HomeMy WebLinkAbout10A - Purchase of a 2009 Ford Focus and Trade In of a 1996 Jeep Cherokee
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MEETING DATE:
AGENDA #:
PREPARED BY:
AGENDA ITEM:
DISCUSSION:
4646 Dakota Street S.E.
Prior Lake, MN 55372-1714
CITY COUNCIL AGENDA REPORT
AUGUST 3, 2009
10A
STEVE ALBRECHT, DIRECTOR OF PUBLIC WORKS
CONSIDER APROVAL OF A RESOLUTION AUTHORIZING THE PURCHASE
OF A 2009 FORD FOCUS AND THE TRADE IN OF 1996 JEEP GRAND
CHEROKEE BUILDING INSPECTION VEHICLE (#1096)
Introduction
The purpose of this agenda is to seek City Council approval for the purchase of a
2009 Ford Focus and trade in of a 1996 Jeep Cherokee Building Inspection
vehicle.
Historv
As part of the Capital Improvement Program (CIP), the City Council adopts an
Equipment Replacement Fund and Matrix each year. The purpose of this fund
and matrix is to identify and budget for equipment and vehicles that need to be
replaced due to age or wear, or for additional equipment that needs to be
purchased due to growth. Actual expenditures for all equipment identified in the
matrix are subject to Council approval. For 2009 the matrix identifies $15,000 for
a replacement building inspection vehicle.
Staff has been monitoring the 1996 Jeep Cherokee (originally donated to the city
as a DARE car by the Prior Lake Rotary) to determine the best timing for
replacement. Because the trade in value of the Jeep is $1,000 or less Staff's
approach has been to utilize the vehicle to zero value or until it requires major
repairs. Yearly maintenance on this vehicle has averaged $500-$800 over the
past three years.
Current Circumstances
The Federal Government as part of the stimulus funding has initiated the Car
Allowance Rebate System (CARS) which allows low value low miles per gallon
(mpg) to be traded in for a credit of between $3,500 and $4,500 towards a new
high mpg vehicle. This program began on 7/27/09 and is expected to be funded
for one to two weeks even though the program end date is in November 2009.
There are several criteria that need to be met to be eligible for the CARS
program.
o Trade-in must be less than 25 years old
o Trade-in must get less than 18 mpg
o Trade-in must be on a purchase or lease of a new vehicle
o Trade-in must be registered and insured for one full year prior to
transaction
R\Council\2009 Agenda Reports\08 03 O~~@li~pcg~OOe'dfcSlX 952.447.4245
www.cityofpriorlake.com
At the time of this report preparation the dealerships still had not received all the
program information to confirm eligibility of government agencies for trade-in. But
in order to be in position to realize savings through this program, City staff
believes it is prudent to continue to pursue this opportunity.
City Staff solicited quotes for compact high mpg cars and received the following
prices:
Vendor Wolf Burnsville Walser* New Walser Belzer's
Motors Toyota Hyundai Prague Honda
I Make Ford T ovota Hyundai Chew Honda Kia I
I Model Focus Yaris Accent Aveo Fit Rio I
I MPG City 24 29 26 25 27 26 I
I Price $13,247 $14,128 $14,424 $15,743 $15,810 $16,800 1
I Trade In -$4,500 -$4,500 -$4,500 -$4,500 -$4,500 -$4,500
I Subtotal $8,747.00 $9,628.00 $9,924.00 $11,243.00 $11,310.00 $12,300
I Tax $601.36 $661.93 $682.28 $772.95 $777 .56 $845.63
I License $200.00 $200.00 $200.00 $200.00 $200.00 $200.00
I Total $9,548.36 $10,489.93 $10,806.28 $12,215.95 $12,287.56 $13,345.00
*A second quote was solicited but written confirmation was not submitted to the City.
The City also solicited the following hybrid vehicle quotes:
I Vendor
I Make
I Model
I MPG City
I Price
I Trade In
Subtotal
Tax
License
Total
$21,360
-$4,500
$16,860.00
$1,159.12
$200.00
$18,219.13
Burnsville Toyota
Toyota
Prius
50 I
$22,950 I
$-4,500 I
$18,450 I
$1,268.43 I
$200.00 I
$19,918.44 I
Walser Honda
Honda
Civic
42
The Ford Focus had the lowest quote submitted.
ISSUES:
Staff has completed the equipment analysis for the 1996 Jeep Cherokee. The
attached Needs Analysis analyzes each piece of equipment in the following
categories:
I.
II.
III.
IV.
V.
VI.
VII.
Refurbishing
Lease/Rental Options
Zero Value Operation
Alternative Fuel Analysis
Equipment Utilization
Equipment Partnership
Used Equipment Options
Based on the equipment analysis Staff does recommend replacing the Jeep as
the proposed CARS trade-in allowance allows the City to purchase a new vehicle
at substantially less than budgeted. The new vehicle purchase price is also less
than any suitable (2 years or less with less than 20,000 miles) used vehicle
currently available. While the hybrid vehicles offer substantially higher mpg they
have a substantially higher cost to the City per year over a ten year analysis
period and exceed the amount of funds budgeted in the Revolving Equipment
Fund for purchase.
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Because the costs are very similar staff analyzed the mileages of the three lowest
priced vehicles to further evaluate the best value. Over the past 3 years the Jeep
mileage has ranged from 8,500 to 15,000 miles depending on staff levels and will
likely stay within those ranges over the life of the vehicle. Fuel costs also are
variable as the City is currently experiencing low fuel prices as compared to a
year ago. If over the ten year analysis period the vehicle is consistently driven
between 8,500 and 15,000 miles per year the Toyota Yaris would save the City
between $40-$140/year when compared to the Ford Focus. However should the
mpg vary even 1 mpg in the comparison for either vehicle range in savings drops
to $0-$90. When evaluating costs that are this close on an annual basis other
factors come in to play for the City that include parts costs and existing City fleet
equipment compatibility. Staff also reviewed safety and warranty information and
the safety information and crash ratings are very similar with each model differing
depending on the crash type. From a warranty perspective the Hyundai did have
a better warranty package of 5/60 basic and 10/100 powertrain as compared to
3/36 and 5/60 for Toyota and Ford, but for the quote received it had the highest
annual cost.
All three cars represent a great value to the City, however Wolf Motors has
submitted the low quote and has been a reliable vendor to the City. Additionally
the City currently maintains about 35 Ford cars and trucks and does not maintain
any Hyundais or Toyotas. Because of the City's parts inventory and expertise on
Ford vehicles the City Fleet staff does not believe any savings will be realized
purchasing Toyota or Hyundai and therefore recommends purchase of the Ford
Focus.
FINANCIAL
IMPACT:
The Equipment Matrix portion of the CIP allocated $15,000 for the purchase of
the vehicle as outlined in this report. Funding is available from the revolving
equipment fund.
ALTERNATIVES:
The alternatives are as follows:
1. Approve a resolution authorizing the purchase of the Ford Focus and trade in
the existing Jeep Cherokee as detailed in this report.
2. Table this agenda item for a specific reason.
3. Deny this agenda item for a specific reason and provide staff with direction.
RECOMMENDED
MOTION:
Alternative #1.
Frank BOY'(J t, anager
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3
EQUIPMENT NEED ANALYSIS
Equipment: Jeep Cherokee (Unit #1096)
Year: 1996 Mileage: 68,613
I. Refurbishing Analvsis:
This vehicle is almost 14 years old and refurbishing it is not a cost effective solution for a vehicle of this type
and condition.
II. LeaselRentalOptions:
This vehicle is currently the only Building Inspection vehicle the City utilizes and will be driven 15,000 miles
this year. Since the City reorganized the Building Department in the spring of2008 this vehicle has seen
increased use which will continue as it is the only Building Inspection vehicle the City utilizes.
If the City were to exercise a lease option on this vehicle, it would result in entering into a long term lease.
Long term leases cost more than an out right purchase in the case of this vehicle.
III. Zero Value Operation:
The current value of this vehicle is estimated to be about $1,000. The CARS program will give the City $4,500
for the vehicle thus greatly enhancing the value of trading the vehicle and not driving it until it no longer can be
maintained.
IV. Alternative Fuel Analvsis:
The City also solicited quotes for Hybrid cars. Both the Toyota Prius and Honda Civic were quoted with the
Honda providing the lowest price at $18,219.13. The Honda Civic Hybrid gets an estimated 42 mpg combined
which is significantly higher than the Jeeps 15 mpg and the proposed Ford Focus' 27 mpg. The annual savings
to the City for fuel is about $1,400 and 650 gallons over the existing Jeep and 250 gallons over the Ford Focus.
While the Hybrid will save the City an estimated $535 per year gas expenses over a compact gas car the cost of
that vehicle is nearly double the cost of the Focus and over a 10 year period and it will cost the City an
estimated $4,300 more over that period of time. The proposed Ford Focus will reduce fuel use by 400 gallons
per year.
V. pauipment Utilization:
This vehicle is fully utilized by the Building Department. Currently the building inspector and building official
share this vehicle. This vehicle's use has ranged from 8,500 miles per year to an estimated 15,000 mpy
depending on the size of the building department.
VI. Eauipment Partnership:
Because of the full utilization by the Building Department there is not an opportunity to partner on the purchase
and use of this vehicle.
VII. Used Eauipment Options:
Staff completed a CarSoup.com search ofFord Focus' that met the proposed specifications and were 2008 or
newer with less than 20,000 miles. There are 53 vehicles available in the Twin Cities area that meet this criteria
with the most affordable being $10,950 and having 5,500 miles. The lowest cost used Ford Focus is more
expensive than the proposed new vehicle due to the CARS program.
R:\Council\2009 Agenda Reports\08 03 09\equipment needs analysis Unit 1096.doc
Created on 7/27/2009 11: 11 :00 AM
4646 Dakota Street S.E.
Prior Lake, MN 55372-1714
RESOLUTION 09-XX
A RESOLUTION AUTHORIZING THE PURCHASE OF A 2009 FORD FOCUS
Motion By:
Second By:
WHEREAS, Each year the City Council adopts an Equipment Replacement Fund and Matrix as
part of the Capital Improvement Program (CIP); and
WHEREAS, The 2009 Equipment Replacement Matrix contemplates the trade of an inspection
vehicle; and
WHEREAS, The 1996 Jeep Cherokee currently is experiencing a high use and increasing
maintenance costs; and
WHEREAS, The Federal Government CARS program will give the City $4,500 in trade for this
vehicle for a limited time which is considerably more than the trade in value; and
WHEREAS, An analysis of the 1996 Jeep Cherokee for replacement was included in the agenda
report and verbally presented to the City Council; and
WHEREAS, Quotes were solicited from six dealerships to ensure the lowest cost to the City.
NOW THEREFORE, BE IT HEREBY RESOLVED BY THE CITY COUNCIL OF PRIOR LAKE,
MINNESOTA as follows:
1. The recitals set forth above are incorporated herein.
2. Staff is authorized to trade in of the 1996 Jeep Cherokee (#1096) and to purchase a 2009 Ford
Focus for an amount not to exceed $9,548.36 from Wolf Motors of Jordan.
3. If the Jeep Cherokee is determined to be ineligible for the CARS program the City will not pursue
replacement at this time.
4. Funds are to be drawn from the Equipment Replacement Fund and Matrix Account #410-43100-
580.
PASSED AND ADOPTED THIS 3rd DAY OF AUGUST 2009.
YES
NO
I Haugen
I Erickson
I Hedberg
I LeMair
I Millar
Hau~en
Erickson
Hedberg
LeMair
Millar
Frank Boyles, City Manager
R\Council\2009 Agenda Reports\08 03 09\inspection vehicle purchOOWW~&yofpriorlake.com
Phone 952.447.9800 / Fax 952.447.4245