REPORT TO THE CITY COUNCIL
September 25, 2014
FROM: BRIAN MARSHALL, Director
Transportation Department
BY: JOSEPH AYERZA, Manager
Fleet Management Division
SUBJECT
Title
Award an extension of the five-year lease/purchase financing agreement with Kansas State Bank in the amount of $3,635,600 at an annual interest rate of 3.389 percent to acquire 82 police vehicles, eight PARCS trucks, and a PARCS trailer, and authorize the Controller or designee to execute same
Body
RECOMMENDATION
Staff recommends the City Council award an extension of the five-year lease/purchase financing agreement with Kansas State Bank to acquire 82 police vehicles, upfit hardware, eight PARCS trucks, and a PARCS trailer, and authorize the Controller or designee to execute same.
EXECUTIVE SUMMARY
The Police Department is in need of replacing 50 patrol cars, 18 undercover vehicles, and 14 motorcycles, together with the upfit hardware. These vehicles have reached the end of their economic life. Replacement of these units is critical for the Police Department to effectively and efficiently provide public safety services within the City of Fresno.
The PARCS Department has had limited budget funding over the past several years and has not replaced vehicles in the typical fashion since 2008. The PARCS Department vehicle fleet has been decreased due to mechanical breakdowns, and those that have been retained are far beyond their expected lifespan. PARCS is in need of replacing eight trucks and a utility trailer.
BACKGROUND
The Police Department requires replacement vehicles, including marked units, unmarked units, and motorcycles. Over the last few years poor economic conditions and tight budgets have required the life span of a patrol car to be extended from five years up to seven years. Though improvements in vehicle technology and reliability have made this possible, several vehicles in the fleet are Ford Crown Victorias that are nine years or older. Additionally, several Dodge Chargers are seven years old and have accrued well over 100,000 miles. All of these vehicles have reached the end of their economic life. Replacement of these vehicles is critical for the Police Department to effectively and efficiently provide public safety services within the City of Fresno.
The PARCS Department has many types of vehicles in its Fleet, with utility trucks being the highest use unit. PARCS has not had scheduled vehicle replacements since 2008. Some utility trucks have been required to be removed from service due to major mechanical breakdowns that were cost prohibitive to repair. This has decreased the fleet and caused inefficiencies within PARCS operations.
The funding for one-lease payment in FY15, in the amount of $398,296.50, has been approved in the current year budget. The award amount will fund the purchase cost of the base vehicles, motorcycles, utility truck bodies, as well as all the hardware needed to upfit the vehicles into a fully functional units. The Police vehicles will be upgraded in the City of Fresno Fleet Upfit shop utilizing current City personnel.
ENVIRONMENTAL FINDING
Not applicable since the financing does not constitute a "project."
LOCAL PREFERENCE
Kansas State Bank was the only financial institution to respond to the City's Request for Proposals.
FISCAL IMPACT
The funding has been included in the City FY15 adopted budget. Only one lease payment will be made in FY15. Beginning in FY16, lease payments will be made twice per year at $398,296.50 each, or $796,593.00 annually, for a total of nine additional payments over the remainder of the four-and-a-half year term. The interest rate for this financing is 3.389 percent, which is identical to the original agreement awarded in FY14. Total interest paid over the term of the financing will be $347,365.00. The vehicles will be owned by the City at the end of the five-year term.
Attachment: Equipment Lease-Purchase Agreement Part Two