DETROIT (WXYZ) - Would you ever pay $608 a month to lease an eight-year-old car? We are not talking about a Ferrari. We are talking about a run-of-the-mill Dodge.
That is what the Detroit Police Department is paying for a 2004 Dodge Intrepid. And the 7 Action News Investigators have learned there are over a hundred other similar expensive leases still being paid by the department.
One expert said this lease arrangement is wasting millions of dollars at a time when the city is teetering on the brink of bankruptcy.
Our Investigation reveals that Detroit Police have 110 cars on the road with leases that have been expired for as long as six years. Yet they are still paying full lease payments and are liable for over-mileage penalties and excess wear and tear. Even worse, the city is stuck with these cars now, and is looking for a way out.
What kind of cars are we talking about?
Not the kind you usually think of as police cars, with lights and sirens and police markings. We are talking about cars that look just like the ones you and I drive. Police use them for undercover work. They are called U-C cars in police lingo. And one respected economics professor tells 7 Action News what the city is paying for these cars is hard to believe.
You can judge for yourself.
What would you think if you saw a deal like this in the want ads? For lease: a 2004 Dodge Intrepid, just $608 a month, plus 15 cents per mile.
Chances are you would never agree to a deal like that. But that is what the Detroit Police Department is paying for the Intrepid.
They got the car back in September of 2003 on a two-year lease with Trader Ray Leasing in Detroit. But the car was not turned in when the lease expired in 2005. It is still on the road and the city is still paying $608 a month for an eight-year-old car.
But wait, there's more.
Through the Michigan Freedom of Information Act, we obtained a whole stack of expired city car leases, 110 identical two-year contracts on 2004 through 2007 models. All of them are expired, and the cars are still on the road. The city is still making the full lease payments ranging from $400 to $600 per month to Trader Ray Leasing.
"It seems very, very hard to believe," said Alan Reinstein, George Husband Professor of Accounting at Wayne State University.
He said if true, this lease arrangement is a huge waste of taxpayer's money. We asked Professor Reinstein to go through the stack of leases and give us a ballpark figure on how much the city has wasted.
"The difference between buying a car and leasing a car for 110 cars is over $4 million," Reinstein said.
Reinstein also said that the city would have saved about $4,000,000 either buying the cars up-front or leasing them and turning them in for new models when the two-year leases expired. Reinstein said maintenance costs become a big factor after a car is a few years old and packing on mileage.
In lease payments and mileage overages alone, some of the cars could have been paid off twice over, or more.
Let's take that 2004 Dodge Intrepid as an example.
The city has been paying $608 for 93 months. That comes to $56,544. Then there is the cost for extra miles. If, for instance, the Intrepid has 100-thousand miles on it, which is a conservative estimate, that's 60,000 miles over what is allowed in the lease agreement.
At 15 cents per mile, that is another $9,000, bringing the total amount invested in the 2004 Intrepid to $65,544. That does not take into account all of the money the city has spent on maintenance over the last eight years, or the fact that they will have to pay for any excess wear and tear when they eventually turn in the car.
"I think mismanage is probably the wrong word. This is malfeasance. It makes no sense to me," said Joseph Duncan, president of the Detroit Police Officers Association.
Duncan told 7 Action News that this kind of waste is especially troubling given the sacrifices his members have made.
"It's appalling. It's an affront to the men and women that go out every day. They haven't had a raise since 2008," said Duncan. "They made historical concessions on their pension, and now the city wants to take a ten percent pay cut again?"
Even from a policing standpoint, Duncan said keeping undercover cars this long makes no sense.
"I mean the advantage of having a U-C car is that you flip the car around. So you don't have the same car," Duncan said.
So how in the world did this happen? Why has the city left these cars on the road long after their contracts were expired?
"I don't want to attribute to why it happened, I just know the dollar effects are very large and I see really no upside. You know maybe someone didn't realize what was going on, but it does not make any sense to me," said Professor Reinstein.
Brian Tellier, the administrative manager at Trader Ray Leasing declined to talk about the lease situation on camera. But in a phone interview Tellier chalked it up to city mismanagement.
"We've extended them a courtesy by not calling
the cars back in. No one is holding a gun to their heads…they could turn the cars in tomorrow. This kind of reflects on their inability to get things done for themselves," said Tellier.
Commander John Serta joined the police department's management Services Bureau last February. He inherited the lease problem and cannot fully explain how it happened.
"On the surface, I'm sure it doesn't make sense, even to me. But when you look at it closely there are a lot of factors involved and it's a very complicated process," said Serta.
7 Action News asked Serta if it appears someone in the police department was asleep at the switch allowing these cars to stay on the road so long and continuing to make the high payments.
"I can't say that. That happened before my time in this bureau," Serta said.
He also said that coordinating a big lease fleet like this one with the police department and Detroit City Council is a cumbersome process.
But the head of the police union thinks someone needs to take a hard look at how this happened.
"I mean, somebody needs to be held accountable for it," said Duncan.
For now the city is stuck with these high payments for old cars. They tried to replace the fleet through Trader Ray, but the deal didn't fly. With Detroit in bad financial shape and struggling to pay vendors, no one is willing to finance the deal without a big up-front payment, which the city does not have.
Serta said they are now looking for a creative way out and re-evaluating how many of these cars are really needed.
In the meantime, Detroit taxpayers continue to bleed.