HomeMy WebLinkAboutStreet Department to enter into a municipal lease-to-own agreement with Merchants Capital for Sweeper1
Commission Memorandum
REPORT TO: Honorable Mayor and City Commission
FROM: John Van Delinder, Street Superintendent
Debbie Arkell, Public Service Director
Anna Rosenberry, Finance Director SUBJECT: Award Lease for Street Sweeper
MEETING DATE: December 19, 2011
AGENDA ITEM TYPE: Consent
RECOMMENDATION: Authorize the Street Department to enter into a municipal lease-to-own agreement with Merchants Capital for a 2012 Elgin Broom Bear Sweeper.
BACKGROUND: In the current 2012 budget the Street Department has $50,000 budgeted to
lease a sweeper. We will be able to tag onto the Montana Department of Transportation
purchase of sweepers. If a sweeper is purchased outright, the price is $185,592.96. The price of
this same sweeper after December 31, 2011 is estimated to be $220,000. By leasing at this time our payments will be six annual payments of $33,495.16, for a total price of $200,970.96. At the
end of the five year (six payment) lease, we will own the sweeper. This sweeper will be in
addition to the sweeper we are getting through the MACI (Montana Air Congestion Initiative).
These two sweepers will replace a 1991 model and 1999 model. These sweepers will be sold.
We solicited and received two lease bids for the sweeper and after review by Finance Director Rosenberry it was determined that the Merchants Capital bid has a lower total cost, better terms
and requires fewer funds in advance.
UNRESOLVED ISSUES: None
ALTERNATIVES: 1) Purchase outright. 2) As determined by the City Commission.
FISCAL EFFECTS: The proposed lease is shown in the Capital Improvement Plan (CIP) at
$50,000 per year. If we lease the sweeper this year, we will need to budget the lease payment of
$33,495.16 for the next five years. This lease is $16,504.84 less than the $50,000 that is in the
approved FY13- FY17CIP.
Report compiled on: December 7, 2011
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