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Hemet council approves Enterprise Fleet Management lease program, presenters cite multiyear savings
Summary
Council approved a partnership with Enterprise Fleet Management to implement an open-end equity lease model intended to cycle vehicles sooner, capture resale equity and lower lifecycle costs; presenters estimated multi-year savings and the motion passed 4–0.
The Hemet City Council on Nov. 12 approved an Enterprise Fleet Management leasing program intended to replace aging vehicles on a shorter cycle and capture resale equity.
Dan Skagen of Enterprise described the company’s "open end equity lease" model and walked the council through an example in which a $40,000 vehicle produces equity when sold after a shorter lifecycle. In the presentation the speaker cited a projected 10-year savings figure of "$271,000" at one point and later referenced a related $371,000 figure in his financial example. He described how the model preserves equity for the city and avoids mileage or wear-and-tear penalties typical of dealer leases.
Skagen said the approach allows the city to order vehicles directly from the factory, leverage Sourcewell contract pricing and manage resale on the city’s behalf. "This is not that kind of lease. This is an ownership lease... what that means to the city of Hemet is that $12,500 of equity, that's your money, comes back to the city of Hemet when we sell that vehicle on your behalf," he said.
Council members asked about fees and the vendor explained there are standard service charges, interest expense and holdback money in the financial model. After questions, Mayor Jackie Peterson moved and Mayor Pro Tem Krupa seconded a motion to approve the agreement. A roll-call vote recorded four yes votes; the motion passed 4–0.
The council did not vote on a specific vehicle purchase schedule at the meeting; staff will work with Enterprise to bring procurement and implementation details back to council as needed.
