HomeMy WebLinkAbout1998-02-17 City Council (20)City
City of Palo Alto
Manager’s Report
TO:HONORABLE CITY COUNCIL
FROM:CITY MANAGER DEPARTMENT: PUBLIC WORKS
DATE:FEBRUARY 17, 1998 CMR: 136:98
VEHICLE REPLACEMENT FUND STATUSSUBJECT:
This is an information report and no Council action is required. -
BACKGROUND
In 1995-96, spending was curtailed in the Vehicle Replacement Fund (Fund) due to the
internal audit of fleet usage and the potential to defer some scheduled replacements by
extending the useful life of equipment. In addition, there was a delay in replacing a few of
the items scheduled because of the difficulty in developing suitable specifications (fire
vehicles), coupled with a lengthy procurement process. At the end of FY 1995-96, there was
a backlog of vehicles to be replaced. In 1996-97, although progress was made to reduce the
backlog, a backlog of $880,000 remained.
DISCUSSION
In FY 1997-98, in an effort to meet the Vehicle Replacement Fund’s Mission Driven Budget
impact measure which targeted the replacement of vehicles within six months of their
scheduled replacement date, Fleet Management aggressively worked to complete the
ordering process for scheduled equipment and vehicle replacements, including backlogged
items. In addition, changes in technology, safety requirements and inflation increased the
cost of a few items beyond the amount budgeted. The Fund also incorporated replacement
of some existing equipment (from the Golf Course) not previously budgeted in the Fund. As
a result, the FY 1997-98 Budget is not sufficient to provide for the proposed joint purchase
with Mountain View of an aerial ladder truck. Although the amount of budget appropriation
is not sufficient, the Fund has reserves of $5.3 million available to provide for the purchase.
During 1997-98, the most expensive item in the fleet, an aerial ladder truck, was scheduled
for replacement at an estimated cost of $800,000. The Fire Department evaluated their
existing aerial apparatus and determined that a 75-foot ladder truck ( instead of the budgeted
100-foot ladder) would be sufficient, decreasing the replacement cost to $500,000. The Fire
Department planned to use the remaining budget of $300,000 to make a joint purchase of a
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reserve aerial ladder truck with the City of Mountain View (see related CMR). Because of
the progress made in reducing the backlog in 1997-98, there are not enough funds remaining
in the FY 1997-98 Budget to make this joint purchase. Therefore, a budget amendment is
being requested to fund this joint purchase, using available funds in the Vehicle Replacement
Fund retained earnings.
Staff anticipates completing the reduction of the backlog in 1998-99, which will require an
increase to the proposed 1998-99 Budget.
RESOURCE IMPACT
A Budget Amendment Ordinance for an unscheduled joint purchase of an aerial ladder truck
during 1997-98 is being submitted to Council in a separate report. The proposed FY 1998-99
Vehicle Replacement Fund Budget will include funding to eliminate the backlog. There are
sufficient funds in Vehicle Replacement Fund reserves for the backlog elimination because
of the previously unspent budget. As the end of FY 1997-98, reserve levels will continue to
exceed targetlevels of approximately $3 million, which are intended to fund a typical one
year replacement budget plus the most expensive item in the fleet.
POLICY IMPLICATIONS .,
This informational report does not contain any changes to existing City policies.
PREPARED BY: Shari Reynolds, PUblic Works Administrator
DEPARTMENT HEAD:
GLENN S. ROBERTS
CITY MANAGER. APPROVAL:
Director of lic Works
City Manage/
CMR: 136:98 Page 2 of 2