Questions Raised on Equipment Lease Agreement

Questions Raised on Equipment Lease Agreement

ROCK SPRINGS — Despite some questions about the process used and how much would be spent on the lease agreement for a new 2022 Caterpillar 320-07 hydraulic excavator, the Rock Springs City Council approved the agreement.

While the agreement was approved, the vote wasn’t unanimous with Councilors Brent Bettolo and Tim Savage voting against the motion. Prior to voting, Councilor Bettolo had a few questions on the excavator’s lease agreement.

Under the governmental equipment lease to purchase agreement between the city and Caterpillar Financial Services Corporation, the city will lease a new 2022 Caterpillar 320-07 hydraulic excavator for a little more than $34,000 each year. Bettolo said the lease would be for six years with the city having the option to buy the excavator after the sixth year. He wanted to know how much the city spent on the last six years renting a track hoe, if the city looked into purchasing a used one, and why the city didn’t have any competitive leases from other companies that sell track hoes.

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Director of Engineering and Operations Paul Kauchich said the city spends about $24,000 to $30,000 renting a track hoe during four months out of the year. He said the city initially pursued demo and used models which would be cheaper to purchase all at once, however given the current budget it would be less expensive to lease it from year to year and not impact the budget as much.

“A lot of the used equipment have been used by contractors and for lack of a better term I guess ‘used and abused’ and then require additional maintenance of course,” Kauchich said.

As for why the city didn’t seek additional lease quotes, Kauchich said by Wyoming State Statute the city is allowed to sole source equipment. The majority of the city’s equipment is Caterpillar and they wanted to remain consistent for maintenance purposes.

“We are not required to entertain multiple bids by state statute,” he said.

While Bettolo said he understood where the city was coming from, he didn’t know if now was the time not to be asking for competitive leases since the budget is so tight.

“Perhaps we could have got another brand for less money per month…” Bettolo said.

Councilor Keaton West, who sits on the budget committee, said this purchase was discussed thoroughly and they did look at various avenues that Bettolo was suggesting because they had the same concerns. What the thought is with this option is it does not lock the city in for the full six years, he explained. While West agreed with a lot of Bettolo’s concerns, he said he felt it was easier on the budget to pay $34,000 than one lump sum for a used one. West said they also wanted to lease this piece of equipment to see if it was something the city needed year round. If not, they wouldn’t purchase one.

Councilor Rob Zotti, who also sits on the budget committee, said he agreed with what West was saying about the budget discussion on this particular item. He said they also took into account having the same equipment for a mechanic to work on instead of trying to find parts for ones they aren’t familiar with. The committee also looked at the need for this equipment in the event of an emergency on a holiday, weekend or after hours. They would need to try and find equipment last minute to help, but with this option it’s already on hand if the city needs it. Under this option, the city isn’t spending much more than it is now, but it will be on a yearly basis for it instead of four months out of the year, he said.

“After weighing everything, it just kind of made more sense that way,” Zotti said.

Kauchich said they rent this piece of equipment for four months, which will be about the same amount they will pay to lease it for an entire year. This year, the city tried to rent one when it needed it and one wasn’t available to rent. “We had to wait months until one became available,” he explained.

In addition to having problems renting the equipment, the city has had to hire contractors to complete needed work, such as water-line breaks because they didn’t have the equipment to take care of it themselves, which then cost the city more money.

Mayor Tim Kaumo said they could try it for a year or two and see if it’s worth it. He also pointed out that this equipment could be used by any department that needed it.

After all of the questions were answered, the Council approved the request.