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HomeMy WebLinkAbout01-25-2010 Regular MeetingCity of Fairhope Financial Advisory Committee Agenda-Monday, Januarv 25, 2010 4:45 p.m. in the Delchamps Room City Hall-161 N. Section St., Fairhope, AL 1. Approval of Minutes for December 28 , 2009 2. Funding request for upgrades to skateboard park, estimated to be $36 ,000 of City funds and a matching Federal grant of $36 ,000 ; $72 ,000 total. 3. STAGG grant request. 4. Recommendation to City Council regarding healthcare insurance. 5. Discussion of vehicle policy. 6. Other current financial requests. Schedule Of Future Meetings (Note: Regular meetings are on the 4th Monday of each month at 4:45 p.m. in the Delchamps Room at City Hall, 161 N. Section St., Fairhope, AL.) • Next regular meeting: Monday, February 22 , 2010 " STATE OF ALABAMA )( COUNTY OF BALDWIN )( The Financial Advisory Committee met at 4 :45 p.m., City Hall, Delchamps Room, 161 North Section Street, Fairhope, Alabama 36532, on Monday, 25 January 2010. Present were: Chuck Zunk, Chairman Members: Stan Grubin, Mac McCawley, John Brown, and Marvin Wilder Ex-Officio Members: Debbie Quinn, Dan Stankoski, Lonnie Mixon, Mike Ford and Rick Kingrea . Mayor Kant and Dick Kwapil were absent. Chuck Zunk called the meeting to order at 4:45 p.m. He announced that the first item is to approve the minutes from the December 28, 2009 Financial Advisory Committee meeting. Stan Grubin moved to approve the minutes from the December 28, 2009 Fairhope Financial Advisory Committee meeting. Seconded by Mac McCawley, motion passed unanimously by voice vote. Mr. Zunk said the next item on the agenda is the funding request for upgrades to skateboard park, estimated to be $36,000 of City funds and a matching Federal grant of $36,000 for a total of $72,000. Debbie Quinn explained the grant and the due date of June 1, 2010 for prefab upgrades on the existing concrete pads. After further discussion , Ms. Quinn moved to ask the City for permission to go out and get an estimate to add infrastructure to the skateboard park and spend up to $70,000 and get back $35,000 from the Federal Government. Seconded by Rick Kingrea, motion failed by the following voice votes: A YE -Quinn. NAY -Grubin, McCawley, Brown, Wilder, Stankoski, Mixon, Ford, and Kingrea. The next item on the agenda to be discussed was the STAGG grant. Jim Homer explained the grant in detai l and how an inventory of the City's storm water infrastructure would help the City of Fairhope. Mike Ford mentioned that the City had several studies previously that we might be ab le to use for doing our own. Debbie Quinn moved to go forward with the STAGG grant. Dan Stankoski seconded the motion . Rick Kingrea stated that Ford mentioned several studies and we could use the resources to review and build on those studies. After further discussion, motion failed by the following voice votes: A YE -Quinn. NAY -Grubin, Mccawley, Brown, Wilder, Stankoski, Mixon, Ford, and Kingrea. Financial Advisory Committee Monday, 25 January 2010 Page-2- Mac McCawley went over briefly some of the recommendations to the City Council regarding healthcare insurance. One of the recommendations was to cap the insurance per person per month. Chuck Zunk stated that we need to make sure the City has money to pay and help with the unfunded liability. Mr. Zunk said we should recommend allowing others an invitation to bid for City healthcare insurance and furnish two separate bids: one is to quote the same coverage and one is to quote market based coverage . After further discussion, Mr. McCawley moved that F AC recommend to the City Council to add to the agenda and request that the City go out on quotes for insurance from at least three companies; and each company must quote on the same coverage the City has now and on market rate coverage. Seconded by Lonnie Mixon, motion passed unanimously by voice vote. The item on the agenda is the discussion of vehicle property. Marvin Wilder presented a written document to each FAC member and asked for feedback for items which should be included in a Fleet Management System for the City of Fairhope. Lonnie Mixon moved to adjourn the meeting. Seconded by Rick Kingrea, motion passed unanimously by voice vote. There being no further business to come before the Financial Advisory Committee, the meeting was duly adjourned at 5:30 p.m. Chuck Zunk, Chairman , . Establishing an Effective Fleet Management System Because each municipality's fleet and useage is unique, a universal management guide does not exist that can be applied to all types of fleets for every locality. For example, a police vehicle has different maintenance demands than a pickup truck in the department of public works. Even within a single department, a vehicle used by a detective may be maintained and replaced on a different schedule than that of a patrol car. However, some commonalities exist. An effective fleet management program for any local government should establish guidelines for the acquisition, maintenance, replacement and disposal of vehicles. City officials should put together a fleet management policy that covers all of the guidelines established. This policy should be monitored for compliance by the heads of each of the individual departments. Essential to this oversight is the maintenance of pertinent records such as vehicle daily mileage logs, fuel usage logs, and the cumulative costs of parts, labor and overhead by a vehicle over its life. Maintenance Department heads should establish preventive maintenance intervals, based on local driving conditions and manufacturer 's recommendations, for each type of vehicle and eac h type of maintenance serv ice . Overly frequent or delinquent preventive maintenance intervals are counterproductive to controlling costs. Standards of acceptable quality s hould also be set for vehicle parts and fluids used. As with al l other areas of fleet management, there is no one maintenance template that wi ll cover all vehicles in the city. However, an effective sc heduled maintenance program will hold down maintenance costs. Preventive maintenance is the key to avoiding the repair or replacement of costly major vehicle components such as engines, transmissions and drive trains. It is important, however to make adjustments to the manufacturer's recommendations based on the specific vehicle's use. Accurate and comp lete vehicle maintenance records are a key tool for making fleet management decisions. Vehicle maintenance costs are variable and distinct to each ve hicle . Without proper records of accumulated maintenance costs, the basis for many management decisions, including replacement, is limited at best. As a result, decisions become educated guesses instead of informed choices. Pertinent records that s hould be maintained for each vehicle are: • Vehicle daily maintenance logs • Fuel usage logs • Cumulative costs of parts, labor, and overhead by a vehicle over its life • Vehicle daily mileage logs It is important that the department heads and City Manager remain involved in oversight to ensure that the appropriate records are maintained, and that policies and procedures are being followed. Maintenance costs represent a s ignificant portion of the total cost to own and operate a vehicle and tend to increase as a vehicle ages. Escalating maintenance costs are a key factor in determining when to replace a fleet vehicle. [n addition to the added cost of maintenance as a vehicle age , there is an additional cost to the city when a vehicle is in the garage receiving maintenance and not available for use. Re placement City officials should analyze the cost of owning and maintaining city vehicles over the life of these vehicles and establish a vehicle replacement standard. Different replacement standards may be considered depending on the results of the analysis and the different vehicle types and usage patterns. As with other aspects of fleet management, replacing a vehicle too soon or too late wastes money. A replacement standard can be developed by analyzing the costs associated with a vehicle and identifying the point when, on average, a vehicle is reasonably depreciated but not yet incurring significant maintenance costs. By replacing vehicles at this point, a city can avoid escalating maintenance costs and optimize vehicle resale value. Two criteria to consider when establishing a vehicle replacement standard are vehicle mileage and age. Remember to factor in any pertinent information on use and location that may affect the optimal time to replace a vehicle. There is not a single point at which the vehicle should be replaced in order to minimize its cost, but a period of time-often lasting several years in duration-during which it can be replaced. Thus, deferring replacement purchases in order to accommodate short-term budget constraints does not necessarily increase total fleet costs immediately. Many municipalities pick a specific number of years or rely on staff opinion to determine when to replace a vehicle. A much more cost effective method is to track each vehicle 's total life cycle costs from the date of acquisition to its point of disposition. This information is especially helpful for fleet management, since all too often vehicle replacement is one of the first items sacrificed when budget cuts occur. With accurate and complete records showing the optimal time to replace a vehicle, budget constraints will be less likely to drive fleet management decisions Another tool that can be used when considering vehicles for replacement would be to use the following "Points System" as a guide. This does not necessarily indicate that the vehicle will be replaced but would only serve as a "tool" in making a decision as to which vehicles will be recoqunended for replacement during the budget cycle. Ultimate decision for replacement will be availability of funds. Vehicles in this replacement policy are defined as: sedans, pickup trucks and vans, medium (3/4 ton) and heavy duty (1 ton) trucks. It does not include equipment, tractors, dump trucks, backhoes and fire trucks. • The Points system is based on the following with a possible top score of 21 . • Age 1 to 4 points • Mileage l to 5 points • Maintenance Cost vs . Replacement Costs 1 to 5 points • Overall Condition l to 4 points • Frequency of use l to 3 points Factor l: When the a ge of a vehicle reaches the following it will be assigned the fo llowing points : ge l to 2 3 to 4 Points l 2 5 to 6 7+ 3 4 Factor 2: When the mileage of a vehicle reaches the following, it will be assigned the following points: Mileage 0 to 30,000 30,001 to 50 ,000 50,001 to 80,000 80,001 to 1000,000 100,000 + Points 1 2 3 4 5 Factor 3: When the total repair cost of a vehicle reaches the following replacement cost of the vehicle it will be assigned the following points: Percent of Replacement 0 to 15% 16% to 35% 36% to 55% 56% to 75% 75%+ Points 1 2 3 4 5 Factor 4: When the overall condition of the vehicle is evaluated as shown below, the following points will be assigned: Overall Condition Excellent Good Fair Bad Points 1 2 3 4 When the frequency of use, expressed in number of hours used per week, wi II be assigned the following points: Frequency (in hours) Points 0 to 10 hrs. Seldom 1 11 to 9 hrs. Moderate 2 0 + hrs . Heavy 3 Disposal Once it has been determined that it is time to replace ehicle, you should make sure there are no better alternatives than purchasing a replacement. Ensure that the vehicle you are taking off the road is used enough to justify a replacement. Periodic review of all com parable vehicles will identify tho e that are underutilized and allow you to reassign them where they are needed more. City officials hould analy ze the various methods for the disposal of unneeded vehicles and d termine the mo t c t effec tive method of disposal for their purpo e . The goal is to ield the highe t al age alue of the ehicles. ethods of di posal include public aucti n, s aled bids or trade-in.