AGENDA #1c
TO: W. Calvin Horton, Town Manager
FROM: Bruce Heflin, Public Works Director
SUBJECT: Report on Options Regarding the Fleet Replacement Program
DATE: May 30, 2001
This budget working paper provides additional information to supplement the budget working paper on this subject dated May 2, 2001, attached.
The second attachment is the “Fleet Replacement Program Post-Implementation Review” completed by DMG MAXIMUS during April and May of this year. The key recommendations in the report are summarized below:
· Extend loan terms to more closely match vehicle life expectancy.
· Conduct a more thorough annual update of the plan.
· Review and adjust replacement parameters annually.
· Seek a multi-year loan agreement with lending institutions.
· Ensure that contributions to the fund are adequate.
· Distribute costs for all charges for all vehicles back to user departments.
We agree with the consultant that the fleet replacement program is generally accomplishing our primary goals. We concur in the recommendations of the consultant; however, we offer the following comments on two of the recommendations:
· Seek a multi-year loan agreement with lending institutions
We made a limited inquiry into the possibility of establishing multi-year debt financing with a single banking institution. The initial response is that we would not achieve additional savings by using a multi-year plan, but we will continue to pursue this as a possible option.
· Distribute costs for all charges for all vehicles back to user departments
The Town currently charges back to the departments based on specific fleet assets. However, since we are using a modified sinking fund, we only charge departments for amounts in excess of the amount we are using from sinking fund balances. We will continue to charge departments based on specific fleet assets to the extent possible while using a modified sinking fund.
1. May 2, 2001 Memorandum (p. 3).
2. Fleet Replacement Program Post-Implementation Review (being new page 1).