CITY OF COMMERCEAGENDA REPORTCITY OF COMMERCEAGENDA REPORT
CITY OF COMMERCE
AGENDA REPORT
CITY OF COMMERCE
AGENDA REPORT
Item No. Item No.
Item No.
Item No.
TO: Honorable City Council
FROM: City Manager
SUBJECT: Approval of City Vehicle Use Policy Amendment Meeting Date: March 28, 2023
RECOMMENDATION:
The City Council will consider adopting a Resolution approving the City Vehicle Use Policy Update VI-2.
Background & Analysis:
This item was reviewed with the City of Commerce Employees Association (CCEA) and through the Joint Labor Management Meeting with no issues and there is agreement on the proposed changes. The current City Vehicle Use Policy VI-2 was last updated circa February 3, 1993. The City Council approved a resolution and update to the February 3, 1993 City Vehicle Policy VI-2 on May 15, 2012.
The current policy does not include information related to the taxable value of a take home vehicle per the Internal Revenue Service (IRS). This information is recommended to be added to the current policy.
Specifically, staff recommends that the City use the IRS Lease Value Rule to calculate the taxable value of a take home vehicle and add this amount to the Employees W-2. The City will use the guidance as provided in IRS publication 15-B Employer’s Tax Guide to Fringe Benefits. The taxable value of the take home vehicle may be reduced for qualified business use and if the following procedures are followed:
The employee must account to the City for the business use. This is done by substantiating the usage (mileage, for example), the time and place of the travel, and the business purpose of the travel.
Written records made at the time of each business use is best practice (such as the Mileage Form attached) The determination of whether a car trip was deductible business-related travel is made under the same rules that apply to City business travel. Commuting to and from work is not considered business use.
Any use of a company-provided vehicle that isn't substantiated as business use is included in the Employees income using the IRS Lease Value Rule.
Please refer to IRS publication 15-B for additional information and details on qualified non-personal use vehicles. For example a pickup truck with a loaded gross vehicle weight of 14,000 pounds or less is a qualified non-personal use vehicle if it has been specially modified so it isn't likely to be used more than minimally for personal purposes. Use of fuel will be valued at the IRS rate.
Staff is also recommending additional amendments to this policy update by incorporating Standard Operating Procedures (SOPs) and the resolution language from May 15, 2012 since the language in these documents relates to City Vehicle Use and has similar, if not, redundant language as in the policy. This incorporation will consolidate several documents into one policy.
Attached herein to this staff report are two versions of the amended City Policy VI-2 that staff is recommending for Council to review and approve. One version of the policy is the consolidated and marked up Policy Update indicating the source of the information incorporated into the proposed City Vehicle Use Policy VI-2 Update. The second version of the policy is a clean final version of the policy showing the final incorporations and updates, should Council approve.
Last fiscal year there was one CCEA represented employee and one executive manager assigned a vehicle. This policy makes it clear of the tax implications for anyone assigned or that may be assigned a take-home vehicle in the future.
ALTERNATIVES:
Approve staff recommendation
Provide staff with further direction
FISCAL IMPACT:
There is no fiscal impact associated to the City by authorizing approval of this policy amendment.
Respectfully submitted: Edgar P. Cisneros, City Manager Prepared by: Ela Pappo, Director of Human Resources
Reviewed by: Vilko Domic, Assistant City Manager
ATTACHMENTS:
City Vehicle Use Policy – 1993
City Vehicle Use Policy Resolution – 2012
Mileage Form
SOP-7
Passenger Liability Waiver Form
Proposed Vehicle Use Policy VI-2 (Track Changes)
Proposed Vehicle Use Policy VI-2 (Final Version)