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HomeMy WebLinkAbout2014-07-16 PACKET 08.B. REQUEST OF CITY COUNCIL ACTION COUNCIL AGENDA MEETING ITEM # DATE 7-16-2014 0 . PREPARED BY Public Works Les Burshten ORIGINATING DEPARTMENT DEPARTMENT HEAD ************************************************ COUNCIL ACTION REQUEST Consider approving the replacement of two one-ton trucks and five pickups with the purchase of two one-ton trucks and five pickups for the Public Works and Parks Department for a combined purchase price of $268,717.63. STAFF RECOMMENDATION: Consider the replacement of two one-ton trucks and five pickups with the purchase of two one- ton trucks and five pickups for the Public Works and Parks Department for a combined purchase price of $268,717.63. BUDGET IMPLICATION: $281,000.00 $268,717.63 BUDGETED AMOUNT ACTUAL AMOUNT ADVISORY COMMISSION ACTION � � � � ■ ■ ■ PLANNING PUBLIC SAFETY PUBLIC WORKS PARKS AND RECREATION HUMAN SERVICES/RIGHTS DATE APPROVED ❑ ❑ ❑ ❑ ❑ ❑ ❑ ECONOMIC DEV. AUTHORITY SUPPORTING DOCUMENTS REVIEWED ❑ ❑ ❑ ❑ ❑ ❑ ❑ � MEMO/LETTER: Adam Moshier, July 10t", 2014 ❑ RESOLUTION: ❑ ORDINANCE: ❑ ENGINEERING RECOMMENDATION: ❑ LEGAL RECOMMENDATION: ❑ OTHER: ADMINISTRATORS COMMENTS: ) City Administrator DENIED ❑ ❑ ❑ ❑ ❑ ❑ ❑ �� Date C:\Users\nbelscamperWppData\Local\Microsoft\Windows\Temporary Internet Files\Content.Outlook�XRITLL4J\council-action.doc Cottage J Grove � Pride and P�osperity Meet To: Les W. Burshten, Director of Public Works From: Adam Moshier, Management Assistant Mark Olson, Shop Foreman Date: July 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 pickups 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 $99,000 for the replacement of three pickups, one with plow equipment. Backqround Storm Water 1-Ton Truck This vehicle is one of the oldest in the fleet, has over 116,000 miles and is 20 years old this year. The City's replacement schedule for this type of vehicle is typically 12 years. This is a front line truck and is the only truck used for storm water maintenance. 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 storm water truck is used in emergency situations and needs to be readily available and trustworthy. When this truck is out of service, the storm water division cannot perform the duties assigned to them in an efficient manner. There are many situations when the truck is called out for an emergency flooding situation and time is of the essence. There have been recent breakdowns to this truck which has decreased efficiency as this is the only truck the storm water division has to use. Shown below is the maintenance graph over the last 12 years. The first 8 years are unknown. Maintenance Cost Each Year $6,000 $5,000 $4,000 � $3,000 52,000 $1,000 $- -1-Ton Tru ck 9 10 11 12 13 14 15 16 17 1$ 19 20 Year During the mechanics report, the following was found to need replacing if the purchase of the truck is delayed: • Starter • Transmission • Timing chain and gears • Door repair • Oxygen sensor • Seats If Public Works were to delay the purchase of this truck, maintenance costs are estimated at $4,935.71 based upon the mechanics recommendation. Resale value of the truck is estimated at $1,500. The body on this truck is also very poor as one of the doors does not open properly due to the frame rusting out. This has already caused a safety issue while on the jobsite and led to lost time trying to fix the door. 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 Ownershlp Each Year 5 , S�,om �..., Sc,oao ! 55,000 } � �.� Si,oro �j .. _ . .. ... . . . St�ppp -...._....._... ._......_..... St,000 :. . . . -Ne�v 7-Ton Truck (maintenance � � � cozt and lost resale value included) -&isting 1-Tan Truck (maintenance cozt and lost resale value included) � : . . ; � . . . . . . . 2014 2015 7016 2017 2018 2019 2020 7021 2022 2023 2024 2015 Year 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. During the mechanics report, the following was found to need replacing if the purchase of the truck is delayed: • Power steering pump • Oil cooler lines • Fuel pump • Sandblast and paint dump box • Seats • Steering wheel If Public Works were to delay the purchase of this truck, maintenance costs are estimated at $4,390 based upon the mechanics recommendation. This vehicle is estimated to be worth $6,000 resale value based upon past eBay sales. This truck was stalling on the highway which was a huge safety concern and the truck needed to be fixed. Some of the electrical equipment was shorting out and other maintenance costs which led to $1,700 in repairs. 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 cost of ownership each year for the new truck and the existing truck is displayed in the graph below. Also shown is the past maintenance cost per year for the current truck. Cost of Ownership Each Year w.000 - Ss,ouo - 5�.uuo � 53 nm - 51App St,000 � 101< lOIS 7016 ]RI/ 7018 I019 1070 ]O17 10)I� 707J 1074 7015 Year Maintenance Cost Per Year 3 4 5 6 7 8 9 10 11 12 13 14 15 Year —Ne�il-TOn 56,000 Tnxk (maintxnana coztandbst $5,000 ![53�lVd�u! included) Sq ppp —Eaistingl-Ton V $3,000 Tn ck (maintemnce $2,000 cost and bst resalevalue $I,000 induded) $- —Streets 1-Ton Pickup Trucks There are five pickups proposed for replacement. Typically the City's replacement schedule for pickup trucks is 12 years. Four of the five trucks are 14 years old and the fifth is 12 years old. Each truck has between 88,000 and 110,000 miles. During the winter, most of these vehicles are used for plowing cul-de-sacs. The salt and snowplowing put a beating on the trucks which increases the maintenance cost and decreases longevity. These trucks are also used for hauling trailers and material in the daily operations of the park, recreation, 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. Any downtime with these vehicles decreases production. For example, if during a snow event one truck breaks down, this person needs to be picked up, their route needs to be re-assigned to another driver which will cause the snow removal to take longer and possibly lead to overtime. Most of the pickups have moved down the chain and have not been used as front line vehicles the past couple years to help extend the life which has decreased maintenance costs. During the mechanics report, the following was found to need replacing if the purchase of the pickup truck is delayed: Unit 1402: • New computer • Muffler and tailpipe • Trans output seal • Front left out ujoint • Seat repair • Plow repair • Rear brake shoes and drums • Floor needs repair from rusting If Public Works were to delay the purchase of this truck, maintenance costs are estimated at $1,925 based upon the mechanics recommendation. This vehicle is estimated to be worth $2,000 resale value based upon past eBay sales. The floor on the driver's side is rusting out and will need to be addressed if the vehicle is kept. This is a safety issue and could be a costly repair which will put the truck out of service for an extended time. Public Works recently had trouble with this truck stalling on the road. Last week, the truck stalled in the middle of the roundabout backing up traffic and creating a safety hazard. Employee's safety was put at risk when the truck broke down in the middle of the road and time was also lost switching trucks and equipment into a different vehicle. The shop Foreman also had to drop everything he was doing, help coordinate the situation and tow the vehicle. This truck is currently unsafe and out of service. Unit 5013: Ball joints Pinion seal Tires • Tie rod end-inner • Serpentine belt If Public Works were to delay the purchase of this truck, maintenance costs are estimated at $2,703 based upon the mechanics recommendation. This vehicle is estimated to be worth $1,500 resale value based upon past eBay sales. This truck is currently out of service as the steering is unsafe without the needed repairs. This truck has also had many transmission problems in the past which have led to significant downtime. Unit 1502: • Spark plugs • Tie rod end-inner • Plow repair • Exhaust repair • Steering shock • Wheel alignment If Public Works were to delay the purchase of this truck, maintenance costs are estimated at $2,154 based upon the mechanics recommendation. This vehicle is estimated to be worth $2,300 resale value based upon past eBay sales. Unit 1005: • New computer • Steering linkage and repair � Tires . Fuel Pump Muffler and tailpipe If Public Works were to delay the purchase of this truck, maintenance costs are estimated at $3,149 based upon the mechanics recommendation. This vehicle is estimated to be worth $1,500 resale value based upon past eBay sales. Unit 1508: • Tune up and fluid change � Ball joints • Tie rod end-outer • Water pump • Seat repair • Plow repair • Power steering pump • Wheel alignment If Public Works were to delay the purchase of this truck, maintenance costs are estimated at $4,840 based upon the mechanics recommendation. This vehicle is estimated to be worth $2,000 resale value based upon past eBay sales. Shown below is the average past maintenance costs of the vehicles. S�,000 $6,004 $5,000 .� $4,000 0 �' S3,000 $2,000 $1,000 S- Average Maintenance Costs for Current Pick-up Trucks �� 1 2 3 4 5 6 7 8 9 10 11 12 13 Year The cost of ownership graph and table for a new pickup and an existing pickup is shown below. Cost of Ownership Each Year 55.000 i Ss.�p - $4.ppp _ __ I � S3.oao r Si.ono j I 51,� I S I 201d 2015 1016 2017 2018 2019 1070 3071 10Z2 1023 1021 7025 Year -New P¢k-up � Trvck (maintenance mst and lost resale value included) -Existing Pick- upTruck (maintenance costandlost resale vatue included� Existing Pick-up Truck Year Capital Cost Est Maintenance Cost Resale Value Cost of Ownership 2014 0$ 2,500 $ 2,000 $ 2,500 2015 $ 2,675 $ 1,860 $ 2,815 2016 $ 2,862 $ 1,730 $ 2,992 2017 $ 3,063 $ 1, 609 $ 3,184 2018 $ 3,277 $ 1,496 $ 3,390 2019 $ 3,506 $ 1,391 $ 3,611 2020 $ 3,752 $ 1,294 $ 3,849 2021 $ 4,014 $ 1, 203 $ 4,105 2022 $ 4,295 $ 1,119 $ 4,380 2023 $ 4,596 $ 1,041 $ 4,674 2024 $ 4,918 $ 968 $ 4,991 2025 $ 5,262 $ 900 $ 5,330 7% annual increase 7% annual decline $ 45,821 New Pick-up Truck Year Capital Cost Est Maintenance Cost Resale Value 2014 $ 25,914.00 $ 1,300 $ 2015 $ 1,378 $ 2016 $ 1,461 $ 2017 $ 1,548 $ 2018 $ 1,641 $ 2019 $ 1,740 $ 2020 $ 1,844 $ 2021 $ 1,955 $ 2022 $ 2,072 $ 2023 $ 2,196 $ Cost of Ownership 24,100 $ 3,114 22,413 $ 3,065 20,844 $ 3,030 19,385 $ 3,007 18,028 $ 2,998 16,766 $ 3,002 15,592 $ 3,018 2025 $ 2,468 $ 10,847 $ 6% annual increase 7% annual decline $ *Includes purchase price minus resale value estimated $2,000 3,087 3,140 3, 206 3, 284 6,997 Alternative Options Analysis 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. 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 above table displays the estimated price the City would pay if the purchase of the pickup trucks was delayed by 1, 2, 3 or 4 years. The trucks will eventually need to be replaced in the coming years. The cost of maintenance will continue to increase as does the purchase price of the pickups every year. The resale value of the trucks also declines year by year. With three of the five pickups being used for snowplowing, the total wear and tear on the vehicles is much higher than a normal work truck. Snowplowing decreases the life of the trucks and increases maintenance costs. Most of the pickups have moved down the chain and have not been used as front line vehicles the past couple years to help extend the life. Public Works has worked hard to extend the life on the pickups beyond 12 years. Staff also looked at delaying the purchase of the pickups. 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 Ford 1 Ton $68,000 $76,368.27 4-Wheel Drive Streets 31-4203-99 $6,000 Ford 1-ton $50,000 $53,795.11 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 Recreation 41-5013-01 $1,500 '/2 ton $33,000 $26,899.33 extended cab 4 wheel drive pickup Total $16,800 $281,000 $268,717.63 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 pickups 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. This will save an estimated $16,800 on the purchase price to equal an estimated total of $251,917.63 spent on the vehicles and bringing the total under budget by $29,082.37. ° Recommendation Consider approving the replacement of two one-ton trucks and five pickups with the purchase of two one-ton trucks and five pickups for the Public Works and Parks Department for a combined purchase price of $268,717.63.