AGENDA CAPTION:
Title
Consider approval of Resolution 2023-198R, approving an agreement with Enterprise Fleet Management, Inc., through the Texas Interlocal Purchasing System (TIPS), to provide for the lease and maintenance of one hundred and eight (108) vehicles for use by several city departments and the purchase of miscellaneous equipment in the estimated amount of $2,115,083.00; authorizing the City Manager, or her designee, to execute the agreement; and declaring an effective date.
Body
Meeting date: December 5, 2023
Department: Public Works Department - Sabas Avila, Director / Ricky Gee, Fleet Manager
Amount & Source of Funding
Funds Required: $2,115,083
Account Number: 10001280.52111 (Vehicle/Equipment Lease Payment); 21006322.5211; 22006335.52111
Funds Available: Annually Budgeted
Account Name: Vehicle/Equipment Finance Payments, City Fleet Leasing
Fiscal Note:
Prior Council Action: The City first entered into a contract for leased vehicles with Enterprise Fleet Management in 2014.
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Background Information:
With over 477 light vehicles in all departments, the city has previously faced budgetary challenges replacing vehicles according to the adopted replacement schedules. In 2014, the City executed a Fleet Management contract with Enterprise Fleet Management, Inc., through the Interlocal Purchasing System, TIPS, for the leasing of Police Department detective and undercover vehicles. After the successful leasing of the PD vehicles, Enterprise developed a citywide fleet management program to save the city money and provide predictable cost schedules. The city currently leases 233 of the City’s 477 light vehicle fleet.
Through the Fleet Management program with Enterprise, light duty and pursuit rated vehicles are directly bought from the manufacturer or preferred dealers at government pricing or better with all applicable rebates applied. A leasing factor is applied to the purchase price and annual lease payments are set. The city buys aftermarket equipment, and the equipment is included in the recurring annual lease amount and is also included in the contracted amount with Enterprise. Vehicles are replaced on an approximate five-year schedule. At the conclusion of the lease or sooner, the vehicles are either sold by Enterprise on the open market and the equity is rolled into the next five-year lease or sold to other municipalities with the revenue from the sale deposited into the city and a new five-year lease entered into with Enterprise. All maintenance (excluding marked Patrol vehicles) is included in the annual lease payment with the exception of tires and Enterprise Fleet Management contracts with local vendors for these services. By moving the routine maintenance out of the city shop, mechanics are able to work on larger equipment repairs that are routinely outsourced. Bringing these repairs in-house has minimized repair costs and created efficiencies in the City’s fleet operations.
A comprehensive study report of the Enterprise Lease program was conducted by a third-party consultant with final report issued in November 2020. A few points made in the report worth noting:
• Enterprise can purchase vehicles at a significantly lower price; therefore, when comparing leasing a vehicle to the city purchasing the vehicle it is estimated there would be a cost savings.
• If purchased instead of leasing vehicles it is anticipated that additional personnel would be needed as the recommendation is one Technician for each 100 vehicles
• City does not have capacity at the garage facility to service all vehicles.
• While payments would be eliminated after five years with purchased vehicles, increased maintenance expenses would need to be considered.
This contract is brought to City Council each year for the approval of the annual vehicle allocation and contract increases. For FY24, the City will lease one hundred and eight (108) vehicles for San Marcos Police, Fire, Utilities, Neighborhood Services, Public Works, Planning, Parks & Recreation, Emergency Management, Engineering, and Finance Departments to include the Marshals office and Convention Visitors Bureau from Enterprise Fleet Management, Inc.
The first-year lease price is $2,115,083.99 which includes the annual lease price of $1,645,711.85 and the equipment “upfitting” cost of $469,372.14. After the first year, the annual lease price will be $1,645,711.85 for each additional year for four (4) years. Total cost for the five (5) year lease period for these 108 vehicles is $8,697,931.39.
The 108 vehicles are to be distributed as follows:
• Police Dept., 33 vehicles
• Fire Dept.,4 vehicles
• Public Works Dept., 10 vehicles
• Utilities Dept., 30 vehicles
• Neighborhood Services Dept., 11 vehicles
• Planning Dept., 5 vehicles
• Parks & Recreation Dept., 3 vehicles
• Emergency Management, 2 vehicles
• Engineering, 3 vehicles
• Marshals’ office, 6 vehicles
• Finance, 1 vehicle
• Convention Visitors Bureau, 1 vehicle
The FY 24 order will include 2 electric vehicles and 17 hybrid-electric vehicles to support City Council’s goal for Sustainability.
Council Committee, Board/Commission Action:
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Alternatives:
Revert back to purchasing vehicles instead of leasing.
Recommendation:
Staff recommends approval.