Title
Authorizing the City Manager to execute agreement with Enterprise Fleet Management (EFM) for the capital lease of the City's fleet and establish an effective date
Summary
Fleet Management Solution:
• 15% of the current light and medium duty fleet is over 10 years old
• Older vehicles have higher fuel costs, maintenance costs, and tend to be unreliable
• It would take 9.1 years to cycle out the entire fleet at current acquisition rates
Enterprise Fleet Management Objectives:
• Save the City resources and funding through a managed vehicle program
• Utilize an open-end capital lease* as a funding mechanism, allowing the City to acquire additional vehicles while avoiding a large capital budget outlay.
• EFM anticipates a conservative cost savings of $2,000,000 over the next 5 years which does not include savings from maintenance or fuel by operating newer vehicles.
• Replace aged vehicles with newer models to increase fuel efficiency and reduce maintenance expense. Integration of more fuel-efficient vehicles will reduce carbon footprint.
• Establish a proactive replacement plan that maximizes potential equity at time of resale, reduces operational expenses, and increases safety.
*An open-end lease means there are no early termination, no mileage, and no wear and tear penalties. Leases are written to a residual balance to preserve cash flow. The City receives flexibility of ownership, as well as net equity from sale at time of disposal. This is the opposite of the type of lease that you would incur at a dealership. The open-end equity lease is a flexible way to utilize a proactive vehicle replacement program.
The Adopted FY22 Budget included capital lease of the City's fleet. The funding authorized in General Fund at $229,488 and Utility Fund at $109,718.
Prior City Council Action
N/A
Deadline for City Council Action
Prior to October 1, 2021
Funding Expected: Revenue __ Expenditure x__ N/A __
Budgeted Item: Yes _x_ No __ N/A __
Amount: _$339,206_______
1295 Form Required? Yes _x_ No __
Legal Review Required: N/A __ Required _x_ Date Completed: _9/6/2021__________
Supporting documents attached:
[Master Lease Agreement, Government addendum "GP3N - City of Pflugerville, Texas Addendum to Equity MLA", Capital Lease Addendum "3N City of Pflugerville, Texas - FASB 13 - Capital Lease Addendum", FY22 Vehicle Lease]
Recommended Action
Staff recommends approval of the lease agreement and supporting addendum.