CHATTANOOGA, TN – The City of Chattanooga, Tenn., has created a formal replacement fund for its fleet vehicles and equipment. Government Fleet magazine spoke with Brian Kiesche, the fleet manager for Chattanooga, about how the new fund is set up and the benefits it will provide for the City.

Kiesche said that before the new fund existed, getting vehicles or equipment replaced involved each department requesting capital funds derived, in part, from 20-year bond notes.

“We were essentially financing short-term assets with long-term debts; not the best practice for financing vehicle and equipment assets,” Kiesche said.

The previous funding method made it difficult to conduct lifecycle forecasts and decisions about when to replace vehicles and equipment due to the lack of knowledge about whether funding would be available.

The new formal replacement fund moves the cost burden of a vehicle from the City’s finance department and City Council to each department.

“Each department now pays a lease payment for each vehicle that covers both the maintenance and the depreciation in a cost-per-mile or hour format,” Kiesche said. “The depreciation portion is held in reserve until the schedule is complete, and this allows us to go and purchase the replacement before it becomes a maintenance and downtime problem.”  

Kiesche said the previous funding method only allowed each department to pay maintenance and fuel costs for vehicles and equipment, which meant higher maintenance costs due to the inability to replace them on a scheduled basis.

The benefits from this new fund setup include newer, more reliable vehicles and equipment (such as new dump trucks), timely replacements, reduced maintenance and fuel costs (due to better fuel economy), reduced emissions, and less overhead associated with maintenance. Kiesche added that this means the City needs fewer staff members for fleet and equipment maintenance. Lastly, this new method allows for better analysis of vehicle utilization and the ability to determine the optimal fleet size for the City.

“From a city-wide perspective, it forces examination of each vehicle and whether or not it is truly needed, assisting in a reduction in the overall number of fleet vehicles by requiring less reserve vehicles,” Kiesche said. “While it is difficult to calculate, vehicle downtime is a very costly item when you consider the cost of idle work crews or police officers. It lowers productivity per person, no matter what task or job they perform, and makes the department appear less efficient and productive when they simply don’t have good equipment.”

By Greg Basich