Selma unlocks fleet savings with enterprise deal

City steers its municipal vehicle management in a new direction through lease, replacement agreement with Enterprise Fleet Management

Members of the Selma City Council listen to presentations during a regular meeting March 4, 2024. (Serena Bettis)
Members of the Selma City Council listen to presentations during a regular meeting March 4, 2024. (Serena Bettis)
Serena Bettis
Published March 14, 2024  • 
11:00 am

SELMA – The city has expanded its fiscal frontier by partnering with Enterprise Fleet Management to lease and maintain city vehicles, effectively navigating a path towards safe and modern transportation for public servants.

The city maintains a fleet that includes dozens of public safety vehicles, public works vehicles and more, and with that faces the costly challenge of keeping up with repairs and replacing older vehicles, City Manager Fernando Santillan said. Purchasing new vehicles and outfitting them to match city needs is expensive, and so the city often opts to keep vehicles past their recommended useful life. 

“In that time that we do have it (the vehicle), we’re spending more on maintenance, we’re spending more on fuel consumption, we’re risking safety, because some of them have outdated brake systems, backup cameras, all those things, and so … the cost of keeping these aging vehicles in our fleet becomes more significant,” Santillan said.

 In order to more efficiently manage its fleet, the city sought out the lease and replacement agreement with Enterprise Fleet Management, a service provided by the parent company of Enterprise Rent-A-Car. The Selma City Council approved the agreement with a 4-1 vote at its March 4 meeting; Mayor Scott Robertson voted against the item. 

Instead of engaging in a competitive bidding process to find fleet management services, Selma is “piggybacking” off a contract that Enterprise has with Sourcewell, a government agency that conducts its own bidding process for service contracts and then allows public entities to use those contracts. 

“We would probably not have gotten a better price going out on our own for procurement because Sourcewell, they’re going to be able to leverage the buying power of all the public agencies who could potentially use them,” Santillan said.

The five-year agreement will take on a phased approach to replace existing city vehicles with ones leased by Enterprise. Santillan said the city will prioritize which vehicles to replace based on age and mileage.

This year, 18 city vehicles that are all more than 10 years old will be replaced like-for-like with leased vehicles, and the city will work its way to leasing a total of 53 vehicles by 2028.

Santillan said that leases will ideally be for five years, and when that time is up, the vehicle will be replaced with a new one so the city keeps the average age of its fleet low. The leasing cycle will also help the city with the transition to electric vehicles as mandated by the state.

Robertson pointed out that although the initial cost of the agreement will be approximately $206,200 the first year — covered partially through Measure S and partially through either the general or streets fund — the annual cost will increase each year as more vehicles are phased in, which Robertson said the city needs to be cognizant about. 

“In year five, if you add all those up, you’re looking at almost $1.8 million in total payments over five years,” Robertson said. “I just wanted to mention that because over time, it’s a pretty significant cash outlay; there’s a long tail, there’s a five-year tail there.”

 Robertson also voiced concerns about the newness of the type of services the city would be receiving from Enterprise, as it is something Selma has never tried before. 

Gabe Perez, a consultant for Enterprise Fleet Management, presents a lease and replacement agreement proposal to the Selma City Council at the regular meeting March 4, 2024. The council voted 4-1 to enter into the agreement, which will help the city maintain its vehicle fleet. (Serena Bettis)

Gabe Perez, a fleet consultant with Enterprise, assured the council that the lease agreement is flexible, and there are no early termination fees if the city is dissatisfied with the services and wants to end the agreement. 

Enterprising benefits

As part of the agreement, the city will participate in Enterprise’s maintenance program, where Enterprise will pay or reimburse the city for costs connected to regular maintenance or repair of the vehicle, which the staff report said reduces the city’s average monthly maintenance cost from $165 to $66.45 per vehicle.

Instead of city staff performing these repairs, they will use Enterprise-approved services within the city, contributing to local businesses and freeing up city fleet maintenance workers to repair vehicles not leased through Enterprise, such as fire engines and public works equipment, Santillan said.

When a vehicle’s lease is up, Enterprise will look for the best time to sell it, and the city will receive the equity that comes from that sale. 

On this point, Santillan referred back to Robertson’s concern about the lease payments building up over the agreement, and said that once vehicles cycle through, “there’s a wave of equity that comes back in, which doesn’t happen today because the city’s on a buy and hold strategy.” 

Perez said that Enterprise purchases new vehicles directly from manufacturers, but local dealerships will deliver the vehicles to the city and receive a courtesy delivery fee for that.

Santillan said the agreement with Enterprise could ultimately save the city a lot of money. Enterprise calculated a “conservative estimate” of savings of more than $143,000 over a 10-year period.

“But most importantly, it’s going to provide us a very reliable fleet in public safety and public works administration vehicles and reduce the amount of time that our staff is spending on maintaining each vehicle,” Santillan said.

Serena Bettis
General Assignment Reporter