MEETING DATE:
FEBRUARY 24, 2015
SUBJECT:
Title
LIGHT DUTY VEHICLE LEASE AND MAINTENANCE PROGRAM
Body
Recommendation
Recommendation
APPROVE authorizing the City Manager to execute the Enterprise Master Equity Lease Agreement, upon final review by the City Attorney.
Body
Board or Commission Action
Not Applicable.
Relevant Council Strategic Theme
Good Governance
Relevant Department Goal
Not Applicable.
Introduction
The City currently owns and maintains approximately 100 light duty vehicles for various City
Departments, including the Fire Department. Approximately 43% of these light duty vehicles are past their useful life. As a result, the majority of the light duty fleet needs to be replaced to mitigate the escalating repair and maintenance costs.
Discussion
City vehicles are used to perform various tasks throughout the city and serve the public on a daily basis. Light duty vehicles make up approximately 67% of the City's entire Fleet (including emergency response and heavy duty vehicles). Unfortunately, due to budget challenges that prevented more timely replacement, the current condition of the light duty fleet is deteriorating.
During a vehicle's useful life cycle, preventive maintenance (such as fluid changes, and tire brake and filter replacements) is the primary needed maintenance. However, it has become necessary to replace entire engines, transmissions, radiators and other major components for many of our light duty vehicles in recent years. During major repairs, the lack of available vehicles and number of out-of-service days can adversely affect operations. As maintenance costs for our fleet continues to erode the budget and interfere with the efficiency of City operations, it has become imperative to find a solution to update this portion of the fleet.
A complete evaluation of the entire fleet was prepared to identify the most cost effective means of vehicle replacement. The evaluation also included a thorough assessment of the fleet inventory, which resulted in 10 vehicles being identified as underutilized and removed from service. Upon completion of the analysis it was determined that it will require approximately $4.1million, over the next five fiscal years, to purchase and maintain the deferred replacement vehicles needed. Whereas, entering into a lease program will allow the City to realize a 27% decrease in the cost to purchase and maintain the light duty fleet.
In light of the projected savings, City staff has identified a qualified public bid for Fleet Management services that complies with the City's Purchasing Ordinance (Section 2.30.100 Cooperative Purchasing). The bid, advertised by the West Contra Costa Unified School District, contains a "piggy back "clause that will allow the City to utilize the pricing and options provided by the winning bidder, Enterprise Fleet Management.
Utilizing this bid to establish a vehicle lease program with Enterprise Fleet Management will provide a consistent preventive maintenance cycle and substantially reduce repair expenses and downtime. The proposed lease for these vehicles will be an "Open Ended" Lease, which at the end of the term will allow the City to purchase the vehicles if it is determined to be a viable option. Enterprise Fleet Management will also provide a "Full Maintenance Program" for all leased vehicles for a low fixed monthly fee. The Full Maintenance Program will include all necessary vehicle maintenance and 24 hour roadside assistance, eliminating the need for City resources to be used for the emergency repair and maintenance of these vehicles. Additionally, the proposed leasing program will not require a large initial outlay of funds, which will alleviate the existing burden on the Vehicle Replacement fund to allow for the replacement of heavy duty and emergency vehicles scheduled for replacement. The lease program will be implemented in a phased approach over a three year period, with roughly one third of the light duty fleet entering the program each fiscal year.
Fiscal Impact
Entering into the Enterprise Master Equity Lease Agreement will significantly reduce the portions of the Public Works-Fleet Operating budget (103033) and the Vehicle Replacement fund (602) currently affected by the declining condition of the light duty fleet. The proposed lease program is expected to result in a combined fund savings of $1.1million over a 5 year period. Initial savings are expected to be realized and reflected no later than the Fiscal Year 2015-16 budget period, after coordination and delivery of the first phase of leased vehicles is complete. The cumulative five year contract amount shall not exceed $3M. All projected expenses related to the lease and maintenance of light duty vehicles will be reflected in the Public Works-Fleet Operating budget.
Attachment
Letter of Agreement - West Contra Costa Unified School District-Notice of Award
Prepared by: Lisa Fowler, Public Works Manager- Administration & Fleet
Submitted by: Jim Chafe, Deputy Public Works Director
Reviewed by: Mike Edwards, Public Works Director/City engineer
Approved by: Jack Griffin, City Manager