PURPOSE

The purpose of this report to request City Council approval of a five (5) year lease agreement between E-Z-Go Textron and the City of Burbank for the lease of 80 new golf carts, to be used at the DeBell Municipal Golf Course.

BACKGROUND

In December 2000, the City entered into a five (5) year lease agreement with E-Z-Go Textron to lease a fleet of 80 golf carts.  The existing lease agreement expired on December 15, 2005.  The golf carts are currently being leased on a month-to-month basis. 

During this performance period, the golf carts have functioned extremely well.  E-Z-Go Textron also provided support services in a timely and professional manner.  The E-Z-Go Textron golf carts are equipped with a control system that automatically regulates the speed which a cart can obtain.  This is of paramount importance given the hilly terrain of the DeBell Golf Course.  The system works well and has limited the number of speed related incidents to a minimum.  In addition, the carts have proven to be very reliable and can sustain extensive and challenging use.  The City has had a very successful working relationship with E-Z-Go Textron, and continues to remain very satisfied with the services provided and the quality of the golf carts.    

ANALYSIS

Staff met with E-Z Go Textron representatives and discussed a potential new agreement. It was the City�s desire to secure an agreement which emulated much of our previous contract, with some additional enhancements.

The terms of the proposed lease agreement with E-Z-Go Textron will remain very similar to the existing agreement.  This includes continuing with the same low monthly lease payments of $50.77 per cart, or $4,061.60 for all 80 carts.  The �bumper to bumper� warranty on the golf carts will be for a period of four (4) years, which includes both parts and labor. The warranty work will be performed on site, utilizing E-Z Go Textron authorized repair mechanics. The work will be completed in an expedient manner. A separate battery warranty will also be provided for four (4) years.  In addition, E-Z-Go will provide free training to the golf course personnel.  The training will be available at both the factory and on-site.  And finally, E-Z-Go will provide a semi-annual fleet inspection at no cost.        

The new proposed agreement has been specifically designed for municipalities. It provides a number of enhancements to the City, when compared to the original agreement. The municipal lease interest rate is 5.5% instead of the standard 9%. It also offers the City the option of trading the carts at anytime during the lease.  As an example, following approximately 48 months of payments, the balance due on the contract and the trade in value of the carts would both equal approximately $1,300 per vehicle, allowing the City to trade in the old fleet for a new fleet with no additional costs. Under the new proposed agreement, following the 60^th month, the City has the option of either paying the balloon payment of $56,000 ($700.00 per vehicle) thereby owning the carts, or trading in the carts to E-Z-Go Textron for a new fleet.  The trade-in value of a 60 month old E-Z-Go golf cart should be approximately $800-$1,000 per vehicle depending on the condition of the fleet. 

Park, Recreation & Community Services, City Attorney and Financial Services staff met to review and discuss the City�s options to either go out to bid for this service or execute a new multi-year lease agreement with E-Z-Go.  Based on the excellent service, no increase in the lease payment, and the condition of the existing golf carts, it was mutually agreed that it was in the City�s best interest to enter into another five (5) year agreement with E-Z Go Textron. If approved, the City will obtain all eighty (80) new carts in twelve weeks. However staff is hopeful that we will received them sooner based upon a discussion with an E-Z Go Textron representative.

FISCAL IMPACT:

The City is currently paying a monthly lease of $4,061.60.  Under the new five-year agreement, the monthly lease payment will remain the same for the entire 60 month term.  This expense is budgeted annually in the golf course�s operating budget; therefore, there will be no additional fiscal impact.

RECOMMENDATION:

It is staff�s recommendation that City Council approval the five (5) year lease agreement with E-Z-Go Textron for the lease of 80 new golf carts.

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