HomeMy WebLinkAboutE-3.1. Approval of Vehicle Lease Agreement Extension CONSENT CALENDAR
TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY
BOARD
FROM: RICHARD TORRES, INTERIM GENERAL MANAGER
DATE: MARCH 28, 2022
SUBJECT: APPROVE THE EXTENSION OF EIGHT (8) ELECTRIC VEHICLE FLEET LEASE
AGREEMENTS WITH MK SMITH CHEVROLET FOR AN ADDITIONAL 18
MONTHS IN THE AMOUNT OF $46,395.36.
BACKGROUND:
On April 22, 2019, the Utility Board approved the leasing of eight electric vehicles with Low Carbon
Fuel Standards (LCFS) credits in order to help reduce greenhouse gas emissions. The end of the lease
contract is set to expire April 23, 2022. These vehicles support fleet operations for Azusa Light & Water
(ALW), Code Enforcement, non-emergency Police Department, and Community Resources personnel.
Under the lease agreement, the City has the following options: 1) terminate the lease and return the
vehicles, 2) extend the lease agreement for 18 months with the option to terminate the lease after 12
months, 3) lease new vehicles, or 4) buy the vehicles at the remaining contract price per vehicle. Staff is
recommending to extend the existing lease agreement due to vehicle supply shortages and elevated
market pricing.
RECOMMENDATION:
Staff recommends the Utility Board take the following action:
1) Approve the lease extension of eight (8) 2019 Chevy Bolt electric vehicles for an additional
18 months; and
2) Authorize the Director of Administrative Services, or designee, to amend purchase order
031147 to MK Smith Chevrolet in the amount of $46,395.36.
E-3
Approval of Vehicle Lease Agreement Extension
March 28, 2022
Page 2 of 3
ANALYSIS:
The Utility Board authorized a vehicle lease agreement with MK Smith Chevrolet for the acquisition of
eight (8) electrical vehicles in 2019. Staff recommends extending the leases for eight 2019 Chevy Bolt
EVs from MK Smith Chevrolet at a cost of $46,395.36 over an additional 18-month period, with the
option to terminate the extension after 12 months. The vehicles have been deployed to ALW, non-
emergency Police Department, Code Enforcement, and Community Resources personnel. Some of the
uses include meal deliveries for seniors, field inspections, court appearances, and staff training. The
vehicles are still fairly new, with low mileage, and require little to no maintenance.
Due to the ongoing COVID-19 pandemic and supply chain issues, vehicle inventory is low causing
prices to be driven up over fair market value. Automobile dealerships have little to no inventory for
leasing and purchasing options. To buyout the current eight (8) Chevy Bolt EV’s, ALW would pay the
buyout balance of $19,592.50 per vehicle, totaling a cost of $156,740. The total amount paid toward the
original three-year lease agreement was $108,766.00. Extending the eight lease agreements with MK
Smith Chevrolet, will cost $46, 395.36 for an 18-month lease with the option to terminate the lease after
a 12-month period.
Staff recommends approving the lease extensions with MK Smith Chevrolet, as it is the most cost-
effective and supply driven option at this time.
FISCAL IMPACT:
The fiscal impact of this lease extension is $46,395.36. There are sufficient funds available under
Account No. 23-40-770-550-2903 from sales of LCFS credits.
Approval of Vehicle Lease Agreement Extension
March 28, 2022
Page 3 of 3
Prepared by: Reviewed and Approved:
Brittany Palagonia Danny Smith
Administrative Technician Utilities Admin & Finance Manager
Reviewed and Approved: Reviewed and Approved:
Richard Torres Sergio Gonzalez
Interim General Manager City Manager
Attachments:
1) Vehicle Lease Agreements for 8 Chevy Bolts
2) MK Smith Lease Invoices with Updated Extension Date