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Agenda Item # 20

BOARD MEMORANDUM

RECOMMENDATION:

Authorize the General Manager to execute a lease agreement extension with Toyota Motor Credit Corporation in the amount of $144,000 for the lease of twenty electric vehicles.  The effective term of the lease extension shall be one year, with a lessee option to extend the lease one additional year. 

BACKGROUND: 

On November 4, 1999, the Board of Directors authorized the General Manager to execute a lease agreement with Toyota Motor Credit Corporation in the amount of $385,000 for the lease of twenty electric vehicles (RAV-4s). 

The twenty leased vehicles were received from November 1999 through January 2001 as electric vehicles became available.  As a result, these vehicles have varying lease expiration dates, with three vehicles ending their term in October 2002, 14 in August 2003, and three in January 2004.

In 1999, in an effort to expand its use of alternative-fuel vehicles, VTA applied for and received two grants totaling $237,500 from the Transportation Fund for Clean Air (TFCA) grant program.  The first grant was received for $117,500 for the lease of five electric vehicles and the purchase of charging equipment.  The second grant was received for $120,000 for the lease of 15 electric vehicles. 

DISCUSSION: 

Toyota Motor Credit Corporation is offering to renew the leases on these 20 vehicles for one year, with a lessee option to extend for one additional year as the current leases expire.  Beginning in 1999, 21 electric vehicle charging stations were constructed at the VTA administrative facility to recharge the leased twenty vehicles with one of the charging stations available to the public.  Each vehicle must have a vehicle specific charging unit, which was sold separately from the vehicle.  VTA has invested approximately $211,000 in electric vehicle charging station infrastructure.  VTAs electric vehicle program total costs are listed below:

Maximum Net VTA Cost (5 Years)                                     $502,500

To maximize VTAs investment in electric vehicle charging station infrastructure, it is recommended that the leases be extended per the terms of the RAV4 Electrical Lease Agreement.  The lease extension cost of $144,000 will be incurred over three fiscal years because the vehicles have varying lease expiration dates as they were received by VTA from 1999 through 2001.  In addition, VTA will apply for grant funds in September 2002.  The expected grant amount for the lease extension is $4,000 per vehicle for a total of $80,000.  This could further reduce VTAs total program net costs to $422,500.

ALTERNATIVES:

VTA could discontinue the electric vehicle program and return the vehicles to the manufacturer.  VTA could also procure other non-revenue vehicles to replace the electric vehicles or provide VTA employees mileage reimbursement at the rate of 36.5 cents per mile.  However, staff does not recommend these options due to the popularity of the vehicles and VTAs clean fuels strategy.

FISCAL IMPACT: 

The cost of renewing these leases is included in VTAs Capital Budget.  Net lease costs of $144,000 could be reduced by $80,000 if VTA is awarded additional grant funding.  This would make the net costs to VTA $64,000 for the 20 electric vehicles over the next three fiscal years.

SMALL BUSINESS ENTERPRISE (SBE) PARTICIPATION:

Based on the limited scope of work and no subcontracting opportunities, no specific goal has been established for this contract.  Contractor is encouraged to make reasonable efforts to utilize SBEs in its procurement of ancillary services and products associated with the performance of this contract. 

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