Item 11: Vehicles & Equipments

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COSM_Admin

Administrator
Staff member
Consider approval of Resolution 2022‑231R, approving an agreement with Enterprise Fleet Management, Inc., through the Texas Interlocal Purchasing System (TIPS), to provide for the lease and maintenance of sixty‑two (62) vehicles for use by several city departments and the purchase of miscellaneous equipment in the estimated amount of $801,957; authorizing the City Manager or his designee to execute the agreement on behalf of the City; and declaring an effective date.
 

JHughson

CoSM Members
What does "- $14k Equity Applied " mean?
How much more do these vehicles cost?
Please remind of the general lease terms?
3 years per vehicle and we do 1/3 every year?
 

COSM_Admin

Administrator
Staff member
Responses provided by Sabas Avila, Director of Public Works:
What does "- $14k Equity Applied " mean?

Equity is the difference between the vehicle’s loan balance and the current worth of the vehicle.
Using the Enterprise lease program, equity is used to reduce the City’s subsequent lease costs.
For example, a vehicle that is purchased at $38,000 will have a lease cost of approximately $6,000 annually. At year 4, the loan cost is approximately $11,000 and the vehicle resale cost is approximately $25,000. The equity at year 4 would be $14,000 ($25,000-$11,000 =$14,000) .

The equity is subsequently applied to reduce the new replacement vehicle cost. If the replacement vehicle cost is $38,000, the vehicle cost after equity is $24,000 ($38,000-$14,000 = $24,000). With equity, the City’s lease payment is reduced to approximately $4,000 (from $6,000) annually which is a savings of $2,000 annually. If the Enterprise quote includes “equity applied,” it means that the equity has been applied, as a credit, to reduce the lease payment.
Across the fleet, the City currently has approximately $2.8 M in equity.


How much more do these vehicles cost?
The original cost of the vehicles are typically less through the Enterprise lease program than if the City paid for the same vehicles from a dealer lot. Enterprise purchases vehicles directly from the manufacturer or preferred dealers. If the City was to purchase the same vehicles from a dealer lot, the City could expect $3K to $5K in dealer markups.

The vehicle price is dependent on vehicle make and model. For 2023-year models, Enterprise expects to pay the following costs for the vehicles below:

  • Chevy Traverse ( cost: $38,115.00)
  • Ford F-150 ( cost: $37,995.00)
  • Ford F-250 ( cost: 48,590.00)

Please remind of the general lease terms?
The City can lease vehicles at any term between 1 and 5 years. In general, the municipal fleet is leased at 4- and 5-year terms. Police CID and Narcotics assets are typically leased at 1–3-year terms to limit vehicle identification.


3 years per vehicle and we do 1/3 every year?
Prior to 2023, the City typically replaced approximately 30 vehicles each year based on age and/or resale value. In FY 23, SMPD will begin leasing Patrol vehicles. With Patrol vehicles, the City is expected to replace approximately 45 vehicles annually based on age and/or resale value.
 
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