HomeMy WebLinkAbout13.A.1. Purchase of Air Compressor for the Parks Division-tabled 3/18/08
CITY OF SHAKOPEE
MEMORANDUM
J 3. A. J.
TO: Mayor & City Council
Mark McNeill, City Administrator
Bruce Loney, Public Works Director
FROM: Michael Hullander, Public Works Superintendent
DATE: April 8, 2008
SUBJECT: Purchase of Air Compressor for the Parks Division.
INTRODUCTION:
On March 18, 2008 Council directed staff to research the option of rental vs. purchase of
the requested Air Compressor for the Parks Division.
BACKGROUND:
Staff contacted two equipment suppliers' to get a monthly rental rate for a 250 C.F.M.
Air Compressor. Aspen Equipment rents for $1,000.00 and Hertz Equipment has a
comparable compressor for $1,035.00. The cost of labor, vehicle and fuel also will have
to be included for the pick-up and return to the vendor. If there are any rate increases due
to inflation the cost to rent for the next 25 years, which staff believes is the minimum for
the service life, can easily exceed $30,000.00. Adding additional daily ($120.00) or
weekly ($380.00) rental only increases the amount that will have to be budgeted for
annually. Staffhas $15,000.00 in the 2008 General Fund Budget for this purchase; this is
a one time expenditure of $l4,773.68 that will cover the next 25+ years. If the air
compressor is not purchased using today's budgeted dollars staff will have to budget for
rental in 2009 and future years. We would like to remind council that even with this
purchase we will still use the S.C.A.L.E. agreement and borrow S.P.U.C.'s or the
County's compressor for the larger systems. The 1969 air compressor we purchased
from Public Utilities for $600.00 is undersized and unreliable. The old unit will be taken
in trade for $500.00.
Although this purchase is a Capital Expenditure and is not included in the Equipment
Fund I used our Internal Service Fund spreadsheet to calculate the estimated replacement
cost, 25 years @ 4% is $28,547.00. The monthly rental rate needed to cover the
replacement is $95.00 and the annual rate would be $1,l42.00.
Staff would also be able to use this air compressor throughout the year for other purposes
other than just the annual winterization of irrigation systems and seasonal buildings.
Staffwould be able to use this equipment for our jack-hammer and post pounder which is
both used for maintenance activities in the street, sanitary, storm and park divisions.
ALTERNATIVES:
1. Authorize staff to purchase one new air compressor from Aspen Equipment Co.
for the price of $14,773.68.
2. Deny the request.
3. Table for additional information.
RECOMMENDATION:
Staff recommends alternative number one.
ACTION REOUESTED:
Move to authorize staff to purchase one new air compressor from Aspen Equipment Co.
for the purchase price of$14,773.68 using State Bid Pricing with the funds to be
expended from the 2008 Park General Fund Budget, Capital Expenditures.
~.~
Michael Hullander
Public Works Superintendent