Questions raised over sweeper
The City of Warren is going to purchase a new street sweeper that is slated to cost $213,292.
But just because it is going to happen does not mean everyone is happy about it.
Council was asked to approve an obligor resolution as part of the financing structure. The city will make annual payments of $45,327.58 on the 3.13 percent interest loan.
“What is the reasoning behind taking a debt obligation when we have cash available?” asked Councilman Sam Harvey at this week’s council meeting. “What are we getting by spreading it?”
Harvey was the sole dissenting vote at the January council meeting when the purchase was approved.
“We don’t want to deplete fund balance,” City Manager Nancy Freenock said, explaining that the financing idea is to “stretch the debt out over the useful life of the piece of equipment. We don’t know what is going to happen in the future.”
Freenock added that paying the entire price of the equipment now would reduce the city’s fund balance to approximately $550,000. “If the interest was higher, I would agree” that the sweeper could be paid for now in its entirety, she said.
Department of Public Works Director Mike Holtz said interest over the five-year duration of the loan will be approximately $16,000.
Freenock said council likely would not have approved the purchase if the money had to be paid up front.
“We’ve had that 12 to 13 years,” Councilman Jim Zavinski said, referring to the current street sweeper. “If we get another one that lasts for 13 years, we’ll be lucky.”
“That doesn’t account for maintenances of the existing sweeper to keep it running,” Freenock said.
Harvey proposed saving approximately $80,000 for three years to purchase the sweeper.
“The variable here is having maintenance that is not a constant variable,” Councilman Dr. Howard Ferguson said. “If that variable wasn’t there, I think what Sam (Harvey) was saying would be more in tune with what I would think.”
Holtz told council in January the city has invested approximately $40,000 over the last three years into maintenance costs on the current sweeper.
He reminded council on Monday that $50,000 was allocated in the 2013 budget toward the purchase.
Holtz said that the new sweeper should be delivered by the middle of March. The obligor resolution was unanimously approved.