HomeMy WebLinkAboutTIS 2021-06-14 Item 1 - Presentation - Fleet LeasingObjective
Analyze alternatives to fund the City's Fleet program
Identify an alternative way to fund Fleet that will provide some relief for the General
Fund
Make recommendation of possible solutions
Current Situation
Fleet meets with Departments and fleet needs/changes are discussed
Fleet requests are submitted through the budget process
Fleet requests are approved/denied during budget discussions
GF makes budgetary contributions at the department level
Enterprise funds make budgetary contributions at the fund level
GF cannot continue to support Fleet in its current capacity
GF has taken contribution "holidays" while Enterprise fuds continue to contribute
What We Looked At
Buying used
Eliminate Commuter Trip Reduction Program
Leasing
Electric vehicles
Shrinking fleet
Sharing vehicles between departments
Recommendation
Fleet leasing
No cuts to department's fleet size
Accounting change for GF fleet in Dept. 20 (Nondepartmental)
Equity Lease vs. Traditional Lease
City retains all rights of ownership/equity
No mileage restrictions
No time restrictions
No wear & tear penalties
tsi- I
Fleet Makeup
Fleet Count
Standard Fleet 115 (33%)
PD Patrol 46 (13%)
Other 190 (54%)
Total 351
Other, 54%
Fleet Percentage
Standard, 33%
1111
Pd Patrol, 13%
What Does Fleet Leasing Look Like?
Included (approximately 115 Vehicles)
PD non -patrol vehicles
Standard fleet
Enter into leasing as budget is approved 9 cars in 2021, 2 vehicles in 2022
Entire Fleet replaced by 2025
Not Included
PD Patrol vehicles
Mowers
Trailers
Forklifts
Tractors
Why Fleet Leasing (Benefits)
Increase cash flow
Reduce large fluctuations to fund balance
Replace the white fleet by end of 2025
New vehicles are good for morale
Maintenance reduced to oil changes/warranty work
Consider PD Patrol vehicles later
More nimble
Better positioned to transition to e -vehicles
Get out of vehicles that do not fit our needs
Reduced fleet as recognized
Fun Fact: Enterprise is not in the rental car business. They are really in the
secondary car business.
Why This Model Works
• Buy low
• Low miles
Sell at optimal period
Purchase Example
Vehicle Value
City Purchasing Power
Lease Payments (2 yrs.)
Payoff Amount
Sell Vehicle
Payoff Amount
Enterprise Fee
Less Lease Payments (2 yrs.)
Net Income
40,000
29,000
(12,000)
17,000
31,000
(17,000)
(500)
(12,000)
$ 1,500
References
Spokane City
Mason County
Muckleshoot
Resale value
Service
Cash flow
Who Else is Using Enterprise Fleet Leasing
Bainbridge Island
Grays Harbor
Pacific County
Cowlitz County
City of Forks
City of McCleary
City of Sultan
City of Vancouver
10 + Local School Districts
Worst Case Scenario
We have the vehicles we would have had anyway
Exit strategy is same as how we entered
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Change in Accounting
Fleet Fund owns all the fleet vehicles and equipment
Account for GF Fleet in Dept. 20 (Non -departmental)
Fleet budget will not be assigned to GF departments
Departments will continue to determine fleet needs
Fleet operates as pooled cash
Streamline fund balance
Eliminate fleet fund balance at the department level (off book tracking)
Eliminates department reconciliations
Penultimate Slide
Overall, there is not big savings
This program is for obtaining vehicles
We would still outfit the vehicles ourselves
We will still maintain the vehicles in house
No reduction in fleet
Applies to 33% of total fleet
Primarily this frees up cashflow
Conclusion
Recommendations for the Directors
Fleet will continue to be funded at its current level of service
No cutes to department's fleet size
Enhance cashflow by utilize fleet leasing
General Fund fleet accounting will be maintained in Dept. 20 NonDepartmental