Minutes - 2000/05/22 - Laserfiche WebLink

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Mounds View City Council May 22, 2000 Regular Meeting Page 7 • 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 has broken down as a result of a manufacturer defect, or any combination of any parts of the machine, the City would only be liable for $2,000 worth of the cost of that repair in that five-year period, and the remainder would be paid by Zeigler. Interim Administrator Ulrich stated the guaranteed maintenance includes the costs for changing oil, greasing the machine, and preventative maintenance. He indicated the requirements for greasing the machine are based upon a specific number of hours of usage, and through the competitive purchasing agreement and the written specifications, the Caterpillar backhoe was less expensive than other machines. He stated these factors were considered in the interest of protecting the City from the costs of major breakdowns and major maintenance. He added that if the City desired to sell the machine back to Zeigler, they were aware of exactly how much the machine would be worth. He advised that other competitors did not quote as competitively as Zeigler, and that is why the City chose to purchase the Caterpillar backhoe. Mr. Jahnke inquired if the maintenance program was similar to an extended warranty agreement, which must be purchased. Interim Administrator Ulrich indicated the maintenance of the backhoe is set up by Caterpillar, which specifies that the machine must undergo certain maintenance procedures within a specific number of hours of usage. He stated the costs for the anticipated labor and materials over the course of five years would be the guaranteed maintenance. He advised that the guaranteed breakdown represents the primary benefit to the City, in that this provides that the City would only be liable for $2,000 of the expense of any breakdowns related to the hydraulic system, electrical system or any of the major components of the machine over the course of five years. Mayor Coughlin inquired if the City has utilized this guarantee. Interim Administrator Ulrich stated yes. He indicated the backhoe that is currently in the shop belongs to Zeigler Corporation. He stated there has been an ongoing problem with the hydraulic system on that machine, and Zeigler has corrected it a number of times for a relatively small amount of hours of usage during any given period. He explained that the hydraulic problem has been somewhat difficult to isolate, and Ziegler has spent a significant amount of their money attempting to repair the backhoe. He advised that Ziegler is still in the process of repairing the machine, and staff has indicated that they desire the machine to be repaired to the City's specifications and properly functioning, or replaced. He stated an enormous amount of money • has been saved on this repair, which otherwise, after one year or a specific number of hours, would have to be paid by the City.