Modesto puts $5.4 million plan to lease fire engines, trucks on hold

The Fire Department has put its nearly $5.4 million proposal to lease five new fire engines and two new ladder trucks on hold after Modesto’s new City Council members raised questions about the deal.

Fire Chief Sean Slamon said he decided to pull the item from Tuesday’s council meeting agenda and hopes to bring its back to the council in mid-March for a decision.

“We have several new council members that have a lot of good questions,” he said, “and we are going to work with them to answer their questions.”

Kristi Ah You, Mani Grewal and Doug Ridenour were elected to the seven-member council in November. Voters elected newcomer Ted Brandvold as mayor in the Feb. 2 mayoral runoff election. He will be sworn in as mayor at Tuesday’s meeting.

Grewal said he wants the city to do more homework.

“Are we being fair to ourselves to see if we are getting the best deal possible?” he asked.

The proposal calls for Modesto to lease the engines and trucks from Wisconsin-based Pierce Manufacturing and PNC Equipment Finance over 10 years. At the end of the 10 years, the city could purchase the engines and trucks, extend the lease for five years or enter into another lease for new engines and trucks.

Pierce provided Modesto with an offer Jan. 19 that is good until Feb. 29. Slamon said he has asked the manufacturer to extend its offer and is waiting for an answer.

City officials say the proposal addresses a critical need to replace aging fire apparatus that costs too much to maintain and do it in a way that doesn’t break the Fire Department’s budget. Slamon has said the money for the lease payments would come from savings from reduced maintenance costs and from money now being used to pay off the recent purchase of two Pierce fire engines. Those payments end in 2018, and the lease payments begin in 2017.

City officials gave a presentation last week about the proposal at the council’s Great Safe Neighborhoods Committee. Officials from Modesto-based Burton’s Fire – which is a dealer for South Dakota-based Rosenbauer, one of Pierce’s competitors – were at the meeting and asked why the city was not putting this project out to bid to ensure it was getting the best price.

The answer was confusing. City officials said at the meeting that Modesto did not have to seek bids because in 2006 the City Council decided to use Pierce exclusively for fire apparatus. But Slamon said after the meeting that arrangement ended in 2013, and the city used a competitive process for the current proposal.

As cities do at times, Modesto used the bidding results from another agency, in this case the Houston-Galveston Area Council. But those results were for basic engines and trucks that do not have the options and extras Modesto wants on its engines and trucks.

Last week’s presentation raised other questions.

City officials talked about the considerable savings the Fire Department would see by having new fire engines and ladder trucks. And they talked about how the Pierce proposal was substantially cheaper than two other alternatives: buying one new piece of equipment each year or starting up a fund to pay for replacing engines and trucks as they reach the end of their useful life.

That’s all good, but it misses the key point: Is the Pierce proposal the best lease deal for the city?

Modesto formed a committee about eight months ago to look at how the Fire Department could replace its aging fleet. But there was a sense of urgency at last week’s meeting because of Pierce’s Feb. 29 deadline. That was odd. Will Pierce really walk away from a roughly $5.4 million deal just because Modesto needs more time? The sense of having to act now reminds me of a bad deal the city avoided nearly two years ago.

The City Council in June 2014 was considering entering into a roughly $10 million deal with Siemens Technology to have the global giant replace more than 9,500 streetlights with energy-efficient ones that would cut the city’s electric bill, as well as perform other energy-efficiency upgrades. Officials talked up the proposal and said the council had to act before July 1, when new state energy-efficiency standards took effect that would greatly increase the project’s cost.

But San Francisco-based Tanko Lighting questioned the cost of the streetlight work, which made up the bulk of the project, as did Councilman Bill Zoslocki. The city took a second look and decided to do only the streetlights and put that out to bid. Tanko bid $3.2 million, Pacific Gas and Electric Co. bid $3.8 million and Siemens bid $4 million. Modesto choose Tanko.

Streetlights are not fire engines, but the circumstances are similar: City officials were advocating a great deal that needed a quick decision, while a competitor raised questions. This is not to say the Pierce proposal is not a great deal, but city officials have yet to show that in public.

This story was originally published February 17, 2016 at 5:13 PM with the headline "Modesto puts $5.4 million plan to lease fire engines, trucks on hold."