Why does CHPD always have new cars?
Aug 23, 2018 03:32PM ● Published by Jana Klopsch
Fully outfitted CHPD vehicles are provided by Garff Enterprises every two years. (Cassie Goff/City Journals)
By Cassie Goff | email@example.com
Newly designed police cars have been roaming the streets. As they were first spotted, many residents questioned the expenditure for the Cottonwood Heights Police Department’s (CHPD) fleet, especially with the current budget discussions and potential of a property tax increase.
“I often get questions about the kinds of cars we drive,” wrote Police Chief Robby Russo on July 1 in a weekly report.
CHPD’s public safety fleet is leased biennially, not owned. The lease agreement is best illustrated through the two different resolutions brought before the Cottonwood Heights City Council for approval of the agreement.
The first resolution is a vehicle repurchase option agreement. CHPD enters into this agreement with Garff Enterprises for police vehicles and associated equipment. Under this agreement, Garff Enterprises provides CHPD with cars fully outfitted with all the equipment officers will need, including lights and sirens. After the two years, Garff Enterprises buys the fleet back at a predetermined cost.
“The vehicle lessor requires the city to purchase the fleet at the end of the two-year lease term. The city requires the original seller of the fleet to agree, at the same time of sale, to repurchase the fleet at the end of the lease term. Thereby insulating the city of repurchase risk,” explained City Attorney Shane Topham.
The second resolution is a lease-purchase agreement. Cottonwood Heights enters into an agreement with a local or national bank (previous lenders have included Zions Bank and Chase Bank) for the lease.
“The lender provides an interest rate for the money used to purchase the fleet for the next two year period,” Topham said.
During those two years, Cottonwood Heights pays for interest on the lease-purchase agreement and basic necessities for the cars including gas, oil changes, tires and brakes.
“The city doesn’t need to hire mechanics for a city shop to repair the cars since, under lease, they are under warranty and the repairs are free,” Russo explained. “The city is only responsible for oil changes and a set of brakes and tires over the two-year term of the lease.”
The original lease agreement was written when the city incorporated in 2005. It allowed the city to lease the fleet instead of buying police cars and equipment outright.
The agreements are explained in every city’s annual comprehensive budget: “At the end of the two-year lease purchase, the dealer repurchases the vehicles for a previously agreed amount, usually clearing the remaining balance of the lease obligation in full.”
“When the dealer gets the cars back in two years, they hold a much greater resale value. The city gets the fleet cost and doesn’t pay tax,” Russo said.
For example, this year’s fleet includes F-150 Lariat trucks. For each of those trucks, the city cost is $38,180 with the equipment adding $4,965. However, with the high return after two years under the lease agreement, the city’s cost for each of the trucks is $11,146 or $464.41 a month.
In the current draft of the 2018–2019 fiscal year’s proposed budget, the police equipment and vehicles are a line item under expenditures and have a price of $1,859,827.
For comparison, the Unified Police Department (UPD) owns their fleet vehicles. During the fiscal year ending on June 30, 2017, UPD purchased $3.1 million of vehicles. The total balance for their fleet as of the same date was $16,116,917.
“Besides the initial capital expenditure, the lease program is a better product,” Russo said. “Safety of the officers, less down time of vehicles and professional appearance to the residents are some of the added benefits.”
On July 17 this year, the Cottonwood Heights City Council approved Resolutions 2018-45 and 2018-46, which approved the lease agreement for the CHPD fleet. (Resolution 2018-45 approved a vehicle repurchase option agreement with Garff Enterprises for police vehicles and associated equipment. Resolution 2018-46 approved entry into a governmental lease-purchase agreement with Zions Bank, National Association, for the lease of police vehicles and associated equipment and authorized the execution and delivery of all related documents, taking all required actions.)
At that time, the council expressed interest for being more involved with the lease-agreement negotiation process. “It will be reviewed during the budget discussions,” said Councilman Scott Bracken.
This current lease agreement will extend through 2020.