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5.11. SR 06-07-2004TO: FROM: DATE: SUBJECT: MEMORANDUM Mayor and City Council Bruce A. West, Fire Chief June 7, 2004 Fire Department Pumper Purchase Item ~ 5.11. On behalf of the Elk River Fire Department, I would like to thank our Truck Committee for its dedication and hard work with the new pumper purchase project. I would like to present to you the bid findings and Truck Committee conclusions in reference to the new fire department pumper as proposed by the Elk River Fire Department Truck Committee. The Truck Committee members are: Phil Collins, Jeremy Collins, Chff Anderson, Dan Kreuser, Gary Lore, Mike Trunnell, and Brent Richter. On May 21, 2004 at 10:00 a.m. at the Elk River City Hall, two bids were received and opened and the results were as follows: Pierce Manufacturing General Safety Equipment $374,975 8398,042 The Fire Department Truck Committee has reviewed the two bids received to assure adherence to the published truck specifications. The Truck Committee compared the bid proposals versus the published specifications page by page for any discrepancies. After completion of the bid review process, the Fire Department Truck Committee voted unanimously to recommend acceptance of the Pierce Manufacturing proposal. The City of Elk River advertised for bids for the pumper fire apparatus for 30 days and bid specifications were requested by four truck manufacturers of which include: Crimson Fire Apparatus, Custom Fire, General Safety Corporation, and Pierce Manufacturing. The Truck Committee's recommendation is based on many hours of analysis and comparison of bid specifications of the product proposed. Both bid proposals meet all federal safety standards, NFPA requirements, noise level requirements, and standards mandated by OSHA. The Elk River Fire Department Truck Committee has successfully completed the pumper purchase project with many meetings, preparations of bid specifications, review of pumper apparatus proposals, and recommendation for the purchase of the new Fire Department pumper. The Truck Committee members are very excited and pleased with the proposed Fire Department pumper as to the value and benefits of this purchase. It is estimated per the bid proposal the delivery of the new Fire Department pumper shall be approximately eight months. I have discussed the entire bid process and proposals with both Finance Director Lori Johnson and City Admimstrator Pat Kdaers. The possible funding options were discussed with Finance Director LoriJohnson and Lori has included a memo in reference to the financing of the new Fire Department pumper apparatus. Please review Lori's memo in regards to financing and fmancing options. Action Requested On behalf of the Elk River Fire Department and its Truck Committee, I am requesting Council approval for the Pierce Manufacturing pumper fnce apparatus proposal for $374,975. The new Fire Department pumper will be located at station ~¢2 and will become the first responding engine out of station 792. The Elk River Fire Department membership would like to thank the Mayor and City Council for their continued support of our Fire Department. I will be present at the June 7, 2004 City Council meeting to answer any questions the Mayor and City Council may have in reference to the Fire Department pumper purchase. If you have any questions prior to the June 7 City Council meeting, please call me at the Elk River Fire Department at 763-635-1105. S:~Council~Bruce~2004~approvalofpumperbids.doc MEMORANDUM Item 5. II. TO: FROM: DATE: SUBJECT: Mayor and City Council Lori Johnson, Finance Director June 7, 2004 Financing for Fire Pumper The Fire Department is requesting authorization to purchase a pumper from Pierce Manufacturing, Inc. at a cost of $374,975.00. Although this purchase was discussed with the Council previously, the final financing method and source of funds have not been determined. The main decision to be made is whether this purchase is funded through a tax levy, reserve funds, or a combination of both. Reserve funds could be used for initial payment or to fund debt repayment. As in the past, the manufacturer is offering financing for all or part of the pumper. Additionally, equipment certificates may be issued for this purchase. The advantage of equipment certificates is that the repayment may be funded through a special tax levy. This is important when levy limits are imposed on cities, but, as you know, when there are no levy limits in place, the Council may levy what it feels appropriate so either financing method could be repaid through a tax levy during years with no levy limits. One advantage of financing through the manufacture is that the term may be extended to ten years; equipment certificates may only be issued for a term of five years or less. The interest rate is another consideration. In this case, the manufacture is offering five year financing at 4.49 percent. If equipment certificates are issued, they will not be issued until November or December so it is difficult to make an exact comparison of interest rates at this time. Typically, the interest rate on an equipment certificate is lower than the rate offered by the manufacturer. In addition to financing, Pierce is again offering a discount for prepaying the chassis which the City would take advantage of to save $5,900. Pierce is offering something new on this purchase which is paying the City 4 - 4.25 percent interest on funds deposited with Pierce to be used to make payments on the pumper. This option will be discussed in more detail at the meeting. Finally, additional information on reserve fund balances and the estimated annual tax levy for an equipment certificate xvill be provided at the meeting. If the Council does not ~vant to levy a tax to pay for the pumper, either £mancing method may still be used with funding coming from a reserve fund. Action Requested The City Council is asked to consider whether equipment certificates should be issued for this purchase, either in part or in total. This will determine the use of reserve funds. If reserve funds are to be used, action will be needed to identify which reserve fund(s) will be used.