Title
Recommendation to Authorize the City Manager to Execute an Agreement with WEX Inc. for Temporary Fleet Fueling Services During the Underground Storage Tank Replacement Project at the Maintenance Service Center in an Amount Not-to-Exceed $315,000; and
Adoption of a Resolution Amending the Fiscal Year 2025-26 Budget to Increase Authorized Expenditures in the Fleet Fund Operating Budget (60141580) by $50,000. (Public Works 60141580)
Body
To: Honorable Mayor and Members of the City Council
From: Jennifer Ott, City Manager
EXECUTIVE SUMMARY
The City of Alameda (City) is replacing the aging underground fuel storage tanks (UST) at the Maintenance Service Center (MSC) to comply with State requirements to close all single-walled USTs by December 31, 2025. This work will take the MSC fueling station offline for approximately six months, beginning in late September early October 2025.
To maintain uninterrupted fueling for City fleet vehicles during construction, staff recommends a temporary fueling agreement with WEX Inc. (WEX), a nationwide government fuel card provider. Terms and conditions are based on Wex's Sourcewell Agreement 030625-WEX. The City is an active member of Sourcewell, a national purchasing agency, whose cooperative purchasing agreements have been competitively solicited in conformance with state and local purchasing requirements.
The WEX program will allow City vehicles to fuel at a wide network of retail stations in the City and throughout the Bay Area, with transaction level reporting and purchase controls to ensure accountability. The proposed not-to-exceed amount of $315,000 is based on the most recent six-month average fuel consumption at MSC, current Bay Area fuel prices, and a 10% contingency. Only fuel pumped will be billed and the not-to-exceed amount is not a guarantee of usage. Because retail prices are higher than the City's wholesale rates from Hunt & Sons, the City's wholesale fuel delivery service provider, staff estimates an additional $50,000 in fuel costs during the construction period, which requires a corresponding budget amendment.
BACKGROUND
The MSC fueling station serves most municipal departments, including Police, Alameda Municipal Power, Public Works, and Recreation and Parks, and also supports emergency generators. On November 19, 2024, City Council approved an agreement with Hunt and Sons, LLC (Hunt and Sons) for the delivery of unleaded and diesel fuels to City fueling stations, including the MSC and Fire Stations.
On July 15, 2025, City Council approved an agreement to remove the MSC's single-walled USTs and replace them with an above-ground tank that meets current environmental standards. The Police Station UST will also be replaced under the same agreement, but that work will not affect fleet fueling operations.
While the MSC fueling station is offline for construction, Hunt & Sons will not deliver fuel to that location. They will, however, continue fuel deliveries to the existing above ground storage tanks at the City's Fire Stations. Because no on-site fueling will be available at MSC during the construction period, the City must provide an alternative fueling solution to support essential operations and emergency response readiness.
DISCUSSION
Staff evaluated three temporary fueling options for MSC-dependent fleet vehicles:
* Mobile Fueling Truck - Maintains wholesale pricing and centralized distribution but requires a secure staging area, has limited fueling windows, and could create delays.
* Temporary Above-Ground Tank - Also maintains wholesale pricing but requires permitting, adds installation delays, presents challenges on where to locate the tank during construction and carries high short-term rental costs.
* Retail Fuel Card Program - Provides immediate implementation, flexible fueling locations, and secure transaction controls, though at higher retail pump prices.
After evaluating operational impacts, cost, and timing factors, staff recommends the retail fuel card option through WEX's Sourcewell Agreement (Exhibit 1). The City is an active member of Sourcewell, a national purchasing agency, whose cooperative purchasing agreements have been competitively solicited in conformance with state and local purchasing requirements. Advantages of the WEX Sourcewell Agreement include:
* 1% rebate on posted pump price (with certain exclusions)
* Federal excise tax exemption applied at billing
* Secure PIN -based transactions tied to specific vehicles and drivers
* Transaction level reporting and a mobile app for locating low-cost stations.
Fuel purchases through WEX will be billed at the retail pump price minus any federal excise tax, with only actual fuel dispensed invoiced. The proposed not-to-exceed amount of $315,000 is based on the most recent six-month average fuel consumption at MSC, current Bay Area fuel prices, and a 10% contingency. To enroll in the WEX fuel card program, staff seeks City Council approval for the City Manager to sign the Addendum (Exhibit 2) to the Fuel Card Services Agreement Between WEX Bank and Sourcewell.
Because retail prices are higher than the City's wholesale rate from Hunt & Sons, the City's fuel delivery service provider, staff estimates an additional $50,000 in fuel costs during the construction period, which requires a corresponding budget amendment.
Upon completion of the UST replacement project, the City will resume wholesale fueling through Hunt & Sons and terminate the WEX program.
ALTERNATIVES
* Approve the agreement as recommended to ensure uninterrupted fueling during the project.
* Modify the agreement scope or funding amount.
* Do not approve the agreement and direct staff to pursue an alternative fueling solution, which may cause delay or operational impacts.
FINANCIAL IMPACT
Fuel costs are budgeted in the Fleet Maintenance Division (60141580) and allocated to departments based on actual consumption. Retail fueling during the construction period is projected to increase costs by approximately $50,000, requiring a budget amendment to the Fleet Fund and does not impact the General Fund. A budget amendment resolution is attached to this City Council item.
MUNICIPAL CODE/POLICY DOCUMENT CROSS REFERENCE
This action is consistent with the Alameda Municipal Code.
This action is subject to the Levine Act.
ENVIRONMENTAL REVIEW
This action does not constitute a "project" as defined in California Environmental Quality Act (CEQA) Guidelines Section 15378 and therefore no further CEQA analysis is required.
CLIMATE IMPACT
The City's Fleet Replacement Policy, aligned with Climate Action and Resiliency Plan, prioritizes greenhouse gas emission reductions through right-sizing the City fleet, transitioning to electric vehicles when feasible, and lowering emissions through acquisition of low emission vehicles. The temporary use of retail fueling stations does not alter the City's long-term goal of reducing fossil fuel consumption and emissions.
RECOMMENDATION
Authorize the City Manager to execute an agreement with WEX Inc. for temporary fleet fueling services during the underground storage tank replacement project at the MSC, in an amount not-to-exceed $315,000; and adopt a Resolution amending the Fiscal Year 2025-26 budget by increasing appropriations in the Fleet Maintenance Division by $50,000.
Respectfully submitted,
Erin Smith
Financial Impact section reviewed,
Ross McCarthy, Finance Director
Exhibits:
1. Wex Sourcewell Agreement
2. Addendum|1010|