TITLE
Recommendation to adopt resolution authorizing City Manager, or designee, to execute all documents necessary to enter into a contract with Acme Auto Leasing, LLC, of North Haven, CT, for the lease purchase financing of 51 Chevrolet Bolt electric vehicles and 19 Nissan Leaf electric vehicles with related equipment and accessories, on the same terms and conditions afforded to Sourcewell (formerly the National Joint Powers Alliance), of Staples, MN, with 72 Hour LLC, dba National Auto Fleet Group, of Watsonville, CA, and the Climate Mayors’ Electric Vehicle (EV) Purchasing Collaborative, for a period of 30 months, in a total amount not to exceed $2,310,930. (Citywide)
DISCUSSION
City Council approval is requested to enter into a contract with Acme Auto Leasing, LLC, for the lease-purchase financing of 51 Chevrolet Bolt and 19 Nissan Leaf electric vehicles. This agreement will enable the City to take advantage of federal tax credits, which will reduce the total aggregate vehicle cost by $228,875. The City will submit a down payment of $1,289,410 to secure the 70 vehicles and will pay total aggregate lease fees of $1,021,520 over 30 months. When lease finance charges are included, the City will save $113,374 by purchasing through the proposed lease agreement instead of buying the units directly because municipalities can only take advantage of these rebates when purchasing qualified new vehicles through a leasing agreement on qualified new vehicles. When the lease payments are completed, the City will retain ownership of the 70 vehicles.
Of the 70 vehicles, 58 were in the approved FY 17-19 vehicle replacement plans and 12 were approved through FY 18 Mid-Year enhancement requests. While sufficient capital to purchase the vehicles has been collected, the Fleet Services Bureau in the Financial Management Department is recommending financing through lease agreements to take advantage of federal tax credits. The tax credits range from $2,625 to $5,000 per vehicle, depending on the model specifications.
These vehicles will be procured using Sourcewell agreements developed from the Climate Mayors’ EV Purchasing Collaborative. The City participated in the launch of this innovative joint procurement platform in September 2018, along with 21 other municipalities, including California cities Santa Monica and Chula Vista, Portland, OR, and Jersey City, NJ. This initiative provides access to competitively bid electric vehicles and chargers and demonstrates the commitment of cities around the country to “going green,” and is sponsored by Sourcewell, formerly the National Joint Powers Alliance, and the Electrification Coalition. The effort was initiated and organized by the City of Los Angeles.
City Charter Section 1802 provides an alternative procurement method by permitting the City to purchase or otherwise obtain services, supplies, materials, equipment, and labor with other governmental agencies by purchasing under their contracts on a voluntary and selective basis when authorized by a Resolution of the City Council.
The Fleet Services Bureau and the Purchasing Division of the Financial Management Department investigated procurement options, and Sourcewell’s agreement with 72 Hour LLC, DBA, National Auto Fleet Group, of Watsonville, CA (not a SBE, DBE, MBE, WBE, or Local), was determined to provide the best discounted price while allowing for timely acquisition and delivery. All Sourcewell’s contracts are competitively bid and offer the best available pricing.
Acme Auto Leasing is the designated lease agent of National Auto Fleet Group and will purchase these vehicles on behalf of the City on the same terms and conditions as afforded to Sourcewell, under contract #120716-NAF. Acme Auto Leasing, LLC (not a SBE, DBE, MBE, WBE, or Local), was determined to provide the best lease-purchase financing options to the City. This business has been leasing to government agencies since 1982, and is also used by the National Cooperative Purchasing Alliance (NCPA), the Houston-Galveston Area Cooperative (HGAC), and the General Services Administration (GSA), to obtain federal rebates available for alternative-fueled vehicle purchases.
This matter was reviewed by Deputy City Attorney Taylor M. Anderson on February 20, 2019, by Purchasing Agent Tara Yeats on February 22, 2019, and by Budget Management Officer Rhutu Amin Gharib on March 1, 2019.
SUSTAINABILITY
The new all-electric vehicles have no particulate or greenhouse gas emissions and are fully compliant with the State of California and local district air quality regulations.
TIMING CONSIDERATIONS
City Council action is requested on March 19, 2019, to ensure the contracts are in place expeditiously and before manufacturer cut-off dates for the 2019 model year orders.
FISCAL IMPACT
The total cost of the lease-purchase finance agreements for the 51 Chevrolet Bolts and 19 Nissan Leafs will not exceed $2,310,930, which includes the down payment, sales tax, licensing fees, and financing costs. This amount also includes a reduction of $228,875 from federal tax credits. Costs are budgeted in the Fleet Services Fund (IS 386) in the Financial Management Department (FM), offset by capital charges collected from user departments through the Fleet Memorandum of Understanding (MOU) monthly billing process. There is no local job impact associated with this recommendation.
SUGGESTED ACTION
Approve recommendation.
BODY
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Respectfully Submitted,
JOHN GROSS
DIRECTOR OF FINANCIAL MANAGEMENT
APPROVED:
PATRICK H. WEST
CITY MANAGER