TO:
Honorable Mayor and Members of the City Council
THROUGH:
Talyn Mirzakhanian, City Manager
FROM:
Rachel Johnson, Police Chief
Michael Lang, Interim Fire Chief
Libby Bretthauer, Acting Finance Director
Marcelo Serrano, Grants & Financial Analyst
SUBJECT:Title
Consideration of Resolution Approving the Intention to Issue Tax-Exempt Obligations; Consider Waiving Formal Bidding and Authorizing the Purchase of Mobile and Portable Radios in an Amount Not-to-Exceed $3,584,056.72; and Appropriating $3,625,807 from the General Fund Balance and Adjusting General Fund Revenues by an Equivalent Amount in Fiscal Year 2026 (Unbudgeted) (Acting Finance Director Bretthauer).
(Estimated Time: 15 Mins.)
A) ADOPT RESOLUTION NO. 25-0081
B) WAIVE FORMAL BIDDING
C) AUTHORIZE PURCHASE
D) APPROPRIATE $3,625,807 FROM GENERAL FUND BALANCE AND ADJUST GENERAL FUND REVENUES BY AN EQUIVALENT AMOUNT FOR ANTICIPATED BOND PROCEEDS IN FISCAL YEAR 2026
Body
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RECOMMENDATION:
Staff recommends that the City Council: A) Adopt Resolution No. 25-0081 Approving the Intention to Issue Tax-Exempt Obligations; B) Waive formal bidding per Municipal Code Section 2.36.140 (Waivers); C) Authorize the purchase of mobile and portable radios in an amount not-to-exceed $3,584,056.72; and D) Appropriate $3,625,807 from the General Fund balance and adjust revenues by an equivalent amount in Fiscal Year 2026 for anticipated purchase costs and bond proceeds.
FISCAL IMPLICATIONS:
The purchase of the Mobile and Portable radios is intended to be financed utilizing debt issuance, wherein the equipment will be ordered from the vendor, Motorola Solutions, Inc. (Motorola), before June 27, 2025, via a Notice to Proceed and, in FY 2026, a Purchase Order will be issued to secure the equipment. The financing of the purchase necessitates an appropriation of $3,625,807 from the General Fund balance in FY 2026 to fund the purchase, along with an equivalent adjustment to revenues to account for anticipated bond proceeds. This figure includes the purchase price of the equipment ($3,584,056.72), the Cost of Issuance ($25,000) and the Underwriters Discount ($16,750).
After the acquisition of 400 Manhattan Beach Boulevard in April 2025, staff has been working with the City’s Municipal Advisor (KNN Public Finance) and Bond Counsel (Stradling, Yocca, Carlson & Rauth) to issue Certificates of Participation (COPs) for the property. During a discussion of that financing, staff communicated the need to purchase the public safety radio equipment and desire to lock in pre-tariff pricing to save the City between $250,884 and $358,406 (7% to 10%).
Financing options were then analyzed to determine the most fiscally prudent option among a lease-purchase plan through Motorola, a Bank of America Master Equipment Lease or tax-exempt COPs. The lowest cost option to fund the purchase is through the sale of tax-exempt COPs since the financing for 400 MBB already in progress and the City is able to save on some financing costs. Using the quoted purchase price of $3,584,056.72, the average annual debt service cost is estimated at $687,000 per year over a seven-year term at current interest rates. Subject to confirming compliance with tax-exempt financing requirements, the preference would be for Debt Service payments to commence on January 1, 2027, and end on July 1, 2032. Staff will return to City Council on August 5, 2025, for approval of the financing plan and required documents to issue the COPs.
BACKGROUND:
Improvements to public safety communications equipment periodically cause older equipment to become obsolete. Although individual equipment items are replaced as necessary, the City generally performs an assessment for a full replacement of communications equipment every seven to ten years to determine if an update is warranted. As the last major refresh of communications equipment occurred in FY 2018, staff performed a comprehensive assessment of the current equipment available, as well as a review of the requirements for several major upcoming regional events that will occur in the vicinity of the City, to create a plan for the next full replacement of communications equipment.
DISCUSSION:
One of the greatest challenges the public safety sector has is communications between varying radio and wireless networks. The creation of a national interoperable communication system was one of the many 9/11 Commission recommendations. As communications technology has advanced, the City has made investments to purchase and maintain equipment that allows first-responders from different jurisdictions, including law enforcement and fire, to communicate across the various communication platforms utilized. The City’s communications equipment purchases generally have a useful life of roughly seven years, which become obsolete as continued advances in communications technology increase levels of security, interoperability, and resilience.
During the current review cycle, staff has determined that a large portion of the current inventory of communications equipment is near the end of its useful life and is not at the recommended level of interoperability available, especially given the advent of several major events in the area over the next three years, including the 2026 World Cup, 2027 Super Bowl, and 2028 Olympics. As part of the review, staff identified new technology available that offers a higher level of security and greater interoperability with partner agencies. In order to provide the highest level of public safety for the listed events, staff has determined that a full replacement of communications equipment is warranted to ensure full interoperability. Additionally, as part of this purchase, new equipment includes a seven-year warranty covering all hardware repairs and device technical support. The current equipment is not under warranty, necessitating expenditures of approximately $1,000 each time one of the current radios needs to be repaired, a cost that would no longer be incurred under the warranty period.
While discussing the City’s public safety communications requirements and the estimate for a full replacement of the equipment with Motorola, staff was informed that the pricing for these items would be increasing by an estimated seven to ten percent during the month of June 2025 due to costs imposed by tariffs. To secure favorable pricing, the City would need to move forward with a purchase before June 27, 2025. For these reasons, staff recommends that the City Council authorize the funding plan for the equipment and adopt Resolution No. 25-0081 regarding the City’s intention to issue tax-exempt Certificates of Participation to fund the purchase of the equipment.
Tax-Exempt Bonds
It is anticipated that the purchase of the communications equipment will be funded through debt issuance. Resolution No. 25-0081 declares the City’s intention to issue tax-exempt obligations and reimburse the General Fund for the purchase price. To cover any ancillary costs that may arise, the resolution states that a maximum principal amount of the obligations is $3,800,000. This resolution is necessary to comply with U.S. Treasury department regulations and is a standard practice for public agencies planning to issue tax-exempt bonds. Adoption of this resolution preserves the City’s ability to issue tax-exempt financing, which will result in lower borrowing costs for the City, but it does not bind the City to any particular financing option.
Waive Formal Bidding
In order to maximize the efficiency and effectiveness of the project, staff recommends that this purchase be considered sole-source, and that a purchase order be awarded to Motorola Solutions. Furthermore, the vendor is willing to extend the prices of the City of Glendale agreement, which offers the City additional discounts. Under MBMC Section 2.36.140, the City Council may waive purchasing procedures to fit a specific purchase. Although there are other vendors that can provide acceptable hardware solutions, the software and hardware are proprietary and can only be obtained directly from Motorola Solutions, the manufacturer.
Staff recommends that the City Council waive formal bidding requirements in accordance with Municipal Code Section 2.36.140 due to sole source, approve the purchase from Motorola, and appropriate funds for the purchase and adjust revenues for the anticipated bond proceeds. Additionally, by adopting Resolution No. 25-0081, the City will be able to take advantage of the lower financing costs.
PUBLIC OUTREACH:
After analysis, staff determined that public outreach was not required for this issue.
ENVIRONMENTAL REVIEW:
The City has reviewed the proposed activity for compliance with the California Environmental Quality Act (CEQA) and has determined that the activity is not a “Project” as defined under Section 15378 of the State CEQA Guidelines; therefore, pursuant to Section 15060(c)(3) of the State CEQA Guidelines the activity is not subject to CEQA. Thus, no environmental review is necessary.
LEGAL REVIEW:
Bond Counsel has reviewed this report and determined that no additional legal analysis is necessary.
ATTACHMENTS:
1. Resolution No. 25-0081
2. Motorola Solutions Quote
3. Notice to Proceed Letter