Title
A RESOLUTION AUTHORIZING THE CITY MANAGER TO ENTER INTO A LEASE AGREEMENT WITH SUNTRUST EQUIPMENT FINANCING & LEASING CORP. FOR PURPOSES OF FINANCING THE PURCHASE OF AN EXCAVATOR FOR USE BY THE DEPARTMENT OF PUBLIC WORKS; TO AUTHORIZE THE PURCHASE OF THE EXCAVATOR FROM SOUTHEASTERN EQUIPMENT COMPANY, INC. THROUGH THE NATIONAL JOINT POWER ALLIANCE PURCHASE CONTRACT; AND DECLARING AN EMERGENCY.
Executive Summary: The 2014 Fleet Capital replacement budget currently has approved funding for the purchase of a replacement snow plow truck. Public Works Staff has identified a greater need to purchase an essential piece of equipment needed in the operational area of storm water maintenance and construction and wishes to discuss a purchase plan option with City Council.
Body
Legislative History
None.
Purpose & Explanation
The Public Works storm water maintenance and construction work group has historically used a large specialized excavator to carry out the City's storm water ditching program. The Public Works (PW) Department staff requested the replacement of this machine during the 2014 budget meetings as it is 22 years old and currently requires an estimated $40,000 to $45,000 of needed repairs, replacement parts and attachments. The replacement cost of the current unit has been quoted at $264,756 on the National Joint Power Alliance (NJPA) government purchase contract through Southeastern Equipment Co. Inc.
Due to the high upfront cost of the unit, PW staff recommended that it be purchased through a government lease to own program utilizing the salt truck funds of $165,000 as a down payment. Annual payments of $20,253.25 would then begin in 2015. The lease agreement would impact the storm water budget annually in the amount of $20,253.25 for the term of the lease.
The PW staff recommends the 5 year lease to own option with $165,000 down and an annual payment of $20,253.25 (This reflects a 1.895% interest rate).
PW staff and fleet maintenance managers are in agreement that the current machine is not worth the repair investments. Further, to stay within the budget allocations for 2014 PW staff agrees the ditching machine takes priority over the salt truck purchase for 2014.
The current ditching machine will be auctioned for parts on Govdeals Internet Auctions. The purchase of the snow plow truck will be delayed until 2015.
Timing Considerations
Staff seeks to have emergency legislation appear on the April 16, 2014 City Council meeting consent agenda to expedite arranging the lease agreement.
Fiscal Impact
X Currently Budgeted
Supplemental Appropriation Required
Appropriation Not Required.
Recommendation
Suggested Action
Staff recommends City Council authorize and direct the Interim City Manager to enter into a purchase agreement with Southeastern Equipment Company Inc.1500 Industrial Parkway, Brunswick, OH. 44212 for one (1) Gradall Excavator XL3300 III at the purchase price of $264,756.
Additionally, as this unit will be purchased on a lease to own option, staff recommends the City enter into a lease agreement with Suntrust Equipment Financing & Leasing Corp.
Submitted by,
Scott N. Schroyer, Interim City Manager
Frank J. Comeriato, Director of Public Works