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C I T Y O F S A N B E R N A R D I N O
INTEROFFICE MEMORANDUM
CITY ADMINISTRATOR'S OFFICE
DATE: July 26, 1993
TO: Mayor and Common Council
FROM: Shauna Clark, City Administrator
SUBJECT: Purchase of vehicle
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A violation of the Municipal Code has occurred with regard to the
lease purchase of Mayor Minor' s city vehicle. Mayor Minor has
requested that the problem be rectified as soon as possible.
BACKGROUND
Upon receiving a request to locate a Ford Crown Victoria for Mayor-
elect Minor, the Purchasing Agent contacted Ed Butts Ford in La
Puente and arranged for Mayor-elect Minor to test drive a vehicle
on May 10 . By way of a memo from Phil Arvizo to Manuel Moreno,
Jr. , the vehicle was accepted and taken to the city garage for
installation of a phone.
On May 26, 1993 , the Purchasing Agent negotiated a lease purchase
of the vehicle from Ed Butts Ford with financing through Ford Motor
Credit Corporation. The purchase order was revised three times
with the final revision made on June 16. With taxes and financing,
the total amount of the purchase was $25, 296. 00.
Unfortunately, prior to finding the vehicle and negotiating the
lease purchase, the Purchasing Agent failed to secure bids.
Municipal Code Section 3 . 04 . 070 requires purchases over $25, 000 to
be made only after a formal bidding procedure which includes
advertised bid notices and written bids. If you take the view that
the purchase did not exceed $25, 000 because the base price of the
vehicle was $22 , 225 . 76, then the process would have been for the
Purchasing Agent to secure three informal bids prior to purchase.
The Purchasing Agent spoke only to one vendor, Ed Butts Ford, and
signed financing and purchase documents without formal or informal
bidding.
The simplest remedy would be to turn the vehicle back to Ed Butts
Ford. However, since the car was sold by Ed Butts to Ford Motor
Credit in Detroit to accommodate the lease purchase, we must pay
off the car first and then sell it back to Ed Butts. Ford Motor
S .q
Memo to Mayor and Common Council
re: Vehicle purchase
July 26, 1993 Page - 2 -
Credit has given us a payoff price of $21, 937 . 26 if payment is
received by August 8 , 1993 . Once the city owns the car, Ed Butts
will buy it back from us for $19, 000. Our loss would be $2,937 . 26.
Using the proper bid procedure, we would then purchase a similar
vehicle. The City Attorney concurs that the safest course is to
return the vehicle and buy another one through proper bidding
procedures.
RECOMMENDED ACTION
1. That the Mayor and Common Council approve the buyout of
the lease from Ford Motor Credit Corporation for the total price of
$21, 937 . 26 with funds to come from the vehicle replacement fund;
2 . that the vehicle be resold to Ed Butts Ford for the total
amount of $19 , 000. 00 and the proceeds of the sale be placed in the
vehicle replacement fund;
3 . that the Director of Finance be instructed to secure three
informal bids on a new or used 1993 Ford Crown Victoria with
equipment identical to the vehicle sold back to Ed Butts Ford;
4 . that the vehicle be purchased from the lowest bidder for
cash rather than through lease purchase;
5. that the monies allocated in the Mayor' s 93/94 budget for
vehicle lease be transferred to the vehicle replacement fund.
City Administrator