CR 91-231 Loader Truck PurchaseY Y 0
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October 15, 1991 P K`C� Council Report: 91 -231
PURCHASE OF LOG LOADER TRUCK
AND AERIAL LIFT TRUCK FROM CITY OF COON RAPIDS
Proposed Action.
Staff recommends the following action: " Move to approve the
purchase of a 1987 Ford Log Loader for $37,100 and a 1988
Ford Aerial Lift truck for $44,000 from the City of Coon
Rapids."
Overview.
In the Equipment Replacement Schedule adhered to by the
city, the 1972 Log Loader is scheduled for replacement in
1992. During review of this scheduled replacement it was
discovered that the City of Coon Rapids was eliminating
their forestry programs and put for sale all equipment
associated with these programs. I Hopkins Public Works
examined the equipment and submitted bids for a 1987 Ford
Log Loader and also a 1988 Ford Aerial Lift truck. The
City's present 1983 Aerial Lift truck is scheduled to be
replaced in 1995. Both bids were accepted and approved by
the City of Coon Rapids City Council at their October 8,
1991 meeting.
Primary Issues To Consider_.
o How does the purchase of these two units fit into the
Equipment Replacement Schedule?
o What are the cost benefits of purchasing these two
units?
Supporting Information.
o Analysis of Issues
o Memo to Lee Gustafson - 9/25/91
Norbert Kerber, Bldg. & Equipment Services Supt.
Lee �'.ustafkifi, Pdblic Works Director
Council Report: 91 -231
Page 2
Analysis of Issues.
o How does the purchase of these two units fit into the
Equipment Replacement Schedule?
When the equipment. replacement schedule was set up it
was designed to project a maximum life expectancy of a
given piece of equipment. It was also designed so that
a certain number of dollars be put into the fund each
year in order to avoid budget problems with some years
being high and others low. The two vehicles proposed
to be purchased from the City of Coon Rapids is one of
the very reasons a fund such as this can work in your
favor. The Log .Loader is already scheduled for
replacement in 1992 and by replacing this truck three
months ahead of schedule a substantial savings will be
realized.
The Aerial Lift truck is currently not scheduled for
replacement until 1995. However, when an opportunity
arises to save a large sum of money on a high liability
piece of equipment such as the Aerial Lift truck, the
opportunity has to be reviewed closely. While we are
asking to move this piece of equipment up on the
schedule, we have on the other hand pushed back several
pieces of equipment including two pickups, an asphalt
paver and a tandem dump truck. These pieces of
equipment have a total value of $109,800 and were
rescheduled for replacement in 1993 or later. The
reason we have delayed purchase of these pieces of
equipment is that in our opinion they have not reached
the point in their. useful life when it becomes cost
effective to replace. But in the case of the Aerial
Lift truck the opportunity arose to purchase it at an
extremely low price so it does become cost effective to
replace at this time.
o What are the cost benefits of purchasing these two
units?
LOG LOADER
Budgeted Amount in 1992 $56,300
Bid Amount $37,100
Net Savings $19,200
By purchasing the Log Loader in October of 1991 and not
waiting until January of 1992 a substantial cost
savings is realized.
Council Report: 91 -231
Page 3
AERIAL LIFT TRUCK
Budgeted amount in 1995 $86,400
Minus 16% or 4% per year $11,900
Price adjusted to 91 dollars $74,500
Adjusted budgeted amount $74,500
Bid price $44,000
Net savings $30,500
The Aerial Lift truck proposed for purchase is in new
condition with only 6,000 miles on it. This piece of
equipment bears the highest liability of any vehicle in
the city because of a man working in an aerial bucket 8
hours a day. The present Aerial Lift truck is a 1983
Ford. The man -lift apparatus on the 1983 Ford is a
1973 model Reach -All, My worry is the age of the lift
apparatus at 18 years old has passed its useful life
and should have been moved up on the schedule even
before this opportunity came up. Any opportunity to
replace it at $.50 on the dollar is money well spent in
terms of safety and long term lowest cost.
CITY OF HOPKINS
MEMORANDUM
DATE:
TO:
FROM:
SUBJECT:
September 25, 1991
Lee Gustafson, Public Works Director
Norb Kerber, Superintendent of Buildings & Equipment A
Log Truck Purchase
At the present time in the Forestry division, we have a 1972
International Log Truck., The truck is used for hauling logs and brush
for our diseased tree removal and weekly brush, pick up. The vehicle
is also used for many other hauling jobs, such as catch basins,
curbstops, and scrap iron. The condition of this vehicle is at
present very poor. Parts for the truck and boom assembly are at the
point of being impossible to obtain. We have scheduled a replacement
for the Log Truck in. 1992.' At that time we proposed to purchase a 5
year old or new Log Truck. The amount budgeted was $56,300 maximum.
That amount was arrived at by calling dealers and suppliers to see
what was available and what the approximate costs were. We also
checked on prices for new and they were around $85,000 in 1989.
Several weeks ago we noticed an ad in the league bulletin for a used
1987 Ford Log Truck. The vehicle was being offered by the City of
Coon Rapids. The truck was purchased in 1987 for use in their parks
department and was being sold because their council decided to drop
the tree program because of budget restraints. The truck was
purchased new in 1987 for $83,256 and was advertised once in May for
bids. with a $37,000 minimum bid. At that time no bids were received
so they deiced to re -bid with no minimum.
On September 12th, Ray Vogtman, Vern Pankratz and I went up to Coon
Rapids to look at the Log Truck. The truck turned out to be almost
exactly what we would be looking for to replace the old Log Truck.
Also the truck being offered was equipped with several very desirable
features. These features would not be available to us if we had to go
out into the private sector and purchase a used piece of equipment.
Some of the features are listed below:
o Dump Box
o Automatic Transmission
o Air Conditioning
0 2 Speed Rear Axle
o Cab Protection
o Heavy Duty Suspension
o Front Mounted P.T.O.
0 Undercoated and rustproofed
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September 25, 1991
Page 2
What I propose is that we make a bid on the Log Truck. The amount we
bid can be contingent on the number of people bidding. If we - are the
only bidder and we know that they had already bid the vehicle
previously with a $37,000 minimum, we know they will accept less but
not so much less to prevent them from throwing out the bid. What I
propose is to bid $30,500 if no one else bids, and $37,500 if there
are several bidders. Even at $37,500 we will be $18,800 under our
budgeted amount and we will acquire a truck that is perfectly suited
to our needs.
There are several alternatives to the above method. One, is we do not
bid with the hope that no one else bids or they throw out all bids for
.being too low. Then we could go out to bid with their specs and have
them bid tows. The drawback is that they could accept someone else's
bid at the opening or the amount they bid to us could be much higher
than the minimum. We would then be in a situation of buying the truck
because it meets specs at a much higher price.
The other alternative is to wait until 1992 and try to find a Log
Truck with similar equipment. The problem with this alternative is
the amount of time that will have to be spent looking at various
pieces of equipment. Also, most of the trucks that meet our specs
will probably be bid to us by dealers and suppliers which means you
add in their percentage and we could easily end up spending the entire
budget amount for a truck with less equipment.
If you have any questions, please let me know.
cc: Steve Mielke, City Manager