Memorandum 15-135 Purchase of New Dump Truck

Memorandum 15-135

To:                       Katie Koester, City Manager

From:                  Dan Gardner, Public Works Superintendent

Date:                   August 4, 2015

Subject:             Purchase of New 10-Yard Dump Truck

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As you know, our thirty-four year old dump truck has been taken out of service as of four weeks ago.  This is due to extensive frame damage that is cost prohibitive to repair.  Feelers were put out to multiple companies in an attempt to obtain repair estimates.  No one was willing to take on the work, but one did estimate that the cost would be $50,000 were they to take on the project.  This would not make sense to do on a vehicle this old.

This vehicle is considered a necessity to our work fleet.  Without it, we are left with only one truck.  We often use both truck simultaneously, and one backs up the other when it is down for repairs or maintenance.  In the winter, one has the large sander unit installed, which leaves the other truck for hauling snow, hauling waste excavation and fill material for repairs, and other hauling needs that arise.  In the summer and fall, simultaneous operations of ditching, culvert replacements, water/sewer repairs, fire hydrant repairs, etc. require the use of two trucks.

To purchase a new truck and dump body, we can take advantage of the State’s purchase contract which gives us about a $27,000 savings when compared to normal retail for the same truck.  This makes buying new rather than used attractive because the city isn’t paying that depreciation to a used truck owner.  We have looked hard at some used trucks, and even sent our road foreman and head mechanic to look at one on the peninsula, but it would not be a wise decision due to the age of the vehicle and the costs to get it set up properly for us.  Most available used vehicles that would be reasonable choices are located in the lower 48, and would require sending personnel to survey the truck and costly shipping expenses.  Many of these used vehicles rival or meet the cost of a new vehicle under the State’s purchase contract.

We currently have a quote for $149,989 for a new Mack truck through the State’s purchase contract complete with new dump body from Construction Machinery Industrial, in Anchorage.  I am requesting approval to make this purchase as soon as possible.

The City could pay for the truck outright through reserve funds, or obtain a lease/loan.  Through Construction Machinery, we can obtain a lease purchase with approximately $18,000 down payment, and 60 monthly payments of around $2,300 with an interest rate of 2.833%.

This request is not for an upgrade, but for maintaining the existing fleet and maintenance needs.