Page 252 - City of Westlake FY20 Budget

Section 5 Internal Service Funds
Guidelines for Vehicle Maintenance & Replacement

Category "D" - This category consists of other off-road equipment (mule and mowers) that are used to
serve the public on an "as needed" basis. Replacement of this category may be made after 2,500
operating hours, or provided the maintenance cost is considerably higher than equipment of the same
type. The Town currently has one (1) Kawasaki utility vehicle and (1) mower.

Category "E" - This category consists of light equipment (weed-eaters, chain saw and pumps,
generators, trailers, and other small hand-operated equipment) which are used to serve the public on
an "as needed" basis. Replacements in this category may be made after the total maintenance cost
exceeds the original purchase price of a particular piece of equipment. The cost of upgrading a piece
of equipment will be the responsibility of the operating division. The Town currently has one weed-
trimmer, chain saw, blower, small generator and a trailer.

GUIDE FOR EARLY REPLACEMENT OF TOWN-OWNED VEHICLES
Early Replacement - The consideration of early replacement of a vehicle often arises when major
expenditures are necessary to restore it to a safe operating condition (e.g., major component failure
or incident damage). The economic effect of such repairs cannot be avoided because the cost to the
Town is normally about the same whether the vehicle is sold in un-repaired condition or restored to
repaired condition.

However, replacement prior to the normal criteria for vehicles will result in an acceleration of all future
replacement cost cycles required to satisfy a continuing vehicle need. This acceleration of cost cycles
causes a sizable increase in the total present value cost of all fixture cycles and should be avoided
whenever possible. Major vehicle repairs should always be made, with two exceptions:

1. Major expenditures for repair should not be made when the cost of the repair plus the
vehicle salvage in un-repaired condition exceeds its wholesale value in repaired condition.

2. Major deferrable expenditures should not be made when a vehicle is in the final six months of
its retention cycle. During this period, the penalty for early replacement is small and,
therefore, the vehicle should be replaced rather than repaired.

Depreciation Formula - Current acquisition price of each vehicle divided by the utilization cycle
mileage or total maintenance cost) will provide the yearly depreciation allowance.

EXAMPLE A – Vehicles
Mileage: $30,000 vehicle divided by the target replacement cycle of 100,000 miles will give you
a depreciation cost of $.30 per mile.
$0.30 times the number of miles (20,000) the vehicle was driven the previous year will give
you the yearly depreciation amount $6,000.

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