§ 2-425.22. Motor vehicle.

I.

Purpose. To provide guidelines which govern the usage of City owned motor vehicles, authorize City owned motor vehicle usage, and align the usage of City owned motor vehicles with IRS tax guidelines for motor vehicle usage.

II.

Definitions.

A.

City Owned Motor Vehicle: For the purposes of this policy, any motor vehicle owned or leased by the City of Effingham.

B.

Department Head: For the purpose of this policy the Public Works Director, Economic Development Director, Chief of Police, Fire Chief, and City Administrator are considered Department Heads.

C.

De Minimis Fringe Benefit: A benefit that is infrequent and of little value. For example, a small personal detour to pick up lunch while out of the office on business.

D.

Fair Market Value: For the purposes of this policy, the fair market value of the City owned motor vehicle is the amount a person would pay to purchase the motor vehicle from a third party in an arm's length transaction within Postal Zip Code 62401. This amount will be determined by consulting Kelley Blue Book at www.kbb.com or a comparable reliable resource and utilizing the private party value and selecting the appropriate condition for said vehicle.

E.

Personal Use: The following are examples of taxable personal use of a City owned motor vehicle:

a.

Commuting between residence and workstation.

F.

Personal Vehicle: Any vehicle not owned or leased by the City of Effingham.

G.

Qualified Non-Personal Use Vehicle: Any City owned motor vehicle an employee is not likely to use more than minimally for personal purposes based upon its design. Qualified non-personal use vehicles include:

a.

Clearly marked police, fire, and public safety officer vehicles. The employee must be on-call, required to commute in the vehicle, and be readily available to respond directly to an emergency situation. A police, fire, or public safety vehicle is clearly marked if, through painted insignia or words, it is readily apparent that the vehicle is a police, fire, or public safety officer vehicle. A marking on a license plate is not a clear marking for this purpose.

1.

Unmarked City owned motor vehicles used by law enforcement officers. The officer must be authorized to carry a firearm, execute search warrants, make arrests, and be readily available to respond directly to an emergency situation.

2.

A specialized utility repair truck may qualify as a non-personal use vehicle if the truck (not a van or pick-up truck) is designed to carry tools, equipment, etc.; the truck has permanent interior construction, including shelves and racks; the City must require the employee to commute for emergency call-outs to restore or maintain water or sewer services. For a van or pick-up truck to qualify the City owned motor vehicle must be clearly marked with permanently affixed decals, special painting, striping, or other advertising associated with the City and:

i.

Vans must have only a seat for the driver and a maximum of one passenger and permanent shelving that fills most of the cargo area, or the van always must carry material and equipment used for City business in an open cargo area.

ii.

Pick-up trucks must be either equipped with at least a hydraulic lift gate, permanent tanks or drums, or permanent sideboards or panels that materially raise the level of the sides of the truck bed.

3.

Bucket trucks, dump trucks, and flatbed trucks.

H.

Standard Federal Mileage Rate: As determined by the Federal Government. As of the date of this Policy, the standard mileage rate is 51 cents per mile. The rate for the current year can be found on www.irs.gov or in IRS Publication 553.

I.

Take-Home Vehicle: Any City owned motor vehicle which upon authorization, can be used during both working and non-working hours.

III.

IRS Compliance Requirement.

IRS Guidelines: Based on IRS guidelines in the Taxable Fringe Benefits Guide, unless it is considered a de minimis fringe benefit or a qualified non-personal use vehicle the IRS guidelines consider the personal use of a City owned motor vehicle a taxable fringe benefit. Personal use includes commuting to and from work in a City owned motor vehicle, even if the vehicle is taken home for the convenience of the employer. The value of the fringe benefit must be included in the employee's wages and is subject to income, social security, and Medicare tax withholding. An employee's use of a qualified non-personal use vehicle qualifies as a working condition fringe benefit. This is a non-taxable fringe benefit.

Documentation/Substantiation Required: If the employee uses the City owned motor vehicle, excluding qualified non-personal use vehicles, for both business and authorized personal use, separate records for business and personal mileage are required. If records are not provided by the employee the value of all use of the automobile is considered wages to the employee. The employee can then itemize any substantiated business use on IRS Form 1040, Schedule A. Authorized employees shall be provided with mileage log books/forms (attached hereto as Exhibit A) to be placed within their City owned motor vehicles. Employees shall submit a monthly mileage record to the City Administrator or his/her designee for timely computation of the employee's taxable fringe benefit. The employee shall have this turned into the City Administrator Office by the 7 ^th day of each calendar month for the previous month.

Safe Harbor Substantiation Rules: Employees using City owned motor vehicles are not required to keep detailed records of vehicle use if all of the following tests are met:

a.

The City owned motor vehicle is owned or leased by the employer and is provided to the employee for use in the employer's business, and

b.

When the vehicle is not in use, the vehicle is kept on the employer's premises, and

c.

The City has a written policy prohibiting personal use, except de minimis use, and

d.

The City reasonably believes the vehicle is not being used for any personal use other than de minimis use.

Fringe Benefit Calculation: If an employee uses a City owned motor vehicle that does not qualify as a non-personal use vehicle, and the employee uses the vehicle for personal use, which includes commuting, the personal use of the vehicle is a non-cash taxable fringe benefit. It is the City's responsibility to determine the actual value of this fringe benefit and to include the taxable portion in the employee's income. There are three (3) methods that can be used by the employer to determine the value of the vehicle provided to the employee. For the purposes of this policy, the City shall employ the following valuation rule:

a.

Automobile Lease Valuation Rule: The fair market value is determined by identifying the value of the vehicle on the first day made available to the employee. The annual lease value is based on the annual lease table located in IRS Publication 15-B (attached hereto as Exhibit B), as amended. Since the City provides fuel for the City owned motor vehicles, 5.5 cents per mile driven by the employee shall be added to the annual lease value. The annual lease value is then multiplied by the percentage of personal use pursuant to the employee's substantiation. The annual lease value will be recalculated on an annual basis during the month of December, after it is first adopted.

Example: An employee of the City of Effingham uses a City owned motor vehicle. In 2011, the employee drove the vehicle 7500 miles of which 400 miles (5%) was for commuting and de minimis personal use, as permitted within this policy. The fair market value as determined by the City for said vehicle is $14,500 for an annual lease value of $4,100. Personal use is valued at $205 ($4,100 × 5%) plus $22 (5.5 cents × 400 miles) for fuel costs. $227 ($205 + $22) is included in the employee's wages at the end of the calendar year. Said wages shall be subject to federal and state income tax, Medicare, and social security taxes.

IV.

Vehicle Use.

A.

Valid Driver's License Required: All employees operating a City owned motor vehicle must have a valid Illinois Driver's License with the required endorsements and the acceptable level of training.

B.

Legal Compliance: All employees operating a City owned motor vehicle shall adhere to all applicable local, state, and federal traffic laws.

C.

Suspended; Expired; Revoked License: An employee with a suspended, expired, or revoked driver's license is prohibited from operating a City owned motor vehicle.

D.

Suspended; Revoked Reporting Required: Any employee that has had his/her driver's license suspended or revoked for any reason or has reasonable knowledge to believe that his/her driver's license will be suspended or revoked is required to report the suspension or revocation to his/her immediate supervisor as soon as possible. Said employee shall not knowingly operate a City owned motor vehicle.

E.

Authorization: Only City employees authorized by their Department Head shall be allowed to operate a City owned motor vehicle. For the purposes of this policy, said employees shall be at least eighteen (18) years of age.

F.

Official Business: City owned motor vehicles are only to be used for official City business and not for personal business, unless it is incidental to the performance of official business. The use of City owned motor vehicles as a personal conveyance to and from authorized breaks or in an emergency during official business is permitted.

G.

Operation Standards: Employees authorized to use City owned motor vehicles shall use the vehicle properly, safely, and in the manner for which it was designed.

H.

Smoking Prohibited: Smoking is prohibited in all City owned motor vehicles.

I.

City Owned Motor Vehicle Use Outside of City Limits: No City owned motor vehicle may be taken outside City limits unless it is being used for official City business. Employees who need to travel outside City limits shall receive permission from their Department Head or his/her designee prior to leaving City limits, or as soon as possible in the case of an emergency.

J.

Department Head Response to Emergency Service Calls: In order to allow emergency service department directors efficient response capability to emergency calls, the Chief of Police and Fire Chief are authorized to use the City owned motor vehicle assigned to them for personal use within a forty (40) mile radius of City limits.

K.

On-call Detectives and Arson Investigator: In order to allow rapid emergency response on-call detectives and the Arson Investigator are authorized to use the City owned motor vehicle assigned to them for personal use within a twenty (20) mile radius of City limits.

L.

Seatbelts Required: Employees are required to wear seat belts in City Vehicles so equipped.

M.

Passengers Restricted: Passengers who are not City employees are allowed to occupy City vehicles only with the authorization of the respective Department Head. Said occupant shall comply with the requirements as set forth within this policy (refer also to City Ordinance #45-98).

V.

Vehicle Decals.

A.

Definition: Vehicle decals are defined as a sticker, markings, striping, license plate holder, municipal license plate, and/or any other emblem that is placed on a City owned motor vehicle in any location.

B.

Authorization: Permitted decals and decal location shall be determined and approved by City Department Heads for their respective Department. The City Administrator reserves the right to have final say on any decal display or placement, and may revoke a decal at any time.

C.

Compliance: It is the Department Head's responsibility to ensure compliance with this policy.

D.

Undercover Police Motor Vehicles: The vehicle decal portion of this policy shall not apply to undercover police motor vehicles.

VI.

Take Home Vehicles.

A.

Authorization: Department Heads and employees who have the responsibility to respond to an emergency on a 24-hour a day basis are authorized to take home a City owned motor vehicle. If such responsibilities are rotated, the employee on-call is authorized to take home a City owned motor vehicle.

B.

Outside City Limits Prohibited: Department Heads and on-call employees are prohibited to take their assigned City owned motor vehicle to their home if they reside outside the City's corporate boundaries, as amended from time to time through annexation.

C.

Personal Use Prohibited: Take home vehicles are to be driven to and from work only and not for personal use, except for de minimis personal use such as a stop for a personal errand on the way between business and the employee's residence.

D.

Police Take Home Vehicles: City full-time police officers are authorized to have a take home vehicle, if they reside within the City corporate limits, as amended from time to time through annexation. The Deputy Chief of Police and Police Lieutenants are authorized to have a take home vehicle as long as they remain in compliance with the City's approved Residency Policy as amended from time to time.

VII.

Vehicle Maintenance, Breakdowns, Cleanliness.

A.

Inspection and Reporting: Drivers of City owned motor vehicles should continually observe the condition of the motor vehicle at all times. Drivers should note and report any problems or potential problems before, after, and during the use of said vehicle. Employees are expected to promptly notify their Department Head or his/her designee of any damage, defect, or necessary repairs.

B.

Mechanical Problems: If a mechanical problem is observed, it should be reported to the Department Head or his/her designee immediately.

C.

Breakdowns: If a breakdown occurs, drivers should report this immediately to their Department Head or his/her designee immediately.

D.

Cleanliness: Employees are responsible for maintaining the cleanliness of the interior and exterior of the City owned motor vehicle.

E.

Routine Maintenance: Employees are responsible to insure routine maintenance (i.e., oil changes every three thousand (3,000) miles) of their assigned vehicle is completed per the manufacturer's recommendations.

VIII.

Personal Vehicle Use for City Business.

A.

Mileage Reimbursement: Employees who are required to use personal vehicles for City business shall be reimbursed at the standard federal mileage rate. Written mileage records will be required for such reimbursement.

B.

City Owned Vehicle Use Required: Employees should make every effort to utilize a City owned motor vehicle for City business and to carpool when more than one employee is going to the same location for the same period of time.

C.

Insurance Liability: The employee's personal automobile insurance provider shall be the primary insurance carrier, when an employee utilizes their personal vehicle for City business.

(Ord. No. 72-2011, § I(Exh. A), 12-20-2011; Ord. No. 3-2014, § VII, 1-21-2014; Ord. No. 75-2017 , § IV(Exh. A), 9-5-2017)