Press "Enter" to skip to content

County sours on vehicle leasing plan costs

Surry County tried something new when it entered into a vehicle leasing agreement with Enterprise in 2019. While best known to the public as a car rental agency, parent Enterprise Holdings brings in a good portion of its income annually from auto leasing and auto sales as well according to the company.

One of the reasons Surry County finds itself on favorable financial footing today is the tendency of the county administration and board of commissioners to seek savings where possible.

County leaders felt they found such savings with the leasing plan as it was figured that there would be some measure of cost control in having a set rotation of vehicles moving through the fleet, allowing for reduced maintenance and lower fuel costs.

With leased vehicles being rotated in it would have allowed newer automobiles to enter service that would, in theory, have better fuel economy than models they replaced. Similarly, maintenance costs were expected to go down as the vehicles in service would be newer so replacement parts would be easier to find.

These assumptions were not wrong, but supply chain problems and inflationary pressures post-pandemic drove costs of the leasing program to a level that was no longer palatable for the county leaders, who last week opted to exit the leasing program.

County manager Chris Knopf advised when the matter was first under consideration that he had discussed the leasing arrangement with other counties and municipalities and reported positive feedback. This led to a unanimous vote to enter the Enterprise Fleet Leasing program by the 2019 board; the current board is comprised of the same five members.

In a memo to the board, Denise Brown of the county finance office said, “Although there has been some advantage to this program, it has not shown the return-on-investment anticipated.”

The board approved the plan to transition away from the Enterprise leasing program to resume to outright purchase of county vehicles starting with fiscal year 2025. The county will hold all purchases and new leases approved in the fiscal year 2024 budget and through budget amendments remove those funds from the budget.

The finance committee outlined a timetable to make the transition back to vehicle purchasing and said the county would work with Enterprise to develop a transition plan. That plan needs to be back in front of the commissioners before the end of the calendar year.

Also, by year’s end, the county is to create a positional vehicle request form and a rollout process for that requisition form to go active at the start of January. Knopf explained, “Based on the type of position a county employee may be in there would be certain vehicles, a limited number and make or model they could potentially purchase.”

When departments submit their budget requests to the county for fiscal 2025-2026, each department will have its vehicle purchase requests factored into their proposals.

Knopf said that the transition will be a phased one. “There are a lot of logistical items that need to be worked out about what this purchase program looks like and how it’s managed by the finance office and purchasing agent. So, a lot of that will take time.”

“We would still be leasing for a number of years as we have leases that are currently in place and as those leases expire, we can decide whether to sell the car and get our equity along with Enterprise or we could purchase them from Enterprise. But, as we move forward, we would start next year budgeting for new leased vehicles that are needed, and we would go back to outright purchase.”

Commissioner Van Tucker summarized, “We tried this and, you know, we weren’t getting into a marriage, we were looking for a relationship to see how we like it. Turns out this relationship’s become so expensive — we still like it, and we like the convenience of it — but we simply think the county cannot afford it.”

“They basically want to take our whole fleet of county vehicles that (are) driven… and trade it out more often than we feel we can afford to pay the price of. We also feel like we give up some ability to determine how quickly we replace the vehicles and what kind of vehicles we replace them with and what the total cost is,” Tucker said.

“With inflation and with everything and what’s happened with the car industry, all this has just become a perfect storm and we’re leasing so many cars at such a high amount of the rate… we simply want to stop and catch our breath.”

To allow the county to catch its breath Knopf said, “We think that having sort of an off year, making this current year an off year, where we’re doing neither (purchase or lease), or at least moving forward with neither… that will be time used to plan for going into the purchase program starting next year and then phase out leasing over the next few years.”

Source


Source: https://www.mtairynews.com

Be First to Comment

    Leave a Reply