03-20-90 CCM - Laserfiche WebLink

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To: Mayor and City Council From: T. R. Williams Subject: CIP Committee Recommendation on New Dump Truck Date: March 12, 1990 - on March 12, 1990, Mayor Dunn and I met with Dan Olinger, the Public Works Supervisor. The subject of our meeting was discussion about whether or not the Council should award a bid for a new dump truck. Below are a number of conclusions we came to regarding this purchase.and other capital purchases planned for Lake Elmo in the future. 1. Because our citizens rely on the proper functioning of all City equipment, especially in the winter, it is proper to replace old equipment on a regular basis. In this way the City can have a high level of confidence that its equipment will be available when needed. 2. For at least the last three years, Lake Elmo has had a formal capital improvement program or plan (CIP) to plan for the replacement of major equipment. This CIP now includes virtually all the hardware items owned by the City: trucks, plows, mowers, office equipment, etc. Prior to 1986, items were assigned replacement periods, but no formal, considered replacement schedule was in place. 3. The current CIP includes the philosophy of spacing out purchases of major mechanical equipment, especially for the Fire Department and for the Public Works Department, so that there are not years in which much money is spent, followed by years in which no money is spent. The goal is to have an even level of expenditure over the years. With the number of items owned by the City, this goal can only be met approximately. Once such a CIP is in place, changing the schedule on a major item can seriously disrupt the desired even level of purchases. The problem is that each item is on its own depreciation schedule, independent of any other item. 4. The subject truck was ordered at the end of 1982, but it is a 1983 model. It has over 30,000 miles on it, mostly snow -plowing miles. Repairs for 1989 were just over $5000. Expected repairs to make the truck worthy of another year are about $2500, none of which is in the budget. A delay of one year will reduce trade-in value by.$2500-$5000. Unplanned but very possible major repairs include engine and transmission rebuilding for $5000-$14000. The cab and box are beginning to show rust and should be repainted if we keep it for another year. The truck has been on a seven year replacement schedule since its purchase. 5. The low bid provides for replacement of a seven-year old $52000 unit ($45000 original truck and $7000 added equipment) with a functionally equivalent brand new $60000 unit for $38000 plus a $22000 trade-in. The consensus of the CIP Committee was to recommend that the City Council proceed to award the bid to the low bidders for the truck and the plow package.