TO: Honorable City Council
FROM: City Manager
SUBJECT: A Resolution of the City Council of the City of Commerce, California, Approving the Purchase and Lease Agreements of two 2025 Over-the-Road Buses MEETING DATE: October 8, 2024
RECOMMENDATION
A Resolution of the City Council of the City of Commerce, California, Approving the Purchase and Lease Agreements of two 2025 Over-the-Road Buses.
BACKGROUND
The City's existing over-the-road buses are primarily used to transport passengers (e.g., seniors, park and recreation program participants, and dignitaries) on various excursion trips throughout the year. Bus numbers 304 and 305 were purchased in 2007 and have exceeded their useful life.
Per FTA Circular 5010.1D, the useful life span for large over-the-road coaches is 12 years or 500,000 miles. Due to their age, the buses referenced below have become less reliable and expensive.
Unit MileageYearLicenseMakeDescriptionVIN30416305820071067207MCIExcursion 56 Pass2M93JMPA27W06390730515915320071067208MCIExcursion 56 Pass2M93JMPA27W063908As a result, the City needs new excursion buses. It should be noted that the City's previous purchase of its over-the-road buses was through a lease-to-own program.
SOUTH COAST AIR QUALITY MANAGEMENT DISTRICT (SCAQMD) RULE 1196 This rule requires public fleets of heavy-duty vehicles operating in the South Coast Air Quality Management (District) to acquire alternative-fuel heavy-duty vehicles when procuring or leasing them to reduce air toxic and criteria pollutant emissions. This rule applies to all government agencies located in the District, including federal, state, regional, county, and city government departments and agencies, and any special districts such as water, air, sanitation, transit, and school districts, with 15 or more heavy-duty vehicles.
Provisions of the above rule shall not apply to the following:
A) Paratransit vehicles.
B) Buses that provide long-distance service (out-of-district) are generally equipped with luggage compartments, restrooms, and overhead storage. (C) There may be no more than ten evaluation/test vehicles per fleet provided by or operated exclusively by the vehicle manufacturer for testing or evaluation. (D) School buses as defined in the California Vehicle Code. (E) Buses not used for public transportation, such as employee transportation or transportation of prisoners. (F) Signed contract agreements as of this rule's adoption date for purchasing or leasing new transit vehicles or urban buses. This exemption does not apply to executing options to purchase transit vehicles following this rule's adoption date.
SOUTH COAST AQMD (RULE 1196 WAIVER)
The City staff researched the possibility of purchasing excursion buses with electric or CNG fuel types. However, due to the limited luggage capacity caused by the electric battery packs and CNG vessel storage containers, the City has no other option but to stick with the diesel MCI buses to continue their transportation services. Based on the factors mentioned above, the City received a waiver from SCAQMD to purchase clean diesel MCI buses (Exemption B)
ANALYSIS
Per the Master Tax Exempt Lease/Purchase Agreement, the City shall enter into a seven (7) year lease-to-purchase agreement. The proposed lease-to-purchase financing structure will allow the City to buy the buses over time through the operating side of the City's budget while preserving the City's CIP budget for other immediate needs.
FISCAL IMPACT
A complete breakdown of the estimated lease payments is as follows:
Payment No.
Due Date
Annual Lease Payment
1 1-Oct-24
$240,763.52
2 1-Nov-24
$240,763.52
3 1-Dec-24
$ 240,763.52
4 1-Jan-25
$ 240,763.52
5 1-Feb-25
$ 240,763.52
6 1-Mar-25
$ 240,763.52
7 1-Apr-25
$ 240,763.52
The annual cost is approximately $240,763.52 during the term of the Lease.
The lease payment structure will enable the City to purchase newer, more efficient buses without incurring a large upfront ($1,411,036.84) capital expenditure. The City will own the buses at the end of the lease term. There is no upfront cost associated with the proposed Lease, and the agreement shall commence upon receipt of the first annual lease payment of $240,763.52. The buses shall be covered by the manufacturer (Motor Coach Industries) with a standard warranty for the first three years, and the City is responsible for routine maintenance and insurance.
The lease price above reflects the net trade-in value of $87,000 for the City’s existing over-the-road buses, which are being replaced:
Unit #YearLicense #MakeCAPACITYFUELVIN #30420071067207MCI56 PASSENGERSDIESEL2M93JMPA27W06390730520071067208MCI56 PASSENGERSDIESEL2M93JMPA47W063908 Over the past thirty-eight years, the City has purchased six over-the-road coaches directly from MCI. It has been satisfied with its customer service, equipment reliability, and proven reputation in the transportation industry for standing behind its product.
MEASURE AA APPROVAL
The Measure AA review committee approved the funding for this project on June 25, 2024, with the City Council formally approving this item as part of the Capital Improvement Program budget on July 23, 2024. The funding will be placed in Measure AA Account: 41-8331-73050.14616 Equipment Lease Payments Excursion Buses.
RELATIONSHIP TO STRATEGIC GOALS
Guiding Principle #4: Support and evaluate community services, programs, and events that promote healthy and quality lifestyles for our residents. The new over-the-road buses will allow residents to actively participate in various excursion-related trips and activities.
Recommended by: Claude McFerguson, Dir. of Transportation Approved as to form by: Noel Tapia, City Attorney
Fiscally Reviewed: Vilko Domic, Assistant City Manager Respectfully submitted: Ernie Hernandez, City Manager Attachments: Resolution
Purchasing Agreement
Lease-to-Own Master Agreement
CITY OF COMMERCE
AGENDA REPORT
Item No.