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R-1834 - 11/26/2019 - PUBLIC WORKS - Resolutions ITEM 6.C.1 BOARD OF TRUSTEES MEETING VILLAGE OF SAMUEL E. DEAN BOARD ROOM OAK BRq ikK , BUTLER GOVERNMENT CENTER 1200 OAK BROOK ROAD OAK BROOK, ILLINOIS 630-368-5000 AGENDA ITEM Regular Board of Trustees Meeting of November 26th, 2019 SUBJECT: Award of Contract—John Deere Lease Agreement FROM: Doug Patchin, Public Works Director i Rick Valent, Public Works Superintendent �(T' BUDGET SOURCE/BUDGET IMPACT: $129,310 is budgeted in Equipment Replacement(342-90200) for the lease of these items. RECOMMENDED MOTION: I move that the Village Board waive further bidding since Sourcewell has already conducted the bid process for John Deere Construction Equipment (Cooperative Contract#032515-JDC) and award a three-year lease agreement with Deere Credit, Inc. for a new 2019 John Deere backhoe and 2020 John Deere excavator, and approve Resolution R-1834. Background/History: Public Works construction equipment has traditionally been purchased and not leased. When reviewing the age, usage hours, and repair costs of existing equipment then comparing that to the residual value, leasing becomes a viable option for consideration. The Department's construction equipment fleet is predominantly comprised of John Deere which is available through Sourcewell. Staff reviewed its operations and feels comfortable in reducing the Department's equipment inventory by one by trading-in units 511 and 611, both being a 2003 and 2012 John Deere backhoe, and unit 613, a 2007 Yanmar excavator. These in turn will be replaced by a 2019 John Deere backhoe and a 2020 John Deere excavator. Excavating attachments (bucket, breakers, etc.) will also be purchased to accommodate the new construction equipment. BOT AGENDA Page 1 RG Below is a breakdown of purchase versus lease versus lease/purchase. 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 Buy Net Purchase 41OLand 50G $]54,379 $ - $ - $ - $ - $ - $ - $ - $ - $ - Less Estimated Accumulated Cash (175,000) - - - - - - - - - 5-Year Warranty 7,821 - - - - - - - - 4-Year Maintenance Package 23,256 - - - - - - - - - 410L Backhoe Loader Replacement Charges 17,603 17,603 17,603 17,603 17,603 17,603 17,603 17,603 17,603 17,603 50G Excavator Replacement Charges 9,826 9,826 9,826 9,826 9,826 9,826 9,826 9,826 9,826 9,826 Annual In-House/Contracted Maintenance - - - - 6,000 6,180 6,365 6,556 6,753 6,956 Estimated Miscellaneous Consumables 500 930 1,200 5,330 1,300 1,630 500 5,430 1,200 530 Total Purchase Charges $ 38,384 $ 28,358 $ 28,628 $ 32,758 $ 34,728 $ 35,238 $ 34,294 $ 39,415 $ 35,382 $ 34,914 Lease Less Estimated Accumulated Cash $(17,500) $(17,500) $(17,500) $(17,500) $(17,500) $(17,500) $(17,500) $(17,500) $(17,500) $(17,500) 410LBackhoe Loader Annual Lease Cost 21,395 21,395 21,395 21,500 21,500 21,500 21,750 21,750 21,750 32,500 50G Excavator Annual Lease Cost 16,098 16,098 16,098 16,200 16,200 16,200 16,300 16,300 16,300 20,000 Total Annual Lease Charges $ 19,994 $ 19,994 $ 19,994 $ 20,200 $ 20,200 $ 20,200 $ 20,550 $ 20,550 $ 20,550 $ 35,000 Annual Lease(Savings)/Cost $(18,391) $ (8,365) $ (8,635) $(12,558) $(14,528) $(15,038) $(13,744) $(18,865) $(14,832) $ 86 The Village has an estimated $175,000 of accumulated funds in the Equipment Replacement Fund related to the purchase or lease of future units 511,611,and 613. Under the purchase option, these funds would nearly cover the cost to purchase two new replacement units net of trade-in values, along with five-year warranties and 4-year preventative replacement plans. Should the Village choose to continue purchasing Public Works Equipment,we would also begin setting aside funds for the purchase of replacement equipment in 10 years. Once the four-year preventative maintenance package is up, it's estimated the Village will spend an average of$6,000 annually to maintain the equipment, and increasing gradually with inflation each year. Under the lease option, the accumulated $175,000 would remain in the Equipment Replacement Fund and will be applied against future lease payments. The trade-in values of current units 511, 611, and 613 would be spread across the first three lease agreements (nine total years) in order to keep annual lease costs stable. The Village would expect to see an increase in lease costs in year 10 as prior trade equity runs out, but at that point, we would evaluate if leasing is still a viable option for the Village. There are various assumptions not included in this analysis due to unpredictability, such as major breakdowns or repairs if we owned older equipment. Should one of these pieces of equipment suffer a major breakdown,this could result in thousands of dollars in unplanned repairs. The technical and mechanical advancements in today's equipment is more complex than in the past and unfortunately those come with a cost. From an operational perspective, giving staff up-to-date equipment also allows them to take advantage of those advancements that can improve their day to day functions. BOT AGENDA Page 2 Recommendation: I move that the Village Board waive further bidding since Sourcewell has already conducted the bid process for John Deere Construction Equipment (Cooperative Contract #032515-JDC) and award a three-year lease agreement with Deere Credit, Inc. for a new 2019 John Deere backhoe and 2020 John Deere excavator,and approve Resolution R-1834. BOT AGENDA Page 3 THE VILLAGE OF OAK BROOK COOK AND DUPAGE COUNTIES, ILLINOIS RESOLUTION 2019-EG-AG-R-1834 A RESOLUTION APPROVING AND AUTHORIZING THE FINANCING OF PUBLIC WORKS EQUIPMENT GOPAL G. LALMALANI, Village President CHARLOTTE K. PRUSS, Village Clerk JOHN BARR PHILIP CUEVAS MICHAEL MANZO MOIN SAWED EDWARD TIESENGA ASIF YUSUF Village Board Published in pamphlet form by authority of the President and the Board of Trustees of the Village of Oak Brook on this the 26th day of November, 2019 RESOLUTION 2019-EG-AG-R-1834 A RESOLUTION APROVING AND AUTHORIZING THE FINANCING OF PUBLIC WORKS EQUIPMENT WHEREAS, the Village of Oak Brook is a municipal corporation with authority provided for and granted pursuant to the Illinois Municipal Code to exercise certain powers and perform certain functions pertaining to its local government and affairs; WHEREAS, the Village of Oak Brook (hereinafter referred to as "Village") upon approval of the corporate authorities may enter into an Agreement with another party pursuant to Illinois Statute; WHEREAS, the Village desires to lease new equipment to be utilized by the Department of Public Works for the continued maintenance of the village thoroughfares and streets as a result of which Sourcewell has solicited bids for the said purchase and financing of a 2019 John Deere backhoe and a 2020 John Deere excavator(hereinafterreferred to "Public Works Equipment"); WHEREAS, pursuant to Section 1-7-10 of the Village Code, the Village shall have the authority to join with other units of government in cooperative purchasing plans when the best interests of the Village will be served by engaging in such cooperative purchasing plans; and WHEREAS, to the extent the Village were to engage in a competitive bid process to secure pricing for Public Works Equipment, the Village would be unable to secure pricing at or lower than the prices secured by Sourcewell; and WHEREAS, the Village and Sourcewell have identified John Deere Construction Company and Deere Credit, Inc. as the companies best suited to sell and finance the desired equipment; and WHEREAS, the Village of Oak Brook Corporate Authorities feel that it is in the best interests of the Village of Oak Brook to participate in the cooperative purchasing of Public Works 2 Equipment and enter into a lease agreement with Deere Credit, Inc. for the financing of the public works equipment as provided for herein. THEREFORE, BE IT RESOLVED by the Village President and Board of Trustees of the Village of Oak Brook, Cook and DuPage Counties, Illinois as follows: Section One - Recitals The Corporate Authorities hereby find that all of the recitals hereinbefore stated as contained in the preamble to the Resolution are full, true and correct and do hereby, by reference, incorporate and make them part of this Resolution as legislative findings. Section Two— Approval of Financing of Public Works Equipment The Village Board of Trustees hereby approves lease of the public works equipment and hereby authorizes the Village Manager to negotiate the final terms of the lease of the public works equipment and is hereby authorized to execute any and all forms and agreements required to the financing of the identified equipment. Section Three —Authorization and Direction The Village Manager is hereby authorized to execute, and the Village Clerk is hereby authorized to attest the Village Manager's signature, the necessary agreements, contracts and forms to finance the equipment identified herein with such changes therein as shall be approved by the Village Attorney and the officials of the Village executing the same, their execution thereof to constitute exclusive evidence of their approval to any and all changes or revisions therein from and after the execution and delivery of such Agreements. Section Four- Other Actions Authorized The officers, employees and/or agents of the Village shall take all actions necessary or reasonably required to carry out and give effect to the intent of this resolution and otherwise to consummate the transactions contemplated herein, and shall take all actions necessary in conformity therewith including, without limitation, the execution and delivery of all documents required to be delivered in connection with the transaction contemplated herein. 3 Section Five - Authorization of Expenditures The Corporate Authorities hereby authorize and direct the expenditure of all costs related to the execution of the Agreement, additionally, the Village is authorized and directed to allocate and spend all necessary funds to fulfill the requirements of the Agreement and of this resolution. Section Six—Waiver of Bidding Process To the extent that any requirement of bidding would be applicable to any of the transactions contemplated hereunder, the same is hereby waived. Section Seven - Acts of Village Officials That all past, present and future acts and doings of the officials of the Village that are in conformity with the purpose and intent of this resolution are hereby, in all respects, ratified, approved, authorized and confirmed. Section Eight- Conflict Clause That all resolutions, parts of resolutions and board actions in conflict with the terms of this resolution shall be repealed to the extent of said conflict Section Nine - Passage Clause That this resolution shall take full force and effect from and after its passage, approval and publication as provided by law. Section Ten - Publication This resolution shall be published in book or pamphlet form as provided by the Illinois Municipal Code. Section Eleven - Saving Clause If any section, paragraph, clause or provision of this resolution is declared by a court of law to be invalid or unconstitutional, the invalidity or unconstitutionality thereof shall not affect the validity of the remaining provisions of the resolution, which are hereby declared to beseparable. 4 Section Twelve - Recording This resolution shall be entered into the minutes and upon the journals of the Board of Trustees of the Village of Oak Brook. 5 APPROVED THIS 26th day of November, 2019. Gopal Lalmalani Village President PASSED THIS 26th day of November, 2019. Ayes: Trustees Baar, Cuevas, Manzo, Saiyed, Tiesenga. Yusuf Nays: None Absent: None ATTEST: 1Gti F O4,� d r >; Charlotte K. Pruss aIr a� Village Clerk COUNTI 6 Exhibit A Lease Agreement 7 .' ". , 'F' 6 '�_� , - S a :� t�.,�;Y,:.�: ", REVIEW OF CONTRACTS Awarding_,;_ge fl.fy: ype or Con ct; I �eaa w - rogram/Accou Number: Awarded Contract Price: Budgeted Amount: D Under $20,000 D $500,001 -$1;000,000 $20,000 • $500,000 D Over $1,000,000 <-Jch(1 U -a,.,re...- u o.f,e.., Acg.01,,eHCP- -Q,r C: :Vtu 6qwp Name: Date: Name: r.� ` Date: Name: Date: )-Zl __ Name: Date: D Three (3) Originals signed by other party Date/Initials D Original provided to staff member for other party Date/Initials D Original provided to Official Flies Date/Initials Village of Oak Brook I Approved by Board of Trustees- Date/Initfals