Financial Matters:
In 2016, the estimated replacement cost for unit 1077 was estimated at $277,165 including non-refundable HST. This replacement amount remains in the fleet replacement reserve fund 136 to fund the purchase of a new front end loading garbage packer as unit 1077 was fully depreciated when eliminated in 2017.
The estimated cost today for one (1) front end loader garbage packer is approximately $400,000 excluding HST, or $407,040 including non-refundable HST.
Administration recommends that the total purchase cost of a new front end loader garbage packer of up to $407,040 be charged to the 2020 Corporate Fleet Additions Project 7201009, and funded from the Fleet Replacement Reserve (Fund 136). The expected shortfall of funding available in the reserve is $129,875 based on the estimated cost of this addition today of $407,040 less funds of $277,165 currently in the reserve.
Funding of the estimated shortfall may add pressure to the reserve, however, we continue to attempt to mitigate any additional costs through extending vehicle life, competitive tendering processes, proven new technological advances, etc. Ten-year projections of all equipment reserves are reviewed annually in consideration of both capital and operating budget requirements for replacements and additions of vehicles and equipment.
In addition to the Capital costs, there will be an operating impact. The table below compares three options: adding a dedicated unit (recommended by Administration), status quo, and renting an external unit. Adding a dedicated unit results in an operational savings of $30,895 while the other two options both result in a negative budget impact.
| Budget Impacts: | OPTION 1: Add Dedicated Unit | OPTION 2: Status Quo (Unit 1077 in use) | OPTION 3: Unit 1077 no longer in use - External Rental |
|---|---|---|---|
| Revenue | (88,000) | 19,000 | (88,000) |
| Vehicle Rental - Temporary | (41,625) | (41,625) | (41,625) |
| Vehicle Rental - External | 128,225 | ||
| Delivery / Pickup Charge | 1,500 | ||
| Vehicle Rental - Dedicated | 91,960 | ||
| Vehicle Repairs / Costs | 6,800 | 60,000 | 49,000 |
| Net Budget Increase/(Reduction) | (30,865) | 37,375 | 49,100 |