City of Jacksonville Considers Leasing Portion of Fleet
The City of Jacksonville is considering leasing vehicles in the hopes of saving millions of dollars in fleet purchase expenses, according to Jan. 25, 2004 edition of the Jacksonville Daily Record newspaper.
Last December, Jacksonville's interim Chief Financial Officer Walt Bussells, Finance Director Cal Ray, and Fleet Management Chief Sam Houston met with Enterprise Fleet Services to see if Enterprise could help implement the city's new pay-as-you-go approach to replacing vehicles.
During Mayor John Peyton's transition, Bussells proposed that the city lease vehicles to save large up-front expenditures from buying new, according to the Jacksonville Daily Record. When Peyton took office, the city had set aside $58 million to fund future purchases. By leasing, Peyton hoped to free about $30 million of that money for investment into the General Pension Fund. That fund targets an 8.5 percent return on investments versus the estimated 1 percent the money earned sitting in a money-market account.
Since June 2003, when he took over Peyton's transition, Bussells has been working to take better advantage of the city's strong credit rating and tax-exempt status to borrow at lower rates, according to the newspaper. Bussells has advocated re-investing that money into taxable markets with traditionally higher rates of return. If the pension performed as targeted, the city could earn more than $2 million annually through the new leasing structure, according to the newspaper.
The cities of Chicago and Pittsburgh have implemented similar programs with Enterprise Fleet Services.