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Staff Report PREPARED BY: MATT MORLEY Director of Parks and Public Works Reviewed by: Town Manager, Assistant Town Manager, Town Attorney, and Finance Director 110 E. Main Street Los Gatos, CA 95030 ● 408-354-6832 www.losgatosca.gov TOWN OF LOS GATOS COUNCIL AGENDA REPORT MEETING DATE: 09/19/2017 ITEM NO: 7 DATE: SEPTEMBER 7, 2017 TO: MAYOR AND TOWN COUNCIL FROM: LAUREL PREVETTI, TOWN MANAGER SUBJECT: AUTHORIZE THE TOWN MANAGER TO PURCHASE FOUR REPLACEMENT HYBRID SPORT UTILITY VEHICLES (SUVs) FROM FREEWAY TOYOTA IN AN AMOUNT NOT TO EXCEED $121,437 RECOMMENDATION: Authorize the Town Manager to purchase four replacement hybrid Sport Utility Vehicles (SUVs) from Freeway Toyota in an amount not to exceed $121,437 (Attachment 1). BACKGROUND: As part of the Fiscal Year 2017/18 Operating Budget, the Equipment Replacement Fund was approved, providing funds for replacement of high mileage or older vehicles that have reached their replacement criteria or do not meet federal regulations for emissions. The Town Vehicle and Equipment Acquisition and Replacement Policy (Attachment 2) determines which assets should be replaced by evaluating predetermined age and/or mileage criteria. Fleet vehicle replacement purchases are reviewed annually through the Operating Budget and approved as part of the budget process. These vehicles were not included in the identified replacement schedule for this fiscal year, thus necessitating the associated budget adjustment. DISCUSSION: Four 2007 Ford Explorers, which have been assigned to the Community Development Department (CDD), were originally scheduled for replacement by 2015, per the Town’s vehicle PAGE 2 OF 3 SUBJECT: AUTHORIZE THE TOWN MANAGER TO PURCHASE FOUR REPLACEMENT HYBRID SPORT UTILITY VEHICLES SEPTEMBER 7, 2017 S:\COUNCIL REPORTS\2017\09-19-17\Puchase four SUVs\Staff Report - SUV Final.docx 9/14/2017 11:06 AM SH DISCUSSION (cont’d): replacement schedule. These vehicles were previously evaluated by the Parks and Public Works Department by reviewing the maintenance records and performing in-depth inspections for each vehicle, resulting in an extension to the replacement cycle through 2023 based on low mileage and overall condition. The transmission in one vehicle has recently failed, needing replacement and as the vehicles meet the replacement criteria, staff is now recommending replacement to avoid costly repairs and to maximize resale value. Replacement now will ensure reliable vehicles so that staff can continue to meet the needs of the community. Staff is recommending replacement of all four vehicles with Toyota compact SUV all-wheel drive hybrid platforms taking into consideration several factors, including uses for the vehicle, the vehicle’s fuel consumption, and overall costs. Hybrid vehicles have a proven track record in reduced long-term operational costs based on fuel savings at an estimated 34 miles per gallon (mpg) city and 30 mpg highway rating. When Town vehicles are added to the inventory, dollars are set aside for each vehicle on an annual basis in alignment with the replacement schedule to allow for the accumulation of funds. These funds are later utilized to replace the vehicles and appropriated through the budget process as needed. In the case of these vehicles, staff had anticipated additional years of service and now recommends replacement. This requires the transfer of funding within the Vehicle Replacement Fund to allow for the purchase. The cost for the recommended replacement vehicles is $121,437 (Attachment 1). The accumulated funds in the Town’s Vehicle Replacement fund for these vehicles totaled $113,403, meaning that total cost as requested exceeds the accumulated funds by $8,034. The excess costs can be attributed to increased vehicle costs through price escalation and because the recommended replacement vehicles are hybrid vehicles, which are more expensive than regular gasoline vehicles. The addition of hybrid vehicles to grow the Town’s green fleet and the availability of dollars in the Vehicle Replacement Fund to make up the required funding, drives the staff recommendation. The replaced vehicles will be sold at auction with a combined value estimated at $13,000. These auction funds typically return to the vehicle replacement fund to address shortfalls. Staff recommends utilizing these funds to fully fund the replacement, with any remaining excess returning to the vehicle replacement fund. In accordance with the Town’s Purchasing Policy, Section 7c (Cooperative Purchasing), this purchase is based on a formal bid process completed by the State of California Department of General Services, which allows for other municipalities to purchase vehicles using their formal bid proposal documents (see Attachment 3). PAGE 3 OF 3 SUBJECT: AUTHORIZE THE TOWN MANAGER TO PURCHASE FOUR REPLACEMENT HYBRID SPORT UTILITY VEHICLES SEPTEMBER 7, 2017 S:\COUNCIL REPORTS\2017\09-19-17\Puchase four SUVs\Staff Report - SUV Final.docx 9/14/2017 11:06 AM SH CONCLUSION: Staff recommends that the Town Council authorize the Town Manager to purchase four replacement hybrid Sport Utility Vehicles (SUVs) from Freeway Toyota in an amount not to exceed $121,437 (Attachment 1). ALTERNATIVE: Alternatively, the Town Council could direct staff to delay replacement of the vehicles. Staff does not recommend this alternative because the current vehicles have reached the end of their useful life. FISCAL IMPACT: Due to anticipated proceeds from salvage value of the replaced assets, staff anticipates no fiscal impact on the fund balance of the Town’s Equipment Replacement Fund, as an adequate source of funding has been accumulated. The total estimated balance of the Equipment Replacement Fund is over $1.7 million. ENVIRONMENTAL ASSESSMENT: This is not a project defined under CEQA, and no further action is required. Attachments: 1. Purchase Proposal. 2. Town Vehicle and Equipment Acquisition and Replacement Policy. 3. State of CA Department of General Services award to Freeway Toyota.