AGENDA CAPTION:
Title
Consider approval of Resolution 2026-169R, approving a Master Lease Agreement with Dell Financial Services, through the Texas Department of Information Resource Cooperative, to provide financing services for high-value technology purchases in an amount not to exceed $3,750,000.00; authorizing the City Manager, or her designee, to execute the agreement on behalf of the city; and declaring an effective date.
Body
Meeting date: September 15, 2026
Department: Information Technology
Amount & Source of Funding
Funds Required: $3,750,000 Financed over 4-5 Years
Account or Project Number (C = CIP funds): 30131280-60125
Funds Available: FY2026-27 Proposed budget and contingent upon budget approval based on financing term
Account Name: Internal Service Fund - Capital Outlay
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Background Information:
Purpose
The purpose of this item is to request approval to establish a Master Lease Agreement contract with Dell Financial Services (DFS) utilizing the Department of Information Resources cooperative contract DIR-CPO-5792. This contract will allow the City to finance future technology equipment over its useful life instead of paying the full cost upfront. By using financing, the City can better manage increasing technology expenses and spread costs over several years.
Background
Although this agreement is referred to as a Master Lease Agreement, it functions as a financing arrangement, and no equipment will transfer back to the vendor. The City will retain full ownership of all hardware at the end of each financing term once all payments have been made.
The City routinely purchases technology equipment such as computers, servers, and other hardware. Historically, these items have been purchased by the City paying the full cost upfront at the time of purchase. As technology needs have grown and costs have increased, this approach has become more fiscally challenging.
In addition to the price increases, another fiscal challenge is that technology vendors no longer offer long-term price quotes. Because of the price volatility in the technology equipment market, vendors will only offer to honor a price quote for a few days. This dynamic change in pricing means that equipment costs can increase 10-25% from the time a vendor provides a price quote to the time that a technology equipment purchase request is presented to Council for consideration.
The proposed financing agreement with Dell Financial Services includes purchasing the specific technology equipment listed below, and the financing term would be 4-5 years depending on dates of purchase for each specific technology equipment. Through this approach, the technology equipment can be purchased within the vendor price quote timeframes that are provided, thus avoiding the dynamic technology equipment price increases resulting from expired price quotes. This approach aligns financing with the useful life of the equipment and offers greater flexibility in managing the costs of technology equipment investments.
Proposed Technology to be Financed (Estimated Cost):
• Enterprise Data Storage Hardware = $1,400,000
Enterprise Storage hardware is high-capacity, high-reliability equipment used by organizations to store large amounts of data. It provides a secure, centralized place for servers, applications, and users to save and access information. This type of hardware is designed to be fast, stable, and scalable so the organization can easily expand storage as its needs grow.
• Virtual Desktop Server Replacement Budget Shortfall = $160,000
Virtual desktop servers are systems that host and run desktop environments so users can access them remotely. Instead of each employee having a fully powered computer at their desk, the desktop, applications, and data all live on centralized servers. Users connect to these servers through a thin client, laptop, or any device with internet access.
The replacement funds were initially budgeted for fiscal year 2026; however, due to rapid increases in technology costs, we encountered a funding shortfall that impacted the progress of the replacement initiative.
• Virtual Server Infrastructure Replacement = $1,800,000
Virtual servers are software-based versions of physical servers. Instead of running on their own separate hardware, multiple virtual servers can run on a single physical machine. Each virtual server acts like an independent system with its own operating system and applications.
• Enterprise Network Firewall Replacement = $140,000
Enterprise network firewalls are security devices that protect the organization’s network from unauthorized access and cyber threats. They monitor and control incoming and outgoing network traffic, making sure only approved connections and data can pass through. Firewalls help keep systems, applications, and information safe by blocking harmful activity and preventing attackers from entering the network.
• Municipal Building Uninterruptible Power Supply = $250,000
An Uninterruptible Power Supply (UPS) is a device that provides backup electrical power when the main power source fails or becomes unstable. It keeps critical equipment running long enough to safely shut down or switch to another power source.
UPS units are especially important in data centers because they protect servers and storage systems from sudden power outages, voltage drops, or surges. This helps prevent data loss, hardware damage, and service interruptions, ensuring the data center stays reliable and accessible.
Total estimated amount financed = $3,750,000
The amount the City estimated to finance in fiscal year 2027 is a not-to-exceed amount of $3,750,000. Each technology purchase will be financed individually, meaning the City will not finance all technology needs at once. Interest rates are fixed for each individual purchase and remain unchanged for that purchase’s entire financing period. However, the rate may differ from one purchase to another, as each is based on the market conditions at the time the purchase is made.
How Financing Will Work
For each technology purchase, the City will work with a value-added reseller (VAR) to confirm the equipment specifications and final cost. Once the City decides to move forward with the purchase, the VAR will send the pricing and project details to Dell Financial Services. DFS will then prepare the financing terms for that specific purchase for the city to review and sign. After financing is arranged, the City will acquire the equipment through DFS and DFS will make payment to the VAR for the hardware being financed. All payments from the city will be paid to DFS. This process will repeat for each individual purchase, allowing the City to finance technology needs on a case-by-case basis.
Benefits
Financing technology purchases through DFS would provide several benefits to the City, including:
• Improved budget planning by spreading costs over multiple years
• Ability to maintain up-to-date technology without large upfront expenditures
• Enhanced financial flexibility across departments that depend on updated hardware
• Potential to reduce unexpected capital budget impacts as technology needs grow
• Locking in better pricing before volatility in the market increases cost
History
In previous years, the City purchased technology equipment using a full upfront payment model. This worked well when technology costs were lower and upgrades were less frequent. However, as equipment has become more advanced and more expensive, the full upfront payment model is challenging to fiscally achieve. Establishing a financing agreement with DFS is an option that can secure the needed technology equipment through a financing agreement that matches the useful life of the technology equipment. Dell Financial Services is a well-known vendor for many public-sector organizations.
Council Committee, Board/Commission Action:
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Recommendation:
Staff recommends the approval of the resolution.