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City may Lease of Certain Fleet Vehicles instead of Purchase

At tomorrow’s meeting, the Council will discuss a proposal to lease the City’s mid-size vehicles as a cost-effective way to improve the City’s aging fleet of these vehicles. Currently, the City’s vehicle procurement process requires funding from the CIP Vehicle Replacement Plan for vehicle purchases. Funds are available in the CIP – Vehicle Replacement Program.

Leasing will allow the City to better leverage financial resources. For 5 vehicles (4 light trucks plus an electric sedan), the five-year lease cost is $153,720 ($30,744/year x five years) vs. an up-front capital outlay of $158,000 to purchase the 5 vehicles.

This lease program provides a $76,000 residual value that will come back to the City (or be applied to the subsequent lease) at the end of the five years. That equates to a 5-year net cost of $78,000 ($154K total lease payments less $76K Residual Value) for 4 trucks and an electric sedan.

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