The City of San Diego has begun using a $16-million replacement fund to immediately swap out aging fleet vehicles that have been deemed 'critical,' and will consider leasing, financing, and other funding options to close a backlog.

The city began an overhaul of its fleet management operations in the fall to restructure oversight of the fleet management unit, replace aging vehicles, optimize vehicle utilization, boost staffing, and improve an archaic software system. The move reverses a previous mayor's decision to nest fleet management of police, fire, and other city vehicles under the Public Works department.

Alia Khouri, the city's new deputy director overseeing the 4,100-vehicle fleet, brings with her a financial management background to the fleet department that now operates in the Internal Operations Branch under the oversight of Ron Villa, deputy chief operating officer.

"I was asked to serve in an interim capacity to identify and fix deficiencies that the division had experienced through the Great Recession," Khouri said about her initial appointment. "A primary focus was to reengage the vehicle acquisition program which had delayed purchases for several years. Additionally, the Fleet Services division had experienced a lack of direction following the consolidation of three fleets into one operation."

To acquire vehicles more efficiently, Khouri and Villa preliminarily identified more than 700 "over-aged" vehicles (18% of the fleet) that needed replacing. Fleet consultant CST Fleet Services also performed a utilization study.

To finance a two-year replacement plan, the city will use its reserve fund, financing and possibly leasing to replace these 700 vehicles, including 413 deemed as "critical" in the report submitted to City Council in January. The fund is estimated at $16 million for the 2016 fiscal year. The city will be purchasing 31 fire apparatus at an estimated cost of $24.8 million and will amortize the purchase over 15 years.

By updating the fleet unit's vehicle maintenance information system, Khouri and Villa will gain a greater understanding of the life-cycle costs of the vehicles.

"The Fleet Services Division is now focused on establishing proper procedures to accurately capture life-cycle expenses (acquisition price, maintenance expense, gas/oil/tires, and resale value) to determine which vehicles should be replaced or rotated," Villa said. "The next step will be to upgrade the software system to incorporate newer capabilities. This entire effort is anticipated to be complete within the next 12-18 months."

Future funding options could include leasing for alternative-fuel vehicles. The fleet unit will be tasked with implementing Mayor Kevin Faulconer's Climate Action Plan that sets a goal of replacing half of the city's gasoline-fueled fleet with electric vehicles by 2020.