Regional Transit Authority_Termination of Lease Agreement, Sprinter BusesMasterpiece on the Mississippi
Dubuque
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AA- America City
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2007
TO: The Honorable Mayor and City Council Members
FROM: Michael C. Van Milligen, City Manager
SUBJECT: Recommendation to Terminate Vehicle Lease on Sprinter Buses
DATE: October 31, 2011
Director of Transit Operations Barbara Morck recommends the City Council terminate
its lease with The Regional Transit Authority for two light duty Sprinter buses in
exchange for a payment to the City of $24,181.18. The buses are no longer needed by
the City.
I concur with the recommendation and respectfully request Mayor and City Council
approval.
ael C. Van
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Attachment
cc: Barry Lindahl, City Attorney
Cindy Steinhauser, Assistant City Manager
David Heiar, Economic Development Director
Barbara Morck, Director of Transit Operations
Kelley Deutmeyer, Executive Director, ECIA
Milligen
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Masterpiece on the Mississippi
Dubuque
Afl4me tcacny
2007
TO: Michael Van Milligen, City Manager
FROM: Barbara Morck, Director of Transit Operations
CC: David Heiar, Economic Development Director
Kelley Deutmeyer, Executive Director of ECIA
SUBJECT: Recommendation to Terminate Vehicle Lease on Sprinter Buses
DATE: October 13 2011
BACKGROUND
In July 2010 The Jule was struggling to keep buses road -worthy and in service, with an
average age of its fixed route buses 20 years old and of its mini bus fleet 10 years. The
Jule and The Regional Transit Authority (RTA) both had received 5309 funding through
the state, but the RTA did not have the local match necessary in order to use the
funding. RTA approached the City with the offer to lease two (2) light duty Sprinter -
brand buses to The Jule in exchange for the City providing the local match (17% of
cost). The City agreed, and a lease agreement was authorized by City Council in late
December 2010.
DISCUSSION
The lease agreement gave The Jule use and control of RTA's two (2) Sprinter buses for
a period of four (4) years, and allowed for the use of City's payment of the local match
as payment on lease agreement (17% of the cost of the 2 vehicles for a total of
$26,180). The three buses, one of which belonging to The Jule and the other two to
RTA, were delivered in late December 2010. About this same time The Jule received
notification that they had been awarded two (2) federal grants, the State of Good
Repairs (SGR) and the Clean Fuels (CF), for a combined total of $3.8 million, with the
RTA named as a sub - recipient on the SGR grant. The grants provide funding for the
replacement of The Jule's entire transit fleet and the purchase of ITS equipment, as well
as the purchase of several vehicles and ITS equipment by RTA.
The Jule's new buses — 4 heavy duty, 12 medium duty and 11 light duty - began arriving
in early June 2011 with the last buses delivered in late August. At present The Jule
needs 8 light duty buses in order to operate daily mini bus service and has 12 to work
with (not counting the 2 RTA buses). In recent conversations with RTA it has become
clear that although The Jule no longer has a pressing need for the 2 light duty Sprinter
buses, the RTA does have need of them. Financially the RTA is in much better position
than this time last year, and is now requesting that they be allowed to buy -out the
remaining portion of the lease on the 2 Sprinter buses. This buy -out would include the
costs that were incurred in the "make ready" preparation of the vehicles, e.g. application
of paint, decal /logo and the bus wrap advertising. To -date the City's total investment in
the buses is $34,096: $26,180 for the initial local match and $7,916 in the "make ready"
costs (paint, and the application of the decals /logos and bus wraps). Figuring the
amount of the investment to -date ($34,096) spread over the length of the 48 month (4
year) lease, and with 39 months remaining on the lease the depreciated cost RTA is
prepared to pay towards the termination of the lease is $24,181.18.
RECOMMENDATION /ACTION STEP
I recommend that the City of Dubuque terminate its lease with RTA for the two (2) light
duty Sprinter buses in exchange for a payment of $24,181.18.
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