The Palmview City Council canceled a contract to lease police cars last week, calling the alternative financing agreement a bad deal.
Palmview will return two police cars to South Carolina-based Public Finance Strategies and stop paying the company a cut of certain traffic tickets.
When the city approved the contract last year, however, Palmview considered the deal a creative way to buy police cars without putting any money down.
Then-police Chief Chris Barrera brought the deal to then-City Manager Ramon Segovia, who signed the contract in March 2017. Public Finance Strategies provided the city with two police cars, which hit the streets in June.
With the exception of police radios, the 2017 Ford Explorer and 2017 Ford Taurus came fully equipped. They cost nearly $71,000.
Palmview promised the new police cars would spend more than 240 hours every month “performing traffic enforcement duties in known chronic speeding areas that may endanger public safety,” according to the contract.
The Palmview Municipal Court tracked traffic tickets written by officers who drove the new police cars.
Whenever a motorist paid a ticket, Public Finance Strategies collected $25 from the city.
“In theory, if they issue no tickets, they owe no money. Zero,” said company President William B. Danzell.
The contract also allowed Palmview to buy the vehicles after paying the purchase price plus interest.
“Once we’re whole, they have the option to buy the vehicle for $1,” Danzell said.
Public Finance Strategies is dedicated to improving public safety by cracking down on speeding, which causes deadly car crashes, Danzell said. The company offers cash-strapped police departments a way to buy new vehicles for traffic enforcement without borrowing money from a bank or burdening taxpayers with higher bills.
“From our standpoint, if they really don’t want to continue with the program, usually we just take the vehicle back and deploy it to another community,” Danzell said. “There’s no cost or penalty involved.”
Any city unhappy with the program may simply return the police cars and cancel the contract.
“There’s no money being made,” Danzell said. “We’re recovering our costs.”
City Finance Director Rachel Chapa disagreed, adding that the contract included predatory terms and resembled a payday loan agreement.
“He was making a killing off the city of Palmview,” Chapa said.
While the contract allowed Palmview to purchase the police cars from Public Finance Strategies, the terms included a catch.
After the first year and the second year, Palmview could buy the police cars if payments covered all costs plus 12 percent interest. After the fourth year, Palmview could buy the police cars for all costs plus 3 percent interest.
The contract, though, didn’t include an option to buy during the third year, Chapa said, adding that the third year is probably when Palmview would hit the threshold.
Officers driving the new police cars wrote 627 traffic tickets from July to December 2017, according to city records. Under the deal, Palmview owed the company $15,675 for the first six months.
Based on that six-month period, Palmview would pay Public Finance Strategies about $31,350 annually from traffic tickets.
Palmview would cover all costs plus interest during the third year, but wouldn’t be able to purchase the police cars until the fourth year — when payments to Public Finance Strategies would total more than $125,000.
“It sounds like it’s minimal or no risk. It’s appealing,” said City Manager Leo Olivares. “But you got to read the fine print.”