AGENDA CAPTION:
Title
Consider approval of Resolution 2026-188R, approving a Change Order to the agreement with Enterprise Fleet Management, Inc., through the Texas Interlocal Purchasing System, to provide for the lease and maintenance of nine vehicles for use by the Fire and Police Departments and the purchase of miscellaneous equipment in the amount of $902,260.00 for a five-year term; authorizing the City Manager, or her designee, to execute the Change Order on behalf of the city; and declaring an effective date.
Body
Meeting date: October 20, 2026
Department: Public Works - Fleet Services
Amount & Source of Funding
Funds Required: $902,260.00
Account or Project Number (C = CIP funds): 10001280.52111 (Vehicle/Equipment Lease Payment)
Funds Available: $902,260.00
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 502 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 329 of the City’s 502 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.
Operational and financial criteria for the replacement of Enterprise leased vehicles are as follows:
General City Fleet Replacement Criteria:
• Public Works considers mileage, utilization, contract obligations, equity position, and repair history when determining whether a vehicle should be replaced.
• Vehicles with higher utilization or increasing repair costs may be prioritized for replacement to reduce downtime and future maintenance expenses.
• Fleet also considers the vehicle’s current equity value and contract timing to determine when replacement provides the greatest financial benefit to the City.
SMPD - Additional Replacement Criteria: Tahoe
• SMPD considers vehicle age, mileage, engine hours, and repair history when determining whether a Tahoe should be replaced.
• Vehicles approaching or exceeding 80,000 miles are often recommended for replacement because major repairs can become more frequent and costly.
• As an example, two engine replacements were completed in FY26 at an approximate cost of $16,000 each.
• Because ordering, production, and upfitting a new police vehicle can take more than one year, Fleet must also consider the additional mileage and engine hours the current vehicle is expected to accumulate before its replacement arrives.
Fire Department - Additional Replacement Criteria: 4x4 Trucks
• The Fire Department considers emergency response requirements, towing needs and capacity, repair history, and equity position when determining whether a 4x4 truck should be replaced.
• Because these vehicles support emergency operations, replacement decisions also consider the need to maintain reliable response capability and adequate towing capacity.
• Fleet also reviews repair costs and equity position to help determine the most appropriate timing for replacement.
Agenda Item Attachments Narrative:
Enterprise FY27 Change Order - This document itemizes each vehicle to be leased by the City including manufacturer make/model, lease cost, upfitting costs (if applicable), as well as one-time down payment for upfitting costs (if applicable). The FY27 Change Order includes two vehicles which are replacing existing leased vehicles and seven new leased vehicles which are replacing City owned PD vehicles past useful life. The retired vehicles will go to auction for sale and cost recovery.
Enterprise Master Equity Agreement - This document is the Master Agreement with Enterprise Fleet Management. This document sits as the “overarching agreement” with Enterprise allowing the City to lease vehicles and return those leased vehicles at the end of the lease term.
MGT Analysis of Enterprise Contract - 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 are:
• 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 FY27, the City will lease nine (9) vehicles for San Marcos Police and Fire departments from Enterprise Fleet Management, Inc.
The first-year lease price is $272,452.00 which includes the annual lease price of $157,452.00 and the equipment “upfitting” cost of $115,000.00. After the first year, the annual lease price will be $157,452.00 for each additional year for four (4) years. Total cost for the five (5) year lease period for these 9 vehicles is $902,260.00.
The 9 vehicles are to be distributed as follows:
• Police Dept., 7 vehicles
• Fire Dept., 2 vehicles
Council Committee, Board/Commission Action:
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Alternatives:
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Recommendation:
Staff recommends approval.