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2.01.008_Vehicle ReplacementCITY OF ROHNERT PARK CITY COUNCIL POLICY SUBJECT POLICY NO. RESO. NO FISCAL POLICY: 2011-56 VEHICLE REPLACEMENT PURPOSE Policy #: 2.01.008 Type: City Council Effective Date: 2011 Former Policy #: 415.37 EFF. DATE PAGE. 6/28/2011 1 OF 2 The purpose of the Vehicle Replacement Policy is to establish a Vehicle Replacement Fund and criteria for a Vehicle Replacement Schedule, which will ensure vehicles are funded and replaced according to their anticipated lifecycle, reduce maintenance costs, and eliminate reliance on the operating budget and large cash outlays for vehicle purchases. DEFINITIONS Depreciation: means the decrease in value due to wear and tear, decay, decline in price, etc. Capital Replacement Fund: means a plan for capital expenditures and the means of financing them, to be incurred each year over a fixed period of years, to meet capital needs arising from long-term work program. Fleet Manager: means the staff person responsible for managing the repair, replacement and maintenance of the City's vehicle fleet and equipment inventory. Operating Fund: means a programmatic, financial, and organizational plan for furthering the goals of the City Council through departments of the City, which does not include capital improvement projects. Straight -Line Depreciation: means the depreciation of an asset by a fixed percentage of its original cost based on its estimated life Vehicle Depreciation Schedule: means the programmatic plan used to calculate the replacement of City vehicles and equipment. POLICY The City of Rohnert Park's vehicle replacement and depreciation schedule is maintained by the Department of Public Works and specifically managed by the Director and Fleet Manager. Vehicle Replacement criteria are determined by anticipated useful service life. Typically, this is based upon the type of vehicle and its usage. A vehicle will be replaced according to these established criteria unless the Department Head(s) and Fleet Manager determine that: 1) mechanical failure or vehicle damage warrants earlier replacement, or 2) the vehicle is still serviceable and may serve additional years beyond its original anticipated service life. Funding for vehicle replacement shall be incrementally allocated from department operating funds to a restricted capital replacement fund — the Vehicle and Equipment Replacement Fund. Future vehicle replacements will be funded from the Vehicle Replacement Fund, which receives accumulated operating fund transfers based on the Vehicle Depreciation Schedule. v CITY OF ROHNERT PARK° CITY COUNCIL POLICY SUBJECT POLICY NO. RESO. NO. EFF. DATE PAGE FISCAL POLICY: 2011-56 6/28/2011 2 OF 2 VEHICLE REPLACEMENT Funding will consist of an annual set-aside based upon a straight-line depreciation for each vehicle over the course of its lifecycle and budgeted as part of the annual budget development process. Depreciation fees shall commence the same fiscal year of each new and replacement vehicle purchase. Depreciation expenses shall be expensed from the respective department operating budget and deposited into the Vehicle Replacement Fund. Depreciation expenses shall continue through the service life of the new vehicle and shall cease upon retirement of said vehicle. Calculating the Annual Set-aside The annual set-aside is calculated by determining the future value of a vehicle and using straight- line depreciation. This method determines the dollar amount that will be set aside each year throughout the vehicle's lifecycle. For example, a Crown Victoria costing $26,000 in 2003 has a useful life of 10 years. It is scheduled to be replaced in 2013 and is estimated to cost approximately $35,000. The annual set-aside amount for this vehicle would be $3,500. Funding will be allocated to the Vehicle Replacement Fund each year and will be used to purchase the new vehicle when it reaches the end of its lifecycle. Retired Vehicles All replaced vehicles shall be removed from the Vehicle Depreciation Schedule and removed from the active City Fleet. Retired Vehicles shall be disposed of through surplus sale by Resolution of the City Council of the City of Rohnert Park Surplus Property Funds received through the resale of any vehicle removed from City services will be deposited in the Vehicle Replacement Fund to help defray unanticipated new vehicle cost increases.