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BACKGROUND The Operations Services Department manages a fleet of 138 vehicles assigned to various City departments. Historically, the department used a purchase oriented plan to acquire new vehicles utilizing either the state's purchasing contract system or open bids. In addition the vehicle acquisition, the City's mechanic shop provides the majority of required vehicle maintenance services resulting in an overall full service operation including vehicle acquisition and maintenance. While the above process has worked well and has generally been cost efficient, it has acted as an impediment to the City replacing its fleet to take advantage of more fuel efficient and clean vehicles. Further, at times staff has leaned toward deferring needed maintenance as a means of meeting budget and cost saving targets. However, while this approach is good in the short run, in the long run, it has resulted in the City maintaining an aging fleet with some vehicles purchased as far back as 1994. Over the past two years, staff has been examining its fleet acquisition and maintenance services, including comparing the benefits of leasing rather than purchasing vehicles and as an outcome, it has determined that leasing vehicles is the most optimal for a fleet our size. While there are many benefits to the program some of the most notable include the following: • Enterprise will maintain the vehicles for the full five year lease term or for the entire time the vehicle is under the manufacturer's warranty which will result in overall maintenance costs savings. • The new vehicles are safer, cleaner and more fuel efficient, thus reducing greenhouse gas emissions • The vehicles will be replaced every five years as compared with our extended replacement schedule which can "stretch" vehicle replacement for up to 20 years • It establishes a more consistent budget • The City will receive a higher resale return through the vendor's resale network versus auctioning the vehicles through the City's surplus property vendor. In view of these benefits staff reviewed the details of various leasing programs and determined that the program provided through Enterprise Fleet Management would effectively meet the City's acquisition and maintenance needs. DISCUSSION The Enterprise Fleet Management program offers vehicles from almost every manufacturer; however we will continue to primarily lease Ford vehicles to retain consistency in our existing fleet. The Lease Program also includes customization to meet specific vehicle needs and the option of a maintenance plan that covers most repairs and all routine procedures during the course of the five year lease period. In addition the Enterprise lease program includes an equity plan that allows money to either be returned to the city or credited toward a new lease of vehicles at the expiration of the lease. Page 2 of 4