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Mounds View City Council May 22, 2000 Regular Meeting Page 6 Mayor Coughlin advised that all major expenditures were subject to Council approval. Mr. Jahnke stated many people believe there is a “Cadillac” mentality at the City in terms of buying the best. He indicated that when he had inquired, he was told that when you buy the best, you get better equipment that last longer, however, to his knowledge, there was not a contractor in the State of Minnesota that purchases Caterpillar rubber tire backhoes because they are so expensive. He explained that they probably come close in cost to other backhoes, however, the maintenance and parts are extremely expensive. He stated most contractors purchase Kumatsu equipment at half the price. Mayor Coughlin stated that as a contractor himself, he would not agree with the broad statement that no contractors in the State are buying Caterpillar backhoes or other equipment, because if they were not, Caterpillar and its subsidiaries certainly would not be located in Minnesota. He explained that if there were no business in the State, they would not be located here. Mayor Coughlin indicated that as a contractor, he was also fully aware that sometimes, especially with its purchase power through the State and other governmental agencies, the City is able to purchase items at a substantially reduced cost than a private contractor. He advised that Mounds View also has a very good repair agreement with Caterpillar, whereby the City pays a specific set rate for any downtime, and Caterpillar pays for the remainder. He explained this backhoe might be referred to as the “Cadillac” version, however, when you purchase discount equipment, you would have discount warranty work on it as well, and in his recollection, the City has already saved a substantial amount of money through the repair contract they have with Caterpillar. Mayor Coughlin stated that as a contractor, he has purchased both discount equipment, and higher end equipment. He indicated the labor saved in the long run, with a quality product and a quality company with a name they wish to stand by, may be an intangible at some level, however, is certainly a benefit to the City. He stated he did not see this as an excessive expenditure of taxpayer dollars by the City. Mr. Jahnke inquired if the City pays for the maintenance agreement. Interim Administrator Ulrich stated that if he was in anyway offensive to Mr. Jahnke earlier that date, he apologized, however, he had many things to do at that time, and did not see that this as an appropriate time or place to discuss this issue. He indicated the backhoe in question was purchased on a competitive bid in a joint cooperation with the city of Maplewood. He stated the city of Maplewood and the City of Mounds View both had a trade in, and he did not remember the exact dollar amount of the trade in, however, part of the package was the guaranteed maintenance, breakdown, and buyback of the backhoe. He explained that at the end of five years, Zeigler Corporation, which handles the Caterpillar dealership in the area, would guarantee the City $45,000 for the repurchase of the machine. He noted that this price was the low end, and Ziegler would obviously have to come up with the competitive market price for the machine, with the hours of usage it has accumulated. Interim Administrator Ulrich advised that the City also had a guaranteed breakdown of $2,000. He explained that for any major component of the machine that requires replacement because it