To the Editor:

If the Marion Energy Management Committee (EMC) gets its way, Marion town employees and Selectmen may well be driving BMW i3s with an MSRP of $43,895. This is based on handout materials distributed to Selectmen at the Dec. 1 meeting. The EMC’s original target list of eight vehicles was pared back to three. The three new target cars would be assigned to the Department of Public Works, the Health Department and the Recreation Department. The new cars would replace the old police car “hand me downs” that have been paid for long ago, retired and recycled to utility vehicle use for these departments. The only cost to the town to continue operating these cars is gas and repairs.

Repairs and maintenance of these ancient and regal chariots is managed by a very talented group of employees who know how to keep an old fleet of vehicles running with parts from the auto parts store, junk yard and the town’s bone yard. It’s the classical making of a “silk purse out of a sow’s ear.” Marion’s old police car recycling program is one of the most cost effective capital asset management program the town has in place.

If the EMC’s proposed program for replacing fully deprecated but usable cars were adopted, Marion would be acquiring the use of three brand new cars with an asset book value of $131,685. This is a foolish and wasteful use of scarce taxpayer resources.

At the Selectmen’s meeting the EMC said the cars would save the town $30,000. I guess I must live in Oz and not Marion to believe the nonsensical statements from a group devoid from economic reality with respect to stringent small town municipal budgets. This comment is especially pertinent when we all face tax, water and sewer rate increases. The EMC, the Selectmen and town administrator appear to be clueless as to the economics of what the EMC proposes to do by replacing perfectly operable used utility cars with new leased cars.

The statement of “clueless” needs some explanation. First, is basic economics. Taxpayers should not support a program of replacing perfectly operable fully deprecated already paid for utility cars with brand new utility cars.

The general rule is municipalities purchase vehicles. First is the low cost of capital and second is the good asset management policy of “drive them to they drop.” This is Marion policy for buying new police cars to meet regulatory and public safety requirements. After useful life as police cars the vehicles are recycled as Town’s utility cars perfectly useful and economical since they are full paid for and have low or no book asset value.

The EMC’s proposed program would utilize a short term lease two or three years for use of the new cars. This is only because the cars are battery powered electric cars eligible for federal and state incentives. These cars have a very limited performance range of 80 miles between changes. (Probably not a good bet for making round trip airport runs or “tripping” to the Providence Mall).

There are two economic incentives involved.

First, there is a $7,500 federal electric car tax credit that phases out after the cumulative sale of 200,000 electric cars by each manufacturer. Being a tax credit, this incentive is only good if the buyer is a taxpaying entity. Marion is not a taxpaying entity so a little creative tax planning is involved to capture this credit. BWM has a captive taxpaying leasing company that would buy the car from BMW manufacturing and take ownership of the car and capture the $7,500 tax credit. BMW leasing calls this credit “lease cash”. This credit is used to adjust $43,895 MSRP in whole or in part to develop what is known as the car’s capitation cost used as the base to determine the monthly lease rate. Marion would lease, but not own the car during the lease term. Indirectly Marion benefits from BMW leasing capturing of the federal tax credit. Marion will also be required to make up front payments on the lease of approximately $4,200 per car. Gap insurance coverage is required so there will be a premium cost, too. To this add the lease payments estimate at $270 per month and the 36-month lease payments total $9,720. At the end of the lease there is a disposition fee of $300. At this point the lease cost is about $13,920 ($387 per month for 36 months).

If the lease is structured as a closed end lease, the leasing company has the risk of loss on the car’s residual value. This will mean Marion will pay refurbishment cost above normal wear and tear which can be expected since the cars are being used as work utility vehicles. This can be a significant additional cost. But for illustration assume this cost is modest at only $1,000 per car. This makes the rounded cost of the lease for each of three cars approximately $15,000. Also to be considered is the 10,000 yearly mileage cap after which BMW changes 20 cents per mile driven over the cap.

At this point the second incentive is considered. The state has a funding reimbursement program of $7,500 per each new leased of purchased car on first come fist server basis as long as the money appropriated holds out. Nothing is assured. By applying this funding towards each lease, Marion cash out flow is $7,500 per car. Effectively the state is picking up 50 percent of the lease funding cost.

At the end of the lease term the town can send the cars back to the leasing company or exercise the predetermined buy out option at a price of approximately $28,000 per car. If the town exercises this option and buys the cars at the end of the lease, the total cash expenditure (lease costs paid and option excise) would be approximately $35,700 per car or $106,500 for the three new utility cars. This comparative cost data is available on the web.

Next the EMC will claim how fuel efficient the new cars will be saving the town a lot of money. This is not factually correct. First the town needs to purchase and install charging stations which can run from $10,000 to $50,000 for a high end quick charge station. State reimbursement funding of $7,500 per charger is available too.

Massachusetts electricity costs are among the highest in the nation. The cars are generally charged at night with this high cost electricity coming directly from the grid.

Gasoline prices have decreased dramatically. Marion gas cost are under $1.50 per gallon since Marion does not pay the state and federal gas excise tax. Given the MPG of the vintage recycled police cars the fuel differential is approximately $18 to $20 per 1,000 miles driven.

The drive “them to they drop” philosophy is not the same for an electric car as the gas utility vehicles. The BMW i3 has an 8-year 100,000-mile battery warranty whichever comes first. As the battery ages performance drops. At some point the battery needs to be replaced; usually after the warranty expires. BMW battery replacements cost $13,000 plus labor. This is not the usual sort of auto parts store, junk yard and Town Bone yard Town maintenance practice now in effect.

A real door buster for me is the EMC has talked the Selectmen and the town administrator in to paying for a consultant to fill out very simple two-page state funding application from (about 15 minutes of work) for which car bids are attached obtained by the usual town procurement process. Add this wasted cost to this project total.

Look for Selectman and Recreation Director Dickerson commuting between the town’s ball fields in his new Town $43,855 MSRP BMW i3 or equivalent. Looks like this has the potential of becoming a Selectman’s perquisite he votes for. “He who has the keys in his pocket controls the use of the Chattel.”

The Town Meetings of Hanson and Carver have voted in bylaws to precluded town employee serving as selectmen. A town bylaw policy “You can be one or the other but not both” contains a lot of wisdom.

Ted North, Marion