Accomplishments of an Innovative Statewide Van Lease and Purchase Program Frederick J. Wegmann The University of Tennessee Knoxville, TN 37996-2010 [email protected] Theodore J. Newsom Center for Transportation Research The University of Tennessee Knoxville, TN 37996 [email protected] ABSTRACT Tennessee Vans is an innovative statewide vehicle procurement service that provides vans for lease and/or purchase to commuter groups, employers, public agencies and private non-profit community organizations. In exchange for access to vehicles and affordable financing provided by Tennessee Vans, the program participants agree to provide safe and reliable transportation services to meet identified needs and to pay for the Tennessee Vans vehicles. The cost recovery strategy for Tennessee Vans is a critical approach to maintaining the viability and longevity of the program. The initial seed grants are provided by local, state, and federal governments with the stipulation and expectation that Tennessee Vans will recover vehicle and administrative costs to the highest extent possible. Tennessee Vans strives to constrain administrative expenses, minimize financial loses, and maximize vehicle cost recovery. Revenues received from program participants are used to purchase replacement vehicles in the lease program and to procure additional vehicles for the purchase program. With no driver costs and other operating costs largely absorbed by the agencies, Tennessee Vans has a distinct financial advantage. Tennessee Vans has experienced a steady rate of growth in funding and service development since its implementation in 1990. Financial resources provided during this time have enabled the program to place over 500 vehicles with 300 different organizations. Currently over two million annual trips are provided by organizations utilizing Tennessee Vans with 354 vans being in active service, 115 in the lease program and 239 in the purchase program. Key words: public transit servicesvehicle lease and purchase program Proceedings of the 2003 Mid-Continent Transportation Research Symposium, Ames, Iowa, August 2003. © 2003 by Iowa State University. The contents of this paper reflect the views of the author(s), who are responsible for the facts and accuracy of the information presented herein.SERVICE DELIVERY APPROACH The service delivery approach used by Tennessee Vans has evolved over the past ten years in response to growing demands for transportation resources among diverse population groups throughout Tennessee. Van transportation services have been used as an energy conservation technique, a measure to help alleviate traffic congestion and air pollution, and an economic resource to assist persons with access to employment and job training opportunities. A variety of van transportation programs have been implemented, including employer sponsored programs, independent owner operators, private third party operations, and public agency programs. Tennessee Vans is an evolving service delivery model designed to meet the changing nature of mobility needs in Tennessee. (1)(2)(3). The Tennessee Vans program was initiated on February 1, 1990, as a continuation of the Tennessee Department of Transportation’s (TDOT) supportive role in the development of van transportation services in Tennessee. The Tennessee Vans program is operated by the University of Tennessee Center for Transportation Research and provides vehicles for lease and/or purchase by commuter groups, employers, private agencies, and public and non-profit community organizations. Tennessee Vans is a provider of vehicle resources to program participants, who are the primary mobility service designers. The program participants design the travel routes, operating schedules, and financial options for those they serve. The only requirement from Tennessee Vans is that the program participant meets the basic requirements for vehicle repayment and travel safety. Tennessee Vans uses grant funds provided by federal, state, and local sources to purchase vehicles for use by program participants. The vehicle costs and associated administrative expenses for Tennessee Vans is recovered from program participants through fees charged for the lease or purchase of vehicles. These generated funds are in turn used to purchase vehicles to replace older vehicles or add more vehicles to the fleet. During the past ten years, the Tennessee Vans fleet has grown to over 500 vehicles across the state (Figure 1). This paper presents a summary of the ten years of accomplishments of Tennessee Vans. Wegmann and Newsom 201002003004005006001990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000YearVansActive Total Retired FIGURE 1. Tennessee Vans Vehicles Per Year BASIC PROGRAM SERVICES Qualified program participants can lease and purchase Tennessee Vans vehicles. Three basic service programs are available: the Employee Vanpool Lease Program, the Agency Vehicle Lease Program, and the Agency Vehicle Purchase Program. The Employee Vanpool Lease Program provides vehicles, insurance, maintenance, and fleet management assistance to commuter groups who want to travel to and from work in a vanpool. Minivans and fifteen passenger vans are provided to groups of commuters who wish to ride together and share the monthly costs of operating the vanpool. The monthly fee covers the vehicle costs, maintenance, gasoline, insurance, and fleet management expenses. A member of the commuter group volunteers to drive the van, collect monthly rider fares, and keep the vehicle properly serviced. The typical vanpool monthly lease fee for a current model fifteen passenger van traveling seventy miles (70) round trip daily is $780.00. Each member of the group pays a portion of the monthly fee (e.g., $65.00 each for a group of twelve paying passengers). The Agency Vehicle Lease Program provides the opportunity for public and private organizations to provide transportation through an affordable vehicle lease plan. Transportation services include transporting persons to and from work, job training sites, work-trip related events, and other activities which facilitate the mobility and meet the travel needs of persons served by the organization. Qualified agencies pay monthly vehicle lease fees on a fixed cost plus mileage basis. The agencies provide their own insurance at program specific coverage levels. The lease costs include the cost of the vehicle, vehicle