Palo Alto Weekly: Under the surface of the motor pool
Publication Date: Jan 19, 1994

Under the surface of the motor pool

A city audit asks why do 16 Palo Alto employees have exclusive use of city cars 24 hours a day and why has the city continually violated its own policies regarding its motor pool?

by Peter Gauvin

When Paul Dias leaves his San Jose home to make his way to his job in Palo Alto his mode of transportation is inconspicuous at best--a 1987 Ford Tempo with 71,000 miles on it.

The best thing that Dias can say about the car is, "it's serviced and it runs."

The only thing that looks unusual is the city emblem on the Tempo's door panels. The car is owned by the city of Palo Alto. The city pays for all of the car's insurance, gas and maintenance. The city also is overdue in buying a new car to replace the Tempo for Dias. Under city policy, all light cars and trucks are replaced after 70,000 miles.

What appears unusual to City Auditor Bill Vinson is that no paperwork exists at City Hall explaining why Dias, director of a division under Palo Alto's Community Services Department, has exclusive use of a city vehicle 24 hours a day, seven days a week. Under city policy, such justification should exist.

But Dias is not alone.

The city now provides "exclusive-use" vehicles for 21 city employees in all. Of those, proper justification does not exist for 16.

This was one of the findings of a highly critical audit recently released by the City Auditor's office on Palo Alto's fleet of 174 cars and light trucks.

The audit, which found widespread problems with supervision of the fleet, has prompted City Manager June Fleming to call for a review of the city's policy concerning "exclusive-use" vehicles and other policies surrounding use of city vehicles.

Due to poor monitoring and analysis, and a failure to follow the city's own policies, the audit found a high potential for misuse of the city's motor pool. It also placed in question the continued need for at least 20 vehicles in the fleet that are driven very few miles.

Some of the auditor's other findings:

Officials repeatedly failed to follow their own rules with regard to documentation of exclusive-use vehicles and the continued use of low-mileage vehicles. Those rules were updated as recently as 1991.

Pool cars were kept overnight without being properly approved. In a check of just one month, vehicles were taken out overnight without authorization on three occasions.

Twenty city vehicles were driven less than 2,500 miles in 1992, meaning they should have been eliminated or reassigned somewhere else, but no action was taken.

A sedan was replaced with a 4-wheel drive vehicle costing $5,000 more without justifying why the extra expense was necessary.

Some pool cars were found to have been operated as far away as Sacramento and San Joaquin counties, even though rules say they are not allowed to be used outside of the Bay Area.

According to information from city officials, those who have access to exclusive-use vehicles clearly are not to blame. Although the paperwork does not exist justifying use of exlusive-use vehicles in a majority of cases, many of these cars were awarded to the employees not out of public need, but rather as part of their compensation packages.

Dias, who oversees the maintenance and operation of Palo Alto Municipal Golf Course, said he has had the Tempo for three years since management of the golf course was put under the parks division and he was made director of the division. The car was provided to him, he said, based both on need and as part of his compensation package.

He believes it is in the public's interest for him to have a car.

"I'm basically on call 24 hours a day, evenings and weekends, in case something happens at the golf course. Plants, grass and water don't stop growing or flowing," he said.

Kathy McKenna got her first exclusive-use car, a 1991 Ford Taurus, in February when she was bumped from traffic manager lieutenant to police captain in charge of investigative services. "I live with my pager on. I never know how much I'll be called," said McKenna, who is also coordinator of the hostage negotiations team. She said she has her own personal car and uses the Taurus "strictly for business."

City policy dictates that employees must not use their "exclusive" vehicles for anything other than their commutes or work-related driving. But the city has not attempted to find out whether this policy is ever violated.

"During the course of the audit we didn't find any deliberate misuse, but the opportunity was certainly there because of the lack of proper justification," said City Auditor Bill Vinson. "We did not follow these people around to see if they were using the vehicles for personal use."

A check with neighboring communities and cities of comparable size finds that Palo Alto is alone in the extent to which it allows employees to take city vehicles home.

In Redwood City, only the police chief and the fire chief are provided with exclusive-use vehicles at the city's expense. This is necessary so they can respond to emergencies at any hour of the day, the city's fleet manager explained.

In Sunnyvale, only the city's public safety officer--a position that serves both as fire chief and police chief--has a city vehicle at all hours.

In Menlo Park, two department heads--the director of Community Development and the director of Engineering--have access to city vehicles 24 hours a day.

In Mountain View, none of the city's department heads--not even the police or fire chiefs--are provided with exclusive-use vehicles.

In Palo Alto, the list of employees with access to exclusive-use vehicles include such emergency officials as the assistant police chief, two police captains, fire chief, assistant fire chief, fire marshal and the chief officer of the Stanford Linear Accelerator Center. The remaining 14 employees include six in the city's Utilities Department, five in Public Works, two in Planning and Community Environment and one in Community Services.

Although only one employee of Sunnyvale has a car, department heads there are given a choice--use of a city car or a monthly car allowance. Sunnyvale's fleet manager said most employees take the car allowance. Other cities have similar policies regarding car allowances for department heads.

So does Palo Alto. According to Glenn Roberts, Palo Alto's director of Public Works, all department heads, regardless of need, are offered an exclusive-use vehicle or a $300-per-month vehicle allowance through the Management Compensation Plan.

Currently, three of the 21 employees on the exclusive-use list are department heads. Roberts is one of them. He drives a 1993 Ford Taurus and is one of only five employees for whom the auditor was able to find a statement of justification. The other four are supervisors in the Utilities Department.

Menlo Park is moving away from providing exclusive-use vehicles. In addition to the two they have now, they had four others when City Manager Jan Dolan came on board in 1990. Dolan said she began phasing them out of the employee benefits package, opting instead for a vehicle allowance. "My preference is not to have city vehicles taken home," she said.

In Palo Alto, exclusive-use vehicles are not to be assigned to anyone who lives more than 30 miles from work and are not to be used for personal business or driven on weekends. But there are few controls, admits Roberts.

"When dealing with managers the focus isn't on the use of vehicles," he said. "Palo Alto's managerial philosophy is you can't monitor equipment on a minute-by-minute basis."

Vehicles used for exclusive use include such models as the Ford Taurus, Pontiac 6000 LE sedan, Mercury Cougar coupe, Ford Ranger pickup and other similar vehicles.

Police and fire vehicles are replaced every three years or 50,000 miles, and non-emergency vehicles every seven years or 70,000 miles.

The City Auditor's Office launched the audit last winter after City Council member Ron Andersen questioned the use of city vehicles he saw in San Jose. This was the city's first audit of the use of its vehicles. Palo Alto officials are quick to point out that there are a number of variables that make an across-the-board comparison of exclusive-use vehicles with other cities difficult.

"An apples-to-apples comparison with other cities I'm not sure is appropriate," said Roberts, who took over in April after moving from San Jose, where he was assistant director of Public Works. The equipment management division of the Public Works Department is responsible for the use, maintenance and replacement of city vehicles, including analysis and oversight of the fleet.

Palo Alto is unique, Roberts said, because it has its own Utilities Department and also an emergency response plan.

The city's policy for vehicle use, maintenance and replacement was revised as recently as 1991 by the Public Works Department and approved by the former city manager, Bill Zaner. The policy explicitly states that proper justification--such as the frequency of call-outs for emergencies or the number of night meetings attended--must be provided for all exclusive-use vehicles annually.

"There's no argument there," that the city didn't meet that requirement)," said Fleming, who as city manager is required to approve requests for exclusive-use vehicles. "We made an error."

In defense of the size of Palo Alto's exclusive-use vehicle fleet, Fleming echoed Roberts comments. "Sometimes a comparison of numbers is not a fair comparison. Different cities have different policies. It's an individual decision on what is best for a particular city and their needs."

As part of the city's Emergency Response Plan, "we have to respond quickly to utility emergencies and natural disasters," Fleming said.

Newly elected Mayor Liz Kniss said she was not aware that department heads and other employees were even offered exclusive-use vehicles.

"Uncovering information like this is exactly the role we want from the City Auditor's office," Kniss said. "This is how (the Council) learns about the hidden expenses that don't pop up all the time. Obviously, we're looking for every way we can to save money to maintain the high service levels that Palo Alto is accustomed to . . . It's always a trade-off of one expense for another."

City Council member Gary Fazzino said he knew that exclusive-use vehicles were offered to department heads and said that's entirely appropriate--as long as the vehicles are needed.

"There are two issues here: one is management compensation and one is need. I think it's probably worth our while to review the entire situation . . . I'm not sure we need to have 21 employees with their own vehicles. It's an issue we haven't addressed in any of my years on the Council."

Fleet Manager Alan Simpson is the man in charge of the 174 cars and light trucks that were the focus of the audit. He also oversees the 328 other vehicles in the city's fleet--everything from fire trucks and landfill bulldozers to parking meter motorcycles and the 28 police patrol vehicles. Simpson's office is located at the massive Municipal Service Center facility between Highway 101 and the baylands just off East Bayshore Road. The center includes three large warehouse-type buildings with machine shops and storage areas as well as acres of pavement for parking.

As Simpson walked through the MSC yard recently, he pointed some fuel pumps and noted how the department is installing some compressed natural gas pumps that eventually will service 100 city vehicles that run on natural gas. "It will be as easy to fill up as it is with gas," he said. Employees must enter their mileage each time they use the fuel pumps, he added.

The yard contains a few cars and light trucks. But most of these vehicles are parked downtown in the garage beneath City Hall, Simpson explained. Others can be found at the Cubberley Community Center and various other city facilities.

Every city vehicle has a city seal on it and a notation of which department it belongs to, except for the exclusive-use vehicles driven by the three department heads and the three Police Department employees, Simpson said. These cars are not marked with a city seal because it would cause "unnecessary suspicion" among the public, Roberts said. They do have government license plates, however.

Simpson, who has been fleet manager for over six years, is mildly critical of the audit. "Some good points were made, but it didn't seem that in-depth," he said.

One of the audit's most significant discoveries, according to the auditor, was the high percentage of low mileage vehicles in the fleet. It found that 61 of the 174 cars and light trucks (35 percent) did not meet the city's minimum use requirements of at least 5,000 miles in 1992. These vehicles cost the city $638,000 and had fuel and maintenance costs of $69,000 in 1992.

This included 20 cars and light trucks that were driven less than 2,500 miles in a year. Those vehicles, according to the city's own recently revised policies, should have either been eliminated from the fleet or reassigned. If the policy was followed, Vinson said, it could have meant more than $200,000 in savings for the city.

The audit found no evidence that vehicle mileage and usage had been reviewed and evaluated by the fleet manager as required by city policy.

"It may be difficult to justify to a taxpayer of Palo Alto that it's worth it to keep a car that's driven less than 2,500 miles a year," Vinson said. "The question is, why are those vehicles necessary? What type of use would justify those low miles?"

Simpson and Roberts agree that there may be some opportunity for savings here, but they say it's nowhere near as much as the auditor implies. Many of the vehicles are used daily in vital city services that are inherently low-mileage jobs, they said, and other criteria besides mileage are needed to determine their true need.

"I think the auditor correctly pointed out that we had not been complying with our own policies and procedures," Roberts said. "But the existence of low mileage alone is not a determining factor in finding underutilization. It is a trigger. The auditor's advice is well taken. The concern that I have is that the potential vehicle cost savings are subject to misinterpretation.

"The vehicles need to be looked at on a case-by-case basis," he said. "The fact that a vehicle is driven less than 2,500 miles is not a good indicator of its use. With 50 work weeks in a year and 250 work days in a year that means a vehicle would have to be driven more than 10 miles a day."

That's quite a bit in a city with the geographic size of Palo Alto and with many vehicles being used exclusively for on-site jobs, Roberts said. "I am confident that some of those vehicles under 2,500 miles will turn out to be underutilized," Roberts said, and steps are being made to put them to better use. For instance, instead of buying a new vehicle, a 1987 Ford Aerostar van identified in the audit as a low-use vehicle will be reassigned to handle the duties of the city's recently adopted graffiti abatement program.

Still, Roberts warns, only a small fraction of the 61 vehicles identified as low-use vehicles will turn out to actually be underused. For example, he said the audit mistakenly identified two vehicles in the Police Department as vehicles under the 2,500-miles threshold when they were new cars that did not go into service until late 1992, the year reviewed by the audit. In 1993, their first full year of service, one of the vehicles was driven more than 20,000 miles and the other over 30,000 miles.

"I don't see an underutilization issue," Fleming said. "I see it as a low-mileage issue. And I think there's a huge difference . . . Meter readers will never ever have a lot of mileage . . . What stands out in my mind is that we need to review and revise" the city's policy on car use.

Indeed, none of the other cities surveyed had such hard-line mileage criteria to decide when a vehicle is underused.

"We look at the situation as vehicles come in for service every six months or 4,000 miles," said Mountain View's fleet manager, Steve Miller, whose fleet include about 160 cars and light trucks. "If a vehicle has unusually low mileage, an inquiry is made and justification is requested." Mountain View moves vehicles between departments quite frequently as workloads change, he added.

Miller added that it's difficult for cities to eliminate vehicles when at the same time they're trying to encourage employees to carpool and use alternative transportation. "It's a double-edged sword because you have to have something for employees to drive once they get to work. One thousand miles driven per year at work (in a city car) may defer 50,000 miles of employee commuter miles."

Sunnyvale went through a similar audit of its entire vehicle fleet (including heavy equipment) two years ago by an outside consultant. Fleet Manager Jim Masch said the city ended up eliminating about 20 vehicles, mostly cars and light trucks. It was difficult, he said, and it took two years to implement.

Palo Alto's audit did not look at larger vehicles and heavy equipment because there is less chance that employees would misuse those for personal purposes, Vinson said.

Among other findings, the audit was critical of the Public Works Department for failing to justify why it replaced a 1984 Ford LTD sedan with a $17,930 GMC Jimmy four-wheel drive vehicle. Under the city's policy the car should have been replaced with another sedan costing $5,000 less.

Roberts said the four-wheel drive vehicle was needed because it would be used off-road at the Refuse Disposal Area and to carry large displays for meetings. But no where in the Public Works Department's official response to the audit was it indicated why the justification for this purchase was no provided and why the city's policy was violated.

Regarding the pool cars that were kept overnight and driven outside of of the Bay Area in violation of city policy, Roberts agreed with the auditor that better documentation is needed.

Much of the problem, he said, is that the fleet management division's major focus has been on maintenance issues, and vehicle use has not received the same kind of attention.

"What I have found since I've been in Palo Alto is they do an excellent job with city services and especially fleet maintenance," Roberts said. In San Jose they had a constant problem with fire trucks and other vehicles breaking down, he said.

"We do need to do a better job on paperwork," he said. "When we get that done we'll have a division that's second to none."

Meanwhile, much of the responsibility has fallen in his lap.

"June Fleming has given me direction to follow up on these items and put a higher priority on the administrative controls of fleet management," Roberts said. "I think we will find some opportunity for some limited cost savings out of this (audit). But the vast majority of the problem is just that we need to do a better job with paper work and administration. I don't think there's a lot of waste or inefficiency there." 

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