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HomeMy WebLinkAbout10C Purchase of Tractor►" PRrO lk �e U �, >4) 4646 Dakota Street SE Prior Lake. MN 55372 AGENDA REPORT MEETING DATE: December 19, 2011 AGENDA #: 10C PREPARED BY: Al Friedges, Natural Resources /Facilities /Fleet Manager PRESENTED BY: Al Friedges, Natural Resources /Facilities /Fleet Manager AGENDA ITEM: Consider Approval of a Resolution Authorizing the Purchase of a Tractor, Front Mount Snow Blower and Loader DISCUSSION: Introduction The purpose of this agenda item is to seek City Council approval for the purchase of a tractor, front mount snow blower, loader and the trade -in of one currently owned tractor and snow blower. History To effectively deliver services in all City Departments including, fire, police and public works, the City makes two key investments. The investments are: 1) em- ployees who have the training, knowledge and motivation to accomplish the work; and 2) the necessary equipment and vehicles to perform the work. The investment in both areas is critical to getting daily work done quickly, safely, correctly and in extreme weather conditions. The investment in one area or lack thereof impacts the other. Years ago the City would purchase vehicles and heavy equipment using four -year equipment bonds. Using this funding source, each vehicle and piece of equipment had to be paid off in four years. As the City grew in its size and maintenance re- sponsibilities, the number and types of equipment needed increased as well. In the early 1990's the city realized the four year equipment bonds were not keeping up with the replacement needs. This was demonstrated by the fact that about 70% of the equipment owned by the City was beyond its expected life span in hours and /or miles. The result was waste of staff time trying to start equipment and ex- tensive breakdowns once equipment was in service. In 1998, the Equipment Replacement Plan became a new element to our five -year Capital Improvement Program. The Equipment replacement Plan identifies the City's equipment needs on a long term basis (12 years) and provides a schedule for identifying acquisitions and replacement of new equipment. The Revolving Equipment Fund was created that would fund the program and eliminate the ne- cessity to issue dept in the form of four year equipment certificates. The Equipment Replacement Plan is broken down by departments -Fire, Police, Buildings, Engineering, and Public Works and includes a summary sheet of ex- penditures and revenue totals with a cumulative fund balance. Each piece of equipment has been assigned a life expectancy ranging from 6 -30 years. By es- tablishing a regular replacement schedule, service costs and down time are re- duced. Currently, there are 141 vehicles and pieces of equipment in the fleet. The total number of vehicles and pieces of equipment includes squad cars, fire equipment, pickup trucks, utility equipment, dump trucks, sweepers, mowers, loaders, skid loaders, trailers, tractors, street repair equipment, snow and anti -ice equipment, forestry equipment, utility vehicles, generators and staff cars. As part of the Capital Improvement Program (CIP) the City Council adopts the Equipment Replacement Plan each year. The purpose of the plan is to identify and program equipment and vehicles that need replacement due to age or wear, or for additional equipment that needs to be replaced due to growth. Actual ex- penditures for all equipment identified in the Plan are subject to Council approval. Current Circumstances The Equipment Replacement Plan is a tool which provides funds which are likely to be needed for vehicle and equipment acquisitions and refurbishing but the de- cision whether to expand the funds is subject to the City Council's final evaluation and approval. Prior to the recommendation for replacement or addition of vehicles and equip- ment, the following criteria are analyzed to determine whether a vehicle /equipment should be replaced, how and with what type: 1. Vehicle and Equipment Refurbishing 2. Lease, Rental and Borrowing Options 3. Equipment Zero Value Operation 4. Alternative Fuels 5. Vehicle and Equipment Scheduling and Operations Procedures 6. Equipment Partnerships 7. Investigation of Used vs. New 8. Alternative Annual Cost Analysis The 2011 Equipment Replacement Plan identifies the replacement of a tractor a snow blower and budgeted funds. Attached for City Council review is a detailed eight -step analysis for the proposed tractor replacement. 2000 Case CX100 Tractor w /Snow Blower Currently the Public Works Maintenance Divisions utilizes two tractors on a year - round basis for athletic field and turf maintenance including: park renovation projects, boulevard and ditch mowing, snow removal, ice rink maintenance, sled- ding hill grooming and a variety of other maintenance tasks. One of the existing tractors, a 2000 Case CX100 Tractor w/ snow blower (unit #507) is 11 years old and has accumulated 3,650 hours. The tractor and snow blower are in need of $6,785.24 in repairs; there could be potentially $15,000.00 in engine and drive train issues with the tractor. 2 The repairs needed are as follows: 2000 Case CX100 Tractor w/ Snow Blower Repairs Needed Parts /Labor Cost Rear tires $1,906.56 Right rear rim $1,206.00 Speed lever $76.17 Range level $87.41 Shift arm $191.78 Shift pawl $147.04 Base seal $6.78 Cutting edge $145.28 Bottom auger $2,018.22 Fabrication for blower housing $1,000.00 Total $6,785.24 Note: With the engine and drive train at its life expectancy, an additional potential cost of $15,000.00 could occur. The repairs needed on the 2000 Case CX100 tractor w/ snow blower (unit #507) would cost $6,785.24 with a potential $15,000.00 if the engine and drive train fails. The engine and drive train for this piece of equipment are operated in a harsh en- vironment at high revolutions per minute (RPM) while snow blowing during the winter months. Considering the age, hours accumulated, the environment and harsh conditions of operation, the current trade -in value and the attached detailed analysis the lowest cost option that meets the City's need is to replace the existing tractor and snow blower. In accordance with the City's purchasing policy, bids were solicited through the State of Minnesota Purchasing Program for John Deere, Caterpillar, New Holland and Case. Case did not submit a bid for this series of tractor. The low quote amount of $65,023.82 was submitted by Trueman Welters for a New Holland T5070 tractor a Loftness 962S snow blower and an 835TL loader. Staff is recommending this vendor. The bids were received as follows: Trueman Welters Sharber Ziegler State Bid Yes Yes Yes Make /Model New Holland John Deere Caterpillar Tractor Cost $61,708.00 $68,555.49 $76,973.08 Blower Cost $11,981.00 $8,995.00 $10,849.03 Loader Cost $8,819.00 $8,075.00 $11,672.00 Trade -in $21,667.00 $21,000.00 $23,500.00 Sub -Total $60,841.00 $64,628.49 $75,994.11 Tax $4,182.82 $4,443.00 $5,224.60 Total $65,023.82 $69,068.49 $81,218.71 In addition to the cost of the tractor, snow blower and loader $1,750.00 will be expended for a two way radio, strobe light package, re- chargeable flashlight, med- ical kit, fire extinguisher and a small tool box. Conclusion The total cost for the tractor, snow blower, loader and appurtenant equipment is $66,773.82; $81,885.00 was allocated in the matrix for this purchase. ISSUES: The attached needs analysis was considered for the purchase of the tractor, snow blower and loader in the following categories: 1. Refurbishing 2. Lease /Rental and Borrowing Options 3. Zero Value Operation 4. Alternative Fuel Analysis 5. Equipment Utilization 6. Equipment Partnerships 7. Used Equipment Options 8. Alternative Annual Cost Analysis FINANCIAL The Equipment Replacement Plan programmed and the Revolving Equipment IMPACT: Fund allocated $81,885.00 for the purchase of the equipment outlined in this re- port. The total cost of the recommended equipment is $66,773.82 which is $15,111.18 less than budgeted. The primary savings was due to over than antic- ipated trade -in value of the existing tractor /snow blower and an excellent bid from New Holland. ALTERNATIVES: 1. Approve a resolution authorizing the purchase of the proposed equipment and trade in the existing equipment as outlined 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 Alternative #1 MOTION: 4 u Li 4646 Dakota Street SE t4ws)SO, Lake, MN 55372 RESOLUTION 11 -xxx A RESOLUTION AUTHORIZING THE REPLACEMENT OF 2000 CASE CX100 TRACTOR AND SNOW BLOWER (UNIT #507) Motion By: Second By: WHEREAS, Each year the City Council adopts an Equipment Replacement Plan as part of the Capital Improvement Program (CIP); and WHEREAS, The 2012 Equipment Replacement Plan contemplates the replacement of one 2000 Case CX100 tractor and snow blower; and WHEREAS, The 2012 Equipment Replacement Plan programmed #81,885.00 to purchase a tractor, front mount snow blower and loader; and WHEREAS, A detailed needs and financial analysis of the proposed tractor, snow blower and loader has been completed and was included in the agenda report; and WHEREAS, Quotes were received through the State Purchasing Program; and 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 one 2000 Case CX100 tractor and blower. 3. Staff is authorized to purchase one 2012 New Holland T5070 tractor, front mount snow blower, loader and appurtenant equipment for a cost not to exceed $66,773.82. 4. Funds are to be drawn from the Revolving Equipment Fund from account #410- 45200 -580 PASSED AND ADOPTED THIS 19th DAY OF December, 2011. YES NO M ser M ser Erickson Erickson Hedberg Hedber Keeney Keene Soukup Souku Frank Boyles, City Manager EQUIPMENT NEED ANALYSIS Equipment: Case CX100 Tractor /Blower Year:2000 Mileage /Hours 3650 I. Refurbishing Analysis: The Case CX100 tractor is in need of $6,785.24 of repairs to be retained and operational for its intended use. The life expectancy of a tractor is 11 years or 4,000 hours. Currently this tractor is eleven years old and has accumulated 3650 hours. To repair this tractor to its intended functional use would lose $6,785.24 in repairs and $21,667.00 in trade -in value for a total of $28,452.24 II. Lease /Rental Options: The City retains its tractors for 11 years or 4000 hours. If the City entered into a lease option on tractors, it would result in a long term lease. Long term leases cost more than an outright purchase. III. Zero Value Operation: Repairs of $6,785.24 are needed. Compounded with potential engine and drive train repairs ($15,000.00) the current trade -in value of $21,667.00, and the harsh environment this piece of equipment is subject to while running the snow blower during winter operations, it should be traded now.(Note: The harsh environment and the stress that this machine endures during snow removal operations has reduced the life expectancy on the engine and drive train) IV. Alternative Fuel Analysis: The proposed New Holland T5070 tractor is equipped with a 96 net (PTO) horse power engine capable of operating on B20 diesel fuel. The engine is low emissions, US EPA tier 3 compliant. V. Equipment Utilization: This piece of equipment will be utilized by all divisions of Public Works. Maintenance staff foremen meet daily to assure that all vehicles and equipment are scheduled to their maximum potential. VI. Equipment Partnership: With the heavy utilization of the tractors needed by the Public Works Divisions, and the occasional shortage of machines, partnerships with other organizations is not a viable option for this piece of equipment. VII. Used Equipment Options: Staff researched the possibility of purchasing a slightly used tractor, snow blower and loader vs a new machine. Tractors were located that had similar specifications. None of these tractors were equipped with the capability to operate a front mount snow blower. Vlll Alternative Annual Cost Analysis Staff researched purchasing a used tractor. Tractors that were located were not equipped with a front power take off (PTO) shaft to operate the snow blower. Staff also performed a cost analysis to determine if equipping a used machine with a front (PTO) would be a cost effective approach. Equipping a used tractor to meet the specifications for its intended use was not cost effective.