City of
CITY COUNCIL Rifle AGENDA
City Council City Hall Barbara Clifton, Mayor City Council Chambers Theresa Hamilton, Mayor Pro Tem 202 Railroad Avenue Joe Carpenter, Councilor Rifle, CO Brian Condie, Councilor Revised Joe Elliott, Councilor Cablecast Live on Comcast Channel 10 Ed Green, Councilor Sean Strode, Councilor Streamed Live at RifleNOW.org
The City of Rifle will make reasonable accommodations for access to City services, programs, and activities and will make special communication arrangements for persons with disabilities. Please call (970) 665-6405 for assistance.
REGULAR MEETING May 20, 2020
WORKSHOP 6:00 P.M. CONFERENCE ROOM
6:00 p.m. Discuss leasing of City Vehicles through Enterprise Fleet Management (Brian Prunty)
REGULAR MEETING 7:00 P.M. COUNCIL CHAMBERS
The City Council may take action on any of the following agenda items as presented or modified prior to or during the meeting, and items necessary or convenient to effectuate the agenda items.
7:00 p.m. 1. Regular Meeting Call to Order, Pledge of Allegiance, and Roll Call
7:03 p.m. 2. Citizen Comments - for items not listed as public hearings on the agenda. Please limit comments to 3 minutes. Email comments prior to the meeting to: [email protected] or Electronic Meeting Participation: Please click the link below to join the webinar: Click here to join electronic meeting or (www.rifleco.org/ElectronicMeetings) Password: 929942 Participate by phone: Dial: 1 301 715 8592 or 1 312 626 6799 / Webinar ID: 416 406 740
7:10 p.m. 3. Consent Agenda – consider approving the following items: A. Minutes April 22, 2020 City Council Special Meeting B. (Acting as Liquor Licensing Authority) Liquor License Renewal for J&L Inc., dba Shanghai Garden and Ruedi Creek Enterprises, Inc. dba Sammy’s Rocky Mountain Steakhouse, Rifle Tequila’s, Inc. dba Tequila’s
7:15 p.m. 4. Action, if any, on Workshop Items (Mayor Clifton)
7:20 p.m. 5. Consider approving a contract with Enterprise Fleet Management for services related to the leasing of City Vehicles (Brian Prunty) . 7:40 p.m. 6. Consider amending Section 4-2-30 of the Rifle Municipal Code to Provide for the Collection of Taxes on Remote Sales – Ordinance No. 6, Series of 2020 – 2nd Reading (Jim Neu)
7. Consider amending Emergency Declaration authorizing temporary expansion of on premise Liquor Licensed businesses and issuance of Right- of-Way Use Permits – Resolution No.10,Series of 2020 (Jim Neu)
7:50 p.m. 8. Administrative Reports
8:05 p.m. 9. Comments from Mayor and Council
The order and times of agenda items listed above are approximate and intended as a guideline for the City Council.
Next Regular Meeting of Council: June 3, 2020 at 7:00 p.m.
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public works interoffice memo
To: Scott Hahn, City Manager From: Brian G. Prunty CC: Michelle Duran, Finance Director Date: May 12, 2020 Re: Leasing Program for Fleet Vehicles
Early this year Michelle Duran and I were introduced to the notion of leasing for our fleet vehicle replacement. Personally, I had never considered it, as was the case for Michelle. Troy Richard, a sales representative for Enterprise Fleet Management provided a short introduction to what it could look like. It had appeal from a multitude of angles.
Fleet management is an area in which we do not invest a lot of effort, but nevertheless requires thoughtful and timely consideration. Over the past year, I have invested more time and effort to fleet management, because it became apparent that this facet was overlooked. We have stepped up our Fleet Management by going all in our electronic record keeping with iWorQ, including an iWorQ module for requesting fleet service. The goal has been to be able to look at any vehicle at any time and get a sense of its condition and cost of ownership. For the purposes of this memo, we will only consider the light-duty wheeled vehicles of and 1-ton and lighter, or about 65 vehicles.
Over the past six months I have gained a better picture of our fleet status and condition. This has been a combination of observation, user input, and data in our fleet management program (iWorQ). What has become apparent is that we have an aged fleet and our rate of replacement is slower than necessary to provide a reliable and safe fleet.
To accomplish the goal of a newer and efficient fleet, I propose a plan of replacement using a Lease Program. In the following, I will lay out an overview of the plan, the proposed Fleet Management vendor, the Sourcewell connection, what funding looks like, the proposed vehicles for replacement, and disposal of replaced fleet vehicles. Ultimately, I ask for your recommendation to City Council to go forward with the plan and begin a steady push to upgrade our fleet.
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Memo – Scott Hahn May 12, 2020
The Fleet Replacement Management Plan (FRMP)
With 65 vehicles in regular use, the challenge is to balance the replacement of the vehicles in an optimum way so as to minimize the cost of ownership while providing a modern, safe, and reliable fleet, which well represents the City of Rifle. I believe a fleet leasing plan can accomplish this goal. First, it provides for regular turnover of vehicles, which ensures reliability and ensures low mileage at time of replacement. Second, due in part to low mileage, it maximizes monies obtained from the sale of replaced vehicles. Third, it demonstrates fiscal responsibility by obtaining efficient, low maintenance, reliable and fuel-efficient vehicles. Fourth, it lowers the cost of maintenance since the fleet would be newer vehicles. Fifth, it provides the latest in equipment for driver safety. The highlights of the plan are as follows: a. Approximately 12 vehicles per year would be replaced. b. There would be a goal of replacing the entire fleet (with a handful of exceptions) every five years. c. Annually, at budget time departments can request replacement vehicles and plan for leasing costs. d. Vehicle maintenance (tires, brakes, fluid changes, etc.) costs would be maintained by the City. e. Each Fall at budget time, we would meet with the Fleet Management Vendor (FMV), to determine next year’s lease requirements. To achieve this plan, the following must occur: selection of a good fleet management vendor, having a solid approach to funding (mainly a consideration for this year), and diligent fleet management on the part of the Fleet Manager. The reality is that without a plan like what we have outlined above, we would not see complete fleet replacement for 16 years (estimated) while constantly supporting an ever-aging fleet. In this scenario and depending how aggressive we were in replacement; the average age of the fleet would certainly go up.
Fleet Management Vendor
The Fleet Management Vendor (FMV) choice for our program is Enterprise Fleet Management (EFM). Between Michelle Duran and me, we have spoken with four government agencies which utilize this vendor for their leasing requirements: Mesa County Sheriff Matt Lewis, Carl Christian – City of Fountain Electric Dept. Superintendent, Sheryl Carstens –City of Commerce City CFO, and Bill Sutter, Boulder Valley School District CFO. All have provided solid and high recommendations due to their experience with EFM. There are many reasons for my selection of them for our FMV: an excellent plan for implementation, a wide variety of services which can be selected on an annual basis, and they are is already under contract with Sourcewell for cooperative buying.
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Memo – Scott Hahn May 12, 2020
As to Sourcewell, prior to this connection I knew nothing about them. They are best described as the Purchasing Agent’s agent. They provide an alternative to the conventional bidding process, i.e. vetting the vendors, soliciting bids, evaluating proposals, and then negotiating a contract with a bidder. With Sourcewell, they have already gone through that process, leaving the agency with the specifics of what they want and issuing a Purchase Request. As a Sourcewell member, we have access to that work, and can secure a vendor (Enterprise Fleet Management, in this case) and have confidence that it conforms to national procurement standards. I know there is much to understand about using such an agency (they are actually a government agency of the State of Minnesota), but I have come to the conclusion it is a great way to expedite purchases. I have included information on EFM’s contract with Sourcewell and the assurance that we have indeed secured a competitive contract through Sourcewell.
Funding
Our current approach funding vehicles procurement is to have each department indicates their intent to acquire a vehicle(s) during the budget development. Money for these purchases is “borrowed” from the Fleet Capital Fund. It is then paid back to the Fund over four years. For example, if we were to purchase four vehicles at $30,000 each (approx. average), we would expend $120,000 per year. At that pace it would take 16 years for complete turnover of the light-wheeled fleet.
With the lease program, the leasing company becomes the finance company and we would lease 12-14 vehicles per year for the same $120,000. In this scenario, we could turn over the entire fleet in 5 years ±. Departments would budget for their lease payments every year, which creates stability in budgeting.
The attached graphics show a framework for the advantages of this program.
Proposed Vehicles
The attached PDF shows vehicles and approximate configuration. It also shows projected costs, Estimated Fair Market value, recouped from their sale.
Vehicle Disposal
Part of the economics of this leasing plan relies on the sale of the old fleet vehicles or Estimated Fair Market Value. One of the Optional features of our contract with EFM would be the handling of the vehicles that we are replacing. Per the plan I am recommending, each vehicle that we would choose to dispose of would cost a $300 handling fee.
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Memo – Scott Hahn May 12, 2020
The remainder of the funds would be placed back into the leasing money requirements for the next year. Year after year, my intent is to replace the older vehicles so that we would have a progressively younger fleet as the program matures. By the time, we reach five years, we are trading in newer vehicles with much more value.
The above is based on a four-year turnover of the Police Department vehicles, which average 15,000 miles per year. For all other fleet, we would have a five-year turnover given the average mileage of 8000 miles per year.
Conclusion
This is a new paradigm for us in our vehicle procurement. It is a program which delivers safe, reliable, and fuel-efficient vehicles which require less maintenance. At the current rate of turnover, within a year or so, we will need to hire additional mechanic help. It may be that a part-time mechanic would be sufficient, but I currently anticipate needing a full-time staff mechanic. Edward has been doing a great job inputting time requirements and parts necessary for repairs and maintenance, so we are building a body of data to help justify that decision as it needs to be made.
An aspect that I have not addressed is the aesthetics of a newer fleet. One of the references I spoke with gave an unsolicited opinion that he saw vehicles as a “traveling billboard”. Such projects professionalism and pride in our City. An additional benefit of that would be retention and hiring better qualified personnel.
For this year, we have already budgeted the funds to start the leasing program, so I am not seeking additional funds. With that, I would ask that you seek City Council’s approval to enter in a contract with Enterprise Fleet Management for 2020 to lease six vehicles for the not-to-exceed sum of $65,000.
Attachments.
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Memorandum
TO: Scott Hahn, Brian Prunty FROM: Michelle Duran, Finance Dir. DATE: May 12, 2020 RE: Fleet Purchasing
Brian Prunty, Tommy Klein and I have been discussing options to address the needs of the City’s fleet in the most economical and responsible way. As addressed in Brian’s memo, the concerns are mainly the age of the fleet, the maintenance costs related to an aging fleet, and the slow rate at which the City seems to be replacing the fleet, especially the non-patrol vehicles. (Often referred to as ‘white fleet’). The Fleet fund has two purposes: 1. To track and report expenses related to maintenance of the entire fleet, including large work vehicles and equipment, reimbursed by annual allocations from other funds. The amount of these maintenance allocations is a function of the number of vehicles and their type, within each of the other funds, and the estimated total maintenance costs paid by Fleet, including wages. 2. To be a ‘bank’ for the purchase of new vehicles. The gross amount of annual purchases is budgeted in the Fleet fund, and the fund acquiring the vehicles then reimburses the Fleet fund over 4 years. These annual ‘debt payments’ are budgeted in each separate fund or department, such as Public Works and PD. The Fund Balance for the Fleet fund at the end of 2019 was about $800,000. The intent of this balance is to have funds available for vehicle purchases, and I believe we want that practice to continue. Any funds spent out of Fleet for purchase or lease would be reimbursed by the applicable fund unless Council would decide otherwise. Because maintenance is also an expense of the Fleet fund, reduced maintenance costs resulting from a less aged fleet would help maintain that fund balance, if payments from other funds were kept at approximately current levels. It is my understanding that the City would still purchase some vehicles outright, because in cases where the vehicle either has light usage, light maintenance, or is anticipated to be used for a much longer period, a purchase can be the economical option. We will still have many ‘owned’ vehicles and equipment in the fleet. Brian’s plan of keeping detailed information about each vehicle’s maintenance and mileage will assist with making those decisions. Conversely, in cases where the vehicle is heavily used, accumulates high miles, and is heavily relied upon by staff, a lease can allow for quicker turnover, lower maintenance, greater reliability, greater safety, and lower fuel costs. Therefore, several other cities use leasing for all law enforcement vehicles, especially black and whites. Over time, I believe we would find this option much preferable in terms of cost, safety, maintenance, and staff time— devoted to purchasing, etc.
Initially, lease cost to the Department compared to annual purchase reimbursement to Fleet would be about the same amount: $12,000 per vehicle, per year. However, it is my understanding that after the initial 3- or 4-year lease period, if the vehicle turned back to leasing company still has value, that would help reduce the cost of the new lease. We would not know that until the first lease term is up.
For the 2020 budget, $204,000 was budgeted for Fleet purchases. $100,000 of this is for two Patrol vehicles which were approved for purchase in 2019 but had not been delivered nor paid for in that year. Those vehicle purchases have now been paid for, with additional payment remaining for the added-on equipment, currently in process. The remaining approximately $104,000 was budgeted for a new Public Works vehicle and a third Patrol vehicle. In previous years, it was anticipated that there would be a purchase of one Patrol vehicle each year, with each vehicle expected to last about 4 years, thus, the Police department always budgets for the repayment of 4 vehicles each year, about $50,000 in total, which ‘reimburses’ the Fleet fund. Because of the additional vehicle added in 2019, the 2020 budget for PD vehicles is $60,000. $12,000 of that is for ¼ of a car yet to be ordered. This amount could be applied to a lease instead since Fleet fund has not yet made the purchase. Thus, the remaining 2020 budget of $100,000 for purchases out of the Fleet fund could be used toward the first year of leasing for several other vehicles. Since subsequent years’ lease costs would be paid directly by the fund using the vehicles, we could bill back the first year lease costs to the fund over the term of those leases, reimbursing the Fleet fund’s fund balance for the initial year of those leases, without a huge impact to the various funds getting leased vehicles. Because Public Works had already planned to purchase a vehicle, their 2020 budget includes $10,900 for reimbursement to Fleet fund for year 1 of their ‘loan’. This could go toward a lease instead.
A gradual phase in of a leasing program for the City would allow us a chance to evaluate maintenance costs, performance, efficiency, and overall effectiveness of the program. It should be noted that although the lease terms are for 3-5 years, depending on the vehicle, the contract must be renewed annually (with Enterprise). They are willing to absorb the risk that at some point, the governing body could refuse to renew. This lowers the City’s risk in entering into leasing contracts with them.
Fleet Report
Apr-20 Fleet ID Fleet Name Department Make Model Year Mileage Hours VRR Repl Notes Prior. 590 0590 - 1999 - Water Chevrolet S10 1999 417226.00 0.00 68.7 Chevrolet - Auction S10 559 0559 - 1997 - Waste Water FORD F250 1997 294038.00 0.00 60.4 FORD - F250 2
4012 4V12 - 2013 - Police FORD INTERCEPTOR 2013 105000.00 9774.00 46.6 Replace w/ mid size SUV FORD - SUV 1 INTERCEPTOR 4X4 SUV 875 0875 - 1998 - Water FORD RANGER 1998 155618.00 0.00 43.6 Replace with full-size 1/2 1 FORD - ton PU RANGER 865 0865 - 1996 - Fleet FORD RANGER 1996 112263.00 0.00 41.2 FORD - PICKUP RANGER PICKUP 1302 1302 - 2006 - O&M-Streets Ford F150 XLT 2006 183080.30 0.00 37.3 Ford - F150 Auction XLT 878 0878 - 1999 - Fleet FORD F-350 1999 110551.00 0.00 37.1 FORD - F- 2 Replace 2021 350 354 0354 - 2001 - O&M-Streets Dodge Ram 2500 2001 186393.00 0.00 36.6 Dodge - Ram 2500 421 0421 - 2000 - Water FORD RANGER 2000 113270.00 0.00 36.3 FORD - PICKUP RANGER PICKUP 558 0558 - 2001 - Waste Water FORD F150 XL 2001 111475.00 0.00 36.1 FORD - F150 XL 939 0939 - 2005 - Water FORD Ranger XLT 2005 155000.00 0.00 35.5 FORD - FX4 Ranger XLT FX4 16 0016 - 2006 - Fleet FORD EXPLORER 2006 145128.50 0.00 34.5 FORD - EXPLORER 792 0792 - 2005 - Parks FORD F150 2005 132784.00 0.00 34.3 FORD - F150
4019 4V19 - 2006 - Police FORD EXPLORER 2006 117359.00 0.00 33.7 FORD - EXPLORER 346 0346 - 2005 - City Hall Ford Explorer 2005 113520.00 0.00 32.4 Ford - Administration Explorer 976 0976 - 2007 - Recreation FORD F150 2007 143137.00 0.00 32.3 FORD - F150
867 0867 - 1996 - Parks FORD F250 1996 0.00 0.00 32.0 FORD - F250
1011 1011 - 2012 - Water FORD F-250 2012 82000.00 5585.00 31.6 FORD - F- 250 1012 1012 - 2011 - Recreation TOYOTA PRIUS 2011 172209.00 0.00 31.2 TOYOTA - PRIUS 1013 1013 - 2012 - Parks FORD F-250 2012 179346.00 0.00 30.9 FORD - F- 250 830 0830 - 2006 - O&M-Streets ELGIN STREET 2006 11009.00 2900.00 30.7 ELGIN - SWEEPER STREET SWEEPER 4022 4V22 - 2004 - Police FORD FREESTAR 2004 76454.00 0.00 30.6 FORD - SES 1 Replace w/like vehicle FREESTAR SES 4021 4V21 - 2007 - Police FORD EXPLORER 2007 105152.00 0.00 30.5 Replace w/ mid size SUV FORD - 4X4 EXPLORER 670 0670 - 2004 - City Hall Ford Taurus 2004 93000.00 0.00 30.3 Replace w/compact SUV 1 Ford - Administration 4X4 Taurus
Page: 1 of 3 Fleet ID Fleet Name Department Make Model Year Mileage Hours VRR Repl Notes Prior. 552 0552 - 1998 - Parks FORD F150 1998 0.00 0.00 30.0 FORD - F150
53 0053 - 2006 - Parks FORD ESCAPE 2006 106062.00 0.00 29.6 FORD - ESCAPE 565 0565 - 2008 - O&M-Streets FORD EXPLORER 2008 121455.00 0.00 29.1 FORD - EXPLORER 6017 V17 - 2008 - Police FORD EXPLORER 2008 91002.00 0.00 29.1 FORD - EXPLORER 978 0978 - 1997 - Parks GMC K3500 1997 0.00 0.00 29.0 GMC - K3500
975 0975 - 2003 - Public Works FORD RANGER 2003 66332.00 0.00 28.8 FORD - RANGER 645 0645 - 2006 - Parks FORD RANGER 2006 94400.00 0.00 28.4 FORD - RANGER 1304 1304 - 2005 - Water FORD TRUCK 2005 181796.00 0.00 28.2 FORD - TRUCK 1305 1305 - 2006 - Waste Water FORD TRUCK 2006 180680.00 0.00 28.1 FORD - TRUCK 1708 1708 - 2008 - Public Works FORD EDGE 2008 108118.00 0.00 27.8 FORD - EDGE 238 0238 - 2005 - Parks FORD F250 2005 64389.00 6.00 27.4 FORD - F250
343 0343 - 2005 - Building Ford Ranger 2005 67500.00 0.00 26.8 Ford - Official 2 Ranger 754 0754 - 2008 - Waste Water FORD RANGER 2008 94322.00 0.00 26.4 FORD - RANGER 974 0974 - 2007 - City Hall Ford 500 2007 77450.00 0.00 25.7 2 Ford - 500 Administration 4016 4V16 - 2013 - Police FORD INTERCEPTOR 2013 113250.00 0.00 25.3 Replace w/ mid size SUV FORD - SUV 1 INTERCEPTOR 4X4 SUV 1010 1010 - 2012 - Water GMC SIERRA 1500 2012 118000.00 0.00 24.8 GMC - SIERRA 1500 4014 4V14 - 2013 - Police FORD INTERCEPTOR 2013 105942.00 0.00 24.8 FORD - SUV 2 INTERCEPTOR SUV 239 0239 - 2005 - Parks FORD F250 2005 45500.00 0.00 24.5 FORD - F250
911 0911 - 2006 - O&M- Ford F-250 2006 54939.00 0.00 24.5 Ford - F-250 Construction
1704 1704 - 2012 - Parks FORD F150 2012 175000.00 0.00 24.5 FORD - F150
995 0995 - 2008 - City Hall Toyota Prius 2008 74000.00 0.00 24.4 Toyota - Administration Prius 1014 1014 - 2008 - O&M-Streets FORD F-150 2008 73635.00 0.00 24.4 FORD - F- 150 1005 1005 - 2009 - O&M- FORD F150 2009 71550.00 0.00 23.2 FORD - F150 Construction
79 0079 - 2006 - Recreation FORD Ranger 2006 40000.00 0.00 23.0 FORD - Ranger 4023 4V23 - 2014 - Police FORD INTERCEPTOR 2014 106334.00 0.00 22.6 FORD - SUV INTERCEPTOR SUV 4010 4V10 - 2011 - Police FORD ESCAPE 2011 65160.00 0.00 22.5 FORD - ESCAPE
Page: 2 of 3 Fleet ID Fleet Name Department Make Model Year Mileage Hours VRR Repl Notes Prior. 1004 1004 - 2009 - Water FORD F150 2009 64000.00 0.00 22.4 FORD - F150
4011 4V11 - 2011 - Police FORD FUSION 2011 63013.00 0.00 22.3 FORD - FUSION 599 0599 - 2006 - Cemetery Ford F-150 2006 32100.00 0.00 22.2 Ford - F-150
4020 4V20 - 2012 - Police FORD ESCAPE 2012 106334.00 0.00 21.8 FORD - ESCAPE 4015 4V15 - 2012 - Police Subaru Forester 2012 102392.00 0.00 21.5 Subaru - Forester 4024 4V24 - 2016 - Police FORD INTERCEPTOR 2016 106334.00 0.00 21.4 FORD - SUV INTERCEPTOR SUV 4018 4V18 - 2014 - Police FORD INTERCEPTOR 2014 91801.00 2.50 21.2 FORD - SUV INTERCEPTOR SUV 757 0757 - 2008 - Parks FORD RANGER 2008 42308.00 0.00 21.2 FORD - RANGER 75 0075 - 2006 - Channel 10 Dodge Sprinter 2006 5073.00 0.00 18.5 Dodge - Sprinter 4017 4V17 - 2017 - Police FORD Police 2017 21676.00 2792.00 18.3 FORD - Interceptor Police Utility Interceptor Utility 4025 4V25 - 2011 - Police Chevrolet Tahoe 2011 82604.00 0.00 17.3 Chevrolet - Tahoe 1311 1311 - 2013 - O&M-Streets Ram 1500 2013 43420.00 0.00 15.3 Ram - 1500 821 0821 - 2009 - Senior Center Ford Explorer 2009 90300.00 0.00 14.0 Ford - Explorer 1602 1602 - 2016 - Parks Ram 1500 2016 35000.00 0.00 12.5 Ram - 1500 1603 1603 - 2016 - Parks Ram 1500 2016 28000.00 1062.00 12.0 Ram - 1500 1501 1501 - 1995 - O&M- Chevrolet K3500 1995 22698.00 0.00 11.8 Replace w/1-ton (DSL) 1 Chevrolet - Construction Quadcab Utility bed K3500 4026 4V26 - FORD - Police Ford Explorer 2018 30492.00 0.00 10.0 Interceptor Interceptor SUV 1801 1801 - 2018 - Waste Water Chevrolet Silverado 2018 36454.00 0.00 7.6 Chevrolet - 1500 Silverado 1500 1802 1802 - 2018 Water Ford F-150 2018 26881.00 0.00 6.7 Ford - F150 4027 4V27 - 2020 Police Ford Interceptor 2020 20.00 0.00 6.0 FORD Interceptor 4028 4V28 - 2020 Police Ford Interceptor 2020 20.00 0.00 6.0 FORD Interceptor 641 0641 - 2019 Police Toyota 4 Runner 2019 4417.00 0.00 4.4 Toyota 4 Runner 1901 1901 - 2019 Parks Dodge Ram 2500HD 2019 2400.00 0.00 4.2 Dodge 2500HD
Total Records: 73 4/21/2020
Page: 3 of 3 City of Rifle February 21, 2020
CONFIDENTIAL AND PROPRIETARY © 2016 Enterprise Fleet Management, Inc.Inc. AGENDA
• Company overview
• Value proposition – Do more with less capital – Streamline vehicle procurement process – Cash flow – Vehicle resale and disposal
• City of Rifle Analysis
• Local Account Management team
CONFIDENTIAL AND PROPRIETARY © 2016 Enterprise Fleet Management, Inc. ENTERPRISE HOLDINGS OVERVIEW
CONFIDENTIAL AND PROPRIETARY © 2016 Enterprise Fleet Management, Inc. DELIVERING SOLUTIONS. DRIVING RESULTS.
TELEMATICS ACQUISITION
ACCIDENT/ FINANCING/ RISK MANAGEMENT CREDIT LINES
DRIVER FUEL SAFETY PROGRAMS
LICENSE, TITLE MAINTENANCE AND REGISTRATION PROGRAMS
AFTERMARKET VEHICLE CUSTOMIZATION VEHICLE RESALE
CONFIDENTIAL AND PROPRIETARY © 2016 Enterprise Fleet Management, Inc. REFERENCES
Schools LOCAL REFERENCES Other Cities
Over 160 Special … Insert Partner Insert Partner Cities Logo Logo
Counties
Insert Partner Logo
Insert Partner Insert Partner Insert Partner Logo Logo Logo
CONFIDENTIAL AND PROPRIETARY © 2016 Enterprise Fleet Management, Inc. EFFECTIVEMONTHLY VEHICLE COST LIFECYCLE ANALYSIS Key Observations • Depreciation/year declines Current over time $ Depreciation Replacement • Operating costs of fuel and maintenance increase gradually over time • Fuel efficiency decreases Optimal Time as a vehicle ages to Replace • MPG on newer models increase year over year Fuel due to mandated CAFÉ requirements $ Cost
Maintenance Time
CONFIDENTIAL AND PROPRIETARY © 2016 Enterprise Fleet Management, Inc. ACQUISITION
Vehicle Selection Factory Order & Stock Vehicle Logistics
• Utilize one channel to source • Enterprise can place orders prior • EFM handles all makes and models to next fiscal year logistics/aftermarket • Ongoing analysis to • Place one order, do not need to • Coordination with all determine best in class issue multiple PO’s aftermarket vendors vehicles • Use all manufactuers • Delivery vehicle turn-key • Lowest cent per mile option • Ability to source vehicles locally
Vehicle Price Increases Within Model Years Throughout the model year, invoice prices can increase up to four times.
CONFIDENTIAL AND PROPRIETARY © 2016 Enterprise Fleet Management, Inc. OPEN-ENDED (EQUITY) LEASE STRUCTURE
$30,000 Delivered Price
Equity Lease • Improve cash flow $20,000
Monthly • No mileage restrictions Depreciation 5 yr lease $333.33 or wear and tear charges
Estimated Resale $15,000 • Customized terms for Equity use and type of vehicle $5,000 Reduced Book Value $10,000 • Flexibility of ownership
$0
CONFIDENTIAL AND PROPRIETARY © 2016 Enterprise Fleet Management, Inc. Flexible Financing Options
Municipal Lease 100% Capital Closed-End Lease
• Equity lease • Ideal for clients with • Walk-a-way lease (Dealer • Flexible term strong cash position Lease) • No mileage restrictions • No mileage restrictions • Fixed term • No abnormal wear and • No abnormal wear and • No responsibility for tear clauses tear clauses vehicle resale at term • Lessee responsible for • EFM is title holder until • Most appropriate for cars book value at term term for vehicle and SUV’s and mileage management services predictability • Lessee keeps vehicle equity at term
CONFIDENTIAL AND PROPRIETARY © 2016 Enterprise Fleet Management, Inc. Current Fleet Situation
CONFIDENTIAL AND PROPRIETARY © 2016 Enterprise Fleet Management, Inc. Plan for the Board
CONFIDENTIAL AND PROPRIETARY © 2016 Enterprise Fleet Management, Inc. Model- 12 month cycle on ½ ton trucks
CONFIDENTIAL AND PROPRIETARY © 2016 Enterprise Fleet Management, Inc. Vehicle Disposal
700 DEDICATED IN 2019, ENTERPRISE REMARKETING EMPLOYEES 150 REMARKETING SOLD OVER 35 in South Florida LOTS IN NORTH AMERICA 1,200,000 VEHICLES.
COMMERCIAL SALES EXCEEDED AT AN 19,000+ AVERAGE OF AUCTION 15% UNIQUE BUYERS SALES 110.6% CHANNELS DIRECT OVER TO 85% DEALER BLACK BOOK (CVI).
CONFIDENTIAL AND PROPRIETARY © 2016 Enterprise Fleet Management, Inc. Our technology will allow us to predict and plan for future years and vehicle values
CONFIDENTIAL AND PROPRIETARY © 2016 Enterprise Fleet Management, Inc. TIME’S IMPACT ON RESALE
85%
CONFIDENTIAL AND PROPRIETARY © 2016 Enterprise Fleet Management, Inc. CONFIDENTIAL AND PROPRIETARY © 2016 Enterprise Fleet Management, Inc. Government Budget Review
CONFIDENTIAL AND PROPRIETARY © 2016 Enterprise Fleet Management, Inc. NEXT STEPS/RECAP
• Questions?
• Discuss current budget-FY2020
• Discuss decision making and due diligence process
• Schedule follow up meeting and next steps
CONFIDENTIAL AND PROPRIETARY © 2016 Enterprise Fleet Management, Inc. Troy Richard 303-947-2842 [email protected]
CONFIDENTIAL AND PROPRIETARY © 2016 Enterprise Fleet Management, Inc. Total Annual Cost without Maintenance $51,871.44 Total Annual One Time Aftermarket Menu Pricing - City of Rifle Cost $16,189.50 Estimated Fair Market Value $6,000.00 $62,060.94 Equity Lease Menu Pricing
Annual Cost Estimated Monthly Annual Cost Cost of One time Down One time without Aftermarket Vehicle Type Year Make Model Quantity Term Annual Cost (Lease without Aftermarket Payment (Per Down Payment Residual Maintenance by Added Mileage Rate)* Maintenance Per Vehicle Vehicle) (total quantity) Quantity
Compact SUV 2020 Chevy Equinox LS AWD 0 60 8000 $393.62 $4,723.44 $0.00 none $0.00 $0.00 $0.00 $4,556
Compact SUV 2020 Jeep Cherokee Latitude 4x4 0 60 8000 $399.57 $4,794.84 $0.00 none $0.00 $0.00 $0.00 $4,621
Compact SUV 2020 Nissan Rogue Sport S AWD 1 60 8000 $339.19 $4,070.28 $4,070.28 none $0.00 $0.00 $0.00 $3,957 IT
Grand Cherokee Mid Size SUV 2020 Jeep 0 60 8000 $454.51 $5,454.12 $0.00 none $0.00 $0.00 $0.00 $5,229 Laredo 4x4
Mide Size SUV 2020 Ford Explorer Base 4x4 0 60 8000 $497.91 $5,974.92 $0.00 none $0.00 $0.00 $0.00 $5,777
Mide Size SUV 2020 Dodge Durango 0 60 8000 $457.84 $5,494.08 $0.00 none $0.00 $0.00 $0.00 $5,282
Frontier S trim king cab Compact Truck 2020 Nissan 0 60 8000 $423.43 $5,081.16 $0.00 none $0.00 $0.00 $0.00 $4,943 4x4
Police Interceptor Police SUV 2020 Ford 2 48 15000 $1,011.68 $12,140.16 $24,280.32 Police Upfit $13,688.15 $6,844.75 $13,689.50 $1,783 PD Utility
2500 Tradesman Crew 3/4 Ton Truck- Crew Cab 2020 RAM 1 60 8000 $511.95 $6,143.40 $6,143.40 none $0.00 $0.00 $0.00 $5,887 4x4 long box
F-250 XL Crew Cab 4x4 3/4 Ton Truck- Crew Cab 2020 Ford 0 60 8000 $543.70 $6,524.40 $0.00 none $0.00 $0.00 $0.00 $6,272 long box
3500 Cab Chassis Gas 1 Ton Crew Cab 2020 RAM 0 60 8000 $766.69 $9,200.28 $0.00 Utility Bed $9,860.20 $2,500.00 $0.00 $400 O&M Engine
F-350 XL Chassis Crew 1 Ton Crew Cab 2020 Ford 1 60 8000 $1,001.08 $12,012.96 $12,012.96 Utility Bed $9,860.20 $2,500.00 $2,500.00 $524 O&M Cab 4x4 Diesel Engine
Cargo Van 2020 Nissan NV200 Cargo S trim 0 60 8000 $303.08 $3,636.96 $0.00 none $0.00 $0.00 $0.00 $3,534
Cargo Van 2020 Nissan NV1500 Cargo SV trim 0 60 8000 $438.41 $5,260.92 $0.00 none $0.00 $0.00 $0.00 $5,118
1/2 ton Double Cab 4x4 1/2 ton truck 2020 Chevy 1 60 6000 $447.04 $5,364.48 $5,364.48 TBD $0.00 $0.00 $0.00 $4,973 Utilities V6 6.6' Box
Minivan 8 Passenger 2020 Toyota Sienna LE 0 60 8000 $509.16 $6,109.92 $0.00 none $0.00 $0.00 $0.00 $5,946
6 $51,871.44 $47,096.70 $18,689.50 Lease rates based on 2020 factory order pricing Maintenance is not included Pricing does not include plates, registration or applicable taxes Pricing does not include expected return on equity at end of lease 2020 pricing is estimated based off of 2019 pricing and may be subject to change 2020 Toyota Sienna factory order cutoff is 4/10/2020 RIFLE CITY COUNCIL MEETING
Wednesday, April 22, 2020
SPECIAL MEETING
6:00 p.m. * Council Chambers
The special meeting of the Rifle City Council was called to order at 6:00 p.m. by Mayor Barbara Clifton. This Rifle City Council meeting was posted as an electronic meeting and is being held as an electronic meeting.
PRESENT AT ROLL CALL PARTICIPATING FROM THE COUNCIL CHAMBERS: Councilors Joe Elliott and Mayor Barb Clifton.
PRESENT AT ROLL CALL PARTICIPATING ELECTRONICALLY: Councilors Brian Condie, Joe Carpenter, Ed Green, Theresa Hamilton, and Sean Strode.
OTHERS PRESENT City Manager Scott Hahn, City Clerk Kristy Doll, City Attorney Jim Neu, Rifle Community Television (RCTV) Michael Churchill and Salvador Tovar-Guzman, Chief of Police Tommy Klein, IT Director Kelly Thompson, Finance Director Michelle Duran, Planning Director Nathan Lindquist, and Katie Mackley.
CONSIDER STIMULUS GRANT TO RIFLE REGIONAL ECONOMIC DEVELOPMENT CORPORATION FOR COVID-19 IMPACTED SMALL BUSINESSES The City of Rifle in collaboration with the Rifle Regional Economic Development Corporation (RREDC) is creating a business assistance program designed to help local businesses who are facing hardship and economic losses due to COVID-19. The RREDC will be administering the Rifle Small Business Emergency Loan Fund as forgivable loans and the City of Rifle will be funding the program.
RREDC Director Katie Mackley requested $100,000.00 from the City to fund the Rifle Small Business Emergency Loan Fund program. The RREDC is also requesting $10,000 from the City to administer the program. Businesses would apply for this grant through the RREDC, and if approved, may receive up to $2,000. Businesses must meet specific requirements to qualify for the loan. Some of the qualifications for the loan include the local business has been forced to temporarily close or dramatically limit operations due to the COVID-19 pandemic, the business must have been open as of March 1, 2020, have a storefront, have less than 50 full-time employees, and applicants have not already received relief funding.
Councilor Hamilton moved to approve a $100,000 grant to the Rifle Regional Economic Development Corporation for a COVID-19 small business assistance program, with a $50,000 contingency fund that could be approved by the Mayor if original funds aren’t sufficient, and $10,000 to Rifle Regional Economic Development Corporation for administrative costs; seconded by Councilor Strode.
Rifle City Council Special Meeting, April 22, 2020 1
Roll Call: Yes – Carpenter, Condie, Elliott, Green, Hamilton, Strode and Clifton
REVIEW TEMPORARY SUSPENSION OF ROARING FORK TRANSPORTATION AUTHORITY (RFTA) BUS SERVICE IN RIFLE Council passed Resolution No. 8, Series of 2020, on April 1,2020, temporarily suspending Roaring Fork Transportation Authority Service within the city limits of Rifle. The Resolution suspended the RFTA services commencing on April 3, 2020, at 11:59 p.m. through May 6, 2020.
City Manager Scott Hahn explained that he contacted Dan Blankenship with Roaring Fork Transportation Authority (RFTA) to inquire about their current services. Currently, RFTA is only allowing a maximum of 9 people on 35 passenger buses to allow for 6-foot separation and they require everyone to wear a face mask.
Councilor Elliott moved to lift the suspension of the Roaring Fork Transportation Authority (RFTA) bus service, effective April 29, 2020; seconded by Councilor Hamilton. Roll Call: Yes – Carpenter, Condie, Elliott, Hamilton, Strode and Clifton No- Green
REVIEW OF GENERAL FUND AND SALES TAX COMPARISONS Finance Director Michelle Duran updated Council on the status of the General Fund and the Lodging Tax Fund. The update included a sales tax comparison for the first quarter of 2019 to the first quarter of the current year. Sales tax revenues for the first quarter are down -4.23% and the sales tax revenue for March is down by -9.37 % due to business closures from the COVID- 19. She explained that they could expect a larger decline in the sales tax figures for April due to a longer business closure as a result of COVID-19. Sales taxes for April are not due until May 20th.
CONSIDER AWARD OF RIFLE ARCH (GRAND HOGBACK) TRAILS CONSTRUCTION PROJECT TO GUMPTION TRAIL WORKS Planning Director Nathan Lindquist explained the City entered into a Memorandum of Understanding (MOU) with the Bureau of Land Management (BLM) in April of 2019. The MOU did not obligate the City to commit any funds, resources, or maintenance of trails, but was intended as a sign of support. Staff developed an RFQ and received one qualified bid from Gumption Trail Works for $86,105 to build the Rifle Arch (Grand Hogback) Trails. Once the trails are built, they will be maintained by the Bureau of Land Management (BLM). The Greater Rifle Improvement Team Advisory Board (GRIT) budgeted $30,000 in 2020 from the Lodging Tax fund for the Rifle Arch (Grand Hogback) Trails project. Currently, the Rifle Area Mountain Biking Organization (RAMBO) and the Rifle Regional Economic Development Corporation (RREDC) have been trying to aquire other grant fund to fund the remaining balance of the trail project. They are hoping to have a confirmation of those grants by late April. Staff recommends awarding the Rifle Arch Trail Project to Gumption Trail Works in the amount of $86,105.
Councilor Elliott moved to award the Rifle Arch Trail project to Gumption Trail Works in an amount not to exceed $86,105, with the condition the new trail has no more than two crossings
Rifle City Council Special Meeting, April 22, 2020 2
over the existing pedestrian trail to the Arch, and with adequate signage installed for the Rifle Arch (Grand Hogback) Trails project; seconded by Councilor Strode.
Roll Call: Yes – Carpenter, Condie, Elliott, Green, Hamilton, Strode and Clifton
ADMINISTRATIVE REPORTS Comments were heard from Chief of Police Tommy Klein, City Manager Scott Hahn, City Clerk Kristy Doll, and Planning Director Nathan Lindquist.
COMMENTS FROM MAYOR AND COUNCIL Comments were heard from Councilor Condie, Councilor Elliott, Councilor Green, Councilor Hamilton, Councilor Strode, and Mayor Clifton.
Meeting adjourned at 8:25 p.m.
Kristy Doll Barb Clifton City Clerk Mayor
Rifle City Council Special Meeting, April 22, 2020 3
Title/File Name: Liquor License Renew
Agenda Item Number: 03
Agenda Item Title: Hotel and Restaurant Liquor License Renewal for Ruedi Creek Enterprises, Inc. dba Sammy's Rocky Mountain Steak House, J & L, Inc. dba Shanghai Garden and Rifle Tequila's, Inc. dba Tequila's
Submitted By: Meeting Date: Time Needed:* Misty Williams 05/20/2020 5 minutes
Agenda Section Selection
Agenda Section Selection:* r Workshop Agenda Item r Consent Agenda Item r Regular Agenda Item r Executive Session r Administrative Reports P" Liquor Licensing Authority Item r Report & Discussion Item r Public Hearing
Recommended Motion:* I move to approve the Liquor License Renewal applications for Ruedi Creek Enterprises, Inc. dba Sammy's Rocky Mountain Steak House, J & L, Inc. dba Shanghai Garden and Rifle Tequila's, Inc. dba Tequila's.
Does this item require Legal review?* i Yes r- No
Fiscal Impact?* i Yes r- No Operational Impact: (Check all that apply excluding submitting Department)
r IT r Public Works r Police Department r Utilities r Parks-Recreation r Planning
Summary:* Ruedi Creek Enterprises, Inc. dba Sammy's Rocky Mountain Steak House located at 412 Park Avenue, Rifle, CO has submitted a Hotel and Restaurant Liquor License Renewal Applications.
J & L, Inc. dba Shanghai Garden located at 1538 Railroad Avenue, Rifle, CO has submitted a Hotel and Restaurant Liquor License Renewal Application.
Rifle Tequila's, Inc. dba Tequila's located at 800 Airport Road, Suite 3 has submitted a Hotel & Restaurant Liquor License Renewal Application.
The following criteria have been met by the applicants:
* The applications are complete * The fees have been paid
I recommend approval of the Hotel & Restaurant Liquor License Renewal Applications for Ruedi Creek Enterprises, Inc. dba Sammy's Rocky Mountain Steak House, J & L, Inc. dba Shanghai Garden and Rifle Tequila's, Inc. dba Tequila's
I would like to upload supporting documentation:* r. Yes r No
Web Client Link
Use this link to review or add supporting documents after the initial submission: https://docs.rifleco.org/laserfiche/index.aspx?db=CityofRifle#id=2907395;view=browse
External Access Read-only Link (For Attorney's Use Only)
Use this link to review supporting documents after the initial submission: https://docs.rifleco.org/weblink/Browse.aspx?dbid=0&startid=2907395
public works interoffice memo
To: Scott Hahn, City Manager From: Brian G. Prunty CC: Michelle Duran, Finance Director Date: May 12, 2020 Re: Leasing Program for Fleet Vehicles
Early this year Michelle Duran and I were introduced to the notion of leasing for our fleet vehicle replacement. Personally, I had never considered it, as was the case for Michelle. Troy Richard, a sales representative for Enterprise Fleet Management provided a short introduction to what it could look like. It had appeal from a multitude of angles.
Fleet management is an area in which we do not invest a lot of effort, but nevertheless requires thoughtful and timely consideration. Over the past year, I have invested more time and effort to fleet management, because it became apparent that this facet was overlooked. We have stepped up our Fleet Management by going all in our electronic record keeping with iWorQ, including an iWorQ module for requesting fleet service. The goal has been to be able to look at any vehicle at any time and get a sense of its condition and cost of ownership. For the purposes of this memo, we will only consider the light-duty wheeled vehicles of and 1-ton and lighter, or about 65 vehicles.
Over the past six months I have gained a better picture of our fleet status and condition. This has been a combination of observation, user input, and data in our fleet management program (iWorQ). What has become apparent is that we have an aged fleet and our rate of replacement is slower than necessary to provide a reliable and safe fleet.
To accomplish the goal of a newer and efficient fleet, I propose a plan of replacement using a Lease Program. In the following, I will lay out an overview of the plan, the proposed Fleet Management vendor, the Sourcewell connection, what funding looks like, the proposed vehicles for replacement, and disposal of replaced fleet vehicles. Ultimately, I ask for your recommendation to City Council to go forward with the plan and begin a steady push to upgrade our fleet.
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Memo – Scott Hahn May 12, 2020
The Fleet Replacement Management Plan (FRMP)
With 65 vehicles in regular use, the challenge is to balance the replacement of the vehicles in an optimum way so as to minimize the cost of ownership while providing a modern, safe, and reliable fleet, which well represents the City of Rifle. I believe a fleet leasing plan can accomplish this goal. First, it provides for regular turnover of vehicles, which ensures reliability and ensures low mileage at time of replacement. Second, due in part to low mileage, it maximizes monies obtained from the sale of replaced vehicles. Third, it demonstrates fiscal responsibility by obtaining efficient, low maintenance, reliable and fuel-efficient vehicles. Fourth, it lowers the cost of maintenance since the fleet would be newer vehicles. Fifth, it provides the latest in equipment for driver safety. The highlights of the plan are as follows: a. Approximately 12 vehicles per year would be replaced. b. There would be a goal of replacing the entire fleet (with a handful of exceptions) every five years. c. Annually, at budget time departments can request replacement vehicles and plan for leasing costs. d. Vehicle maintenance (tires, brakes, fluid changes, etc.) costs would be maintained by the City. e. Each Fall at budget time, we would meet with the Fleet Management Vendor (FMV), to determine next year’s lease requirements. To achieve this plan, the following must occur: selection of a good fleet management vendor, having a solid approach to funding (mainly a consideration for this year), and diligent fleet management on the part of the Fleet Manager. The reality is that without a plan like what we have outlined above, we would not see complete fleet replacement for 16 years (estimated) while constantly supporting an ever-aging fleet. In this scenario and depending how aggressive we were in replacement; the average age of the fleet would certainly go up.
Fleet Management Vendor
The Fleet Management Vendor (FMV) choice for our program is Enterprise Fleet Management (EFM). Between Michelle Duran and me, we have spoken with four government agencies which utilize this vendor for their leasing requirements: Mesa County Sheriff Matt Lewis, Carl Christian – City of Fountain Electric Dept. Superintendent, Sheryl Carstens –City of Commerce City CFO, and Bill Sutter, Boulder Valley School District CFO. All have provided solid and high recommendations due to their experience with EFM. There are many reasons for my selection of them for our FMV: an excellent plan for implementation, a wide variety of services which can be selected on an annual basis, and they are is already under contract with Sourcewell for cooperative buying.
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Memo – Scott Hahn May 12, 2020
As to Sourcewell, prior to this connection I knew nothing about them. They are best described as the Purchasing Agent’s agent. They provide an alternative to the conventional bidding process, i.e. vetting the vendors, soliciting bids, evaluating proposals, and then negotiating a contract with a bidder. With Sourcewell, they have already gone through that process, leaving the agency with the specifics of what they want and issuing a Purchase Request. As a Sourcewell member, we have access to that work, and can secure a vendor (Enterprise Fleet Management, in this case) and have confidence that it conforms to national procurement standards. I know there is much to understand about using such an agency (they are actually a government agency of the State of Minnesota), but I have come to the conclusion it is a great way to expedite purchases. I have included information on EFM’s contract with Sourcewell and the assurance that we have indeed secured a competitive contract through Sourcewell.
Funding
Our current approach funding vehicles procurement is to have each department indicates their intent to acquire a vehicle(s) during the budget development. Money for these purchases is “borrowed” from the Fleet Capital Fund. It is then paid back to the Fund over four years. For example, if we were to purchase four vehicles at $30,000 each (approx. average), we would expend $120,000 per year. At that pace it would take 16 years for complete turnover of the light-wheeled fleet.
With the lease program, the leasing company becomes the finance company and we would lease 12-14 vehicles per year for the same $120,000. In this scenario, we could turn over the entire fleet in 5 years ±. Departments would budget for their lease payments every year, which creates stability in budgeting.
The attached graphics show a framework for the advantages of this program.
Proposed Vehicles
The attached PDF shows vehicles and approximate configuration. It also shows projected costs, Estimated Fair Market value, recouped from their sale.
Vehicle Disposal
Part of the economics of this leasing plan relies on the sale of the old fleet vehicles or Estimated Fair Market Value. One of the Optional features of our contract with EFM would be the handling of the vehicles that we are replacing. Per the plan I am recommending, each vehicle that we would choose to dispose of would cost a $300 handling fee.
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Memo – Scott Hahn May 12, 2020
The remainder of the funds would be placed back into the leasing money requirements for the next year. Year after year, my intent is to replace the older vehicles so that we would have a progressively younger fleet as the program matures. By the time, we reach five years, we are trading in newer vehicles with much more value.
The above is based on a four-year turnover of the Police Department vehicles, which average 15,000 miles per year. For all other fleet, we would have a five-year turnover given the average mileage of 8000 miles per year.
Conclusion
This is a new paradigm for us in our vehicle procurement. It is a program which delivers safe, reliable, and fuel-efficient vehicles which require less maintenance. At the current rate of turnover, within a year or so, we will need to hire additional mechanic help. It may be that a part-time mechanic would be sufficient, but I currently anticipate needing a full-time staff mechanic. Edward has been doing a great job inputting time requirements and parts necessary for repairs and maintenance, so we are building a body of data to help justify that decision as it needs to be made.
An aspect that I have not addressed is the aesthetics of a newer fleet. One of the references I spoke with gave an unsolicited opinion that he saw vehicles as a “traveling billboard”. Such projects professionalism and pride in our City. An additional benefit of that would be retention and hiring better qualified personnel.
For this year, we have already budgeted the funds to start the leasing program, so I am not seeking additional funds. With that, I would ask that you seek City Council’s approval to enter in a contract with Enterprise Fleet Management for 2020 to lease six vehicles for the not-to-exceed sum of $65,000.
Attachments.
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Memorandum
TO: Scott Hahn, Brian Prunty FROM: Michelle Duran, Finance Dir. DATE: May 12, 2020 RE: Fleet Purchasing
Brian Prunty, Tommy Klein and I have been discussing options to address the needs of the City’s fleet in the most economical and responsible way. As addressed in Brian’s memo, the concerns are mainly the age of the fleet, the maintenance costs related to an aging fleet, and the slow rate at which the City seems to be replacing the fleet, especially the non-patrol vehicles. (Often referred to as ‘white fleet’). The Fleet fund has two purposes: 1. To track and report expenses related to maintenance of the entire fleet, including large work vehicles and equipment, reimbursed by annual allocations from other funds. The amount of these maintenance allocations is a function of the number of vehicles and their type, within each of the other funds, and the estimated total maintenance costs paid by Fleet, including wages. 2. To be a ‘bank’ for the purchase of new vehicles. The gross amount of annual purchases is budgeted in the Fleet fund, and the fund acquiring the vehicles then reimburses the Fleet fund over 4 years. These annual ‘debt payments’ are budgeted in each separate fund or department, such as Public Works and PD. The Fund Balance for the Fleet fund at the end of 2019 was about $800,000. The intent of this balance is to have funds available for vehicle purchases, and I believe we want that practice to continue. Any funds spent out of Fleet for purchase or lease would be reimbursed by the applicable fund unless Council would decide otherwise. Because maintenance is also an expense of the Fleet fund, reduced maintenance costs resulting from a less aged fleet would help maintain that fund balance, if payments from other funds were kept at approximately current levels. It is my understanding that the City would still purchase some vehicles outright, because in cases where the vehicle either has light usage, light maintenance, or is anticipated to be used for a much longer period, a purchase can be the economical option. We will still have many ‘owned’ vehicles and equipment in the fleet. Brian’s plan of keeping detailed information about each vehicle’s maintenance and mileage will assist with making those decisions. Conversely, in cases where the vehicle is heavily used, accumulates high miles, and is heavily relied upon by staff, a lease can allow for quicker turnover, lower maintenance, greater reliability, greater safety, and lower fuel costs. Therefore, several other cities use leasing for all law enforcement vehicles, especially black and whites. Over time, I believe we would find this option much preferable in terms of cost, safety, maintenance, and staff time— devoted to purchasing, etc.
Initially, lease cost to the Department compared to annual purchase reimbursement to Fleet would be about the same amount: $12,000 per vehicle, per year. However, it is my understanding that after the initial 3- or 4-year lease period, if the vehicle turned back to leasing company still has value, that would help reduce the cost of the new lease. We would not know that until the first lease term is up.
For the 2020 budget, $204,000 was budgeted for Fleet purchases. $100,000 of this is for two Patrol vehicles which were approved for purchase in 2019 but had not been delivered nor paid for in that year. Those vehicle purchases have now been paid for, with additional payment remaining for the added-on equipment, currently in process. The remaining approximately $104,000 was budgeted for a new Public Works vehicle and a third Patrol vehicle. In previous years, it was anticipated that there would be a purchase of one Patrol vehicle each year, with each vehicle expected to last about 4 years, thus, the Police department always budgets for the repayment of 4 vehicles each year, about $50,000 in total, which ‘reimburses’ the Fleet fund. Because of the additional vehicle added in 2019, the 2020 budget for PD vehicles is $60,000. $12,000 of that is for ¼ of a car yet to be ordered. This amount could be applied to a lease instead since Fleet fund has not yet made the purchase. Thus, the remaining 2020 budget of $100,000 for purchases out of the Fleet fund could be used toward the first year of leasing for several other vehicles. Since subsequent years’ lease costs would be paid directly by the fund using the vehicles, we could bill back the first year lease costs to the fund over the term of those leases, reimbursing the Fleet fund’s fund balance for the initial year of those leases, without a huge impact to the various funds getting leased vehicles. Because Public Works had already planned to purchase a vehicle, their 2020 budget includes $10,900 for reimbursement to Fleet fund for year 1 of their ‘loan’. This could go toward a lease instead.
A gradual phase in of a leasing program for the City would allow us a chance to evaluate maintenance costs, performance, efficiency, and overall effectiveness of the program. It should be noted that although the lease terms are for 3-5 years, depending on the vehicle, the contract must be renewed annually (with Enterprise). They are willing to absorb the risk that at some point, the governing body could refuse to renew. This lowers the City’s risk in entering into leasing contracts with them.
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