Item 285/2026
Final
City of Garden Grove
INTER-DEPARTMENT MEMORANDUM
To:
Lisa L. Kim From: Patricia Song
Dept:
City Manager Dept: Finance
Date: 6/23/2026
Subject: Approval of a Five-Year Master Equity Lease Agreement and Maintenance Agreement with Enterprise Fleet Management, Inc. for the Lease and Maintenance of Five Sedans. (Cost: $127,000)(Action Item)
OBJECTIVE
For the City Council to approve a five -year (60 month) Master Equity Lease Agreement and Maintenance Agreement with Enterprise Fleet Management, Inc. for five sedans assigned to the Economic Development and Housing Department and Community Development Department.
BACKGROUND
In May 2021, the City Council approved a five-year Master Equity Lease Agreement and Maintenance Agreement with Enterprise Fleet Management, Inc. for the lease of five sedans identified for replacement within the City’s fleet. These vehicles are assigned to the Economic Development and Housing Department (Housing Division) and the Community Development Department (Code Enforcement, Planning, and Building Inspection Divisions).
The agreement was established as a pilot program to evaluate the feasibility and cost - effectiveness of leasing vehicles a s an alternative to purchasing them. The program was intended to determine whether vehicle leasing could reduce the City’s overall fleet costs while providing departments with newer, more reliable vehicles and minimizing maintenance - related expenses and downtime.
DISCUSSION
The current Master Equity Lease Agreement and Maintenance Agreement will expire in June 2026, marking the completion of the initial five -year pilot program. Based on the results of the pilot, staff has concluded that leasing vehicles i s a cost -effective alternative to vehicle ownership for standard fleet vehicles that do not require specialized equipment or modifications and are primarily used for employee transportation and administrative functions.
Item 285/2026
Over the five-year lease term, the total cost of the five leased vehicles was $145,315. This amount includes lease payments, routine maintenance services covered under the maintenance program, such as oil changes and fluid services, as well as miscellaneous expenses not covered by the prog ram, including tire repairs and other incidental charges.
During the same period, the total cost of operating five comparable City -owned sedans assigned to the same divisions was $178,742. As a result, the leased vehicles generated an estimated cost savings of $33,427 over the duration of the pilot program.
The cost comparison may understate the long -term cost of vehicle ownership. During the pilot period, supply chain disruptions delayed vehicle deliveries and extended replacement schedules, enabling the City to retain existing vehicles longer than anticipated and defer replacement costs. Under normal operating conditions, the City's traditional vehicle ownership model would likely result in higher overall costs.
In addition to the demonstrated cost savi ngs, the leased vehicles provided access to newer models equipped with enhanced safety features, improved fuel efficiency, and lower maintenance requirements. These advantages compare favorably to the City’s traditional replacement cycle, under which comparable vehicles are typically retained for up to 10 years or until maintenance and repair costs warrant replacement.
To continue realizing these operational and financial benefits, staff recommends entering into a new Master Equity Lease Agreement and Main tenance Agreement with Enterprise Fleet Management, Inc., renewing the Self-Insurance Addendum, and authorizing the City Manager to execute amendments and related administrative documents necessary to administer the agreements.
Enterprise Fleet Management, Inc. provides fleet leasing and management services through a cooperative purchasing contract competitively solicited and awarded by Sourcewell. In accordance with the City’s purchasing policy, cooperative purchasing agreements may be utilized in lieu of conducting a separate Request for Proposals (RFP) process when the cooperative contract has been awarded through a competitive procurement process.
Accordingly, staff recommends that the City Council dispense with formal bidding requirements pursuant to Section 2.50.060(E) of the Garden Grove Municipal Code.
FINANCIAL IMPACT
The total cost of the proposed five -year Master Equity Lease Agreement and Maintenance Agreement with Enterprise Fleet Management, Inc. shall not exceed $127,000, or approximately $25,400 annually. This amount reflects the estimated equity value of the existing leased vehicles, which will be applied as a credit toward the new lease term. Funding for the lease and maintenance costs is included in the operating budgets of the user departments beginning in Fiscal Year 2026-27.
Item 285/2026
RECOMMENDATION
It is recommended that the City Council:
Approve the Master Equity Lease Agreement and Maintenance Agreement with Enterprise Fleet Management Inc., for the lease and maintenance of five sedans;
Approve to dispense of the bidding process per Municipal Code 2.50.060 (E);
Authorize the City Manager , or designee, to approve and execute amendments, addenda, and other related documents necessary to administer and implement the agreements; and
Authorize the City Manager, or designee, to execute the agreements and other documents necessary to effectuate the lease and maintenance program and make any minor modifications.
ATTACHMENT(S)
Attachment 1 – Master Lease Agreement
Attachment 2 – Maintenance Agreement
Attachment 3 – Agreement Amendments and Addendum
Attachment 4 - Quote