Lisbon's Lease to Purchase Program, Figures Lie and Liars Figure!!!!!

                 LEASE TO PURCHASE AGREEMENT

I know that I have written about this before but I think this issue is so important that I need to stress how very wrong this is for the taxpayers.  I am going to use the latest acquisition of two police vehicles as an example to help show how this works.

When the 2013-2014 municipal budget was approved it included the purchase of two police vehicles.  Chief Brooks then put out a request for bid for the purchase of these two vehicles.  Chief Brooks received the bids and presented the purchase of these vehicles to the Town Council.  The Town Council approved the purchase of these two vehicles for $48,816.00 of our tax dollars.

Now, here is where it gets tricky.  Chief Brooks takes this $48,816.00 of our tax dollars for the purchase of these two vehicles and converts this into a Lease to Purchase Agreement.  So instead of spending the $48,816.00, the town spent ONLY $15, 331.21 for the first installation of the Lease to Purchase Agreement.  So where did the remaining money ($33,484.79) go to? 

The first question, I have is why did Chief Brooks go out for bid to PURCHASE these vehicles if he knew he was going to Lease to Purchase them?  Next, why did the Town Council approve $48,816.00 tax dollars if they knew these vehicles were going to be Leased instead of Purchased instead of the $15,331.21?

So let’s take a look at this business decision and see if it is really cost effective.  Remember the Town Council approved, in the 2013-2014 Municipal Budget, the cost to purchase these two vehicles.  This means there were sufficient tax dollars available to cover the cost of these two vehicles. 

The Lease to Purchase Agreement means that the payment for these vehicles would be spread out over several years.  It also means that there is an additional fee for this service.  Then you have to add in the Administrative cost of making the yearly payments.  This would include all the paperwork to generate a Purchase Order and issue a check by the town staff.  It also involves the Town Manager, Finance Director and the Accounts Payable individual.  All of these costs need to be added into the total cost of these vehicles.

Just, the additional fee of the lease program being added to the cost of the original bid price makes these vehicles cost the taxpayers $63,848.79 instead of the $48,816.00.  This means these two vehicles cost the taxpayers an additional cost of $15,032.79 plus the Administrative cost that I am unable to compute.   Why is this necessary if we had the money to PURCHASE these vehicles in the first place?

Public Works has mechanical personnel on staff to keep the town’s vehicles operational.  The town also has the ability to contract out service to local garages in case of an emergency.  So this cannot be justification for lease to purchase.

So, is the Lease to Purchase the best business decision for the Town of Lisbon and their taxpayers?

Larry Fillmore