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Wells approves $906,882 lease-purchase for new fire truck after questions about effective yield
Summary
The Select Board adopted a resolution authorizing a lease-purchase agreement for a new fire truck with a principal of $906,882. One member questioned the effective yield (cited at 4.68%) and whether the arrangement affects the town's bonding capacity; staff said the resolution was a legal requirement and the motion passed 4'0to'0.
The Wells Select Board adopted a resolution on Dec. 16 authorizing the lease-purchase of a new fire truck with a principal amount of $906,882 and authorized town staff to execute the master equipment lease-purchase agreement.
A board member noted surprise at the financing structure and questioned the effective return to the bondholder. The member said the arrangement "has a yield of 4.68," and that, when converted to an equivalent taxable yield, the effective rate is materially higher. The member asked whether the lease affects the town's bond capacity; staff said they could not immediately answer but indicated the board had been provided the facts available at the time.
Town staff described the resolution as a legal formality required to authorize the town manager and designated officials to act on behalf of the town in executing the lease. A board member moved that the resolution be adopted as presented and to authorize the town manager to sign the master agreement; the motion was seconded and approved unanimously (4–0).
The board recorded that it will ask additional financing questions in future transactions and that members know which points to raise next time in order to better understand effective cost and bond implications.
