I. RECOMMENDATION:
The City Manager is requesting council authorization to source new vehicles under the City's existing fleet management contract with enterprise.
II. BACKGROUND:
The City’s current fleet is negatively impacting the overall budget and fleet operations. Here are some statistics from the review of the current fleet conduction in preparation of this proposal:
- 44% of the light and medium duty fleet is currently 10 years or older.
- 35% of the light and medium duty fleet is 6 years or older.
- 10.3 years is the current average age of the fleet.
- 17 years-time it would take to cycle the entire fleet at current acquisition rates
- Older vehicles have higher fuel costs, maintenance costs and tend to be unreliable, causing increased downtime and loss of productivity.
On August 5, 2021 the City Council Authorized the City Manager and Financial Services Director to execute an agreement with Enterprise Fleet Management to leverage its buying power, implement a tighter controlled resale program to lower total cost of ownership and in turn minimize operational spend. Based on the initial proposal presented to Council the City will be able to reduce its fuel costs by 28% and reduce maintenance costs from $135.00 on average to $55.42 per unit. Leveraging an open-end lease maximizes cash flow and recognizes equity from vehicles sold creating an internal replacement fund. Furthermore, the City will leverage Enterprise Fleet Management’s ability to sell vehicles at an average of 109% above Black Book value.
44% of all vehicles are older than 10 years of age and do not contain the most up to date safety features, such as electronic stability control, airbag standardization and anti-lock brake control. The City now has a dedicated, local team to proactively manage and develop the fleet while delivering the highest level of customer service to facilitate the day-today needs.
III. DISCUSSION:
The Police Department, Fire Department and Public Works Department have been working with Enterprise to analyze their current fleet and determine a replacement need for each Department.
Fire Department
The Fire Department is requesting to replace three (3) vehicles and adding one (1) for the new Division Chief. The current fleet is a 2014 Chevy Tahoe, 2014 Chevy Silverado and a 2000 Ford Expedition which is now inoperable due to blown transmission. The four (4) new vehicles will all be Dodge Ram 1500 4x4 with the following lease terms:
- Fire Chief (24 months)
- Division Chief (24 months)
- Staff vehicle (60 months)
- Staff Vehicle (60 months)
The funds will be coming out of my major machinery and equipment fund which has $60,000. There will be a cost of approximately $12,659 this fiscal year for the leases as the equity from the sale of the 2 vehicles (appox. $20,216) will help offset the cost of the (3) leases, however there will be an additional onetime outfit of emergency lights, radios, and decals for approximately $30,000 for all 4 vehicles this fiscal year. Starting next fiscal year the annual cost for these vehicles will be $32,875.
Public Works Department
The Public Works and Utilities Department is looking to replace (8) vehicles ranging from 11 years old to 27 years old. The existing fleet comprises of Chevy Silverado's, Ford F-150's and a Ford Ranger. These vehicles have been in the fleet for several years with various issues from deteriorating interiors/exteriors, high repair costs, reliability issues to vehicles being inoperable. A detailed list of vehicles, mileage, pictures and and trade-in value is attached. The eight (8) new vehicles will all be Dodge Ram 1500 4x2's.
The funds to cover the annual lease payments for these vehicle will come from the major machinery and equipment fund which has $300,000 budgeted with approved expenditures for three (3) new vehicles at the cost of $100,000. This was the plan prior to the execution of the Fleet Management Program Agreement.
The lease cost of these vehicles in FY2022 will be $27,485 ($56,973 - (equity from sale of old vehicles) $29,488) plus a onetime cost to outfit lights, tool boxes, and decals on the trucks for approximately $16,000 for all (8) vehicles. In FY23 the total lease outlay costs will be $56,973.
Police Department
The Police Department is requesting to replace a 2012 Chevy Silverado (140,000 miles). The new vehicle will be a Dodge Ram 1500 4x4 with a 60 mo. lease term for the detective.
The funds will be coming out of my major machinery and equipment fund which has $45,000. There will be a cost of approximately $696.00 this fiscal year for the lease as the equity from the sale of the vehicle (appox. $7,000) will help offset the cost of the lease, however there will be an additional onetime outfit of emergency lights, radios, and decals for approximately $5,000 for the replacement vehicle this fiscal year. Starting next fiscal year the annual cost for this vehicle will be $7,696.00.
The purpose of the 24 month leases is intentional as the City begins to plan to electrify it's fleet with new technology such as the Ford Lightning as it becomes available in the fleet market. This is critical as the city aligns itself to engage with PG&E and the San Juaquin Valley Air Pollution Control District to seek grants related to charging infrastructure. This transition is expected to occur in the next 2 years. In addition, the resale value (equity) of the 2 year old vehicles will be directly applied to the new leases in the future.
IV. ALTERNATIVES:
Do not approve the sourcing of the requested vehicles. - Staff does not recommend as this is needed to ensure a safe and reliable fleet for its operations.
V. FISCAL IMPACT:
Fire Department
The funds will be coming out of my major machinery and equipment fund which has $60,000. There will be a cost of approximately $12,659 this fiscal year for the leases as the equity from the sale of the 2 vehicles (appox. $20,216) will help offset the cost of the (3) leases, however there will be an additional onetime outfit of emergency lights, radios, and decals for approximately $30,000 for all 4 vehicles this fiscal year. Starting next fiscal year the annual cost for these vehicles will be $32,875.
Public Works Department
The funds to cover the annual lease payments for these vehicle will come from the major machinery and equipment fund which has $300,000 budgeted with approved expenditures for three (3) new vehicles at the cost of $100,000. This was the plan prior to the execution of the Fleet Management Program Agreement.
The lease cost of these vehicles in FY2022 will be $27,485 ($56,973 - (equity from sale of old vehicles) $29,488) plus a onetime cost to outfit lights, tool boxes, and decals on the trucks for approximately $16,000 for all (8) vehicles. . In FY23 the total lease outlay costs will be $56,973.
Police Department
The funds will be coming out of my major machinery and equipment fund which has $45,000. There will be a cost of approximately $696.00 this fiscal year for the lease as the equity from the sale of the vehicle (appox. $7,000) will help offset the cost of the lease, however there will be an additional onetime outfit of emergency lights, radios, and decals for approximately $5,000 for the replacement vehicle this fiscal year. Starting next fiscal year the annual cost for this vehicle will be $7,696.00. |