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039-18 - Resolution - Adopt Policies and Procedures for the Equipment Rental and Revolving FundRESOLUTION NO. 039-18 A RESOLUTION OF THE CITY OF PORT ORCHARD, WASHINGTON, TO ADOPT POLICIES AND PROCEDURES FOR THE MANAGEMENT OF THE EQUIPMENT RENTAL AND REVOLVING FUND, FOR FLEET STANDARDIZATION, AND FOR THE MANAGEMENT OF SMALL AND ATTRACTIVE ASSETS. WHEREAS, RCW 35.21.088 requires every city having a population of more than eight thousand to establish an equipment rental fund in its street department or any other department of city government; and WHEREAS, the City Council has determined that it is in the best interest of the city to amend Title 3 of the Port Orchard Municipal Code to set forth the requirements of an equipment rental and revolving fund and to adopt appropriate policies and procedures related thereto; and WHEREAS, the City has determined that it is in the best interest of the city to create and maintain a standard criteria for its fleet vehicles and to adopt appropriate policies and procedures related thereto; and WHEREAS, the City has determined that it is in the best interest of the city to identify various categories and thresholds for identifying assets, including those that are small and attractive, and to adopt appropriate policies and procedures related thereto; and WHEREAS, written, adopted equipment rental and revolving fund, fleet standardization and small and attractive assets policies have many benefits, such as assisting our elected officials and staff in the financial managment of the City fleet and equipment, streamlining discussions of financial matters, engendering public confidence, and providing continuity to the city; and WHEREAS, feedback and recommendations were solicited and obtained from City Departments and the Finance Committee, and the City Council provided additional guidance on the development of these polices; now, therefore, THE CITY COUNCIL OF THE CITY OF PORT ORCHARD, WASHINGTON, HEREBY RESOLVES AS FOLLOWS: THAT: The Equipment Rental & Revolving Fund, Fleet Standardization, and Small & Attractive Assets policies set forth in Attachments A, B, C to this Resolution are hereby adopted. PASSED by the City Council of the City of Port Orchard, SIGNED by the Mayor and attested by the City Clerk in authentication of such passage this 21st day of August 2018* U^Ti utaansuu, Mayor ATTI A7Brandy"Rinearson,£tity Clerk Exhibit A <portORCHARD Policy & Procedure Subject: EQUIPMENT RENTAL AND REVOLVING FUND Page 1 of 4Index: Finance Department Approved by: Noah Crocker Effective Date: 8/21/2018 Supersedes: 1.0 PURPOSE: The purpose of this document is to establish and specify the City of Port Orchard policies governing assets and fund management, including rental, replacement, operations, and maintenance services for vehicles. 2.0 POLICY: The City will establish rental rates to cover operations, maintenance and replacement for all vehicle classes. Other equipment may be included upon mutual consent of the Equipment Rental and Revolving (“ER&R”) Fund Manager and Finance Director. Vehicles/equipment included in the ER&R Fund shall have a value of more than $10,000, unless an exception is approved by the ER&R Fund Manager and Finance Director. Equipment attachments will not be included in the ER&R Fund unless justification is made that it is essential to the primary asset’s use (attached to a specific vehicle in ER&R Fund). When billing outside agencies for use of vehicles/equipment, the hourly cost will be determined based on industry standards. Port Orchard’s standard was established based on the Federal Emergency Management Agency (FEMA) hourly rate table. This will be reviewed and may be adjusted at the direction of the Finance Director. This cost can be changed under the direction of the Finance Director. Exhibit A 3.0 ER&R FUND CONTRIBUTIONS: The respective funds, including but not limited to Current Expense, Street, Water Sewer, and Storm, will contribute to the ER&R Fund to reflect a level that insures continued operation of the fund over the next two biennial periods. Funding levels will be evaluated on a biennial basis. Interest earned, together with gains or losses on disposition of retired assets, will be accounted and applied to each contributing respective fund. 4.0 MINIMUM TARGET FUNDING LEVELS: Minimum fund balance levels will be determined by the Finance Director through the budgeting process. DISPOSALS / REPLACEMENT:5.0 Equipment may be disposed of at time of replacement utilizing the method most beneficial to the City. 6.0 REPLACEMENT CRITERIA: Replacements will be based on three factors: 1) Expected Service Life (Useful life) of vehicle/equipment; 2) Mileage; and 3) Maintenance History/Major repair which will exceed 50% of residual value. (Exhibit A illustrates a schedule for classes of vehicles, useful life, and mileage). Useful life is established based on industry standards and the normal life expectancy of similar assets. Useful life may be adjusted for a number of reasons, e.g., as a result of valid department requests, technological changes in the equipment, and discrepancy in realized average use life of vehicles. Port Orchard’s useful life was established based on Office of Financial Management (OFM) useful life tables, Governmental Accounting Standards Board (GASB) best practices, industry standards, and like-size cities’ and counties’ data. The useful life of assets in the ER&R Fund will be reviewed from time to time and may be adjusted at the direction of the Finance Director. 7.0 INCREASES AND MODIFICATIONS: Any increase or change to the fleet requires written justification from the applicable department director to include cost analysis and rationale. This includes transfer/purchase within departments/funds. Increases or changes are at the direction of the Finance Director, Exhibit A or their designee. Any additions to the City’s overall fleet will require City Council approval. 8.0 REPLACING EXISTING EQUIPMENT WITH UPGRADED EQUIPMENT: (For example, 450 chassis to 550 chassis; police sedan to police utility vehicle) The department director will submit explanation that identifies gained efficiencies. When new vehicles or assets are required due to mission or operational changes, such fleet additions will be approved through the City’s budget process. Once the vehicle/asset addition has been approved by the City Council, ER&R Fund staff will work with the department to procure a vehicle suitable to the department's needs using the fleet standardization policy. 9.0 MAJOR REPAIRS: (For example, engine replacement; transmission replacement) When major repairs are required for an asset, the Finance Director or their designee will evaluate whether repairs are made, or a replacement vehicle is purchased. This includes major body work with expense exceeding more than 50% of residual value. The cost of the major repair will be billed to the department’s operating budget net of any insurance recovery. Only repairs extending the asset’s useful life will be eligible to receive applicable ER&R Fund funding as a source for the specific repair. 10.0 RENTAL RATES: Rental Rates shall be calculated on a biennial basis and may be modified if there are changes to the fleet necessitating a review. The rental rate shall be calculated to cover the following three components: OPERATION RATES The intent is for the operational expenses to break-even on a biennial basis • An estimate of total annual operations will be calculated; • A percentage of each respective fund will be calculated; • Each respective fund will contribute its estimated portion to the ER&R Fund; and • Operational expenses, including fuel, etc., will be paid out of the ER&R Fund. MAINTENANCE RA TES The intent is for the maintenance expenses to break-even on a biennial basis • An estimate of total annual maintenance costs will be calculated; • A percentage of each respective fund will be calculated; • Each fund will contribute its estimated portion to the ER&R Fund; • Expenses, including mechanic and related salary and benefits, supplies, etc., will be paid out of the ER&R Fund; and Exhibit A • Major repairs will be paid out of the ER&R Fund with the respective fund making an additional contribution to replenish the fund. REPLA CMENT RA TES • An estimated replacement value will be calculated per year; • The estimated value will be budgeted biennially; • The replacement payment will be reserved in the fund for future replacements only; • The fund will surplus obsolete vehicles and acquire new vehicles; • Each respective fund will be calculated & accounted for separately within the ER&R Fund;and • Vehicle replacements may be funded with cash or loans. Exhibit A ExhibitA Vehicle Replacement Criteria Type of Vehicle Expected Service Life Mileage Maintenance History Hours Small Cars/ Trucks n/a 50% of Residual value in any given year 12 years 120,000 n/aMedium Trucks 50% of Residual value in any given year 50% of Residual value in any given year 50% of Residual value in any given year 50% of Residual value in any given year 50% of Residual value in any given year 50% of Residual value in any given year 50% of Residual value in any given year 50% of Residual value in any given year 50% of Residual value in any given year 15 years 150,000 Large Trucks/ Equipment n/a20 years 200,000 n/aPolice Line Cars 11 years 130,000 Police Staff Cars n/a12 Years 120,000 n/a n/aAG Equipment 10 years n/a 4,000 hoursTractors15 years n/aSweepers 7,500 hours20 years Trailers/ Misc.n/a n/a20 years n/a n/aMarine20 years Exhibit B ORCHARD Policy & Procedure Subject: FLEET STANDARDIZATION Index: Finance Department Page 1 of 2 Approved by: Noah Crocker Effective Date: 8/21/18 Supersedes: 1.0 PURPOSE: The following policy documents a fleet standardization system. The system is designed to ensure quality controls and financial management of the purchase and maintenance of city vehicles. The intent of fleet standardization is to eliminate cost through a simplified vehicle purchase process, standardize training, reduce the cost of parts, and provide improved maintenance. 2.0 POLICY: It is the policy of the City to maintain a standard vehicle fleet. Additionally, the City desires to have a fleet with a uniform appearance to better promote the City’s brand. The City fleet should be uniformly recognizable for its citizens and for public safety. 3.0 GENERAL: • Standardizing the fleet will have the benefit of the workforce becoming skilled in operating and servicing the vehicles, simplified re-ordering process of vehicles, and reduction of inventory costs. • Simplified ordering - Standardizing the fleet and purchasing the standard vehicles leads to a simplified order and re-order process. This process works to reduce the time between initial order of the vehicle and when the vehicle is received. A standardized fleet eliminates uncertainty about receiving a consistent product. • Standardize training program - A standardized fleet allows the City to standardize the training program. Limiting the variety in the fleet allows for all parties involved, from operators to technicians, to gain a deeper understanding of the Exhibit B fleet’s vehicles. Having the same training program for everyone ensures that employees have the same knowledge base, leading to an efficient work force. • Lower parts cost - A variety of different vehicle makes and models in the fleet requires the City to have parts in inventory for each specific vehicle. The parts inventory must be larger to accommodate the different vehicle makes and models, thus increasing cost. Standardizing the fleet can have the benefit of lowering inventory cost, which will reduce expenses. • Improved Maintenance - Standardizing the fleet will allow technicians to improve their knowledge of the vehicle type. This leads to a shorter turnaround time for repairs and fewer mistakes by the technicians. The more time a vehicle is in operation, and not in for repairs, the more useful it becomes. To get the most value out of each vehicle, maintenance efficiency is crucial. • RCW 43.19.648 - Requires all local governments to convert their vehicle fleets to electricity or biofuel. Local governments are required to transition all vehicles to electricity or biofuels to the extent practicable. WAC 194-29-030 provides further guidance regarding this issue. If it is not practical for local governments to use electricity or biofuel for police, fire or emergency response vehicles, including utility vehicles frequently used for emergency response, it is encouraged to consider alternate fuels and vehicle technologies to displace gasoline and diesel fuel use. • It is the City of Port Orchard’s intent to follow the above rule to the extent practical. The City will convert its fleet, beginning with administrative vehicles across departments when practical following RCW 43.19.648 and as a part of its ER&R fleet replacement plan. • From time to time, but no longer than every four years, the fleet standard specifications shall be reviewed to consider any changes in market conditions or technological improvements. Exhibit B VEHICLE FLEET STANDARDS: STANDARDS FOR VEHICLES Police Department Standard Vehicle Model Chassis Drive Train Color AccessoriesGraphics Ford Sedans Automatic Black City Decal Lights SUV Vehicle Number2WD Radios 4WD Antennas AWD Public Works and Planning Standard Truck Model Chassis Cab Size Drive Train Color Graphics Accessories 1/2 TonFord Regular WhiteAutomatic LightsCity Logo 3/4 Ton Extended 2WD Truck Number Radios Crew Cab1 Ton 4WD Antennas Tool Boxes Administration and Planning Standard Vehicle Chassis Drive TrainType Color Graphics Accessories Electric Sedans Automatic White City Logo Lights Biofuel 2WDSUV Vehicle Number Radios 4WD Antennas AWD 4.0 REFERENCES; • RCW 43.19.648 • WAC 194-29-030 • ER&R Policy Exhibit C (portORCHARD Policy & Procedure Subject: SMALL & ATTRACTIVE ASSETS Index: Finance Department Page 1 of 2 Approved by: Noah Crocker Supersedes:Effective Date: 8/21/18 1.0 PURPOSE: The following policies and procedures document a system designed to ensure controls over small and attractive assets, items that might not be noticed immediately after their disappearance. The intent of this policy is to obtain accountability over items that do not meet the criteria of a capital asset and would not be noticed immediately upon disappearance or replacement. 2.0 POLICY: It is the policy of the city to maintain accountability overall tangible items that fit the definition of small and attractive assets, which may have the likelihood of disappearing without being noticed. Each department shall review and update records, to be verified by a physical inventory at least once a year, and provide such records to the Finance Department for the purpose of monitoring differences between years. 3.0 GENERAL: Small and attractive assets are defined as easily moveable, desirable items with a unit cost of $300.00 to $4,999.99 and have a life expectancy of more than one year. These items are either concealable or portable. Small and attractive assets are not to include more permanent fixtures such as desks, tables, and shelving, or items that are equipment for accomplishing tasks that are very small in nature or of minimal monetary value. These include items like minor equipment, shovels, wrenches, hand tools, and items that are consumed or used up, such as asphalt, bottled water, printer paper, and the like. Small and attractive assets also do not include items that, while they may meet the threshold when purchased, are used as an accessory for larger capital assets, such vehicle accessories like light bars, cages, sirens, etc. Small and attractive assets should include communications equipment, optical devices (binoculars, telescopes, range finders, infrared viewers), cameras and photographic equipment, computer systems, laptop and notebook computers, data-processing accessory equipment, and components (scanners, data displays, etc.), stereos, radios, television sets, tape recorders, DVD Exhibit C players, VCRs, video cameras, weapons and shop equipment (power tools, scaffolding, ladders, etc.). 4.0 RESPONSIBILITY OF DEPARTMENT HEADS The finance department will prepare a list at least annually of the small and attractive assets for distribution and review. Each department head or their designee will review, update, delete, and add new items to the list within 30 days of distribution. Typically, this review will occur in January of each year. If an item is deleted, the department head will note the reason and/or means of disposal. 5.0 PROCEDURES: • ADDITIONS: The City may acquire property via purchase, construction, donation, or lease. Regardless of how it is acquired, when the property is received, the department/fund acquiring the item will add it to their Small and Attractive Asset database listing and will mark the item with the City's name and inventory tag. The department head or designee will notify the finance department and provide documentation of the item(s) purchased. This documentation will include the department, date, serial number(s), model number(s), order numbers, or any other means available for tracking purposes. • DELETIONS: Items previously acquired will eventually be disposed of and will need to be deleted from the department’s list. Deletion may be required due to a sale of the asset, scrapping, mysterious disappearance (lost or stolen), surplus, or involuntary conversion (fire, flood, etc.).The department head controlling the item is the only one in position to remove items from their list. Items disappearing mysteriously may require additional reports to the police department, city clerk, and insurance company. Deletions brought about because of natural disaster may require reporting to the insurance provider for an eventual reimbursement claim. • TRANSFERS: Occasional transfers of property between departments, individuals within a department or funds will occur. The original controlling department/fund is accountable for all items and for initiation of a notice of transfer. Proprietary funds must be compensated for all interdepartmental transfers involving a proprietary asset. The sale price will be fail- market value, which may result in a gain or loss on the sale of an asset. Interdepartmental transfers or intergovernmental (i.e. city to county or state) do not require the city to declare the item surplus or to provide public notice. • LOST OR STOLEN ASSETS: Whenever an item has mysteriously disappeared and all efforts have failed to recover it, the controlling department / fund shall notify the Finance Director or the designee via memo, who may file a police report and report to the insurance provider, if necessary, and update the database accordingly.