TO: Honorable City Council
FROM: City Manager
SUBJECT: A Resolution of the City Council of Commerce, California, Authorizing Approval of the Vehicle Leasing and Replacement Program with Enterprise Fleet Management Inc.
MEETING DATE: August 22, 2023
RECOMMENDATIONS:
Approve a 5-year (Model Year 2024) Fleet Lease Agreement between the City of Commerce and Enterprise Fleet Management Inc., for (21) twenty-one total vehicles, specifically (9) nine new and twelve (12) replacement vehicles, in the amount of $206,473 annually.
Authorize the City Manager or designee to execute any Lease Agreements and necessary amendments between the City of Commerce and Enterprise Fleet Management Inc. for the purchase of replacement vehicles.
BACKGROUND:
On April 2, 2019, the City Council approved to enter into a 5-year Master Equity Lease Agreement between the City of Commerce (City) and Enterprise Fleet Management Inc. (Enterprise). Continued use of lease agreements with Enterprise can be executed by utilizing the cooperative agreement through Sourcewell (formerly NJPA) Contract # 030122 for Fleet Management Services. The Sourcewell contract documents meet all State and City requirements for competitive procurement. Transportation staff concluded that supplementing our vehicle replacement purchases with a leasing program is the most efficient way to move the fleet into an industry-standard replacement model timeline.
Transportation staff has developed a vehicle replacement plan to reduce annual fleet cost by reducing fleet size, converting to 100% electric vehicles when available, establishing a shared motor pool, fleet standardization, evaluating vehicle utilization, and removing low-use vehicles from the fleet. Another benefit to fleet replacement is reduced maintenance and fuel costs. Vehicle average fuel mileage has increased substantially over the last twenty-years, and by simply replacing older vehicles with newer electric and hybrid vehicles, the fleet will decrease fuel and maintenance costs.
United States vehicle and equipment inventory are at their lowest levels since the global financial crisis of the late 2000’s and the shortage of micro-chips and the constantly changing price of materials means that replacement fleet inventory has been difficulty to procure, with an 8–12-month delivery date. Currently, vehicle manufacturers will release a limited number of vehicle orders to government fleet agents., and the limited supply of vehicles is often exhausted in a few hours.
The existing motor pool vehicles are at or getting close to the end of the 60-month term, the City has the option to either purchase the vehicles, or enter into a new lease agreement, with the residual value of the vehicles ($73,046) applied as a credit against the new lease. Transportation staff is recommending the latter.
Existing Motor Pool (Leased Vehicles) Resale Value
Vin #
Make
Year
Model
UNIT #
Resale Net Equity
1FM5K7B85KGA77254
Ford
2019
Explorer
556
$2,565
1FM5K7B80KGA28284
Ford
2019
Explorer
558
$2,565
1FM5K7B8XKGA19303
Ford
2019
Explorer
557
$565
1FM5K7B85KGA41676
Ford
2019
Explorer
559
$1,065
3FA6P0SU5KR265866
Ford
2019
Fusion Energi
365
$9,550
3FA6POSU9KR218422
Ford
2019
Fusion Energi
616
$8,304
3FA6P0SU9KR265868
Ford
2019
Fusion Energi
363
$9,647
3FA6P0SU9KR271489
Ford
2019
Fusion Energi
300
$6,647
3FA6P0SU5KR271490
Ford
2019
Fusion Energi
364
$4,647
3FA6P0SU7KR271491
Ford
2019
Fusion Energi
362
$9,147
2C4RC1H79KR709119
Chrysler
2019
Pacifica Hybrid
360
$8,970
2C4RC1H75KR709120
Chrysler
2019
Pacifica Hybrid
361
$8,970
Additionally, Transportation staff negotiated with Enterprise to purchase the City’s low-use vehicles and the vehicles reaching their useful life.
Note: Enterprise matched the estimate provided by George Chevrolet, 17000 Lakewood Blvd, Bellflower, CA 90706 Fleet Service Manager: Kevin Rivas. The proceeds from the sale of the surplus vehicles below shall be credit ($353,500) against the new lease, as well. It is also worth noting that Enterprise has agreed to simply subtract the trade-in value below of any vehicles that the City does not end up selling to Enterprise if the City Council wishes to remove any from the list.
City Trade-in and Surplus Vehicles
Vin #
Make
Year
Model
UNIT #
Trade-in Value
5BZAFFOAA9EN161225
Nissan
2014
NVP Van
296
$26,000
5BZAFOAA7GN851798
Nissan
2016
NVP Van
230
$33,000
5BZAFOAAOGN854686
Nissan
2016
NVP Van
231
$33,000
5BZAFOAA1EN161302
Nissan
2014
NVP Van
288
$24,500
5BZAFOAA2EN161194
Nissan
2014
NVP Van
290
$23,500
5BZAFOAA9EN161242
Nissan
2014
NVP Van
291
$23,000
5BZAFOAA7FN850391
Nissan
2015
NVP Van
292
$25,000
5BZAFOAA6FN50608
Nissan
2015
NVP Van
293
$26,000
5BZAFOAA9EN161225
Nissan
2014
NVP Van
296
$26,000
5BZAF0AA5EN161285
Nissan
2014
NVP Van
297
$25,500
5BZAFOAA2EN161325
Nissan
2014
NVP Van
298
$26,000
5BZAFOAA2EN161230
Nissan
2014
NVP Van
359
$23,500
1FMJU1GT4GEF57193
Ford
2016
Expedition
388
$14,500
1FMJU1FT6JEA02609
Ford
2018
Expedition
100
$26,500
PROPOSED LEASED VEHICLES
Quantity
Make and Model
Description
Year
7 Ford Expedition XL
SUV (Gas)
2024
6 Tesla Model 3
Sedan (100% Electric)
2024
3 Ford Police Interceptor Utility
Sedan (Gas)
2024
1 Ford F-250 XL Animal Control Body
Truck (Gas)
2024
4 Ford Transit 350 XLT
Van (Gas)
2024
ELECTRIC VERSUS GAS ANNUAL EXPENSES
ModelOutright PurchaseLease to OwnFuel Yearly LeaseMaintenanceAnnual Cost W/ Lease OptionTelsa$42,365$837.47$10,481$10,481Ford Fusion$28,996$554.41$3,984$6,652$3,984$11,443
FISCAL IMPACT
The cost for the proposed lease of vehicles is approximately $206,473 for FY24 and $276,928 in FY25. The cost is pro-rated based on estimated time of delivery based on limited government release of FY24 vehicles. The sale of the City’s surplus vehicles and resale net equity from the existing lease vehicles within the motor pool shall be credited towards the lease payments.
The total proceeds from the surplus vehicles and resale net equity are $426,046.
Surplus Vehicles $353,000
Lease Resale Net Equity $ 73, 046
$426,046
Lease Payment FY24 (Credit) $-206,473
Lease Payment FY25 (Credit) $-219,573
FY25 Payment Due $ 57,355
FY26, FY27, and FY28 Amount Due $276,928
The cost for the program shall be included in the budget for Fiscal Year 2025 as follows: 61-6510-55051 (Vehicle Replacement/Equipment Account).
RELATIONSHIP TO STRATEGIC GOALS
This agenda item relates to the 2016 Strategic Planning Goal: “Remain fiscally responsible and continue to provide quality services to the residents,” as the lease of City vehicles will assist in mitigating maintenance related expenses and standardize the fleet.
ALTERNATIVES:
Approve staff's recommendation.
Reject staff's recommendation.
Provide staff with alternate or further direction.
Prepared and recommended by: Claude McFerguson, Director of Transportation Fiscal impact reviewed by: Vilko Domic, Assistant City Manager Approved as to form: Noel Tapia, City Attorney
Respectfully submitted: Edgar P. Cisneros, City Manager Attachments:
Resolution
Enterprise Fleet Contract #030122
Enterprise FM Trust – Alliant Insurance
Proof of Publication
RFP Scoring Evaluation
RFP and Addendums
CITY OF COMMERCE
AGENDA REPORT
Item No.