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Commission tables purchase of new truck

October 26, 2010
By Ashley Hoholik

GLADSTONE - The Gladstone City Commission has once again tabled the purchase of a new bucket truck for the Gladstone Electric Department. During Monday night's meeting, commissioners explained all avenues for financing and possible rental had not been fully explored.

The commission previously tabled the estimated $162,935 purchase at its Oct. 11 meeting, instructing Electric Department Director Tom White to explore alternative options for the truck, such as leasing. On Monday, White came back to the commissioners to explain the options.

"What it comes down to, as far as dollars, for a 36-month lease, you would be paying around $13,500 more (than purchasing)," he said. "For a 60-month lease, you would be paying $23,788 more than the low-bid price for the truck."

Due to the restrictive nature of the lease, as well as the potential interest rate cost, commissioners decided to forgo the leasing option presented by White.

However, apprehension about making a large purchase out of the electric fund led the commissioners to consider other options.

Commissioners weighed options such as rebuilding the current truck, which is approximately 20 years old, financing the purchase of a new truck through a local bank, and approaching other communities/companies to share or rent a truck.

According to City Manager Darla Falcon, the electric department currently has a cash balance of $1.5 million. Mayor Darin Hunter explained this balance should not give a false sense of security to the community, as it is easily spent.

"You hear $1.5 million, you think it's a lot of money, but if you have 10 purchases (like this), it's gone," said Hunter.

"Basically, if we spend this money now, we're down one-tenth of what we actually have in our cash flow."

Commissioner Joe Maki pointed out that by financing through a local bank, the city could avoid paying the lump sum out of the electric fund, while obtaining better interest rates than those offered by the leasing company.

"We can't go into debt without going to a vote of the citizens, but we can enter into a three-party agreement whereby the bank holds the piece of equipment as collateral," he explained. "So we are not putting the city in debt and then we did finance it with a local bank."

While Commissioner Craig Lauerman agreed to explore the local financing option, he also noted the city should not dismiss a possible shared-services alternative to the bucket truck purchase. According to Lauerman, communities like Escanaba or private companies like UPPCO could possibly rent or share a truck with Gladstone - potentially saving both parties money.

"My only concern is that we have not exhausted all options with other entities in the community and other communities; to at least sit down and look at or try to work something out with somebody," said Lauerman. "Especially as tight as our budget is."

Commissioners voted unanimously to allow the city manager to investigate local financing options for the bucket truck. A unanimous vote was also made to allow the city manager or electric department to investigate a local or private entity with which to rent or share a truck.



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