payments
in place. The telephone monthly billing expense was reduced by approximately$2000/month
and the new system reduced maintenance and,labor costs.Additionally, substantial increases in
functionality were implemented, enabling City staff_iitmany areas to improve productivity and •
services to the public. For example, the new system has more usable voicemail (voicemail
indicators and voicemail forwarding), conferencing, callerID, multi-line capability, number
directory, email integration with voicemail, and.call history. Call trees are implemented easily
and training is much simpler since.desksets are identical in every office. Features such as
callerlD, hold,transfer, call forwarding and conferencing are now available to all users. User
frustration and downtime has been all but eliminated, now estimated at less than 10 hours per
year total over the whole system,
DISCUSSION
The central portion of the City's telephone system, the main voice servers, has reached end of
manufacturer support, thus':repair response and normalupdatestare no longer available for the
models currently in service atthe,City. As well, vendor maintenance contracts are no longer
available.
The original VOW system was.purchased as a Master Lease Agreement purchase from Cisco
Capital / Key Government Finance and the lease was fulfilled in 2011. The original system
leased included voice servers, desk sets and necessary network equipment, with installation,
training and maintenance, for a total of $350,402. The main voice servers have reached end of
support and are over six years old. The models originally acquired had been available for two
years at the time of acquisition and industry standard for servers typically range from 4-7 years.
Among the 2012-2013 Information Technology goals included in the 2012-2013 budget=include
replacement of the voice system servers. A critical role of the IT Division is to ensure continued
operations of the telephone and voicemail systems. The installed system relies on computer
network servers. It is vital to the operation of the phone system that this server hardware and
software be up to date and supportable by the manufacturer. IT relies on manufacturer support
for rapid diagnosis and recovery from problems. Additionally, the replacement models proposed
include redundant configuration of the phone system, reducing the chances of lost phone system
functions. The new servers take advantage of virtual server technology, saving computer room
space, electrical power.and generating less heat energy.
Staff has obtained a quote from AMS.Net for the full replacement of voice server hardware,
software, and installation'and maintenance'services. .This quote has been provided under the Fast
Open Contracts:Utilization Services (FOCUS)'contract, formally bid and awarded by the County
of Merced. AMS.Net was awarded contract 20091,21. In accordance with City Municipal Code
4.04.100, the:Citymaypurchase goods and services that have been already bid and awarded by
other public agencies.
Utilizing the'existing Cisco,Capital /Key Government Finance Master Lease Agreement, the
City can add the proposed acquisition as a schedule by submitting an application. The
application and leasing option are included as-Attachment 2.
The purchase price of hardware, software and services is covered by the FOCUS contract. To
distribute the costs over the life of the equipment, five-years, staff recommends a lease purchase.
The full costs of the project will be supported in the IT fund budget.
Staff recommends that the Council approve the attached Resolution, authorizing the City
Manager to execute all project related documents, including the equipment lease and
maintenance agreement for the replacement of the voice system servers.from AMS.Net.and
Cisco Capital. Implementation of this proposed project will result;in'reduced risk of loss of
phone system functionalit'y,.as"the new servers will be supported by the manufacturer for the'
duration of the lease. Implementation will also include added redundancy, reducing the risk of
lost phone system functions,due to hardware or software failure.
FINANCIAL IMPACTS
Total project costs, including hardware, software, installation, five years maintenance and sales
tax is $117,025.09. The annual cost is $23,405.02 over the 5-year period. The cost has been
factored into the l.T. cost allocation formula to all departments, and the expense has been
anticipated in the budget.
ATTACHMENTS
1. Resolution Authorizing the City Manager to Sign Equipment Lease and Maintenance
Agreement Documents for Voice Server Replacement
2. Cisco Capital / Key Government Finance lease application and leasing option
3
ATTACHMENT 1
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF.PETALUMA
AUTHORIZING THE CITY MANAGER TO ENTER INTO A LEASE PURCHASE
WITH KEY GOVERNMENTFINANCE, INC. ON BEHALF OF CISCO SYSTEMS
CAPITAL CORPORATION IN THEAMOUNT OF $117,025.09 INCLUDING
MAINTENANCE AGREEMENT AND EXECUTE ALL OTHER DOCUMENTS
NECESSARY TO PURCHASE THE EQUIPMENT, SOFTWARE, INSTALLATION
AND MAINTENANCE SERVICES FROM AMSNET AND COMPLETE THE VOICE
SERVER.REPLACEMENT PROJECT
WHEREAS, the City of Petaluma utilizes a functioning, well integrated telephoneand
voiceniail system for the performance of all business and administrative functions; and
WHEREAS, the existing system is not any longer supported by the manufacturer for
these purposes ; and
WHEREAS, the continued use of the existing phone system is viewed by staff to
accomplish the necessary administrative and business functions; and
WHEREAS, the acquisition of replacement voice servers is funded by Information
Technology expenditures; and
• WHEREAS, the existing Master Agreement between the City and Cisco Capital / Key
Government Finance allows for additional lease purchase equipment acquisition; and
WHEREAS, Petaluma Municipal Code section 4.04.100.provides an exception to City
competitive bidding for purchasesof supplies and equipment made under a cooperative
purchasing program with the state, county or other public agencies;•and
WHEREAS, the acquisition of replacement voice servers from AMS.Net is being made
through cooperative purchasing, as an addition to County of Merced FOCUS contract#2009121,
which was competitively bid;and
WHEREAS, the City has retained documentation as to the advantage of the competitive
purchasing, in accordance with Petaluma Municipal Code Section 4.04.100.
NOW,THEREFORE, BE IT RESOLVED by the City Council of the City of Petaluma
as follows:
The City Council authorizes theiCity.Managerto execute lease purchase documents to replace
the voice system servers in the ainoanbof 5117`,'025.09 ,including maintenance agreement and to
execute all other documents necessary to purchase the equipment, software, installation and
maintenances services from AMS.Net and complete the Voice Server Replacement Project.
•
Key Government.Finance,Inc., on behalf of:;Cisco Sysfeins Capital Corp. .1 1 1 1 1.
Financing Application for State& Local Government Customers C I S C O.
Capital
Lessee - Attachment 2
(Full Legal Name) City of Petaluma
,Federal Tax ID ti 94-6000392 —
'Street Address II English St.,
City,State,and Zip Petaluma;CA'94952
:Customer:Contact Tim,Williamsen Invoices to:be sent to:
";Title 'IT Manager Contact. Accounts Payable(Leslie Mannign)
',Phone and Fax No. 707 778:4573.. Department Finance
•e-mail address timwcci.petaluma.ca.us Street Address ll English St.
City,;State,and Zip Petaluma.CA 94952
;Contract Signer John C.Brown Plione and'Fax:No. 707 7784413 and 707 778 4428
Title City,:Manager e-niail'addrcss accountspavable(mci_netaluma.ca.us
;Phone and Fax No. 707 778 4345 and 707 7784 Special Instructions
.e-mail address citymgrttci.petaluma.ca.us •
email PDF file is preferred.
1.Equipment Description:
Cisco servers,software;Call Manager,Unity,Unified Contact Center,CiscoEnlergency,Responder.
2.What is the purpose of the proposed equipment acquisition?
'Replace existing voice servers - •
3.Why is the equipment essential?
Current configuration is no longer supported,end of life.
4.What department is using the equipment?
All Qv users-Police,Fire,Finance,Community DeQelopment,Park and Rec,Public Works,other:admin.
5.Is the new equipment replacement,an upgrade or additional to the department?- replacement
6.If replacement or'upgrade,what is the agu'bfthe existing equipment? 6 years
-
7.If you're upgrading existing equipment,is the existing equipment paid off? yes,in 2011
Source of funds for Fund Balance: $170,000 Date of most recent Audited Financial Statement:
proposed payments: cityofpetaluma.net/finance/finstatement.html
•
General Fund As of_6/30/12 Fiscal Year End: June 30
Other(provide detail) IT intragovernmentat
8.Have funds beed appropriated for the payments due on,the proposed financing during the'currenfbudgetary period? YES
9.Will any loan or grant monies be directly used to make the,payments? NO
If so provide detail.
10..Have you ever defaulted or non-appropriatedon a lease or bond obligation? NO
•
General Liability:Ineurance Coverage limits in'the amountof SI Million is required.If applicable,autmnobile liahilityycoverage of S3'.million required..
lithe lessee a member of a managed risk pool?_YES_ If yes please provide the name
'Self Insured? General Liability Coverage Limits:$ and coverage'amounts below.
If the lessee has additional commercial coverage please provide coverage limits.
S40,000,000 excess coverage via CJPRMA(Calif.Joint
$500,000 self retained retention Powers Risk Mgt)
Submitted by
• (Name): John C.Brown Title: City Manager
Signature: Date: _
•So that we,may.begin'our credit review process,please scan and entail this anplii'ation,along,with your equipment`quote(bill of materials)and the signed financing,
:proposal to katie.l.hamil ton @key,com&julpierc@rcisco.com
-Please mail or email the 2 most recent copies of Your Audited Annual Financial Statements,plus a cony of this year's budget,to:
Katie Hamilton 720-980-3811 ph/216-370-9393.fax
.Key Government Finance,Inc. Katie.Lharriilton{dkey.com
1000 S.McCaslin Blvd.
.Superior CO 80027
;Please note that we do require the copies of your audited annual financial statements in order to process-your request.
KEYCORP.CONFIDENTIAL
tll hill.
CISCO.
•
CISCO CAPITAL-LEASING OP,TION.:"Public Entitles(. -- Capital
September 10,2012
"Quote Expires:10110112
City of Petaluma
11 English Street
Petaluma,CA 94952
EQUIPMENT
LEASE OPTION: The lease financing will be completed by Key Government Finance,Cisco Systems Capital's financing partner for government and education
customers.Payments due under the Lease financing will be made directly to Key.Govemment Finance at P.O.Box 1187,'Englewood,CO 80150-1187.
LESSOR: Key Government Finance,Inc.
LESSEE: City of Petaluma
EQUIPMENT: Cisco Systems Products.
Cisco Systems Equipment ;SA . -` 3;298:00'
Non-Cisco Equipment :uNd`.:.�a..,
Smartnet maintenance,5 years $0="` I.d40,536:a0i
Professional Services/Labor 1$3;b. 125;200';00;
Est.Sales Tax at E0% 1$ :e 1,743:501
•TOTAL AMOUNT TO BE LEASED ISda,'11(1(77e.30;
FINANCING This is a tax-exempt state and municipal government lease with the title to the equipment passing to lessee.This is a net lease under which Lessee
STRUCTURE: pays all costs,including Insurance,maintenance and taxes;for the term of the lease:At the end of the lease term the equipment can be purchased for
SI
Payment — Total #Payments.
Amount to be Leased Interest Rate: .Pactor(')L ' _ Payment,_ Expenditure .Per,Year, Term Ativ:'I Arr...
$110778.30 2.87% 0.0179121. 31984.27. $119,05632 12 60 Months Arrears
•
$110,778.30 2.82% 0.2112780 323,40502. .3117,02509 1 5 Years Advance
("Jibe payment factor expresses the payment as a percentage of the Equipment Cost To calculate the periodic lease payment for any Equipment Cost,multiply the payment factor
by the Equipment Cost.
RATE INDEX: The interest rate provided above is based on current market rates as of the date of this proposal,and will be subject to change based on market
conditions as otlhe time of dosing.After dosing the interest rate will be fixed for the term of tie financing.
APPROVAL: The finandn contemplated by this proposal is subject to the execution and delivery of all appropriate documents(in form satisfactory to Lessor,
9 p P P 1 ry ( ry )
including without agreements to the extent quire able-the Master Lease Agreement,any Schedule,financing statements,legal opinion or other
documents or agreements reasonably required by Lessor.This proposal,until credit approved,serves as a quotation,:not a commitment by Key
Government Finance to provide credit. Final acceptance of.this proposal is subject to credit,collateral and essential use review and approval by
Lessor.
The interest rate quoted herein assumes that the interest component of the Payments is exempt from federal income tax.Lessor will provide a taxable
f nanc ng proposal T it is determined that the financing will not quality for la d exempt interest rates.
CONTACT: Contact your financing representative with any questions:
dulls Pierce.US State B Local Government Account Manager Katie Hamilton-made Sales Representative
Cisco systems Capital Key Government Finance,a Cisco Systems Capital Partner
310-969-2535 once 1000 South McCaslin Blvd
805-390-7750 cell Superior Colorado 80027
julpiereeCISCO,COrn 720-980.381.2t6-370-9393Fax
katie.1.hantifonl Key.corn
Kendall Hansen.Region Manager
Key Government Finance,a Cisco Systems Capital Partner
503-701-8476 office
kenda l khansen(WKey.corn
Alternative financing options available on request. The quoted interest rate assumes the Lessee designates the Lease as"bank-qualified"pursuant to
NOTES: Section 265(b)of the Code.
The rates provided above are based on a minimum funding amount of$1100,000. If total to be funded will be less than$100,000 please contact us for e
revised Proposal.
in Association wish Key Govemment Finance.Inc.
1000 South McCaslln Blvd
Supeder,CO 80027 I n
•