Memorandum 15-125 Dump Truck Replacement

Memorandum 15-125

To:                       Carey Meyer, PW Director

From:                 Dan Gardner, PW Superintendent D   G

Date:                   July 14, 2015

Subject:             Dump Truck Replacement

As you are aware, last week, while starting some planned work on our 1981 10-yard dump truck, it was discovered that the frame and assembly were rusted and coming apart to a degree that required us to remove the vehicle from service. At this time, there are no plans to bring it back into service. This vehicle is thirty-four years old. The frame has been repaired in the past to extend its life, but it is to the point that repair costs would outweigh the vehicle's value.

Attempts were made to obtain repair costs from shops in Anchorage, and none of them were interested. Most scoffed at the idea. One of them said that they wouldn't do the work, but if they were to, the labor alone would be almost $50,000 for the frame rail replacement. And, there was doubt that the necessary frame rails would be available.

I view this vehicle as a must for our fleet.  Without it, we have only the one dump truck.  Although we don't use both vehicles every day, we use them both simultaneously quite often, and one backs up the other when one of the vehicles is down for repair or maintenance. In the winter, one has a sander unit it, which leaves the other one for hauling snow, hauling waste excavation from repair work and hauling gravel. In the summer and fall, multiple operations of ditching, culvert replacements, water/sewer repairs, fire hydrant repairs, etc. requires the use of two trucks.

These types of trucks are not readily available for rent or lease, and when one can be found, they rent for about $5400 per month. Over the past week, I have checked with several heavy equipment rental companies and none are available. Renting is not a realistic option due to cost and the fact that when the vehicle is needed, it is most likely not available. And, the cost to rent one for six months could at least purchase an older truck. Although an older truck of this value is not preferred, it would at least be something in the fleet.

Following are options that are being considered:

Repair the Truck - Not an option

Rent a truck as needed - Not a workable option
Purchase a used truck - $35.000 to $90.000. A reasonable truck can be obtained in this price range. To spend more than that begins to rival the cost of a new truck purchase with warranty, etc. Obviously, the low end of this estimate would purchase an older vehicle of the mid 1990s vintage. A vehicle in this price range may or may not include a dump body and/or the necessary hydraulic kits and electrical connections required to get the truck in service with our sander/trailer/dump body. With any used vehicle, there is a risk that expensive repairs could show up, and because of the age, the vehicle will need to be replaced sooner than a new truck.

Most used trucks need to be purchased in the lower 48. The downside to this is that the vehicle cannot be physically evaluated without the cost and time required to send personnel to the vehicle's location.  Then, there is the cost to ship or pay a driver to bring the vehicle to Homer.

Purchase a new truck - $124.000 to $149.000

$124,000 to $129,000 new truck with hydraulics.  We install our old dump body.

$145,000 to $149,000 new truck with new dump body and ready for use.

A new truck could be purchased through the State's purchase contract. Going through the State's contract saves us approximately $27,000 when compared to normal retail for the same truck. If purchasing a new truck, it would be ideal to have a new dump body with high-lift gate installed, but we could install our old dump body on the new truck in order to save around $20,000, if necessary. A new truck would take six months from the date of order to arrive in Anchorage. If funds could be approved right away, there is currently a truck available that is assembled  and ready to ship. By the time this purchase possibly gets approved, it may no longer be available.  It is safest to assume that a new truck would take six months to obtain. But, once the purchase is approved by council, negotiations could possibly produce  a truck  sooner than six  months.

Purchasing used would require the full purchase price immediately. Purchasing  new  would allow making payments over five years. After a cash deposit of around $13,000 to $15,000 monthly  payments would be $2100 to $2500 - half of what it costs to rent a truck for a month, were one  even available. Although the initial cost of a used truck is less, monies will have to be laid out sooner for repairs, tires, etc., and there is no warranty. Purchasing new allows the city to take advantage of the $27,000 savings to be had by purchasing through the State's contract. Many used trucks that we have been  seeing cost the same or more than  the amount the city would  have to pay for a new  truck.

Recommendation

Obtain approval to negotiate the purchase of a new dump truck with dump body with a maximum purchase amount of $150,000. A lesser amount of $129,000 could be approved if we opt to use our old dump body. If a new truck purchase cannot be approved, obtain approval to negotiate the purchase of a used truck with a stated maximum amount allowed.