City leaders in cash-strapped San Diego are hoping to save millions by slashing how much the city spends leasing, buying and servicing its fleet of nearly 5,000 vehicles. The city is launching two separate studies to determine what percentage of the fleet should be rented, what share should be owned and how to service owned vehicles more effectively so fewer rentals are needed. The studies come after San Diego balanced its budget this spring only by laying off workers and making unpopular cuts like cutting hours at library branches. The first study will be an in-house cost-benefit analysis of renting versus owning led by the city’s General Services Department, which oversees a 4,900-vehicle fleet with an estimated replacement value of $437 million. The second study, which will be led by City Auditor Andy Hanau, will focus only on the city’s vehicle rental contracts and whether the city is getting good value for its money. A January audit of fleet operations by Hanau suggested the city might be paying for unnecessary rentals, due to inefficient service protocols that leave cars sitting for days when they could be back on the road in hours. Such concerns prompted City Council members to express reservations last month about a $25 million increase in the city’s vehicle rental contract, from $41.3 million to $66.5 million. Councilmember Vivian Moreno said the city’s Fleet Management Division must quickly reduce spending on rentals by more efficiently repairing the vehicles its already owns. Moreno said Fleet officials must begin to use appointment scheduling software already in place so that employees can strategically bring cars in for repairs only when city mechanics are available. “The ability for departments to schedule appointments would help prevent vehicles from being dropped off without an appointment and then sitting there for a few days until they can be repaired,” Moreno said last month. City officials said they still plan to follow through on the promise they made last winter to begin using the appointment software, but it likely won’t happen until the end of the year. Musheerah Little, the city’s general services director, told the council’s budget committee on July 16 that her staff is still evaluating the system’s capabilities. More broadly, general services officials have begun a cost-benefit analysis of renting versus owning vehicles, and they say it will be more complicated than initially expected. Alia Khouri, who oversees the department as a deputy chief operating officer, said shifting to more rentals could require the city to renegotiate labor contracts with mechanics because it would shrink their workload. Khouri also said the city’s decision won’t be as simple as prioritizing ownership over renting, explaining that most city cars are bought on credit and increase how much the city spends on debt financing. In addition, Khouri said it makes sense to rent some types of vehicles that are used less frequently, such as specialized types of construction equipment. “If a vehicle is not going to be used every week or every month, we do suggest that you rent it,” she said. And if San Diego wants to own a greater percentage of the vehicles it uses, it must determine whether it has the facilities to house them and service them and enough mechanics to handle all that work. The city’s ongoing shift to an all-electric fleet could reduce maintenance costs. San Diego’s climate action plans calls for all light-duty fleet vehicles to be electric by 2035, along with 75% of its medium and heavy-duty fleet vehicles. But through last year, the overall percentage was just over 5%. Khouri told council members the analysis could take as long as two years if the possible labor negotiations are included. “The 24 months, I think, will be well-spent on putting together a new plan taking into account the cost-benefit analysis you’ve requested,” she said. Hanau’s study is scheduled to be completed sooner — by next June at the latest. An audit he released in July 2024 found that city officials had increased the amount of the city’s vehicle rental contract multiple times without proper council authorization. Despite the concerns raised last month, the council eventually approved the increase to the vehicle rental contract in unanimous vote July 29.