“The first time I heard about this, I thought, ‘this is too good to be true,’” Hawkins County Director of Schools Matt Hixson said of a new vehicle lease agreement the board approved unanimously at their Dec. 3 meeting.
The agreement will allow the system to purchase new fleet vehicles at low government pricing, use them for a few years and then turn the lease back in with equity built up that can go towards the purchase of new vehicles.
The system will begin this agreement by purchasing two new vehicles between now and June—a van for the system’s electricians/HVAC workers and a truck for the plumber— and look at purchasing more in the future.
“But it truly is [real],” Hixson added. “The government pricing now makes a lot of sense to enter into this type of program to ensure our staff are driving dependable vehicles that we’re not putting a lot of maintenance dollars in.”
This purchase will come from the amount the system currently has budgeted to purchase new vehicles this year. The system will not be adding to or amending their current budget to purchase these vehicles.
About the agreement
Director of Schools Matt Hixson reminded the board that he had initially brought up this idea soon after he assumed his current role in the school system. The county’s solid waste department had entered into a similar contract for their trucks, and Hixson thought the idea could work in the school system.
“The County Commission had entered an agreement with a large truck company to purchase solid waste trucks at government pricing,” Hixson explained. “They would use them a couple years and then turn the lease back in. Most times, they were able to submit that lease with an equity built up because of the low purchase price initially.”
He added, “They have very similar pricing for us for Hawkins County School vehicles.”
He explained that the system has been discussing a similar option with Enterprise’s fleet division, which is a branch of the same company as the well-known Enterprise rent-a-car. This agreement would cover every fleet vehicle the system has— including the maintenance, transportation and technology departments.
He noted that, for example, this agreement could save the system between $10,000 to $15,000 on the cost of a work truck for the maintenance crew.
“We can use that for two to three years and sell it back for more than what we purchased it for initially,” he said. “We will have equity built in those vehicles, and we can roll that equity into subsequent vehicle purchases.”
The agreement also has no mileage limits.
Two new vehicles now, more later
Energy Specialist Seth Rhoton addressed the board at their Dec. 3 meeting and explained that the department will purchase the aforementioned van and truck now and look at purchasing more vehicles later.
The truck to be used by the system’s plumber does require a utility bed and some special equipment. However, Rhoton noted that the system only has to pay for 25% of those costs.
“We’re going to get those [vehicles] for a fourth of what we would have to pay for them if we were to buy the equipment for the vehicle that we would have to purchase as it is,” he said.
For these two vehicles for a 12-month period, the system would have to pay just under $16,500. This includes the 25% equipment cost.
This is opposed to the $60,000 per year the system currently budgets to purchase three vehicles per year to “rotate the fleet,” as Rhoton explained.
“It’s getting harder and harder for us to find quality used vehicles at low mileage for $20,000 or less, so that’s why we’re looking at something like this [agreement],” he added.
Hixson further explained that the system will purchase these two vehicles between now and June to “see how we like dealing with the company, see what the program is like, and see the pros and cons.”
“If we like it, we would like to move into July 1 with the correct budgeted amount and a plan to work out the rest of our vehicle replacement through this program,” he added.
The proposed van and truck the system plans to purchase would replace two worn-out vehicles—not add two vehicles to the existing fleet. The worn-out vehicles, which Hixson noted had “multiple hundreds of thousands of miles on them” would then be ‘surplussed’ per usual.
“If we get four or five vehicles over the next year and a half or more, when it comes time to turn those back in, Enterprise takes delivery of those, they deliver a new vehicle to us, and then they are responsible for selling those vehicles and rolling that equity back into our purchase of the new ones,” Hixson said.
BOE Chairman Chris Christian asked Hixson about possibly getting other bids before agreeing to go with Enterprise, but Hixson explained that the system is not required to get multiple bids.
“There are very few companies that actually do this program,” he added.