Folch asks for more information

In my experience, when I looked at leasing vs. purchasing, it’s been more cost-effective to purchase the vehicles and equipment.”

Councilmember Tina Folch

The Hastings City Council is expected to review the 2024 budget at a workshop Tuesday, Sept. 5. 

However, because of the narrow window for ordering new vehicles, a plan for leasing six Dodge Dakota trucks in 2024 was approved on a 6-1 vote on Monday. City administrator Dan Wietecha told the council that he feared that if the city waited to approve the plan as part of the budget, the vehicles would be gone. 

“This is quicker than we intended to bring this to you guys,” he said.  

Wietecha explained that the city is working to bring its vehicle fleet to a five-year life cycle. It will start with a plan to lease vehicles, which will impact the budget less. Over the period of the next several years, it will use that savings to start purchasing again. Vehicles then can be sold after five years, when they still retain a fair amount of value in the used market. 

“We’re working toward bringing all of our fleet vehicles into a more regular and quicker replacement cycle, put them on a five-year cycle instead of most of them being driven into the ground,” he said. 

Through the state bid system, vehicles can be purchased at a significant savings. The city is proposing to lease vehicles through Enterprise Fleet Management. 

Under the proposal, five Dodge Dakota pickup trucks will be leased for use by the Public Works Department, and one will be leased for use by the Facilities Department. Total lease cost for 2024 will be budgeted at $66,000. An additional $41,000 will be budgeted for uplifting the vehicles, installing toolboxes and vehicle registration. 

Vehicles being replaced were all from model years 2001-2007. 

“They’re due,” Wietecha said. “This is the first step of several years of getting into an ongoing rotational basis for our vehicles. It’s a cost-effective approach.” 

He projected that purchasing the vehicles outright would hit the 2024 budget at a level of about $250,000. 

Councilmember Tina Folch said she wanted to see an analysis of the total cost to the city of purchasing versus leasing the vehicles. 

“When I first started on the council, the city had been leasing vehicles and the pendulum swung to purchasing, and now we’re going back to leasing. I didn’t see any cost-benefit analysis here,” she said of Wietecha’s proposal. “In my experience, when I looked at leasing vs. purchasing, it’s been more cost-effective to purchase the vehicles and equipment.” 

“I’m kind of skeptical about this to be honest,” she said. 

Wietecha said the city will own the vehicles outright after the five-year lease and can sell them at the end, rather than utilizing them for extended years and bearing expensive maintenance on them and getting nothing at the end. Also, there’s an estimated $10,000 savings utilizing the state bid system. 

“That’s where the cost savings is. If we drive it into the ground, we don’t capture any of that reduced cost from buying in the state contract,” he said. 

Over the next several years, the city will be able to afford then to mix up vehicle procurement through leasing and purchasing and get its vehicles on a five-year life cycle. 

“The lease isn’t what’s making it cost effective. The cost-effective part is the five-year rotation. The lease would be an easier short-term cost to get into,” Wietecha said. 

Folch said Wietecha’s explanation was more “anecdotal” than actual numbers. 

“I can certainly forward you more detailed numbers if you would like,” Wietecha said. 

Folch responded, “I’m just not understanding how it is a cost savings in the end. I’m all for having a safer fleet for staffing to be driving in on a day-to-day basis. I’m not fully tracking the financing behind it. I don’t see that information here. I’m not personally going to be supporting it,” she said. 

She was the lone dissenting vote. Councilmembers Lisa Leifeld and Angie Haus also questioned the financing plan but ultimately voted in favor of it. 

“I’ve always said in the past, very seldom do I want to go against what staff recommends. This is your job. That being said, I will support this,” she said. “I know for a fact staff has put in the time and due diligence.” 

“I agree with Councilmember Leifeld. I will support this, but I would like to see what the numbers are on a cost-benefit analysis for the future,” said Leifed. 

Councilmembers Jen Fox and Dave Pemble spoke out in favor of Wietecha’s plan. 

“One thing I really like about this plan is it gets into a rotation where it isn’t all happening at once,” Fox said. She suggested perhaps tabling a vote for more information. 

Wietecha said, “Just an answer to the tabling of it. These windows tend to be short. From what we saw last year, they might be a matter of a couple of days. I would not be surprised if the window for ordered the specific vehicle, the Dodge pickup truck, is closed the next time we meet.” 

Fox then made a motion to approve the plan, seconded by Timothy Lawrence. 

Pemble said that since the city doesn’t have its own vehicle maintenance department, starting out with leasing makes sense. 

“In the businesses I’ve been involved with over the years, leasing vehicles was the norm. The only exception was if the entity had its own maintenance department. When you’re purchasing straight out, there are warranties. There’s a lot of wear and tear that aren’t covered under warranties. When you’re talking about pickups that probably get a lot of use and some of it heavy-duty use, we’ve got a squad car sitting out at the other end of town that’s been sitting there over a week because it’s waiting for parts,” said Pemble. “We need to proceed with the lease program as it was presented tonight.” 

Folch was the lone dissenting vote.