Council hears proposal to lease city vehicles from Enterprise Fleet Management

The Freeport City Council on Feb. 10 heard a presentation from Enterprise Fleet Management on a proposal to shift the city's vehicle fleet from outright purchase to an open-ended equity lease arrangement.

City staff introduced the topic as a budget-season item and invited Jeff Kerner of Enterprise Fleet Management to present details. Kerner said the company would manage acquisition, maintenance tracking, fuel programs and resale, and that the open-ended equity lease would return 100% of a vehicle's equity to Freeport at term. "There's no wear and tear, no mileage restrictions, and at the end of term Freeport gets a hundred the % of the equity back," Kerner said.

The proposal would be implemented division by division, Kerner said, tailoring lease terms to vehicle class and typical annual mileage. He told council the city averages about 10,000 miles per vehicle annually while police vehicles average about 15,000 miles; Enterprise proposed five-year leases and a five-year phased replacement schedule to shrink the city's current 12-year replacement cycle to five years. Kerner said about 40% of the city's fleet is more than 10 years old and that older vehicles drive up maintenance and fuel costs. He estimated a conservative fuel savings of 25% and maintenance savings "up to 68%," and presented a 10-year analysis showing more than $500,000 in projected savings before accounting for resale equity.

Steven Campbell, a client strategy manager for Enterprise, described the company's client support model: quarterly health checks, an account coordinator to manage vehicle registration and deliveries, and a web portal that consolidates maintenance and usage data for every division. Campbell said the program helps identify underutilized vehicles and can reduce the time vehicles are down for maintenance by shifting routine work to local shops in the network.

Council members asked about mid-lease changes in vehicle size, accident repairs and upfitting equipment for public safety vehicles. Kerner said adjustments are possible under the open-ended equity lease but depend on the gap between what is owed and the vehicle's market value; typically the break-even window is about seven to 12 months for government entities. Kerner and Campbell said Enterprise will hand-sell used vehicles (not primarily through auction) and that resale proceeds can be returned to the general fund or rolled into future leases.

Staff and council discussed procurement and financing. Kerner and Campbell said Enterprise participates in cooperative purchasing agreements and contracts (TIPS, Sourcewell and Choice Partners) that cities commonly use to procure vehicles and services. City staff said the presentation was intended to inform budget planning for fiscal year 2025-26 and that a more detailed budget proposal and financing analysis would be brought back to council before any commitment.

No motion to enter into a lease or to commit funds was made during the workshop. The meeting closed without formal action on the proposal.

Kerner and Campbell offered references and said they would return with finer budget estimates and recommended unit lists if council asked staff to proceed. City staff said any implementation would be phased and coordinated with the departments identified in Enterprise's plan (public works, wastewater, police and other divisions).