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Home My WebLink About10D - Report Relating to 2009 Vehicle and Equipment Fleet Replacement MEETING DATE: AGENDA #: PREPARED BY: AGENDA ITEM: DISCUSSION: 4646 Dakota Street S.E. Prior Lake, MN 55372-1714 CITY COUNCIL AGENDA REPORT DECEMBER 1, 2008 10D AL FRIEDGES, PARKS & FLEET MAINTENANCE SUPERVISOR CONSIDER APPROVAL OF A REPORT RELATING TO THE 2009 VEHICLE AND EQUIPMENT FLEET REPLACEMENT Introduction The purpose of this agenda item is to seek approval of a report relating to: 1. Review of vehicle and equipment acquisition strategies 2. Timing strategies to order vehicles and equipment 3. Authorization to order used equipment 4. Review of vehicles and equipment to be acquired in 2009 as identified in the 2009 - 2013 Capital Improvement Program Historv The Equipment Matrix was initially proposed as a new element within the 1998 Capital Improvement Program. The Equipment Matrix identifies the City's equipment needs on a long-term basis (12 years) and provides a schedule for acquisition of replacement and new equipment. A revolving equipment fund was created that would fund the matrix and would eliminate the necessity to issue debt in the form of four year equipment certificates. The Equipment Matrix is broken down by departments - Fire, Building, Engineering, Parks and Public Works, and includes a summary sheet of expenditure and revenue totals with a running cumulative fund balance. Each piece of equipment has been assigned a life expectancy ranging from 6 - 20 years with the exception of generators which are identified for 30 years, and the Fire Department's equipment that does not experience typical usage. By establishing a regular replacement schedule, service costs and down time are reduced. Currently, there are 127 vehicles and equipment in the fleet; down two from 2007. The total number of vehicles and equipment includes squad cars, fire equipment, pick up trucks, dump trucks, utility equipment, sweepers, mowers, loaders, skid loaders, trailers, tractors, street repair equipment, forestry equipment, utility vehicles, generators and staff cars. Current Circumstances Review of Vehicle and Eauioment Acauisition Stratecies The following criteria are utilized as consideration for purchasing vehicles and equipment in 2009 and the preparation of the 2010-2014 Equipment Matrix. 1. Vehicle and equipment refurbishing 2. Lease and rental options 3. Equipment zero value operation 4. Alternative fuel analysis R:\Council\2008 Agenda Reports\12 01 08\vechicle eq\ltjYPMi!r1l~etffilJlitLr.ep~tt~enda.doc 1 Phone 952.447.9800 / Fax 952.447.4245 5. Vehicle and equipment scheduling and operation procedures 6. Equipment partnerships 7. Used equipment options Staff believes that these seven strategies continue to be appropriate options for new and replacement equipment acquisition. Timinc Stratecies to Order Vehicles and Ecuioment The equipment matrix is part of the CIP which is annually adopted by the City Council in May. In the past staff has typically requested Council authorization to order equipment in January or February of the same year that the equipment was identified for acquisition in the Capital Improvement Program. With this practice, the delivery on most vehicles and equipment did not take place until mid to late summer, resulting in limited usage and availability of the equipment. Squad cars are a good example of what happens when vehicles are ordered too late. Squad car packages are only manufactured during a short window during the year. When the squad is manufactured dictates the delivery date. Additionally, after the squad arrives, the set up of the light bars, radios, push bars, and appurtenant equipment needs to be conducted by our fleet technicians. Many times the squad arrives during our peak work load times, specifically, in the spring and must wait until time allows the conversion to be completed. To assure better timing on the delivery of vehicles and equipment, staff intends to seek approval earlier (in some cases, the year preceding scheduled replacement) in order to expedite the process. This practice will give staff more effective utilization of the equipment. Authorization to Order Used Ecuioment There are opportunities when purchasing slightly used equipment could be a cost savings to the City. For instance, purchasing used pickups, demo mowers, trailers, backhoes and tractors with low hours or mileage could, if available at the time of need, be a good alternative to buying new. Staff has purchased used equipment in the past; the most recent is the purchase of an enclosed trailer and herbicide sprayer. The biggest obstacle to purchasing used equipment is timing. For instance, if a used vehicle or piece of equipment is located, staff cannot give the vendor confirmation until it is approved by Council. The approval process can take as long as one month before staff has the opportunity to purchase the equipment. For this reason, many vendors are reluctant to retain or "hold on to equipment" until we have authority from the Council to purchase it. The gap between when we identify a piece of used equipment and when the council can consider approving its acquisition can result in the City missing potential opportunities to purchase suitable used equipment. To better expedite and take advantage of used equipment purchases, the Council should consider whether to amend the City's Purchasing Policy to grant the City Manager discretionary purchasing authority to approve the acquisition of equipment identified in the equipment matrix. The City Code and Purchasing Policy presently give the City Manager authority to make purchases of up to $20,000 if they are R:\Council\2008 Agenda Reports\12 01 081vechicle equipment replacement report agenda.doc 2 budgeted. This excludes funds drawn from the revolving equipment fund. State law requires bids for purchases exceeding $100,000. If the Council were comfortable with granting staff additional discretion for equipment, they could authorize purchases less than $100,000 which are identified in the equipment matrix. Under any scenario granting the staff greater discretion, the City staff would prepare a report describing the purchase for the next City Council meeting; including cost and the savings associated with the vehicle or equipment obtained. Review of Vehicles and Eauioment to Be Acauired in 2009 As Identified in the 2009 - 2013 Caoitallmorovement Proaram The Vehicle and Equipment Replacement Matrix, the vehicle and equipment history, analysis and statistics, the Jet Fleet and Gas Boy monitoring system and acquisition strategies are all tools that staff utilizes to evaluate the appropriateness of vehicle and equipment purchases. The Equipment Matrix in the Capital Equipment Program identifies the following new or replacement equipment to be purchased in 2009: DeptlDivision Equipment New Equipment Year Estimated Description Replacement Number Cost Parks Toro Replacement #525 1999 $34,904 Groundsmaster w/ broom Parks Toro Replacement #526 1999 $34,479 Groundsmaster w/blower Parks Case 4210 Replacement #505 1995 $50,923 Tractor Streets/Utilities Ford 4x4 w/plow Replacement #453 1997 $36,601 Utilities Ford Windstar Replacement #494 2000 $53,045 Locate Van Streets Stone Replacement #474 1994 $37,132 Bituminous Roller Code FWD Car Replacement #405 2005 $15,000 Enforcement Streets Liquid Anti-Ice New n/a n/a $12,731 Application Unit Utilities Manhole/gate New n/a n/a $31,827 valve cutter I Streets/Utilities Message board New n/a n/a $10,609 I Streets/Utilities 1 Ton Truck New n/a n/a $53,045 Each vehicle or piece of equipment purchased is subject to Council approval and will be presented at a later date. ISSUES: Purchasing used equipment versus new equipment can have potential complications. 1. It is difficult to equally compare one piece of equipment to another. Example: Three used mowers may be manufactured in the same year, have different hours accumulated on the machine, but yet the piece of equipment with the highest number of hours may be the machine in the best shape. Vendors could disagree with staffs recommendation of the equipment purchased, causing conflict. R:\Council\2008 Agenda Reports\12 01 08\vechicle equipment replacement report agenda. doc 3 2. The specifications on each used purchase may vary from one manufacturer to another. 3. Purchasing used equipment will require a total trust factor from everyone involved that staff has made the correct choice, particularly if a vendor questions our methods or decisions. 4. In order to take full advantage of purchasing quality used equipment, the City Purchasing Policy must be modified to accommodate this type of purchasing. FINANCIAL IMPACT: As shown in the matrix above, funds have been set aside for purchase of new and replacement equipment. The vehicles and equipment being replaced have met or exceeded their life expectancies and soon it will not be cost effective to make repairs. If we continue to utilize the vehicle and acquisition strategies, all purchasing will have gone through strict criteria. Nothing in the alternative purchasing protocol proposed for used equipment eliminates oversight and scrutiny by the City Council; just the sequence of the process will change to eliminate existing timing constraints which translate into opportunity costs. Properly balancing equipment needs is important to maintaining the Revolving Equipment Fund balance. A critical component to ensure the continuing success of the Equipment Matrix is to examine each year the scheduled replacements to extend the useful life, as we have done before, if economically feasible. ALTERNATIVES: The Council should provide direction to staff regarding any changes they wish to pursue with regards to equipment purchases. 1. Approve and receive the report. 2. Direct the staff to prepare amendments to the Purchasing Policy with regard to used equipment. RECOMMENDED As determined by the Council. MOTION: Revievr'dJ by: ,~I t Frank Boyles, CYMsna J R:\Council\2008 Agenda Reports\12 01 08\vechicle equipment replacement report agenda.doc 4