SR-03-14-1978-6PSanta Monica, CrC fornia, March 6, 1978
TO: Mayor and City Council
FROM: City Staff MAR 1 4 1978
SUBJECT: Acquisition of Eight Trucks for CETA Projects
241
Introductions nu , 0 :J.
This report requests that eight light utility vehicles be pur- �)
chased with City funds and leased to the CETA program. "Li
Background
CETA projects operated by the Water, Streets and PFM Divisions
are in need of transportation for employees and materials.
Eight light utility vehicles would satisfy their requirements.
Purchase with CETA funds of equipment costing in excess of
$1000 is prohibited by Federal regulations. Although such
equipment can be leased commercially, there is no lasting
benefit to the City from such an arrangement. Several cities
involved in Title VI projects have chosen to purchase equip-
ment with City Funds and recover the purchase price by leasing
the equipment to the CETA program.
With the assistance of the Equipment Guide Book Company, pub-
lishers of the Rental Rate Blue Book, we have established a
fair operating cost per month of $303 per vehicle. This oper-
ating cost includes depreciation, fuel and maintenance. The
County of Los Angeles has approved this as a lease price to
CETA.
Costs to City
The State Cooperative Purchasing service can make Datsun light
utility vehicles available at the following prices:
HIM
MAR 1 4 1978
To: Mayor and C-nncil
Source
State Cooperative
2
Standard Bed
$ 4030.68
March 6, 1978
Long Bed (84 ")
$ 4184.35
Similar vehicles were included as Item 8 in Bid number 1337,
Automotive Equipment, which also included vehicles in the approved
capital outlay budgets (addressed in a separate report). Proposal
forms were mailed to forty -seven (47) dealerships and notices were
advertised in accordance with City Charter
and municipal code
provisions. Three (3)
bids were received
Source
Standard Bed
Long
Bed (84 ")
Crenshaw Motors -Ford
$ 4317.61
$
4472.76
Pasadena Datsun
$ 4167.72
$
4324.72
Claude Short Dodge
$ 4124.01
$
4238.42
Sales tax is to be added to the prices listed above. The State
price is lower than the competitive bids. Therefore, the total
cost for 8 long -bed vehicles at $4,184.35 each would be $35,483.28,
including applicable taxes.
Recovery of Costs
If the full $303.00 monthly lease price per vehicle were devoted
to defraying the initial capital outlay, recovery of costs would be
effected within fifteen months. The lease price does include a
generous estimate for fuel, repairs, tires and insurance at
$147.92 per vehicle per month. Assuming that these costs consis-
tantly meet the estimate, $155.08 per month is available to defray
the initial cost of each vehicle. At that rate, full costs includ-
ing initial outlay,fuel, maintenance and insurance would be re-
covered within twenty -nine months.
It is possible that CETA will not be funded at current levels for
a full twenty -nine months. Our current CETA contract expires in
To: Mayor and Cc cif 3 1 March 6, 1978
September, 1978. Assuming a forty -day delivery period following
Council Action, this guarantees five months of reimbursement.
President Carter has announced that the current level of CETA
program will be maintained through September, 1979. If, at
the end of 17 months, CETA should not be extended, the City
could sell the vehicles. Using the current wholesale Blue
Book value of a 1976 Datsun Long -bed, cost recovery would be
as follows:
17 Months Reimbursement $ 21,090.88
Resale after 17 months $ 23,200.00
$ 44,290.88
This total exceeds the original purchase price of the vehicles
by $8,807.60.
Alternatives
The CETA program is allowed to lease vehicles for use by parti-
cipants. Using this alternative, the City does not gain title
to the vehicles, which could be used by regular City staff at
conclusion of projects. Forcasting vehicle utilization after
F.Y. 1978 -79, General Services would assign two vehicles in
PFM, one in Sanitation, two in Water and two in Streets. These
needs include both replacement and additional requirements. The
Recreation and Parks Department could use one vehicle for
Clover Park by F.Y. 1979 -80.
Recommendations
It is recommended that a budget appropriation of $35,483.28 be
made to the Administrative Services Department, Budget 245, and
that the competitive bids be rejected in favor of purchase through
the State Cooperative Purchasing Service.
Prepared by: R. N. Arono
Reference:
Contract No. 2488
(CCS)