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Home My WebLink About2014-06-18 PACKET 04.N. REQUEST OF CITY COUNCIL ACTION COUNCIL AGENDA MEETING ITEM # �� DATE 6-18-2014 e . PREPARED BY Pubiic Works Les Burshten ORIGINATING DEPARTMENT DEPARTMENT HEAD *********************************�***�********** COUNCIL ACTION REQUEST Consider approving the replacement of two one-tons and four pick-ups with the purchase of two one-tons and four pick-ups for the Public Works and Parks Department for a combined purchase price of $241,818.30. STAFF RECOMMENDATION Consider the replacement of two one-tons and four pick-ups with the purchase of two one-tons and four pick-ups for the Public Works and Parks Department for a combined purchase price of $241,818.30. BUDGET IMPLICATION: $248,000.00 BUDGETED AMOUNT ADVISORY COMMISSION ACTION ❑ PLANNING ❑ PUBLIC SAFETY ❑ PUBLIC WORKS ❑ PARKS AND RECREATION ❑ HUMAN SERVICES/RIGHTS ❑ ECONOMIC DEV. AUTHORITY ❑ DATE REVIEWED ❑ ❑ ❑ ❑ ❑ ❑ ❑ $241, 818.30 ACTUAL AMOUNT DENIED ❑ ❑ ❑ ❑ ❑ ❑ ❑ SUPPORTING DOCUMENTS � MEMO/LETTER: Adam Moshier, June 10th, 2014 ❑ RESOLUTION: ❑ ORDINANCE: ❑ ENGINEERING RECOMMENDATION: ❑ LEGAL RECOMMENDATION: ❑ OTHER: ADMINISTRATORS COMMENTS APPROVED ❑ ❑ ❑ ❑ ❑ ❑ ❑ � % �. Date C:\Users\nbelscamperWppData\Local\Microsoft\Windows\Temporary Internet Files\Content.Outlook�XRITLL4J\council-action.doc Cottage J Grove � Pride and PrOSPerity Meet To: Les W. Burshten, Director of Public Works From: Adam Moshier, Management Assistant Mark Olson, Shop Foreman Date: June 10th, 2014 RE: Equipment Replacement Purchase Introduction The 2013 budget allocated $182,000 for the replacement of four vehicles within the Public Works and Parks Department. Two one ton trucks and two pick-ups with plows are being replaced. Staff delayed purchasing these items in 2013 in order to avoid paying sales tax due to recently passed legislation which equates to a$12,513 savings on a total purchase price of $182,000. The 2014 budget allocated $66,000 for the replacement of two pick-ups, one with plow equipment. Backqround Storm Water 1-Ton Truck This vehicle will be 20 years old this year. The City's replacement schedule for this type of vehicle is typically 12 years. This vehicle is used in maintaining the City's storm water structures. Some responsibilities include repair and inspection of catch basins, manholes, ponds and waterways. This truck carries all of the tools and equipment needed to complete repairs on the storm structures and has a crane to help lift debris out of tight spaces. The crane will be taken off of the old truck and reused on the new truck. This truck is one of the oldest in the fleet and has over 116,000 miles: Shown below is the maintenance graph over the last 12 years. The first 8 years are unknown. Maintenance Cost Each Year $6,000 55,000 $4,000 0 53,000 u Sz,00Q S l,000 S- -1-Ton Truck 9 10 11 12 13 14 15 16 17 18 19 20 Year Maintenance costs are estimated to increase to $3,500 by the end of 2014. Resale value is estimated at $1,500. Purchasing a new 2015 F450 4X4 -Regular Cab 1 ton truck will provide many benefits to the City. It is a more efficient piece of equipment than what the City currently has for the following reasons: 1. Less time spent repairing equipment thus increasing productivity. 2. Lower maintenance costs. 3. Parts will be readily available whereas older vehicle parts are more challenging to acquire. 4. Increased ability to haul different types of trailers and other equipment. 5. More fuel efficient. 6. More environmentally friendly with fewer emissions. 7. Increased space for tools and equipment. The table below compares total cost of ownership between a new truck and the existing truck. Cost of Ownership Each Year ss.000 S�,000 $6,000 $5.000 � SQ.000 $3,000 $z,000 Si,000 S Year —New 1-Ton Truck (maintenance cost and lost resale value Included) —Ezisting 1-Ton Truck (maintenance cost and lost resale value induded) Streets 1-Ton Truck This truck will be 15 years old in 2014 and has over 80,000 miles. The City's replacement schedule for this type of vehicle is typically 12 years. This vehicle is used for a variety of purposes including hauling the spray patcher, shouldering roads, hauling material for ponds, hauling cold mix, hauling chipper box, pulling skid steer trailer and hauling tree limbs. 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Purchasing a new 2015 F450 4X4 -Regular Cab 1 ton truck will provide the following benefits to the City. 1. Less time spent repairing equipment thus increasing productivity. 2. Lower maintenance costs. 3. More fuel efficient. 4. More environmentally friendly with fewer emissions. The maintenance cost each year for this truck is below. The first two years are unknown. It is estimated the maintenance cost by the end of 2014 will be $2,500. This vehicle is estimated to be worth $6,000 resale value based upon past eBay sales. Maintenance Cost Per Year $6,000 $5,000 S4,000 0 53,000 U 52,000 5i,000 S- 3 4 5 6 7 8 9 10 11 12 13 14 15 Year —Streets 1-Ton The cost of ownership each year for the new truck and the existing truck is displayed in the graph below. Cost of Ownership Each Year 56,oao 5s,oao $a,000 s 5a,000 $z,oao $i.000 S� —New 1-Ton Truck (maintenance cost and lost resale value included) —Existing 1-Ton Truck (maintenance cost and lost resale value induded) 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Year Pick-up Trucks There are four pick-ups proposed for replacement. The City's replacement schedule for pick- up trucks is 12 years. Three of the four trucks are 14 years old and the fourth is 12 years old. Each truck has between 90,000 and 110,000 miles. During the winter, these vehicles are used for plowing cul-de-sacs which increases the maintenance cost on the truck and decreases longevity. These trucks are used for the daily operations in park, street and utility divisions year round. They are the primary vehicles used for traveling to and from job tasks and need to be readily available and in good working condition. Estimated maintenance cost for each existing pick-up is about $2,500 by the end of 2014. Each truck is only estimated to be worth $2,000 resale value based upon past eBay sales. Shown below is the average maintenance costs of the vehicles. Average Maintenance Costs for Current Pick-up Trucks S�,000 $6,000 ss,00a .� Sa,000 O � $3,000 $2,W0 $1,000 S- The cost of ownership graph and table for a new pick-up and an existing pick-up is shown below. Cost of Ownership Each Year $G000 .;.__ .. ...... .. ...__ .__...__ ._. .._._ _ . _ . ...__.. .._._...___.. $5.000 �,� O 5 U 5z.� 51,000 � New Pick-up Truck (maintenante cost and lost resale value included) —Existing Pick- up Truck (maintenance cost and lost resale value included) 1 2 3 4 5 6 7 8 9 10 11 12 13 Year 2014 2015 2016 2011 2018 2019 2020 2021 2022 2023 2024 2025 Year Alternative Options Analvsis In addition to a new vehicle purchase, staff studied both used vehicle purchase and leasing as alternative options. In reviewing used trucks, staff found they do not maximize efficiency compared to purchasing new for the following reasons: • Wear and tear is unknown when buying used. • Vehicle options are limited and will not fit the needs of each department. • Breakdowns are estimated to occur more frequently. • Maintenance costs will be higher for used vehicles. • Price range varies with mileage and year. • A lot of risk involved when purchasing used. • Will not be able to find same exact trucks that fit in the fleet standards. Staff also reviewed leasing the vehicles, however, due to the high use the City has for the vehicles, leasing is generally not pursued. The leases offered are more of an alternative financing option. Municipalities are still required to pay the total purchase price, however, it is spread out over time with interest added to the principal amount. This would increase the cost of the vehicles and would not maximize productivity of City funds. *Includes purchase price minus resale value estimated $2,000 If leasing were pursued, it would be hard to work with a mileage restriction as well as being responsible for any damage that occurs to the vehicle at the time of trade in. The following table displays all of the vehicles recommend for purchase in this memorandum. Department Unit to be Estimated New Budgeted Purchase Replaced Re-sale Vehicle Funds Price Value Description Storm Water 60-1801-94 $1,500 New Ford 1 $68,000 $76,368.27 Ton 4- Wheel Drive Streets 31-4203-99 $6,000 New Ford 1- $50,000 $53,795.11 ton 4-wheel Drive Cab Chassis Utilities 70-1508-00 $2,000 4-wheel $32,000 $27,913.73 drive pickup with plow Parks 41-1402-00 $2,000 4-wheel $32,000 $27,913.73 drive pickup with plow Utilities 70-1502-02 $2,300 4-wheel $32,000 $27,913.73 drive pickup with plow Streets 31-1005-00 $1,500 4-wheel $34,000 $27,913.73 drive pickup Total $15,300 $248,000 $241,818.30 The City is eligible to purchase these vehicles off of the state contract with the associated vendors. The related snowplow attachments for three of the pick-ups will be recommended for purchase at a later date. There is an additional $15,900 budgeted separately for these items. The old vehicles will be sold on eBay once the new vehicles are in operation. Recommendation Consider approving the replacement of two one-tons and four pick-ups with the purchase of two one-tons and four pick-ups for the Public Works and Parks Department for a combined purchase price of $241,818.30.