To:

Members, Board of Education

From:

Maurice O. Green, Superintendent
Leo Bobadilla, Chief Operations Officer

Date:

December 17, 2008

RE:

Contract to Purchase Replacement School Buses 2008-09

Session law 2007-323 authorized the State Board of Education to arrange for the purchase of replacement school buses through financing. Bids were received by the state for school buses on a cash basis and for financing through third-party financing. The best price to the state resulted in a third-party financing arrangement offered by SunTrust Equipment Finance & Leasing Corporation, a third-party finance company, based on the state contract for school buses awarded to Thomas Built Buses.

By Master Facilitator Agreement (MFA) reached between the NC State Board of Education and SunTrust Equipment Finance & Leasing Corporation, each Local Education Agency (LEA) will enter into a Master Replacement Bus Financing Agreement (MRBFA) with SunTrust Equipment Finance & Leasing Corporation. Pursuant to the agreement, the Department of Public Instruction (DPI) will submit installment payments on the behalf of the LEA for the purchase of buses from Thomas Built Buses, based on the terms and conditions as provided therein.

The finance agreement established between SunTrust Equipment Finance & Leasing Corporation and the LEA is contingent on appropriation of funds by the state to make payments during year two and year three of the financing agreement. These funds are being requested in the state’s continuation budget for 2009-2011.

DPI will make three payments of $1,050,218.10 beginning this fiscal year, to SunTrust Inc. on behalf of GCS for the purchase of three (3) 42-passenger school buses, equipped with wheelchair lifts and flat floors, and thirty-six (36) 72-passenger school buses for a total cost of $3,150,654.30. The replacement buses are the Thomas Built Buses C2 model. The North Carolina Department of Public Instruction will make the annual payments directly to SunTrust Equipment Finance & Leasing Corporation on behalf of GCS and will notify GCS when payment is made.

RECOMMENDATION: Staff recommends approval to authorize appropriate staff member(s) to proceed with ordering the thirty-nine (39) replacement buses and to enter into necessary agreements/contracts as outlined above.