For City Council Meeting [October 26, 2021]
TO: Honorable Mayor and City Council
APPROVAL: Marcus Fuller, City Manager
FROM: Marcus Fuller, City Manager
Title
Request City Council to: (1) Approve the Acquisition of 87 New and Replacement Vehicles at a Total Cost of $3,917,497 with Lease-Financing Through Enterprise FM Trust, a Delaware Statutory Trust Via a Master Equity Lease Agreement; and (2) Authorize the City Manager to Execute All Related Documents.
(ACTION)
Body
BACKGROUND
The Public Works Fleet Maintenance Division is charged with the responsibility of maintaining safe, reliable, and clean vehicles and equipment, providing mechanical support in a timely manner, and providing service and products that are safe, efficient, and cost effective. The City’s Fleet consists of 445 pieces of equipment, machinery/tools and includes 265 vehicles. Of the 265 vehicles, 136 vehicles are allocated to the Police Department, 42 vehicles to the Fire Department, 9 vehicles to the Community Compliance Department and 78 vehicles to the remaining City Departments.
On July 6, 2006, the City Council adopted an Equipment Replacement Policy with replacement based on a certain number of years of service, mileage and maintenance cost varying on the type of vehicle (safety vehicles replaced more frequently vs. general staff vehicles). This policy has been amended to follow the APWA standard that qualifies a vehicle’s replacement status based on years in service, mileage, and maintenance cost as follows:
• Replacement Vehicle Age: 5-7 years for non-emergency vehicles.
• Vehicle Mileage: 75,000- 100,000 Miles
• Maintenance Cost Vs Vehicle Value: Maintenance cost exceed 50% of the vehicle purchase value.
Based on this Policy, Staff reviewed the City’s existing fleet and identified the range of vehicles requirement replacement.
Staff presented the initial Fleet Assessment report to the Economic Development Committee (EDC) on February 24, 2021; at that time the EDC reviewed the assessment and provided direction.
On August 12, 2021, Staff presented an updated Fleet Assessment report and received additional direction, outlined as follows:
• Retain a domestic vehicle platform as the type of vehicles utilized in the City’s fleet.
• Eliminate and reduce underutilized vehicles and fleet size by department with use of electric pool vehicles from MSRC Grant Purchase.
• Review the size of vehicle applications and reduce where applicable.
• Implement Alternative Fuel vehicle or Hybrid vehicle options where applicable.
• Surplus revenue is to be deposited into the General Fund.
• Establish a new standard for vehicle replacement criteria to increase surplus value, minimize maintenance cost and surplus older, obsolete vehicles.
ANALYSIS/DISCUSSION
Based on the Citywide Fleet Assessment study conducted by Staff, it is recommended that the City Council authorize the purchase of 41 vehicles for the Police Department, and 46 vehicles for other City Departments. This staff report will identify the specific vehicles being replaced or added in each of the Departments.
City Administration:
The City Administration has 2 existing vehicles that are 13 years of service and qualify for replacement as listed below, with one vehicle being transferred to another Department.
|
Unit # |
Year |
Make/Model |
|
H017 |
2008 |
Ford Escape Hybrid |
|
H019 |
2008 |
Ford Escape Hybrid |
|
H020 |
2019 |
Ford Fusion Hybrid |
Units H017 and H019 will be declared surplus and auctioned off. Unit H020 will be kept in service and transferred to another Department. These vehicles will be replaced as follows:
|
Make/Model |
Cost |
|
(3) Ford Escape Hybrid |
$27,368.00 |
|
Total Estimated Cost |
$82,104.00 |
City Clerk’s Office:
The City Clerk’s Office has 4 existing vehicles that range from 13 to 24 years of service and qualify for replacement as listed below, to be replaced with 3 new vehicles.
|
Unit # |
Year |
Make/Model |
|
H001 |
2008 |
Ford Escape Hybrid |
|
H002 |
1997 |
Ford E350 Club Van |
|
H003 |
2005 |
Chevrolet Colorado |
|
H010 |
1999 |
Chevrolet 2500 Cargo Van |
Unit H010 will be declared surplus with no replacement. Units H001, H002 and H003 will be declared surplus and replaced with the following new vehicles:
|
Make/Model |
Cost |
|
(1) Ford Ranger |
$22,122.00 |
|
(2) Ford Escape Hybrid |
$54,736.00 |
|
Total Estimated Cost |
$76,858.00 |
Finance Department:
The Finance Department, Purchasing and IT Division have 3 existing vehicles that range from 12 to 20 years of service and qualify for replacement as listed below.
|
Unit # |
Year |
Make/Model |
|
H023 |
2001 |
Ford Taurus |
|
H024 |
2009 |
Ford Escape Hybrid |
|
D006 |
2002 |
Chevrolet Venture |
These 3 vehicles will be declared surplus and replaced with shared carpool vehicles. This action will only approve purchase of 1 new vehicle assigned to the Finance Department:
|
Make/Model |
Cost |
|
(1) Ford Escape Hybrid |
$27,368.00 |
|
Total Estimated Cost |
$27,368.00 |
Rialto Utilities Authority:
The Rialto Utilities Authority has 1 existing vehicle that has 13 years of service and qualifies for replacement as listed below.
|
Unit # |
Year |
Make/Model |
|
E018 |
2008 |
Ford Escape Hybrid |
This vehicle will be declared surplus and replaced with the following new vehicle:
|
Make/Model |
Cost |
|
(1) Ford Escape Hybrid |
$27,368.00 |
|
Total Estimated Cost |
$27,368.00 |
Community Development:
The Community Development Department has 4 existing vehicles that range from 13-22 years of service and qualify for replacement as listed below, to be replaced with 3 new vehicles.
|
Unit # |
Year |
Make/Model |
|
B005 |
1999 |
Chevrolet S-10 |
|
B007 |
1999 |
Chevrolet S-10 |
|
B012 |
2008 |
Ford F150 Crew Cab |
|
B013 |
2005 |
Ford Ranger |
Units B005 and B007 will be declared surplus with no replacement. Units B012 and B013 will be declared surplus and replaced with the following new vehicles, including the addition of the 1 new vehicle assigned to the Department:
|
Make/Model |
Cost |
|
(2) Ford Escape Hybrid |
$54,736.00 |
|
(1) Ford Ranger |
$22,122.00 |
|
Total Estimated Cost |
$76,858.00 |
Human Resources:
The Human Resources Department has 1 existing vehicle that has 13 years of service and qualifies for replacement as listed below.
|
Unit # |
Year |
Make/Model |
|
P001 |
2008 |
Ford Escape Hybrid |
This vehicle will be declared surplus and replaced with the following new vehicle:
|
Make/Model |
Cost |
|
(1) Ford Escape Hybrid |
$27,368.00 |
|
Total Estimated Cost |
$27,368.00 |
Community Services:
The Community Services Department has 4 existing vehicles that range from 13-25 years of service and qualify for replacement as listed below.
|
Unit # |
Year |
Make/Model |
|
B006 |
1999 |
Chevrolet S-10 |
|
P002 |
2008 |
Ford Escape Hybrid |
|
P003 |
1996 |
Chevrolet Astro Van |
|
P027 |
1997 |
Ford E350 Club Van |
Units B006, P002, P003 and P027 will be declared surplus and replaced with the following new vehicles:
|
Make/Model |
Cost |
|
(1) Ford Escape Hybrid |
$27,368.00 |
|
(1) Ford Transit Van |
$40,105.00 |
|
(1) Ford F150 Crew Cab |
$33,564.00 |
|
(1) Ford Ranger |
$22,122.00 |
|
Total Estimated Cost |
$123,159.00 |
Maintenance & Facilities Department - Administration:
The Maintenance & Facilities Department (Administration) has 1 existing vehicle that has 23 years of service and qualifies for replacement as listed below.
|
Unit # |
Year |
Make/Model |
|
WM005 |
1998 |
Chevrolet 1500 |
This vehicle will be declared surplus and replaced with the following new vehicle, including the addition of the 1 new vehicle assigned to the Department:
|
Make/Model |
Cost |
|
(1) Ford Ranger |
$22,122.00 |
|
(1) Ford Escape Hybrid |
$27,368.00 |
|
Total Estimated Cost |
$49,490.00 |
Community Development - Engineering Division:
The Community Development - Engineering Division has 5 existing vehicles that range from 13-20 years of service and qualify for replacement as listed below.
|
Unit # |
Year |
Make/Model |
|
E012 |
2005 |
Chevrolet S-10 Blazer |
|
E014 |
2005 |
Ford Crown Victoria |
|
E017 |
2008 |
Ford Ranger |
|
E021 |
2004 |
Ford Crown Victoria |
|
E022 |
2001 |
Chevrolet 1500 |
These vehicles will be declared surplus and replaced with the following new vehicles, including the addition of 3 new vehicles assigned to the Division to accommodate additional staff:
|
Make/Model |
Cost |
|
(3) Ford Escape Hybrid |
$82,104.00 |
|
(5) Ford Ranger |
$110,610.00 |
|
Total Estimated Cost |
$192,714.00 |
Maintenance & Facilities - Street Maintenance & Storm Water Division:
The Maintenance & Facilities - Street Maintenance & Storm Water Division has 2 existing vehicles that range from 13-15 years of service that qualify for replacement as listed below.
|
Unit # |
Year |
Make/Model |
|
M059 |
2006 |
Ford F150 Crew Cab 4wd |
|
M064 |
2008 |
Ford F150 |
Units M059 and M064 will be declared surplus and replaced with the following new vehicles:
|
Make/Model |
Cost |
|
(1) Ford F150 Crew Cab 4wd |
$35,663.00 |
|
(1) Ford F250 Service Body |
$39,792.70 |
|
Total Estimated Cost |
$75,455.70 |
Maintenance & Facilities - Traffic Safety Division:
The Maintenance & Facilities - Traffic Safety Division has 4 existing vehicles that range from 13-17 years of service and qualify for replacement as listed below.
|
Unit # |
Year |
Make/Model |
|
N009 |
2004 |
Ford F350 Service Body |
|
N011 |
2005 |
Ford F350 Service Body |
|
N012 |
2006 |
Ford F350 Crew Cab Service Body |
|
N014 |
2008 |
Ford F350 Service Body |
Units N009, N011, N012 and N014 will be declared surplus and replaced with the following new vehicles:
|
Make/Model |
Cost |
|
(1) Ford F350 Crew Cab Service Body |
$47,427.31 |
|
(3) Ford F250 Service Body |
$119,378.10 |
|
Total Estimated Cost |
$166,805.41 |
Maintenance & Facilities - Facilities Division:
The Maintenance & Facilities - Facilities Division has 3 existing vehicles that range from 13- 31 years of service and qualify for replacement as listed below.
|
Unit # |
Year |
Make/Model |
|
J017 |
2008 |
Ford F350 Dually Service Body |
|
J023 |
1990 |
Chevrolet 2500 Service Body |
|
J024 |
2005 |
Ford F150 |
Units J017, J023 and J024 will be declared surplus and replaced with the following new vehicles, including the addition of 3 new vehicles for additional staff:
|
Make/Model |
Cost |
|
(3) Ford F250 Service Body |
$119,378.10 |
|
(3) Ford Ranger |
$66,366.00 |
|
Total Estimated Cost |
$185,744.10 |
Community Services - Park Maintenance Division:
The Community Services - Park Maintenance Division has 4 existing vehicles that range from 13-17 years of service and qualify for replacement as listed below.
|
Unit # |
Year |
Make/Model |
|
A041 |
2004 |
Ford F350 Service Body |
|
A044 |
2004 |
Ford F150 |
|
A048 |
2008 |
Ford Ranger |
|
A051 |
2008 |
Ford Ranger |
Units A041, A044, A048 and A051 will be declared surplus and replaced with the following new vehicles including the addition of 2 new vehicles for additional staff:
|
Make/Model |
Cost |
|
(1) Ford Ranger |
$22,122.00 |
|
(1) Ford Escape hybrid |
$27,368.00 |
|
(4) Ford F250 Service Body |
$159,170.80 |
|
Total Estimated Cost |
$208,660.80 |
Police Department:
The Police Department has 36 existing vehicles and off-road equipment that range from 3-24 years of service and qualify for replacement as listed below.
|
Unit # |
Year |
Make/Model |
|
R607 |
2007 |
Ford Crown Victoria |
|
R613 |
2007 |
Ford Crown Victoria |
|
R620 |
2007 |
Ford Crown Victoria |
|
R7010 |
2010 |
Ford Crown Victoria |
|
R7512 |
2012 |
Ford Taurus Interceptor |
|
R7212 |
2013 |
Ford Explorer Interceptor |
|
R7112 |
2013 |
Ford Explorer Interceptor |
|
R7713 |
2012 |
Ford Taurus Interceptor |
|
R8513 |
2013 |
Ford Taurus Interceptor |
|
R8313 |
2013 |
Ford Taurus Interceptor |
|
R8113 |
2013 |
Ford Taurus Interceptor |
|
R10016 |
2016 |
Ford Explorer Interceptor |
|
R14016 |
2016 |
Ford Explorer Interceptor |
|
R11016 |
2016 |
Ford Explorer Interceptor |
|
R12016 |
2016 |
Ford Explorer Interceptor |
|
R9214 |
2012 |
Toyota Camry |
|
R9314 |
2012 |
Nissan Maxima |
|
R9514 |
2014 |
Ford Taurus Interceptor |
|
R805 |
2008 |
Ford Taurus |
|
R6812 |
2012 |
Ford Taurus Interceptor |
|
R3011 |
2011 |
Ford Taurus Interceptor |
|
R4011 |
2011 |
Ford Taurus Interceptor |
|
R807 |
2007 |
Ford Taurus |
|
R9815 |
2014 |
Ford Mustang |
|
R627* |
2007 |
Ford Crown Victoria |
|
R600* |
2007 |
Ford Crown Victoria |
|
R10015* |
2014 |
Chrysler 300C |
|
R624* |
2007 |
Ford Crown Victoria |
|
R7012* |
2012 |
Ford Taurus Interceptor |
|
R13016* |
2016 |
Ford Explorer Interceptor |
|
R2011* |
2011 |
Ford Taurus Interceptor |
|
R903* |
2009 |
Ford Crown Victoria |
|
R605* |
2007 |
Ford Crown Victoria |
|
R8713* |
2013 |
Ford Explorer Interceptor |
|
R15016* |
2016 |
Ford Explorer Interceptor |
|
R4118* |
2018 |
Ford Explorer Interceptor |
These 36 vehicles will be declared surplus and replaced with the following new vehicles, including the addition of 5 new vehicles identified for new staff members:
|
Make/Model |
Cost |
|
(10) Ford Explorer Base |
$344,251.10 |
|
(5) Ford Explorer XLT |
$186,855.55 |
|
(11) Ford Explorer Interceptor |
$640,159.19 |
|
(6) Ford F150 Responder |
$343,376.74 |
|
(7) Ford Escape Hybrid |
$214,332.16 |
|
(2) Nissan Altima |
$60,328.22 |
|
Total Estimated Cost |
$1,789,302.56 |
*Unit R627, R600, R10015, R624, R7012, R13016, R2011, R903, R605, R8713, R15016 and R4118 are total loss vehicle collisions.
Alternate Fuel Vehicle Policy
In accordance with the recommendation to increase the alternative fuel vehicle utilization within the City’s Fleet, a benchmark goal of 20% was established. The requested action includes the new proposed Fleet replacement plan introducing 26 alternative fuel vehicles which consist of 17 Gas/Electric Ford Escape Hybrids and 9 Chevrolet Bolt Full Electric vehicles. This results in an increase of 20.24% of Alternative Fuel vehicle usage in the City’s Fleet, reaching a total compliance of 29.21%, excluding emergency response vehicles from this percentage, surpassing the original goal of 20% established by the City Council.
The EDC did recommend the City pursue purchase of new electric trucks and service vans. Staff did contact various dealers, and all dealers stated that there is no governmental pricing being offered at this time, with no confirmed delivery dates. Consumers purchasing electric trucks are paying a deposit for a reservation order through Ford.com, with no estimated time of delivery, at the full MSRP pricing. At this time, Staff recommends waiting for the first model year of electric trucks and service vans to test the market, and for government pricing to be established for these vehicles.
Other vehicles to be acquired in this action are traditional gasoline vehicles, are not offered with a hybrid engine option, and were selected for their specific performance and operational requirements as determined by the respective Department Director. The Fleet Division shall make every effort to incorporate alternate fuel vehicles within the fleet whenever a vehicle is replaced, that is operationally suited for alternate fuel usage, there is a proven track record for the specific type of vehicle being replaced, and the specific “engine family” is approved for use in California by the California Air Resources Board.
National Cooperative Purchasing - Competitive Pricing
Due to the size and scope of this vehicle purchase with 87 vehicles, Staff pursued competitive pricing through two different National Cooperative Purchasing Programs: National Auto Fleet Group (NAFG) and Enterprise Fleet Management. Each of these vendors have a recognized and applicable Cooperative Purchasing Agreement under which the City may “piggyback” and benefit from the competitive and preferred pricing to governmental agencies. This purchasing program is authorized in the City’s Purchasing Ordinance, section 2.48.210 “General-Cooperative purchasing agreements ("piggybacking").”
In this case, Staff coordinated with both NAFG and Enterprise and obtained the following pricing on the exact same set of vehicle specifications for both the Police Department vehicles and the Citywide miscellaneous vehicles:
|
|
NAFG |
Enterprise |
Difference |
|
Police Vehicles (41) |
$1,991,339.27 |
$1,789,302.56 |
$202,036.71 |
|
Misc. Vehicles (46) |
$1,649,958.49 |
$1,375,876.01 |
$274,082.48 |
|
Total Cost Difference |
$476,119.19 |
Also, to confirm that the cooperative purchase pricing was more competitive than local dealer pricing, Staff obtained quotes from Fairview Ford with pricing based on a County contract for the 46 miscellaneous vehicles, with the total pricing at $1,476,598 which was less than the pricing provided by Enterprise.
Lease-Purchase Financing
In this case, and to take advantage of historically low financing rates, Staff recommends the City Council authorize the financing of the total vehicle cost of $3,165,178.57 plus sales tax @ 7.75% of $245,301.34 for a total cost of $3,410,479.91 through the lease-purchase financing offered by Enterprise Fleet Management through their national cooperative purchasing program. With a lease-purchase, the sales tax amount is applied on a monthly basis through the term of the lease. Ultimately, the City will receive its sales tax revenue of approximately 13% or $31,657.79 from this purchase over the term of the lease.
Enterprise is currently offering the City of Rialto financing at a rate of 3.235% (inclusive of a management fee of 0.085%) for the 5-year lease-purchase financing, for a total cost of the vehicles with financing/management fees of $3,917,496.58.
Staff did compare the financing cost compared to NAFG, and NAFG offers a lower finance rate of 2.29% resulting in a total cost of the vehicles with financing cost of $3,895,294.35 - at $22,202.23 below the total cost with Enterprise Fleet Management. However, Staff recommends pursuing the acquisition and financing with Enterprise Fleet Management as it is an open-ended lease allowing the City to payoff the balance owed on the vehicles whenever the City chooses. Moreover, Enterprise Fleet Management offers additional services to the City in coordinating the acquisition of the vehicles and implementation of all the required out-fitting of the various vehicles, with vehicles delivered to the City turn-key and ready for deployment.
Additionally, Enterprise Fleet Management will provide to the City through the Master Equity Lease Agreement the following services:
• Assigned Account Manager & Logistic Coordinator.
1. Enterprise will assist in overview of the City’s fleet to provide recommendations for rotation of vehicles.
2. Enterprise will manage the sale of the vehicle and department will have options for newer vehicles prior to the five (5) year lease term.
• The structure of the lease provides the ability to recapture sales tax from the resale value of the surplused vehicle.
• An open lease offers the ability to upgrade to electric vehicles when they become available.
• Enterprise has relationships with different dealerships for a wide variety of options (Ideal for Narcotic and Undercover police units).
• Enterprise will sell existing PD fleet vehicles identified for replacement at an estimated value of $67,000-$87,000. Based on this evaluation, Enterprise will provide the City with an upfront credit for resale of existing fleet in the amount of $51,600 which will be applied to the down payment. If the surplus value exceeds the initial credit, a check or credit to the account will be provided to the City from Enterprise.
• At lease term, Enterprise will resell the vehicle at the Reduced Book Value.
1. Option to replace existing vehicle.
2. Pay $1.00 pay off and own the vehicle.
Included as attachments to this staff report is the Master Equity Lease Agreement and related documents with Enterprise Fleet Management that will be necessary to complete the lease-purchase transaction.
ENVIRONMENTAL IMPACT
Pursuant to Section 15378 of the California Environmental Quality Act, the proposed request is not a project. A ‘Project’ means the whole of an action, which has a potential for resulting in either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment. A project does not include the creation of government funding mechanisms or other government fiscal activities that do not involve any commitment to any specific project, which may result in a potentially significant physical impact on the environment or Organizational, or administrative activities of governments that will not result in direct or indirect physical changes in the environment.
GENERAL PLAN CONSISTENCY
This action is consistent with Guiding Principle 3A in the General Plan:
Our City government will lead by example, and will operate in an open, transparent, and responsive manner that meets the needs of the citizens and is a good place to do business.
LEGAL REVIEW
The City Attorney has reviewed and supports this staff report and attached documents.
FINANCIAL IMPACT
Operating Budget Impact
The purchase of new vehicles will help to reduce fleet maintenance costs as older vehicles are replaced with new vehicles. Additionally, these new vehicles will be on warranty and have an extended service contract during the term of the new lease.
Capital Improvement Budget Impact
Funds in the amount of $300,000 are in available in the Capital Projects Fund, Account No. 300-500-7150-3050 for purchase of new vehicles. An initial down payment of $264,012 is required to cover the cost of outfitting associated with the vehicles.
The 5-year lease financing will result in annual lease payments of $745,357.94 that will be allocated to the Police Department at $402,981 and allocated to various City Departments at $342,377 in future budgets.
The costs for new vehicles will be partially offset by the sale of existing, and scheduled to be surplus, vehicles with an estimated value of $178,100.
Licensing
Prior to execution of the Professional Service Agreement/Purchase Order/Construction Contract/Amendment, the vendor shall submit a business license application and pay a Business License tax as well as Administration and State fees.
RECOMMENDATION
Staff recommends that the City Council:
(1) Approve the Acquisition of 87 New and Replacement Vehicles at a Total Cost of $3,917,497 with Lease-Financing Through Enterprise FM Trust, a Delaware Statutory Trust Via a Master Equity Lease Agreement; and
(2) Authorize the City Manager to Execute All Related Documents.