FINANCIAL BUSINESS REQUEST (FBR)
Motion/Request:
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MOTION to approve purchase of a new Elgin Pelican sweeper through the Sourcewell lease/purchase provider over a term of five (5) years at $66,467.49 per year.
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Background:
The Town of Ledyard sold its 22-year-old sweeper in 2022 with the thought that the Department could better and more economically cover the Town’s annual sweeping needs through a rental. The Town rented a sweeper to this end in 2023 and 2024, using Beverage (“Nip”) Container Surcharges revenue. The results substantially failed to meet our expectations for a number of reasons. We also learned that availability of rental units of a nature needed to sweep roads has declined significantly, with no prospects of increasing.
In light of this predicament, we now feel owning a sweeper will be the best (and most economical) way to meet our needs. Additionally, the Town of Preston is coincidentally in need of replacing its sweeper, which has reached the end of its service life. This has offered the opportunity to purchase a shared unit that will easily cover the annual scope of work for each town and also be available for spot needs throughout the year. The cost share would be allocated proportionally on the basis of paved road mileage.
Though both towns have shifted to treated salt for winter operations, eliminating the accumulation of sand that used to accompany road treatment, there remains a considerable amount of debris that collects along the road edges from other sources. For the 2024 sweeping season, thirty-two (32) large dump truck loads (about 100 tons) of debris were collected off our roads. Also, annual sweeping is a requirement of the Municipal Separate Storm Sewer System (MS4) program.
I have provided cost information for a new sweeper (attached), including for a 5-year lease-purchase financing arrangement through Sourcewell (attached). The purchase of a new sweeper would explicitly meet the terms of the authorizing legislation for the funding derived “Nip” revenues. Based on the historical income derived from these revenues to date, they would cover an appreciable portion of the purchase for both towns, if they were devoted to this purpose. And there will be an adequate initial balance to cover the full first year payment when it is due.
Ledyard is working in parallel to secure an MOU with the Town of Preston that would provide approximately $22,000 toward the annual lease payment amount of about $66,500. In addition to annual “nip” fund revenues, funds would be drawn from account 21040101-57311 (Public Works Heavy Equipment capital reserve), which has been funded at $85,000 annually.
Department Comment/Recommendation:
Based on the above background, I recommend the purchase of a new sweeper according to the terms of the lease/purchase provided. Also, the ultimate lifetime of the sweeper will exceed the term of the lease by about ten (10) years.
Finance Director Comment/Recommendation:
Based on the lease parameters, the borrowing rate is approximately 4.7%.
Account 21040101-57316 “Beverage Container Surcharges” has an unencumbered, available balance of $44,363.
Mayor Comment/Recommendation:
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I support this request and the use aligns with the approved legislation, which states “uses may include…purchasing a mechanical street sweeper…” Additionally, sharing an asset like this with an adjacent community reduced overall costs for Ledyard.