April 7, 1999

To: Budget Committee

From: Commissioner, Corporate Services

Subject: 1999 Vehicle and Equipment Replacement Program

Purpose:

This report presents the 1999 Vehicle and Equipment Replacement Program for approval.

Funding sources, Financial Implications and Impact Statement:

The Vehicle and Equipment Replacement Program is funded through the Vehicle and Equipment Replacement Reserve Account. This account is currently under-funded and is the subject of a separate report from the Treasurer and Chief Financial Officer.

Recommendations:

It is recommended that:

1. The 1999 Vehicle and Equipment Replacement Program, in the amount of $59,768,415 be approved;
2. Funding for new requests totalling $152,625 for Ambulance Services and Water Wastewater Services be deferred pending provision of cost/benefit justification;
3. When a vehicle or equipment unit becomes surplus, it be reassigned to replace a unit due for replacement, provided it is suitable for continued use in the required application;
4. Fleet Management Services report to the Budget Committee on the long term replacement plan for the City, Ambulance Services, Fire Services, Toronto Police Services, Library, C.N.E. and Zoo and a funding mechanism in conjunction with the Finance Department.

Council Reference/Background/History:

Each year, Fleet Management Services prepares the Vehicle and Equipment Replacement Program for City Fleet units in conjunction with client Departments. Separate submissions are received from the Toronto Police Service, the Toronto Zoo, the C.N.E., the Toronto Library, Toronto Ambulance and Toronto Fire Services, since the Fleet Management Services Division does not have responsibility for fleet management of their vehicles and equipment.

Replacement programs are required in order to replace vehicles and equipment which have exceeded their useful life, are beyond economical repair, or are no longer suitable for the job that they are required to perform. Fleet Management Services has consolidated the listing of vehicle and equipment units which are in need of replacement.

During consideration of the 1998 Operating Budget, the replacement program was deferred. A process was put in place to deal with exceptions requiring urgent replacement. Deferral of replacement resulted in additional capital maintenance costs to Fleet Management Services in 1998, of approximately $924,000, in order to extend the life of units which would normally have been replaced. In addition, the salvage value of the deferred units was reduced by another year of depreciation or approximately $550,000.

The replacement by exception process in 1998, approved 72 units totalling $7.9 million and recommended approval of 146 police cars at a cost of $3.815 million to the Budget Committee. A summary of the 1998 purchases is attached in Appendix D and the procedure for replacement by exception is attached in Appendix E.

Comments and/or Discussion and/or Justification:

Current Size and Mix of the Fleet:

Appendix B provides a breakdown of the City fleet (ie excludes emergency services, ABC's, TTC) as of amalgamation as well as reductions to date, transfers out to other agencies, such as the Parking Authority, transfers in from the Scarborough Public Utilities and the 1999 replacement requests. Appendix C provides a breakdown for Ambulance Services, Fire Services, Toronto Police Services, the C.N.E., Library and the Zoo where the information has been provided.

Fleet size is determined by the vehicle and equipment needs of Departments based on the services that they are required to provide, the level of that service and where the service is delivered from. As such, Fleet Management Services must work with client Divisions to assist them in determining their needs.

The City of Toronto has a significant fleet of 4,889 vehicle and equipment units of which approximately 3,000 are licensed vehicles and 1,900 are off-road units (defined as units with wheels and an axle with a replacement value of $5,000 or more). Fifty-six units have been reduced since 1997, however due to transfers into the fleet of 62 units from the former Scarborough Public Utilities Commission, the net size of the fleet has increased since 1997 by 6 units (see Appendix A for a summary). Approximately 5% of the City's fleet are cars, 28% are light trucks, 36% are heavy trucks, refuse packers, sweepers and other specialized heavy vehicles, 15% is grounds maintenance equipment and 16% is other construction equipment, trailers, etc..

Within the various categories of vehicles and equipment is a wide mix of vehicle and equipment makes and models with a range of specification requirements. Where possible, Fleet Management Services is standardizing specifications and vehicle and equipment types. Over time, standardization will assist in reducing costs through reduced inventory requirements for parts, increased purchasing power, improved maintenance through specialization resulting in faster turnaround times.

Age of the Fleet:

In a report to the Budget Committee in 1998, the average age of the fleet was identified at approximately 7 years. Since that time, only 1.5% of the fleet has been approved for replacement, therefore, the current average age of the fleet is approximately 8 years.

Life expectancy of fleet units vary. Examples of life expectancy are: 7 years for many light duty vehicles, garbage packers and salt spreaders; 8 years for salt dump trucks, "zambonis" and chippers; 10 years for diesel pickups, dump trucks, ice surfacing equipment, back hoes and pruners; 15 years for snow blowers, tractors and trailers; 20 years for Athey loaders.

In many cases, the average age of the units in a category currently exceeds the anticipated life expectancy. There are many reasons why the average age may be higher, such as: the unit has been reliable, well maintained with low annual maintenance costs, allowing for later replacement; insufficient replacement funding resulting in delayed replacement and increased maintenance costs; utilization is low allowing for extended life; significant recent capital maintenance costs extending the life of the unit, etc. Some examples of unit types that currently have a higher average age than life expectancy are: cement mixers, stump cutters, flail mowers, reel mowers, sidewalk plows, pressure washers, thaw machines, road graders, scrapers, snow blowers, snow plows, trailers, flusher trucks, tanker trucks and turf aerators.

Replacement Criteria:

Several criteria are used to evaluate vehicles and equipment for replacement:

• general vehicle condition - includes mechanical and body condition
• engine hours or vehicle kilometres
• age of vehicle and availability of replacement parts
• repair and operating costs
• recent major repairs, or if major repairs are needed or expected if the vehicle is maintained
• whether the vehicle is suitable for the job required. For example, has the job changed making another type of unit is more suitable
• technical obsolescence. Is the unit obsolete? Is there a unit available that will increase productivity?
• vehicle ergonomics and health and safety issues. Are driver/operator injuries and W.S.I.B. claims caused by vehicle?

In addition, this year Commissioners reviewed their departmental replacement listings to confirm that there is an ongoing need for the units due for replacement, as well as identifying opportunities to delay replacement that will not impact on their ability to deliver their services to the public. As a result of this review, approximately $8.9 million was reduced from the program.

1999 Replacement Program:

The 1999 Replacement Program is broken down as follows:

* Includes $152,625 for two new requests

City Fleet:

Several years of fiscal restraint have reduced new vehicle procurement, with vehicles being replaced on an exception basis only. As noted earlier, the average age of the fleet is increasing and costs to maintain it are increasing. The proportion of the fleet that is scheduled for replacement is growing. Currently, 29% of the vehicle and equipment fleet is overdue for replacement. In 1999, another 14.6% becomes due, with a further 9.8% coming due in the year 2000, for a total of 53.4% of the fleet. The total replacement value of the City fleet units overdue or due for replacement in 1999 is $78,659,639 (excludes Police, Fire, Ambulance, CNE, Library and Zoo). The actual amount being presented for replacement ($41,494,038 - which excludes the new request for Water and Wastewater Services) is 52.8% of that amount. The balance of $37,165,601, has been deferred to future years for replacement.

The replacement program for the main City fleet amounts to replacement of 14.3% (700) of fleet units plus replacement of 0.2% (9) of small equipment units. The bulk of the replacements are in:

• heavy trucks (115 units, $9,078,815) - includes dump trucks, truck tractors, flat bed trucks, stake trucks, and sewer cleaner trucks;
• refuse packers (61 units, $9,408,204) - includes packers and recycling trucks;
• light trucks (230 units, $8,003,049) - includes pickups, crew cabs, vans, cube vans and forward control vans;
• earth moving equipment (29 units, $5,198,756) - includes backhoes, front end loaders and excavators;
• full size street sweepers (14 units, $2,064,600)
• grounds maintenance equipment (76 units, $1,768,296) - includes large mowers, turf trucksters and weed harvesters.

These types of vehicles and equipment are the more maintenance intensive units, therefore, the older the fleet in these categories, the more costly the maintenance. Delivery times for new units in these categories can take up to 1 year.

Included is 1 request for a new unit in Water and Wastewater Services, which is discussed below.

Surplus Vehicles and Equipment:

As surplus vehicles and equipment are returned, Fleet Management Services reallocates them to replace existing units that are due for replacement or beyond economical repair, provided that they are suitable for the new application and do not require extensive repairs or modifications to make them safe and functional. In many cases, however, the surplus units are themselves, older and costly to maintain or due for replacement. The Division will continue the practice of reallocating vehicles and equipment as part of its ongoing fleet management role.

Cars:

The number of cars recommended for replacement within the City fleet is 26. The distribution of requests is: Works and Emergency Services - 13; Council Transportation - 1; Urban Planning and Development Services, Licensing - 9; Economic Development, Culture and Tourism - 1 and; Finance - 2.

At the present time the use of cars is under review and as a result, the number of cars recommended for replacement is limited. Further reduction of the number of cars is anticipated and surplus vehicles will be reallocated if possible. The age of the car fleet is high given the lack of replacement over the past 3 years, therefore, replacement of some units is required.

Emergency Services Vehicles:

The Ambulance and Fire Services Division and the Toronto Police Service submitted requests for replacement totalling $17,324,574 or 28.1% of the total replacement program and advise that delayed replacement or deferral is not possible. Given the nature of the work and the conditions that emergency services vehicles operate under, regular planned replacement is essential to public and worker safety.

During the 1998 Replacement By Exception process, approvals were granted for the replacement of 3 light duty Fire Services vehicles and 6 light duty Ambulance Services vehicles. In addition to the vehicles approved in the 1998 Operating Budget for the Toronto Police Service, Fleet Management Services recommended replacement of an additional 146 cars, to the Budget Committee.

While Fleet Management Services does not have responsibility for fleet management and maintenance activities for the Toronto Police Service, information has been provided in the past by police fleet management staff regarding mileage, anticipated salvage value of auctioned vehicles, expected repair costs of deferred replacement and expedited replacement schedule to return to a regular, planned replacement schedule. Maintenance costs will continue to remain high in 1999, however, if the 1999 request is approved, reduced costs would be expected in 2000 once all of the approved vehicles from 1998 and 1999 are delivered later this year.

Fleet Management Services provides maintenance services for Fire Services vehicles in the former Municipalities of Scarborough, Toronto, East York and York. Life expectancy of the larger pumpers and aerials is generally 15 years, however, there are units still in service as old as 27 years. Maintenance costs of older fire vehicles are high because of a lack of parts availability, specialty part requirements and structural deterioration. The 1999 request includes 10 pumpers, 5 aerials, 17 cars and 13 light duty trucks.

Ambulance Services maintains its own fleet. The 1999 request includes 26 ambulances, 1 new step van, 6 cars and 2 carts. At this time, the applicability of Provincial funding as a result of the recent announcement, is not known. The full cost of replacement is included for 1999.

C.N.E., Library and the Zoo:

These 3 agencies are responsible for their own fleet management, while maintenance is provided by a combination of their own maintenance staff and Fleet Management Services.

During 1998, 3 units were approved for the Zoo through the exception process (1 pickup and 2 golf carts). At that time, Fleet Management Services staff reviewed several requests for replacement and deferred all but the 3 noted above, to the 1999 replacement program. The Zoo fleet is made up of many older vehicles in need of replacement. The 1999 program includes requests for 9 light duty trucks, 3 golf carts and 2 tractors.

The C.N.E. has requested 1 street flusher, 2 forklifts and 5 light duty trucks.

The library has deferred 10 light trucks from its original request and is now requesting 17 light trucks for 1999.

The total replacement request for the C.N.E., Library and the Zoo is $1,102,428, or 1.8% of the 1999 Replacement Program total.

New Requests:

Included in the program are requests for 2 new additions to the fleet - 1 step van in Ambulance Services ($63,825) and 1 trailer mounted vac excavator ($88,800) in Water Wastewater Services.

Cost/benefit justifications have been requested and will be forwarded to the Budget Committee for approval of funding when provided.

Conclusions:

Regular replacement of vehicles and equipment is essential to reducing maintenance costs and downtime, which provides client Divisions with reliable tools for the efficient delivery of services to the public. With 29% of the City vehicle and equipment fleet currently overdue for replacement and another 14.6% due in 1999, for a total of 43.6%, replacement of 698 fleet units (14.3%) and 9 small equipment units (0.2%) will enable Fleet Management Services to stabilize maintenance costs in 2000.

The 2 new requests from Ambulance Services and Water Wastewater Services should be deferred pending the provision of a cost/benefit justification.

As surplus vehicles and equipment are returned, Fleet Management Services will continue the practice of reallocating vehicles and equipment as part of its ongoing fleet management role, provided that they are suitable for the new application and do not require extensive repairs or modifications to make them safe and functional.

Fleet Management Services will prepare a long range plan for vehicle and equipment replacement and a funding mechanism in conjunction with Finance Department staff. A report will be forwarded to the Budget Committee prior to the beginning of the next Operating Budget cycle.

Contact Name:

Stan Burrows Director, Fleet Management Services

392-7791

392-7301 (Fax)

Margaret Rodrigues

Commissioner of Corporate Services

Attach.

Appendix A

1999 Vehicle and Equipment Replacement Program

Summary

Appendix B

1999 Vehicle and Equipment Replacement Program

City Fleet Vehicles and Equipment - Summary

Appendix B (Cont'd)

1999 Vehicle and Equipment Replacement Program

City Fleet Vehicles and Equipment - Community and Neighbourhood Services

Appendix B (Cont'd)

1999 Vehicle and Equipment Replacement Program

City Fleet Vehicles and Equipment - Corporate Services

Appendix B (Cont'd)

1999 Vehicle and Equipment Replacement Program

City Fleet Vehicles and Equipment - Economic Development, Culture and Tourism

Appendix B (Cont'd)

1999 Vehicle and Equipment Replacement Program

City Fleet Vehicles and Equipment - Finance

Appendix B (Cont'd)

1999 Vehicle and Equipment Replacement Program

City Fleet Vehicles and Equipment - Urban Planning and Development Services

Appendix B (Cont'd)

1999 Vehicle and Equipment Replacement Program

City Fleet Vehicles and Equipment - Works and Emergency Services (Excluding Fire and Ambulance)

Appendix C

1999 Vehicle and Equipment Replacement Program

Vehicles and Equipment - WES Ambulance Division

Appendix C (Cont'd)

1999 Vehicle and Equipment Replacement Program

Vehicles and Equipment - WES Fire Services Division

Appendix C (Cont'd)

1999 Vehicle and Equipment Replacement Program

Vehicles and Equipment - Toronto Police Services

Appendix C (Cont'd)

1999 Vehicle and Equipment Replacement Program

Vehicles and Equipment - Zoo

Appendix C (Cont'd)

1999 Vehicle and Equipment Replacement Program

Vehicles and Equipment - CNE

Appendix C (Cont'd)

1999 Vehicle and Equipment Replacement Program

Vehicles and Equipment - Library

Appendix D

1998 Vehicle and Equipment Replacement By Exception Program

Summary

Appendix

Interim Procedure for Replacement of Vehicles and Equipment by Exception

1. Program area submits a "Request for Procurement of Vehicle/Equipment by Exception" to Fleet Management for review.
2. Fleet Management staff complete a "Fleet Management Review" form.
3. Fleet Management staff meet with Program staff to review information, look for alternatives such as reassignment of vehicles, etc.
4. Fleet Management staff discuss recommendations with Program staff and then forward to the Director, Fleet Management Services for approval.
5. The Director, Fleet Management Services meets with the Commissioner of Corporate Services to discuss and approve requests. The request is also approved by the Commissioner of the Department responsible for the program area requesting the replacement.
6. A requisition is forwarded to the Finance Department, Purchasing and Materials Management Section, for quotations.