The city is moving forward with buying 60 propane-powered school buses through a lease purchase agreement.
The five-year agreement will cost the city $5.47 million, including an initial 20% deposit of $1.1 million.
The city will acquire 47 buses that seat 77 passengers, seven buses that seat 47 passengers, and six buses that seat 30 passengers. The deal also involves camera systems, two-way radios and GPS systems.
The buses will be built by Blue Bird in the United States. Delivery is expected in early August in time for the next school year. The lease purchase agreement will go through TD Equipment Finance Inc., with an interest rate of 1.27%.
School systems usually hire companies to provide transportation services in contracts that include the companies supplying the buses.
“We’re going to own everything,” Mayor Mark Lauretti said.
Aldermen OK purchase, bid waiver
The Board of Aldermen unanimously approved the propane bus agreement at a special meeting last week, with six of eight aldermen present.
The aldermen also approved allowing the Board of Education (BOE) to waive the need to go out to bid to hire a company to handle transportation services. The company that is hired by the BOE will use the new city-owned buses.
Propane filling station to be built
The city will keep the buses at the current location on Riverdale Avenue, and construct a new propane filling station at that site. State and federal grants will be pursued to help pay for part of the cost of the filling station, based on the use of an alternative energy source for a municipal fleet.
The city also will save money on the cost of fuel. Typical school buses use diesel, and the cost difference between the two types of fuel should lead to $180,000 a year in savings, based on today’s prices, according to Lauretti.
“I like to think we’re ahead of the curve,” he said.
BOE has ‘flexibility’ in selecting provider
School Superintendent Freeman Burr said Monday he hopes to complete the new bus service contract specifications this week, and receive proposals from companies soon thereafter.
With the ability to waive the formal bid process, Burr said, a new service provider could possibly be in place by the end of this month. “The bid waiver gives us a lot of flexibility,” he said.
The current contract with First Student, which includes supplying buses, will expire June 30 after five years. The BOE went out to bid last fall for a new contract, receiving about a half-dozen proposals. Burr expects those same companies to be interested in being the service provider.
The BOE had been looking at an increase of $500,000 to $600,000 for bus transportation services in the next fiscal year, Burr said.
Vendor contract should cost less
While going with a traditional owner-operator bus arrangement might be easier for the BOE, Burr said having the city provide the buses could lower transportation costs. “Our hope and goal is that to just operate as a third party will be less,” he said of a new bus contract.
This will be the first time the Shelton BOE has negotiated such a third-party bus service provider contract. “In the long term, the city sees this as a savings, especially with the propane versus diesel,” Burr said.
The length of the new bus service contract, with the city providing the buses, is uncertain. But Burr said it might be a two-year contract, with an option for a third year.
Lauretti said owning the buses will save the city money because bus service contractors usually build the cost of debt service from purchasing their buses into a contract. Plus, at the end of the service contract, the vendor — and not the city — owns the buses.
“We’re eliminating a lot of interest payments by buying direct,” Lauretti said. “And at the end of the term, we’ll own the buses.”
He said school buses normally have a life span of 10 to 12 years, much longer than the five-year lease purchase agreement.
In addition to the fuel differential savings, Lauretti said, using propane is better for the environment and for passengers, which should please the parents of young people who will be inside them every school day.
While the total amount of expected savings from the initiative is hard to quantify, Lauretti said, “I think it’s big.”
‘Outside the box’
Board of Aldermen President John F. Anglace Jr. said having the city buy propane-powered buses is an example of the city pursuing a creative approach to save money. “In this day and age, you have to think outside the box,” he said.
This approach will provide more money to spend on direct education costs rather than student transportation, according to Anglace.
Anglace also said the arrangement shows the city and BOE can work together as partners. “You have to have trust and confidence in each other,” he said. “You have to be talking with each other.”
Alderman Jack Finn said the possibility of getting outside grants to help build the propane filling station is another positive aspect of the initiative. “We could possibly get some of that money back,” Finn said.