Agenda Report
Fullerton City Council
MEETING DATE: JULY 5, 2022
TO: CITY COUNCIL / SUCCESSOR AGENCY
SUBMITTED BY: ERIC J. LEVITT, CITY MANAGER
PREPARED BY: MEG MCWADE, DIRECTOR OF PUBLIC WORKS
MATT LIGHTNER, ADMINISTRATIVE ANALYST II
SUBJECT: MASTER EQUITY LEASE AGREEMENT WITH ENTERPRISE FLEET MANAGEMENT, INC. FOR TEN LEASED VEHICLES
SUMMARY
Authorize a Master Equity Lease Agreement to lease ten vehicles with Enterprise Fleet Management, Inc. as a supplement to the regular vehicle replacement program.
RECOMMENDATION
Approve and authorize City Manager, or designee, to execute and administer a Master Equity Lease Agreement with Enterprise Fleet Management, Inc. for ten Police light-duty vehicle lease and related insurance agreements, in a form approved by City Attorney.
Authorize City Manager, or designee, to execute Enterprise Schedules to the Master Lease Agreement for individual motor vehicles, together with any other necessary documents in connection with those Enterprise Schedules and to effectuate and manage ongoing Enterprise Fleet Management program options for ten Police light-duty vehicles.
Authorize City Manager, or designee, to execute and administer automatic lease renewals for ten Police light-duty vehicles, including related insurance agreements.
PRIORITY POLICY STATEMENT
This item matches the following Priority Policy Statement:
Infrastructure and City Assets.
FISCAL IMPACT
The Master Lease Agreement with Enterprise provides general terms related to trade-in and leasing of vehicles. Supplemental “Schedules” that determine type of vehicles, costs and annual payments with a 48-month lease accomplish the actual vehicle leases. The vendor will sell existing inventory with sale proceeds used to offset costs of the new vehicle leases as part of this agreement.
Staff proposes purchasing ten vehicles through this program. The requested authorization for the initial four-year lease agreements and related insurance is not-to-exceed $100,000 per year, for a total of $400,000 for the initial leases. Staff anticipates funding the first year of the program through the trade-in of existing vehicles with future annual amounts funded within the City’s vehicle replacement fund.
Since this is a new program for the City, staff will provide City Council an update regarding viability of the Enterprise Fleet Management program prior to the first lease renewal period via memo or City Council agenda item.
DISCUSSION
The Police Department has a need to replace undercover vehicles with high maintenance needs at a quicker rate than currently available given fiscal conditions and the new vehicle market.
The requested authorization would allow the City to enter into a Master Equity Lease Agreement with Enterprise Fleet Management, Inc. The Master Lease Agreement provides the general terms for the leasing process with the actual lease of the vehicles activated through supplemental lease schedules. The lease authorization will have an initial four-year term which will provide ten replacement vehicles for the Fullerton Police Department’s Undercover / Narcotics Division, in not to exceed $100,000 per year during the initial four-year lease term. The City will allow Enterprise to sell ten City-owned vehicles through this program. Enterprise estimates the vehicle sales would generate approximately $127,000 and will cover the first year of lease costs. The City’s Vehicle Replacement Program budget will pay future program costs, funded by departmental contributions.
Enterprise will also review the vehicles leased to the City at least once a year as part of this program. This allows the City to trade a vehicle if a financial gain exists or if the vehicle does not meet the needs of the department. A financial gain would occur when the aftermarket value of the vehicle appreciates in value as opposed to when it depreciates. While this was not typical pre-pandemic, the automotive market has seen fluctuations since that time which have provided this resale opportunity.
Lease Agreement / Vehicle Costs
The City utilizes a cooperative purchasing model to streamline the purchasing process, authorized by Fullerton Municipal Code Section 2.64 and related City of Fullerton Policy and Procedures Manual – Procurement of Goods and Services – Policy 4.1.2 Section IV.D, which allows an exemption to the Open Market process when participating in an established governmental “Cooperative Purchasing Agreement.” Cooperative purchasing is “Procurement conducted by, or on behalf of, one or more Public Procurement Units” as defined by the American Bar Association Model Procurement Code for State and Local Governments.
Sourcewell is a cooperative purchasing State agency that has competitively solicited bids for various products and services establishing predetermined pricing for other governmental agencies, including vehicles. The City will lease ten vehicles from Enterprise Fleet Management, Inc. through Sourcewell contract number 060618-EFM which expires July 24, 2023.
The cost for the initial four-year lease of ten vehicles may fluctuate based on available models and if the City opts for inclusion of an insurance premium. The lease cost for ten vehicles equals approximately $65,000 to $90,000 a year including upfitting cost for radios, sirens, lightbars, etc. The maximum insurance premium offered for a vehicle with a $1,000 deductible through Enterprise Fleet Management, Inc., equals $55 a month or $660 a year per vehicle. The internal $400,000 not-to-exceed amount / budget provides flexibility to cover cost fluctuations and the City’s ability to insure these vehicles through Enterprise. The needs of the Police Department and availability of vehicles will determine the actual vehicles selected and, therefore, the total cost of the agreement.
City Maintenance
Staff anticipates minimal maintenance for these leased vehicles minimal due to newness of vehicles. The maintenance will consist of vehicle inspections, tire rotation and/or replacement, fluid refill, etc. Staff estimates the average in-house maintenance cost of a single leased vehicle would total approximately $300 a year per vehicle or $3,000 a year for ten vehicles. This is significantly less than the $92,000 in maintenance costs over the last four years for the ten vehicles that the City would sell through this program.
Authorization and Purchasing Model
The Master Equity Lease Agreement with Enterprise Fleet Management, Inc. will have an initial four-year lease term with a budget appropriation established a not-to-exceed at $400,000 over this period. This authorization includes a maximum of ten vehicles for the duration of the four-year term. Staff will bring the addition of any lease vehicles beyond the ten in the initial program back for City Council approval.
Attachments:
Attachment 1 – Enterprise Fleet Management Master Lease Agreement Attachment 2 – Lease Replacement Pricing Worksheet
Attachment 3 – Sourcewell Enterprise Acceptance and Award Attachment 4 – Fleet Management - RFP Response-Enterprise 060618 Attachment 5 – Sourcewell Contract 060618-EFM
Attachment 6 – Enterprise Est. 2023 PD VW Atlas
Attachment 7 – Enterprise Est. PD Upfit 2023 Ford F150 Crew Cab Attachment 8 – Enterprise PD Upfit 2023 Chevy Blazer
Fullerton Police Department Master Equity Lease Agreement July 5, 2022 - Page PAGE \* MERGEFORMAT 2