City ponders whether to lease, purchase equipment

Wednesday, August 22, 2018

McCOOK, Neb. — The McCook City Council will decide whether to buy or lease equipment next year for two city departments.

The council approved on its first reading the proposed 2018-19 budget Monday night at its regular meeting but still has to determine whether to lease or buy two mini excavators for cemetery and water departments. The budget has two more readings before it is finalized in September.

Public Works Director Kyle Potthoff and Utilities Director Jesse Dutcher talked to the council Monday night about the advantages of leasing instead of buying

mini excavators (with trailers), for the cemetery and water departments. The proposed budget includes the purchases of two mini excavators next year at $64,000 each, that includes $7,000 each for trailers. Equipment in the water department is paid for by water collection revenue and cemetery purchases, the general fund.

Dutcher said a Bobcat excavator/backhoe can be leased for $4,700 per year and estimated the cost to customers at 10 cents per customer instead of $15 per customer per month for a new purchase. The cost of the leased machine is based on 250 hours; Dutcher said the city’s current mini excavator averages 253 hours per year hours so the lease could be tweaked to reflect that.

He also said that although prices are not usually increased during the year, there was a $500 increase this year due to the steel tariffs.

Leasing equipment is becoming more popular, he said, citing Red Willow County, McCook Public Power District, Cambridge and North Platte as leasing some of their equipment.

The leased machine will leave a smaller “footprint,” Dutcher said in response to a question by Council member Janet Hepp on the differences between the leased machine and the current one the city uses. It’s small enough so traffic can get around it if work is being done on a street, he said, and light enough so it can be parked on the sidewalk, neither of which the current excavator can do. The current excavator, purchased in 2003, will be kept on hand.

Potthoff said for the cemetery department, the leased machine is more maneuverable than the present one and also climate controlled, providing cover for city employees digging graves during the winter time. There is also an option of getting a 36-inch bucket to square off the sides of the holes dug; the current excavator has a 17.5-inch bucket, which means more time is spent squaring off sides. Potthoff said another added feature with leased equipment is that a different model could be leased at the end of the year if what was leased the prior year did not work out for some reason.

Dutcher said the maintenance agreement with the leased machine provides for repairing breakdowns unless the lessee (the city) causes the damage. The city would be responsible for insurance and fuel, the lease agreement with the company provides oil filters and oil. Potthoff said the Bobcat logo on the side of the machine would also be the city’s responsibility to replace if damaged.

Also in Monday night, the council received a three-phased timeline concerning updating the heating/cooling system at the McCook City Library. Phase 1, front-end integration, would take 8 months; Phase II, mechanical room optimization, six months and Phase III, energy optimization, four months.

The timeline did not include a company name. The proposed 2018-19 budget includes $110,000 in city sales tax revenue for upgrading the system.

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