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CITY OF CORTEZ
123 ROGER SMITH AVENUE
CORTEZ, CO 81321

Kelly Koskie
Director of Finance
123 Roger Smith Ave
Cortez, CO. 81321
kkoskie@cortezco.gov

Memorandum

To:

CORTEZ CITY COUNCIL

From:

KELLY KOSKIE, DIRECTOR OF FINANCE

Date:

02/06/2024

RE:

Tax Exempt Lease Purchase of Two Servers to Replace the Current VXRail Server System.

DISCUSSION

After consulting with the City's Network Administrator and IT team during the 2024 budget preparation, a recommendation was made to replace the VXRail server system and enter into a tax exempt lease purchase of two Dell PowerEdge R760 servers. Staff recommends Dell as the vendor because the City would receive State Contract pricing and a discount of $3,820 if the lease purchase was financed through Dell Financial Services. Dell also provides a 30-day price match and a low price guarantee. This cost was budgeted for in the 2024 budget.

At this time equipment is available 5 days after production. The new PowerEdge servers will provide stability, which will increase the reliability and efficiency of the IT environment.

BACKGROUND

The VXRail server system was purchased in 2017 and is past it’s expected lifespan. The City's experience with the VXRail server system has not been positive, with malfunctions on a regular and persistent basis. When there is a problem in the environment, the IT team starts troubleshooting with VXRail. Problems with the VXRail server system tend to spread City-wide with all users unable to log in to the network and only able to see email through a web browser page.

FISCAL IMPACT

Three lease purchase options were researched and responses are listed below:

Dell Financing                   5 Year lease        5.99% interest Annual payments $47,400 *
KSState Bank                   5 Year lease 6.49% interest Annual Payments $49,245
Vectra Bank Cortez 5 year lease    5.43% interest Annual Payments $49,330

*Dell Financing includes a discount of $3,820*

Each lease proposal has an option to purchase the equipment at the end of the lease term for $1.00.

There will be an addition $7,000 charge for technical support during data transfer and transition to the new servers. This will be invoiced separately and not included in the lease.

RECOMMENDATION

Staff recommends that City Council approve the Tax Exempt Lease Purchase offered by Dell Financial Services for two PowerEdge R760 servers for a total lease cost of $236,997, and delegate authority to City Manager Sanders to sign lease documents and production approval.

MOTION

If agreed upon by the City Council, a possible motion would be:
I move that City Council approve the Tax Exempt Lease Purchase offered by Dell Financial Services for two PowerEdge R760 servers for a total lease cost of $236,997, and delegate authority to City Manager Sanders to sign lease documents and production approval.

Attachments

Server Cluster Diagram

Server Cluster Impact Diagram

Dell Tax Exempt Lease Purchase

Exhibit A

Exhibit B