AGENDA CAPTION:
Title
Consider approval of Resolution 2021-96R, approving an agreement with Enterprise Fleet Management, Inc. through the Texas Interlocal Purchasing System (TIPS), to provide for the lease and maintenance of vehicles for the use by several City departments over a five year period and the purchase of miscellaneous equipment and maintenance in the estimated amount of $1,206,000.00; authorizing the City Manager or his designee to execute the agreement; and declaring an effective date.
Body
Meeting date: May 18, 2021
Department: Finance Department - Marie Kalka, Director
Amount & Source of Funding
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Account Number:
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. Vehicles have been added each year since then.
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Background Information:
In 2014, the City began participating in 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. Enterprise presented a citywide fleet management proposal to staff after the successful leasing of the PD vehicles. The City has over one hundred seventy-five (175) light vehicles in the general fund and enterprise funds fleet and has faced budgetary challenges in replacing the vehicles according to the adopted replacement schedules.
Through the Fleet Management program with Enterprise, light non-pursuit rated vehicles are directly bought from the manufacturer 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 not included in the recurring annual lease amount but is 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 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 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 the repair cost and created efficiencies. Fiscal year 2021 is the sixth year that vehicle replacements in the general fund have been leased instead of purchased and the fourth year for the enterprise funds.
Resulting from Council’s inquiry regarding this lease program, a comprehensive study report of the Enterprise Lease program (attached) 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 year 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 increase. For FY21, the City will lease thirty-one (31) additional vehicles from Enterprise Fleet Management, Inc., with estimated annual lease payments in the amount of $219,200 per year, the purchase of equipment the first year estimated at $108,500 totaling an estimated $1,206,000.00 for the five (5) year period. The 31 vehicles are to be distributed as follows:
• Water/Wastewater Utility-4
• Electric Utility-4
• General Fund-17 Replacement Vehicles
• General Fund - 6 New Vehicles
Council Committee, Board/Commission Action:
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Alternatives:
Revert back to purchasing vehicles instead of leasing.
Recommendation:
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