HomeMy WebLinkAbout2013-01-16 PACKET 09.A.REQUEST OF CITY COUNCIL ACTION COUNCIL AGENDA
MEETING ITEM #
DATE 1/16/2013
PREPARED BY : Administration
ORIGINATING DEPARTMENT
Ryan Schroeder
DEPARTMENT HEAD
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COUNCIL ACTION REQUEST:
Receive response to previously raised Council comments and requests regarding vehicle
purchasing.
STAFF RECOMMENDATION:
Receive response.
IN 910:112 u'_ _ •►
BUDGETED AMOUNT ACTUAL AMOUNT
ADVISORY COMMISSION ACTION
DATE REVIEWED APPROVED DENIED
❑ PLANNING ❑ ❑ ❑
❑ PUBLIC SAFETY ❑ ❑ ❑
❑ PUBLIC WORKS ❑ ❑ ❑
❑ PARKS AND RECREATION ❑ ❑ ❑
❑ HUMAN SERVICES /RIGHTS ❑ ❑ ❑
❑ ECONOMIC DEV. AUTHORITY ❑ ❑ ❑
❑ ❑ ❑ ❑
SUPPORTING DOCUMENTS
® MEMO /LETTER: Memo from Ryan Schroeder.
❑ RESOLUTION:
❑ ORDINANCE:
❑ ENGINEERING RECOMMENDATION:
❑ LEGAL RECOMMENDATION:
❑ OTHER:
ADMINISTRATORS COMMENTS
l i
City Administrator Date
http: //i ntra net/ city -cou nci I /council -actio n. doc
City of
Cotta Grove
J Minnesota
To: Honorable Mayor and City Council Members
From: Ryan R. Schroeder, City Administrator
Date: January 3, 2013
Subject: Vehicle Purchasing
At the December 19, 2012 meeting of Council a purchase of a 2013 (new) Ford Explorer was
authorized for the Recreation Division. Funding for purchase of this vehicle was provided for in
the 2012 budget in the amount of $27,000 after trade. The vehicle replaces a 1999 Astro Van.
During Council deliberation it was suggested that staff should consider pursuit of used vehicles
as opposed to purchase of new equipment off the state bid list. It should be noted that we do
often pursue purchase of used equipment and apparatus when the internal subject area
experts believe there is opportunity to save substantial long term costs (purchase and
operating expense) through the used market. An example would be the existing packer truck.
We also have pursued refurbishing of equipment when we believe we can extend equipment
life more cost efficiently than purchase of replacement equipment (we have done this with
squads, which proved ill advised, and also larger public works vehicles which has often proved
beneficial). In both cases, used and refurbished, we often find our analysis of used /refurbished
versus new often rides on the degree of equipment specialty.
The City has an advantage in many equipment purchases not available to the retail or average
business buyer in that we can buy off a state negotiated bid list. This bid list is generally well
below retail pricing due to the volume of sales experienced by the equipment suppliers as a
result of selling to governments. As a result, we do not experience the depreciation in asset
value experienced by the retail buyer by driving a new vehicle off the dealership lot.
In the case of the 4WD Explorer the state bid with options was $24,431.40 plus destination,
licensing, and delivery charges to total $26,165.19. Comparing the $24K purchase to Kelley
Blue Book retail price estimates of a similar vehicle in excellent condition is as follows:
2013 (State Bid)
$24,431.40
2013 (retail 0 miles)
$30,169
2012 (retail 0 miles)
$29,502
2011 (retail 27,500 miles)
$28,364
2010 (retail 37,500 miles)
$19,478
2009 (retail 49,500 miles)
$17,668
2008 (retail 63,500 miles)
$15,318
2007 (retail 78,000 miles)
$12,535
Our goal is to realize a 12 year life of the purchased vehicle. Purchase of an older vehicle
through a retail source would likely result in a lesser life expectancy of the vehicle within the
fleet. Further, it would be anticipated that maintenance costs of a higher mileage vehicle
would exceed that of a newer vehicle throughout its life within the fleet.
The question is a good one and the decision to purchase "new" versus "used" is a judgment
call. In the above example, however, the alternative to the purchase as approved would be to
purchase a vehicle three model years older at a slightly higher expected capital cost per year
of service life with maintenance costs also likely higher during that service life. It is also likely
that trade -in value at the end of service life would be greater for the state bid vehicle over an
older vehicle.
Council Action: No action requested