Memorandum
City of Lawrence
City Manager’s Office
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TO: |
David L. Corliss, City Manager
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FROM: |
Jonathan Douglass, Management Analyst
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CC: |
Debbie Van Saun, Assistant City Manager Casey Liebst, Budget Manager Steve Stewart, Central Maintenance Garage Superintendent
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DATE: |
April 20, 2007
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RE: |
General Fund Fleet Replacement Cost Projections
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The City of Lawrence owns and maintains a fleet of nearly 500 vehicles and pieces of “drivable equipment” such as riding mowers, backhoes, tractors, etc. Of those units, 282 are assigned to departments and divisions whose operations are financed by the General Fund. This report will analyze the City’s General Fund fleet replacement needs and costs for the next five years.
This analysis does not account for units assigned to departments and divisions with funding sources other than the General Fund. These departments and divisions include the Utility Department and Utility Billing Division (Water and Wastewater Fund), Solid Waste Division (Solid Waste Fund), Stormwater Division (Stormwater Utility Fund), Parking Control (Public Parking System Fund), some units from the Street Maintenance Division (Special Gas Tax Fund) and some units from Parks & Recreation (Special Recreation Fund and Public Golf Course Fund). Replacement of units in these departments and divisions is expected to be part of their operating budgets.
This report also does not include replacement costs for public transit buses, fire apparatus, or ambulances. Separate reports on bus and fire apparatus replacements are planned. Ambulance replacement is paid for by Douglas County.
The Central Maintenance Garage maintains the City’s fleet and records pertaining to the fleet. The Garage provided data on the model year, purchase price, and projected life cycle of each unit. Using that data and an inflationary factor I have calculated a projected replacement year and cost for each unit.
Projected life cycles are based on industry standards (including the American Public Works Association, Fleet Management Professionals and the National Association of Fleet Administrators) and our own experience maintaining the fleet. The City uses best practices and industry standards to extend the life cycle of the fleet but sometimes accidents or other issues cause units to fail before reaching their projected life.
Many units in the fleet have already exceeded their projected life cycles but are still in use. While some of these have fared well due to decreased intensity of use and good maintenance practices, most are in need of replacement as soon as feasible. Deferred replacement of these units leads to ever increasing maintenance costs. In the table that follows, these vehicles are categorized as “Deferred Replacements.”
The City disposes of replaced vehicles by various methods, including eBay, GovDeals, and trade-ins. Replacement costs in the table below take into account funds recovered through the sale of old vehicles. Full-size pickup trucks sold by the City in 2006 went for 17%-26% of their original purchase price. Resale amounts can vary widely, so for the purpose of giving a conservative general estimate, this analysis assumes that 17% of the purchase price will be recovered at resale.
This report is meant to be a snapshot of General Fund fleet replacement needs. Actual vehicle purchases are generally presented to the City Commission on two occasions: first, as capital outlay requests during departmental budget presentations; and second, as purchase items on the City Commission’s consent agenda. Questions regarding the need to replace specific vehicles can be discussed in more detail on those occasions.
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Projected Fleet Replacement Costs by Department (General Fund) |
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Department |
Total # of units1 |
Deferred replace-ments. Cost if replaced in 2008 |
2008 |
2009 |
2010 |
2011 |
2012 |
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Administrative Services |
1 |
n/a |
$0 |
$19,536 |
$0 |
$0 |
$0 |
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Fire & Medical |
31 |
80,634 |
51,400 |
145,542 |
0 |
101,964 |
61,215 |
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Information Systems |
2 |
49,164 |
0 |
0 |
0 |
0 |
0 |
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Neighborhood Resources |
15 |
41,009 |
45,716 |
19,536 |
39,546 |
74,966 |
81,331 |
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Parks & Recreation |
80 |
844,264 |
165,937 |
244,708 |
124,582 |
314,700 |
87,600 |
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Planning |
1 |
n/a |
0 |
0 |
0 |
0 |
20,307 |
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Police |
72 |
610,955 |
226,070 |
62,524 |
648,025 |
69,794 |
478,313 |
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Public Works |
80 |
1,153,228 |
345,303 |
351,769 |
190,211 |
134,790 |
378,607 |
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City-Wide Total |
282 |
$2,779,254 |
$834,426 |
$843,614 |
$1,002,364 |
$696,213 |
$1,107,373 |
1Not all of the units would be replaced within the time frame of these projections.
Analysis
If the City were to replace in 2008 all of the units in the General Fund fleet which are already beyond their projected life cycle (deferred replacements) it would cost approximately $2.8 million. This is in addition to the $834,000 it would cost to replace those units which reach the end of their life cycle in 2008. As a $3.6 million expenditure on vehicle replacements in one year would be difficult, the tables below illustrate the impact of spreading the deferred replacements over three and five years.
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Projected Fleet Replacement Costs (General Fund) Deferred Replacements Spread Over Three Years (2008-2010) |
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2008 |
2009 |
2010 |
2011 |
2012 |
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City-Wide Total |
$834,426 |
$843,614 |
$1,002,364 |
$696,213 |
$1,107,373 |
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Deferred Replacements |
$926,418 |
$963,475 |
$1,002,014 |
$0 |
$0 |
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New Total |
$1,760,844 |
$1,807,089 |
$2,004,377 |
$696,213 |
$1,107,373 |
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Projected Fleet Replacement Costs (General Fund) Deferred Replacements Spread Over Five Years (2008-2012) |
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2008 |
2009 |
2010 |
2011 |
2012 |
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City-Wide Total |
$834,426 |
$843,614 |
$1,002,364 |
$696,213 |
$1,107,373 |
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Deferred Replacements |
$555,851 |
$578,085 |
$601,208 |
$625,257 |
$650,267 |
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New Total |
$1,390,277 |
$1,421,699 |
$1,603,572 |
$1,321,470 |
$1,757,640 |
Conclusions
Requests for replacement of vehicles and drivable equipment are regularly made during the annual budget process. The current practice of replacing vehicles as the budget allows each year without a multi-year replacement plan has resulted in many vehicles in service beyond their expected life cycle and a backlog of deferred replacement needs. The table below illustrates projected costs for three replacement options: 1) replacing in 2008 all of the units which are already beyond their life cycle plus all of the units which reach their life cycle in 2008, 2) spreading the deferred replacements over three years, and 3) spreading the deferred replacements over five years. Any of these options would address the backlog of deferred replacement needs and should prevent one from occurring in the future.
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Projected Fleet Replacement Costs (General Fund) |
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Option |
2008 |
2009 |
2010 |
2011 |
2012 |
Total 5-Year Cost |
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1) All deferred replacements made in 2008 |
$3,613,680 |
$843,614 |
$1,002,364 |
$696,213 |
$1,107,373 |
$7,263,245 |
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2) Deferred replacements spread over 3 yrs |
$1,760,844 |
$1,807,089 |
$2,004,377 |
$696,213 |
$1,107,373 |
$7,375,897 |
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3) Deferred replacements spread over 5 yrs |
$1,390,277 |
$1,421,699 |
$1,603,572 |
$1,321,470 |
$1,757,640 |
$7,494,658 |