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Home My WebLink About9A2 - Purchase Front End Loader MEETING DATE: AGENDA # PREPARED BY: REVIEWED BY: AGENDA ITEM: DISCUSSION: CITY COUNCIL AGENDA REPORT February 5, 2001 9A2 BUD OSMUNDSON, DIRECTOR OF PUBLIC WORKS FRANK BOYLES, CITY MANAGER CONSIDER APPROVAL OF A RESOLUTION AUTHORIZING THE PURCHASE OF ONE FRONT END LOADER FOR PUBLIC WORKS MAINTENANCE THROUGH THE STATE COOPERATIVE PURCHASING PROGRAM Historv The purpose of this agenda item is to authorize the purchase of one replacement front-end loader (loader) through the Minnesota Cooperative Purchasing Program. Current Circumstances The Public Works Maintenance Department utilizes two loaders year round in the parks, streets and utility maintenance areas. The duties include: snow plowing on the City's streets, sand/salt mixing and loading; excavation for trail construction and large street repairs; replacement of materials into excavations for water main and sewer repairs; with other lifting attachments docks are installed, pallets of materials are lifted off of delivery trucks, sewer structures are set into place; and trees are planted with a tree spade attachment. The City currently has two loaders. The loader to be replaced is a 1987 Case Model W20C, which is a 115 H,P., 24,000-pound machine, The second loader is a 1995 Case Model 621BXT which is a 116 H.P. 26,500-pound machine, Yearly, as part of the Capital Improvement Program, the City Council adopts an Equipment Replacement Fund and matrix, The purpose of the Equipment Replacement Fund and matrix is to identify and budget for equipment and vehicles that need replacement due to age and wear, or for additional equipment which needs to be purchased due to growth. All equipment identified in the matrix is subject to Council approval. The matrix identifies $167,856 in 2001 as the replacement cost for the fourteen year old 1987 Case W20C loader. This report proposes the acquisition of a new loader and trade of the existing loader at the net cost of$128,840.51. Each piece of equipment identified in the matrix is analyzed for replacement prior to a decision being made on whether or not to move forward with a purchase, The W20C has 4300 hours on it. It was not used for snow plowing until 1995 when the plow and wing were purchased. It is underpowered and underweight when used as a snowplow, This loader has had major repairs completed on it in the past and will need significant transmission repairs soon, With these facts identified, staff front end loader 1 17073 Adelmann 5t. 5.E" Prior Lake, Minnesota 55372 / Ph, (952) 440-9675 / Fax (952) 440-9678 AN EQUAL OPPORTUNITY EMPLOYER r- I Ti . 1 T1li ',:I,t; recommends that the W20C be replaced, However, we recommend keeping the' plow and wing and utilizing them on a new machine because they are in good condition and can be used many additional years, Staff has investigated options for the replacement of the W20C loader, In the report entitled "Evaluation of Street Snowplowing Equipment Alternatives" (January 8, 200 1 workshop), I recommended that the W20C loader be replaced in 2001 with a heavier and more powerful loader, but that in the future the City should not purchase any additional loaders. The State Cooperative Purchasing Venture (CPV) has prepared specifications and solicited bids for various sizes of front end, wheel type loaders. The model numbers and specifications of all makes of loaders have changed since 1987. The size of loader we investigated was in the 150 -160 H.P" 3 cubic yard bucket range, which is larger and more powerful than the existing W20C loader. The bids and some detailed specifications for three loaders in this range received by the CPV are listed as follows: (The Case brand is actually through a CPV with Houston County, but is administered exactly like the State CPV,) Vendor St. Joseph Ziegler, RDO Equipment Incomorated Equipment Manufacturer Case Cat John Deere Model 721C 638G 624H Weight (w/o ctr, wt) 26,200# 27,700# 29,900# Rec, counterweight 4,400# 1,000# 1,045# Bucket size 3 cy 3,6 cy 3 cy Horsepower 152 160 160 Brakes Outboard disk Inboard disk Inboard disk Lever & Link Ductile iron Steel Fuel tank (gallons) 54 67 70 Planetaries Outboard Inboard Inboard Radiator Automotive Multi-row Automotive Base price $ 97,500,00 $106,281,00 $ 83,821.00 Equipped price $116,462,00 $137,977.00 $124,418,00 Less trade W20C ($18,000,00) ($17,000,00) (17,000,00) Total $ 98,462,00 $120,977.00 $107,418.00 Sales tax $ 6,400,03 $ 7,863,51 $ 6,982,17 Total with sales tax $104,862,03 $128,840,51 $114,400,17 Repurchase price $ 74,498,00 $ 75,750,00 $ 72,125.00 Any of these loaders will be delivered within 90 days of order. These state bid prices are good until February 28,2001. front end loader Issues The State CPV is a multiple award process that allows local agencies to choose which vendor and machine it wants based on its specific needs, In the matrix above, each of the loaders are the lowest responsible bid within their particular 2 .:1 ,~-~ category and could be purchased in compliance with state statute. An example - which shows the reasoning for the multiple award process is that some agencies main use for loaders is loading trucks with aggregate from gravel pits, and are therefore concerned with breakout force and speed in truck loading. In Prior Lake the loaders are used for a varietY of purposes, but the most critical use is in snow plowing, so breakout force is not as important, but sightlines, weight distribution, and power are very important. The State CPV requires vendors to have a 5-year buyback guarantee in their bids. This allows agencies to purchase a machine and keep it for 5 years, then sell it back to the vendor for the guaranteed price. (The vendors have to buy a bond to guarantee this buyback provision, the cost of which is passed on to the purchaser.) Agencies can benefit from this provision by utilizing the equipment for the "best" 5 year period in the life of the machine where there should be no major maintenance expenditures and then unload the machine for a guaranteed dollar amount. The drawback is that the agency then has to purchase another machine to replace the "bought back machine" which mayor may not be a financially sound decision. Maintenance staff has investigated and tested the three loaders listed above; the Case 721, the Cat 938G, and the John Deere 624, Any of the three machines will meet the City's minimum needs for a loader. For a number of reasons detailed below, staff unanimously agrees that the Cat 938 is the most superior machine. However, many of these reasons do not add a hard financial value to the Cat loader, and when considered strictly from an initial purchase price viewpoint, the Case 721 is the loader of choice. Staff strongly feels that purchasing the Cat 938 is in the best long-term interests of the City as detailed below. However, we have prepared three alternatives for purchasing a loader as follows: 1. Purchase the Cat 938 and keep it for 13-15 years 2. Purchase the Case 721 and keep it for 13-15 years 3, Purchase the Case 721 and sell it back after 5 years using the "Buy Back Guarantee" Alternative No.1: Purchase the Cat 938G from Ziegler, Incorporated. As stated, the Cat 938G is a superior machine to the two other loaders for the reasons listed as follows: 1. Performance Features: >- Has inboard, totally enclosed, mounted planetaries and brakes versus outboard on the Case. Inboard will last much longer, not being exposed to the elements, dirt, grit, and salt. >- Transmission is much larger, heavier built. >- The Cat has 1,500 pounds more steel built within its construction than the Case, One example is the lever and link which is steel on the Cat and ductile iron on the Case, >- Fuel efficiency is higher with the Cat; approximately 2 gallons per hour more efficient which equates to 2 gallons x 4,000 hours x $1.50 per gallon = $12,000 (over 4,000 hours), In addition, the front end loader 3 ,- T i , .. 'T17' 1,:1.';; front end loader Cat has a 67 gallon fuel tank compared to a 54 gallon fuel tank on . the Case, ~ Better weight balance which equates to less spinning wheels, i,e" less wear on tires and drive train, ~ Has a hydrauliC pump dedicated to steering, not part of the loader lift hydraulics, meaning the steering is much more responsive. ~ Has a 160 H.P. engine versus a 152 H.P, engine on the Case, 2, Safety Features: ~ The sight lines are the best on the Cat. When plowing around moving cars this is extremely important. ~ The AlC unit is built into the engine area on the Cat, while the Case has it mounted immediately behind the operator on top of the engine compartment, hindering sightlines, ~ The steps, handrails, and grab bars are designed for much better entry on the Cat. When an operator goes up and down 15-20 times per day, this is an important safety feature to prevent a fall. 3, Cab Ergonomics: ~ Roomier cab, a seat with more adjustments, larger, easier to read gauges, and a door that opens 1800 all lead to less fatigue for an operator who is in this machine 10 - 12 hours many times in snowplowing operations. 4. Maintenance: ~ The Cat has ground level sight gauges for transmission oil, engine oil, engine coolant, air filter, and hydraulic oil which allows easy access for daily operator checking, ~ The Cat engine compartment cover hydraulics lifts up allowing easier access for routine and major maintenance, ~ The Cat radiator core is a multi-row core, allowing for removal and replacement of one of 8 "cores" instead of total radiator removal. ~ The Cat radiator and AlC core fold out for superior access for cleaning and service. ~ Ziegler/Cat has 24-hour parts and service availability. ~ The entire Cat loader is designed and constructed by Cat, while the Case has components such as the transmission and bucket built by other vendors. 5. Future Trade Value: ~ The sales price and number of particular models for sale of used equipment is a great indicator of future trade value, For example, there were 13, 1986 - 1988 Case W20C's in the nationwide Machinery Trader Auction, a nationwide auction result and sale web site, 10 of which were sold at an average price of $17,442, The Cat 926, a similar size machine had 39 loaders listed for 1986 - 1988 model years, with an average sale price of $28,725, This is a difference of approximately $11,300. This is one example which shows that the Cat is worth 65 percent more after 14 years than the Case, If the past is indicative of the future, a Cat 938G will be worth a lot more when it comes time to trade it or sell it and purchase a new loader in 14 years. ~ Even if we assume that the Cat 938G and the Case 721 C have the same 30% resale value after 15 years, the Cat 938G will be worth $38,652 and the Case $31,459 or a difference of $7,193, (Past 4 " ,.:1.'; history shows that the Cat should have an even higher resale value' than the Case.) 6, Financial Analysis: ~ Using the future resale value difference of $7,193, plus the added fuel efficiency of the Cat of $12,000, there is an added value of $19,193 toward the Cat versus the Case loader. In other words, the initial sales price difference of$128,841 (Cat) - $104,862 (Case) = $23,979 is cut by $19,193 plus other considerations outlined above. If one accident can be avoided due to the added safety features, or one major repair is avoided, or significant time is saved in maintaining the Cat, then there is virtually no difference in the actual ownership cost of the two loaders. ~ Using the above assumed resale price for the Cat 938G of $38,652, the cost of ownership over a 15 year life is $128,841 - $38,652 = $90,189/15 = $6,013 per year. Alternative No.2: Purchase the Case 721C and keep it for 13-15 years. The Case 721 C offered by St. Joseph Equipment is an adequate machine which meets our needs, and is a vast improvement over the presently owned Case W20C, The maintenance staff preferred the Case 721 Cover the John Deere 624H for a variety of reasons in our trials of each machine, In addition, operators and mechanics are familiar with the Case machine, since it is similar to the second loader we own. The total initial purchase price of the Case 721C of $104,862.03 is an excellent value. Assuming a 30% resale value after 15 years of $31,460, the cost of ownership over a 15 year life if $4,893 per year. Staff feels that purchasing the Case 721 C is a viable alternative to purchasing the Cat 938G, although, for the previously discussed reasons, staff prefers the Cat loader. Alternative No.3: Purchase the Case 721C and utilize the buy back option. The 5 year guaranteed buy back price of $74,498 on the Case loader presents a viable alternative to outright ownership, To absolutely guarantee the buy back price, the cost of a bond for $1,100 must be added to the initial purchase price. The cost of ownership for the 5 year period is $104,862,03 + $1,100- $74,498 = $31,464,03/5 = $6,293 per year. This is a good value when compared to the cost of ownership for Alternative 2, outright ownership, over 15 years of $4,893 per year, knowing that over the first 5 years there should be no major expenditures in maintenance costs. The drawback is that after 5 years the City will have to purchase another loader, which with inflation, will have a higher initial purchase price, However, we will have $74,498 to use against that purchase. FINANCIAL IMPACT: The Equipment Replacement Fund and Matrix have identified $167,856 as a replacement cost for this loader. Any and all of the alternatives are significantly under this budgeted amount. front end loader 5 r- T r . T '11i ALTERNATIVES: RECOMMENDED MOTION: REVIEWED BY: front end loader . ,:I ,. ~ The alternatives are as follows: 1. A motion to approve a resolution authorizing the purchase of one Cat 938G front- end loader from Ziegler, Incorporated, 2. A motion to approve a resolution authorizing the purchase of one Case 721 C front- end loader from St. Joseph Equipment. 3, A motion to approve a resolution authorizing the purchase on one Case 721C front- end loader from St. Joseph Equipment, and approving the 5-year buy back option, 4. Table this item for a specific reason. 5, Deny this agenda item for a specific reason, Staff recommends alternative number one. 6 Alternative No.1 RESOLUTION 01-xx oi.~ LUTION APPROVING THE PURCHASE OF ONE CAT 938G FRONT END LOADER FROM ZIEGLER, INCORPORATED MOTION BY: SECOND BY: WHEREAS, THE 2001 Equipment Replacement Fund & Matrix identifies the purchase of one replacement front end loader; and WHEREAS, The loader being replaced is a 1987 Case W20C; and WHEREAS, The front end loader will be purchased through the State of Minnesota Cooperative Purchase Agreement which has prepared specifications and received bids as follows: VENDOR ZIEGLER MAKE & MODEL Cat 938G PRICE $137,977.00 TRADE-IN ($17,000.00) SUB TOTAL $120,977.00 TAX $ 7,863.51 TOTAL $128,840.51 NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF PRIOR LAKE, MINNESOTA, to approve the purchase of one Cat 938G front end loader through the State of Minnesota Cooperative Purchasing Agreement from Ziegler, Incorporated at a cost not to exceed $128,840,51. AND FURTHER, trade-in of 1987 Case W20C loader is hereby authorized, AND FURTHER, funds for this acquisition shall be drawn from the Equipment Replacement Fund. Passed this 5th day of February 2001. YES NO Mader Mader Ericson Ericson Gundlach Gundlach Petersen Petersen Zieska Zieska { Seal } City Manager City of Prior Lake front cro~d]{delmann 51. 5.E" Prior Lake, Minnesota 55372 / Ph, (952) 440-9675 / Fax (952) 440-9678 AN EQUAL OPPORTUNITY EMPLOYER III w . fll 1,:1 ,';; Alternative No.2 RESOLUTION 01-xx o~~ LUTION APPROVING THE PURCHASE OF ONE CASE 721C FRONT END LOADER FROM ST. JOSEPH EQUIPMENT MOTION BY: SECOND BY: WHEREAS, THE 2001 Equipment Replacement Fund & Matrix identifies the purchase of one replacement front end loader; and WHEREAS, The loader being replaced is a 1987 Case W20C; and WHEREAS, The front end loader will be purchased through the State of Minnesota Cooperative Purchase Agreement which has prepared specifications and received bids as follows: VENDOR ST. JOSEPH EQUIPMENT MAKE & MODEL Case 721C PRICE $116,462.00 TRADE-IN ($18,000.00) SUB TOTAL $ 98,462.00 TAX $ 6,400.03 TOTAL $104,862.03 NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF PRIOR LAKE, MINNESOTA, to approve the purchase of one Case 721 C front end loader through the State of Minnesota Cooperative Purchasing Agreement from S1. Joseph Equipment at a cost not to exceed $104,862,03, AND FURTHER, trade-in of 1987 Case W20C loader is hereby authorized, AND FURTHER, funds for this purchase shall be drawn from the Equipment Replacement Fund, Passed this 5th day of February 2001. YES NO Mader Mader Ericson Ericson Gundlach Gundlach Petersen Petersen Zieska Zieska { Seal } City Manager City of Prior Lake front ~d .loAder ' 1/U/j Adelmann 51. 5,E" Prior Lake, Mmnesota 55372 / Ph, (952) 440-9675 / Fax (952) 440-9678 AN EQUAL OPPORTUNITY EMPLOYER Alternative No.3 RESOLUTION Ol-xx J,-lNNESO't~ LUTION APPROVING THE PURCHASE OF ONE CASE 72lC FRONT END LOADER FROM ST. JOSEPH EQUIPMENT MOTION BY: SECOND BY: WHEREAS, THE 2001 Equipment Replacement Fund & Matrix identifies the purchase of one replacement front end loader; and WHEREAS, The loader being replaced is a 1987 Case W20C; and WHEREAS, The front end loader will be purchased through the State of Minnesota Cooperative Purchase Agreement which has prepared specifications and received bids as follows: VENDOR ST. JOSEPH EOUlPMENT MAKE & MODEL Case 721C PRICE (INCLUDES $1,100 BOND) $117,562.00 TRADE-IN ($18,000.00) SUB TOTAL $ 99,562.00 TAX $ 6,471.53 TOTAL $106,033.53 GUARANTEED REPURCHASE PRICE $ 74,498.00 NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF PRIOR LAKE, MINNESOTA, to approve the purchase of one Case 721 C front end loader through the State of Minnesota Cooperative Purchasing Agreement from St. Joseph Equipment at a cost not to exceed $106,033,53, AND FURTHER, trade-in of 1987 Case W20C loader is hereby authorized, AND FURTHER, that the City will utilize the option of the 5 year guaranteed repurchase and purchse a bond to guarantee the buy back and sell the Case 721 C back to St. Joseph Equipment for a guaranteed price of $74,498,00 at the end of the 5 year period, AND FURTHER, funds for this acquisition shall be drawn from the Equipment Replacement Fund. front1d13d1\delmann 51. 5,E., Prior Lake, Minnesota 55372 / Ph, (952) 440-9675 / Fax (952) 440-9678 AN EQUAL OPPORTUNITY EMPLOYER ITi I III ,J ,~: Passed this 5th day of February 2001. YES NO Mader Mader Ericson Ericson Gundlach Gundlach Petersen Petersen Zieska Zieska { Seal } City Manager City of Prior Lake front end loader MEMORANDUM DATE: January 31,2001 TO: BUD OSMUNDSON PUBLIC WORKS DIRECTOR FROM: JON DONOVAN FLEET MAINTENANCE COORDINATOR SUBJECT: STATUS ON VEHICLE #487 1987 CASE W20C LOADER SERIAL #9165109 4,080 HOURS Cab and frame: Cab leaks water, pins and bushings worn out, seat worn out. I $1,500,00 Wheels and brakes: Replace 2 wheel seals and brake linings, both pinion seals leak, brake I $1,500,00 valve leaks, Hydraulics: Left bucket cylinder leaks, replace worn out hoses, I $1,200,00 Engine and drive train: Replace air compressor, transmission slips and has slow response I $11,000.00 (overhaul transmission and converter), replace injectors, TOTAL I $15,200.00 front end loader ITI r I " 1;;1.'; nl