Many public agencies are
discovering that Ford Credit’s Municipal Lease/Purchase financing program is an
answer to acquiring essential equipment within limited budget confines—without
major cash outlays, long-term debt obligations or, in most cases, voter
approval. Fixed-rate financing helps you get the vehicles you need, when you
need them, while sticking to your current budget.
The Ford Credit plan has flexible
repayment terms and billing plans, which can be monthly, quarterly, semi-annual
and annual. In addition to the police vehicle, the police department can finance
both the aftermarket upfitted emergency gear and an extended warranty plan. Equity
is accumulated with each payment, and ownership is realized at lease-end with a
final payment of $1.
This leasing program has a number
of time-honored advantages like 1) avoiding the high costs of maintaining older
equipment; 2) low-cost, tax-exempt interest rates; 3) no down payment or
security deposit required; 4) no mileage restrictions; 5) no maintenance and
repair; and 6) no return provisions.
Case Study: Lincoln, Calif.
The City of Lincoln, located near Sacramento,
was one of the fastest growing cities in the United States. By the 2010 Census,
the population was just under 43,000 residents. Like many municipalities, when
the economy slumped a few years back, the city’s budget also took a dive. These
cutbacks greatly impacted the police department, which had 43 sworn officers. With
layoffs and attrition, the police department was reduced from 43 sworn to just
Budget cuts also
affected the police fleet, which at one time issued take-home cars for the
officers. With no money for new vehicles, the once proud fleet of 39 vehicles
became a rag-tag collection of various years of Ford CVPI and Expedition, Dodge
Charger and Durango,
and Chevrolet Tahoe. Many of these vehicles were purchased used from other
agencies and came in different colors and markings. The newest vehicle in the
fleet was a 2007 Dodge Charger.
At this point,
reliability was becoming a major issue and mechanical breakdowns became the
norm, rather than the exception. This caused the city to pay out huge amounts
of money in repairs just to keep the fleet operational. “My officers were
breaking down while responding to critical incidents and assistance calls,”
complained Dan Ruden, Lincoln’s
interim police chief. “I couldn’t wait anymore for the economy to improve.” As
with any law enforcement agency, vehicle reliability issues can greatly impact
safety, both for the officers and the public at large.
Chief Ruden was
greatly concerned with fleet issues and desperately scraped the bottom of the
proverbial barrel for new vehicle funding. Despite his best efforts, the most
money he could scrape together was about $50,000. This was barely enough money
to purchase and fully upfit one police package sedan. With the condition of the
rest of the fleet, one new car was definitely not enough, so Chief Ruden looked
to other alternatives. One alternative was to continue purchasing other
agencies cast-off vehicles, such as from the Utah Highway Patrol.
Have You Considered Leasing?
contacted Dan Raimondi, a fleet specialist at Folsom Lake Ford, a major
supplier of fleet vehicles to the State of California as well as other law enforcement
agencies in the area. Raimondi suggested Chief Ruden seriously consider leasing
vehicles through Ford’s Municipal Lease/Purchase Financing Program.
As it happened,
Lincoln’s city finance director, Bill Zeoni, had heard about Ford’s program and
was open to Ruden’s idea. While the money in the police budget would barely
cover the purchase cost of one upfitted cruiser, Chief Ruden could now project
additional maintenance, repair, and fuel saving and was now able to raise
enough money to lease an entire new fleet of 15 vehicles.
Lake Ford is a major fleet vendor, Chief Ruden was able to piggyback his order
with a larger existing order, thus obtaining an even better bang-for-the buck.
Lehr Auto Electric, in Sacramento,
then upfitted the vehicles with everything but the radios, which the city
supplied. Chief Ruden had an entire new fleet, almost overnight.
Officer Safety – Officer Morale
Response to the
new police fleet was overwhelming—to say the least. The morale within the
department improved, and so did the public confidence with the police. Many
consider Chief Ruden a hero as with little capital outlay, he was able to
replace his dilapidated fleet with new vehicles that are more reliable, consume
less fuel, and present a positive image to the police department.
“We had a dying
fleet that was literally putting my officers and the public at risk every day,
and replaced it with 15 brand-new, fully equipped cars with warranties and
maintenance agreements; and we did it without increasing the budget by a single
dollar,” Ruden said. “It was a big win for the department and the city.”
There are many benefits
to leasing through Ford’s Municipal Finance Program. Financing costs are
relatively low, and are tax-exempt. There is an initial $425 underwriting fee;
however, this is a fixed fee, no matter how many vehicles are included in the
lease. Any attached equipment, accessories, extended warranties, sales tax,
Ford ESP, and other costs may be included in the amount financed. There is no
down payment or security deposit required, nor tacked-on charges for wear and
tear, maintenance or return provisions, nor are there any mileage restrictions.
schedules are flexible, and can be arranged on a monthly, quarterly,
semi-annual or yearly basis, with the first payment due at the time of delivery.
There are no prepayment penalties. Title to the vehicle will be listed in the
name of the lessee, and Ford Credit is listed as the lien holder. Lease terms
can range from 2–5 years and at the end of the lease, the vehicle can be
purchased for $1.00. There is a non-appropriations clause, which allows
penalty-free return of vehicles if funds are not appropriated and allows for
classification as short-term debt.
eligible to participate in this program include state and local government
entities—counties, cities, townships, villages, public school districts,
municipal airports, and Native American tribes. While this article focuses on
police vehicles, light, medium and heavy-duty trucks, school busses,
ambulances, fire-fighting equipment, street-sweeping, and garbage trucks are
also eligible to be leased with this program. Unfortunately, volunteer fire
departments, private schools and universities, federal agencies, and non-profit
501(c)) corporations are not eligible to finance through this program.
Extended Service Plans
Service Plans (ESP) can be rolled into the finance program. These ESPs
eliminate the variability associated with servicing your vehicle, offer a
potential reduction in your overall operating expenses, and accurately budget
life cycle expenses. A variety of repair protection programs and maintenance
coverage are available.
complete is PremiumCARE,
which has coverage for over 500 components. Premium
Maintenance covers all recommended scheduled
maintenance and parts in six areas: brake pads and linings, clutch disc, engine
belts and hoses, shock absorbers, spark plugs, and wiper blades.
has protection for 113 components, including many high-tech
covers 84 critical components, providing a blanket of
fundamental security. PowertrainCARE
has basic coverage for 29 key engine, transmission and
driveline components. Finally, Diesel
EngineCARE is major diesel-engine component protection for up
to seven years or 200,000 miles.
One of the numerous
advantages to lease versus purchase is leasing can free up funds for other
projects where leasing is not an option. As with the Lincoln, fully operational,
"turn-key" vehicles can be added to the fleet or replace existing vehicles
in minimum time without having to scramble for extra cash, incur long-term debt
obligation, or to wait for the next election to garner voter approval. This would
be an important option where public safety vehicles are destroyed by fire or
other unforeseen circumstances such as, flooding, fire, earthquake, tornado,
civil unrest, or other catastrophes.
Newer vehicles are
more fuel-efficient, much safer and, of course, are both more reliable and under
warranty. Leasing is one option to clearly lower both the total cost of
operation and the total cost of ownership.
Bellah is a technical editor for Police Fleet Manager and is a member of SAE International.
Bellah is a retired Southern California police officer with over 32 years of
service including Patrol, Investigations, Training, Supervision, and fleet
management assignments. He can be reached at email@example.com.