Scott Swanson
Sweet Home City Council members decided Tuesday, June 9, to contract with Enterprise to manage its vehicle fleet.
City Manager Ray Towry introduced the subject by telling councilors that fleet management has been an “issue” for Sweet Home. When Public Works Director Greg Springman joined the city exactly three years ago, “the newest vehicle when he arrived was 10 years old,” Towry said, adding that some were double that.
“The problem is we spend as much time maintaining them as when they’re on the road. It’s not a great way to do business. Enter Enterprise Fleet Management.”
According to a staff report presented at the meeting, Public Works has the largest fleet of vehicles to handle various aspects of its responsibilities, while the Police Department has approximately 10 “with considerably different needs and capabilities than Public Works.”
The city has purchased 12 vehicles over the past three years to replace aged vehicles, according to the report. Prior to those purchases, Public Works’ newest vehicle was 11 years old.
The city has begun setting aside funding to replace vehicles “at an appropriate time,” the report said.
Having Enterprise, which is a division of the vehicle rental company by the same name, help the city manage its vehicles will enable Sweet Home to get discounts when it purchases or leases vehicles and to unload them at the most opportune time, he and others said.
Towry said that if the city upgrades its fleet with Enterprise, vehicles will spend less time in the shop since most will still be under manufacturer’s warranties.
“When we sell and resell, we get maximum dollars, fewer lost work days, maximum return on investment. Our fleet is always up to date.”
Enterprise Account Executive Ryan Alford, speaking virtually from Tualatin, told the council that his company is currently working with “close to 15” cities and counties in Oregon.
“We can pretty much do everything from acquisition to resale and everything in between,” he said. “A key part of our program is to buy a vehicle as low as we can and sell it when it makes the most sense, before it is 15 years old and constantly in the shop.”
He said the city could save significantly on the initial purchase and then possibly make money when a vehicle is sold.
“A $40,000 truck, you can buy for $26,000 and sell it a year later for $27,000,” Alford said, cautioning that that particular scenario “does not apply to every single vehicle you have in your fleet.”
According to a staff report presented to the council, each year, Enterprise would meet with city staff to review its current fleet and the potential resale value of the vehicles, along with the costs associated with replacing those vehicles.
“The principal objective is to maximize return on investment while continuing to provide the necessary equipment for the departments to continue their operations and objectives,” the report from Finance Director Brandon Neish stated.
The company charges a monthly management fee of approximately .08 percent of the vehicle’s value, monthly rental on leased vehicles and a $400 sales fee when vehicles are sold by Enterprise. Alford said there is no penalty to terminate the contract with Enterprise; the city would simply need to fulfill any lease agreements.
He told the council that many vehicles are leased, but the city has the option to buy them as well.
He said the company and the city would work in close collaboration to determine what the city’s needs are and what vehicle might be “the best tool for the job.”
“We want to constantly be part of that discussion,” Alford said. “Every truck is different. An F350 with a utility rack on the back has a different life cycle than a plain Jane F150 for parks.”
He added later that it might not be economical for the city to use Enterprise to sell some vehicles.
“What I’m talking about is when selling $26,000 truck, is finding the right home. If you’re selling a 1987 Ford Ranger, don’t have us sell it. It’s not worth the $400 fee.”
Enterprise can provide police pursuit vehicles, he said.
Police Chief Jeff Lynn said his department typically has patrol cars outfitted by the winner of a state bidding process.
“Police vehicles are definitely more unique than Public Works,” he said. “We’re just interested in weighing the options – the state bid process versus what Enterprise could bring.”
Response from the council was mixed.
“We’ve been blessed, doing what we’ve done so far, I know, at least for Public Works,” Councilor Dave Trask said. “I’m pleased but kind of shocked that it’s been more than 10 years on some of that stuff.”
Mayor Greg Mahler noted that working with Enterprise would mean the city would be able to hang onto capital that it might otherwise expend on “just going out and buying a $30,000 truck; we would only have to invest $6,000 or $7,000 a year.”
He wondered whether the city would feel pressure to unload a vehicle.
“As everyone knows, models change. The city might get something we like.”
“This is not like a Book of the Month club?” asked City Attorney Robert Snyder. “You don’t show up with a new truck every month?”
“We do hold title on the vehicle but it’s your vehicle,” Alford responded. He added that customer service is “critical” in such a relationship, adding, “if that doesn’t work, we don’t have a partnership.”
Councilor Lisa Gourley, who was attending remotely, said she was uncomfortable with the timing of contracting to buy new vehicles “when we’re coming into Phase 2” of the coronavirus shutdown recovery.
“I think we should do this in a couple of years,” she said. “Not right now. I don’t think it would bode well with the community.”
Towry responded that the goal is to “save us money, improve cash flow rather than sinking it into the purchase of vehicles.”
“I don’t think they’ll remember that when they look around and see the city with newer vehicles,” Gourley said.
Neish said the city has “all the options.”
“If we choose not to buy a vehicle, we don’t have to buy a vehicle.”
“This is not a green light to go out and buy a bunch of new vehicles,” Mahler said.
Trask moved to authorize the agreement, with Cortney Nash seconding, remotely.
They, Mahler, Susan Coleman and James Goble voted in favor of the contract.
Gourley and Diane Gerson voted no.