All right, we'll call the April 13, 2026 uh council work meeting to order on the agenda. Fire apparatus discussion. Mr. Mayor, if I can just uh before we jump into this, we are having some technical difficulties with the go live option. Um it may go live, it may not. If you get emails from folks or texts from folks, um we do have backup options so that we will be able to broadcast that tomorrow. They just may not be able to watch it real time here this evening depending on whether it wants to cooperate or not. Um for the fire apparatus discussion, uh I want to thank yourself, Mr. mayor and council member Miller for uh coming together and kind of uh addressing I'm sorry, Council Member Smith and addressing uh the fire apparatus uh issues and um and we've kind of really worked through this uh for a a good amount of time. I think we've come up with a a reasonable uh path forward on this and I have the fire chief here this evening to kind of give us a rundown on what the options are and uh and then leave it up to you folks to decide what you want to do. So, uh mayor, members of the council, thanks for switch uh thanks for having me back uh to continue this conversation. Uh the last time that we were here um we presented the potential financing options for a new apparatus. Uh that was for two apparatus. Um, after more talks uh with uh uh council uh or sorry, city administrator look uh Mike in finance uh and Nate uh we we looked at another option. Um and we believe that it may be a a potential better step forward. Um this would be for one apparatus. Um so we have a lease option that we can show you and then um we also have uh purchasing it outright uh an option there. Uh but the the concern was brought up of having two apparatus that would still need to be replaced together in the future. Uh right now we have coupled apparatus if you will in engine 21 and 31. They were purchased together so technically they would be up for replacement together. And if we did that again, we're not getting away from that. In in 20 years, uh we'd still have two apparatus that need to be replaced again together. Uh so we came up with a staggered solution um buying one in 27, one in 30, and then one in 33. Uh that gives uh the city time to uh build up that CIP fund to where it should be funded in order to purchase these apparatus at the going rates. Um the CIP is uh been adjusted and uh will be shown to you in time to anticipate uh inflation for these rigs uh going forward. So, um, this option that's before you is, um, well, if we go back to the two apparatus, see if I can, we were looking at the 10-year purchase, uh, for a lease. Uh, the payments were 237 and change and 243 and change at 4.89 and 4.91, respectively. We went back uh and asked them to do a purchase of one apparatus uh and we did seven and 10 years uh to show the difference. Um again, this is one of the options. Uh if we did go through the lease, uh if we did the second row here, our first payment wouldn't be due until April of 28, which again still gives us time to build up that CIP and that fund a little bit more. Uh and then uh in talking with Mike uh we were able to develop we sorry Mike was able to develop a way to potentially purchase it and then increase uh the CIP in a yearly fashion. That'd be accurate. >> Um this is purchasing one apparatus again. uh that is the way uh that I believe most of us feel we should go if we're going to go forward with purchasing an apparatus. Uh current funding I think I'm down a little bit, aren't I? Current funding is 318 uh per year and then it would go up by 14.5% each year after that uh to make up for uh the purchase of the vehicle and the depreciated value. Am I describing this correctly, Mike? >> Okay. Um, it's a five-year uh step program, if you will, to get to the uh the fully funded for the CIP as laid out by uh both public works and the fire department. Um so I I guess the recommendation has changed a little bit uh in the in the aspect of not asking for two apparatus but one now and one in essentially three years three and a half years and then the other one in 33. Uh it extends a life of 21 which still has useful life under a 20-year replacement cycle. It does cut it a couple of years short but it's not cutting it significantly short. Um and it again staggers that purchase for the big the big ticket items going forward. So Mr. Mayor and Council, basically just kind of throw the anchor out on that. Um initially we were kind of going into this saying that there's going to be some engine changes out there. uh there's going to be some costs added to it and they were offering uh trucks with the current engines at a at a reasonable rate today. Okay. Um if we were to take advantage of that, we're buying two at the same time. They're going to age at the same time. We're going to have kind of be caught in the same um having to replace two at the same time at some point in the future, which that gets very costly as you can see. Um, so throwing the anchor out here, is it is it your preference to stagger it as we're kind of presenting here? Would that be um something you would you and the council would be uh uh more interested in as opposed to purchasing two? Now, if we stagger it, uh when we buy the next one in, uh 2030, >> y >> um that will have the new engine. you will end up having to pay more for that model. So there is a let's say not a cost savings by postponing that that purchase. Um but again I think ideally you the best model out there is probably to stagger it given the price of where these things have gone just having to come up and crack that nut times two you know gets uh gets rather expensive. Um so anyways like your input on that aspect alone. >> My question is is this going to affect the levy? Are we going to have to levy for some of this money in the future? >> We will have to levy for an increase in the CIP. Yes. So essentially what just kind of to rewind a little bit um during COVID a lot of dollars were made available by the federal government to local municipalities and counties. They could use those dollars to buy equipment such as this and and from what I understand some of the equipment manufacturers may be in hot water for the amount of increase that they've had over the years. In other words, um anytime you get the government involved costs always go up, it seems. Uh but uh but the the the price of these vehicles have tripled if I'm not mistaken in in time that should not have tripled in. So the reality is is you're in a marketplace right now where you're paying a lot more for a vehicle than you ever were before. Uh and um and so when you look at the CIP that was established years ago and kind of trying to track with the with the times so that dollars will be in there when you need to replace it, but then the cost shoots way up. You obviously don't have the money in there to to cover that. So the CIP does have to be adjusted to account for um these increases that we're seeing. I hopefully we're back to the normal 3 to six% type of increases, but there were some huge spikes um that the industry uh had to account for. Um so yes, long story short, we will have to adjust the the levy to account for the change in the CIP dollars. So my other issue is overlapping of payment because we're going to pay for the first one for five years but we're getting the second one in three years. So that's going to be like a overlapping of payment. So it's going to be double payment for a few years. Can we just pay one off and then get the other one and pay that off? That would be the ideal situation in my mind. So essentially, as I understand the the model right now, Mike, is we can utilize dollars in there to purchase this unit or we can lease it, call it a lease to own, if you will, paying interest on this 10-year plan that you see right there. Um the the difference between the two is a philosophical one. Do you want to burn cash that you have in hand that you're getting a 3% return on investment on? or do you want to keep that cash in case it's needed for anything? Um, and uh, and take out a lease for 4.89. So, you're essentially paying 1.89% more interest than you would have gained on those dollars had you spent the dollars today. >> I don't know if you could get a loan for 1.89. >> No, you're the loan the lease is 4.89, but We're getting three. >> I understand the difference. I'm just saying that >> as if we are to go out and get a loan, >> right? >> I don't think we'd get a loan for that low of a rate. >> Right. >> So, that that's the question. I mean, we don't know. There are dollars in there. There's not an infinite amount of money in the capital improvement budget right now. Um, a lot of it has been planned for and prepared for for for parks and uh and public works and um and they've done kind of the model we're switching fire to now, which is a closer run model to what the costs are uh and planning for that. And that's that's where we're going to need to put additional monies aside for future years to account for these eventual replacements. So, the the issue comes down to staggered. I think I saw some head nods that staggered might be the option. Uh but then your second uh decision this evening would be do you want to utilize the dollars that are in there today making 3% interest or do you want to um do a 10-year payment plan for this piece of equipment utilizing their money paying that interest rate and uh and from what I understand it's uh you can pay it off early if you want to. I haven't seen any prepayment penalty, but I will verify that. Again, these are quotes. >> So, potentially, we could pay it off early if if it became a situation where we don't want these double payments and we have cash sitting there and and um and perhaps we've gotten more life out of our equipment that was due to be replaced, but you know, we wouldn't replace it quite yet. You know, we might be able to move some dollars around then and pay it off quicker. Um, that's the options. >> The apparatus. Oh, we have two apparatuses that we're looking at. >> But originally, >> the one that we would be replacing >> is the oldest. >> Would we be taking that one out of service and selling it? >> That would be my recommendation. >> Okay. So there would be some offset because we for whatever it sells for. >> So what are they saying? It might get a h 100,000 out of it. >> The estimate is somewhere around $100,000 for that apparatus that we don't have a buyer for it. Um if we decided to go through this route, uh HME, which is the company that's being proposed, um says that they like to get all of that stuff ahead of time done. And essentially they'll from my understanding uh would have a a purchase agreement on our engine done so that as soon as ours our new one comes engine 11 would would leave our ownership and go to the new department. Here's a little bit offset there. that little cushion as far as answering one question. I think stagger green is the way to go. Staging definitely >> as long as >> as long as these engines don't need to be replaced tomorrow if they got another you know two to five years left in them without major expenses. Engine 21 and 31 both have seven years of loose useful life left. >> Okay. >> So we would have been replacing one much earlier than we needed to. Again, that one there was proposal to potentially keep that as a reserve engine because it did have useful life left in it. Um, but this staggered plan does get more of that initial useful life out of that engine and keep it as a frontline engine and then replace it on a staggered deal. >> It goes out a couple of years before it's truly due for replacement, but it does get the city on a staggered purchase >> Yeah. plan going forward so that in 20 years we're not having a conversation of how to replace two two apparatus again at the same time. So >> so best case scenario we could possibly wait seven years to replace a second one. >> Best case scenario >> we could we still have a third that's going to be up in seven years as well. you know, 30 31's going to eventually come up and that would be the 33 purchase, which would be the second of the the the ones that were purchased in 13 together. Um, if history, if what I've understood from history, both 21 and 31 were purchased because there was a a discount for purchasing them together. There was a a a good price that was uh to be had for that purchase, so that's why they were there. But um and just to get on the record, prices have doubled. Um in 2019 um my previous department purchased an engine for I believe it was 687,000 and that was an extremely expensive engine at that time. So since 2019 to now that same engine is between 1.2 and $ 1.3 million. So in the course of seven years, five years, six years, whatever it is, it's gone up 100%. Now, it's not anticipated that that's going to continue, but >> So I have a question regarding the two payment possibilities. Is there a total cost difference between those two? Like if we give some the cash on hand and then the leasing option versus total leasing option, what's the bottom line and difference in total cost >> that number? I didn't run. Yeah. >> Uh, >> so how many >> 287 910? >> So how many years you estimating that we got to jump this 14%. >> The 14 and a.5% That's five years. So 14.5% >> roughly just a little over 300,000 we'd be adding to the uh to the levy. >> So you'd be going to add 300,00 be like 456,000. So, which of those two payment methods saves us a million dollars? >> Is that what that's the one we I think we need to go with. >> Yes. >> You're not payion time. 287. Yeah. 287. So you finance it. You're going to pay $287,000. But then >> but if you pay for it upfront, you forego your 3% return on investment today. >> So what does that calculate? >> 240,000, >> right? >> 240,000. So it's really >> about 50 grand. Call it 50 grand worth of difference. market right now to go back up. So this is locked in overall the cheapest way to do it is to buy cash. So that fund at the end of the 5-year period will go from 318 up to 546. >> Correct? So 546 is really the target. If you were if you were to fund this thing from day one on the way we have it right now this day, you want to jump up your funding to 547,000. We're saying let's not do that. a lot to offy period that 546,000. >> So there's two there's two decisions, right? There's the um there's a decision that you have to increase your CIP, right? That has to happen in order to purchase your next vehicle. Um, but then there's the decision of do you want to finance it or do you want to pay cash? And the difference being is about $50,000. >> Mike, let me ask you this since you're the financial expert for the city here. What fits with what we're doing as a city better? What would work better or make you feel more comfortable knowing what we have coming in, going out and how we're doing this? >> Um, it's a good question. So, again, this is just one little component of your budget. Right. >> Right. >> So, essentially, there's two big components that we have. It's your salar%. And then you got your police contract, which is the other big estimates are right now. So just with those two items, we're looking at about 4% increase. So we have more CIP kind of fall that right% the model that we have that I left with cash purchase of the apparatus and that increases your CP by 14.5%. Although have the same weight as your salaries. % >> and that doesn't even bring into like u raising the capital for our buildings or nothing like that. That's an open question, too. So, there's all these little pieces, right? But if you wanted to keep your le all these little pieces, you should be eyeballing 3% increase at all. If you're not comfortable with 3%, then you need to eyeball for all these little component pieces something much smaller than that. But once you have one of these pieces coming in at 14.5% which is kind of the model that left it at that pressure on that 3% above. So it is really kind of a increase tolerance that the governance is. It's a tolerance, but you I think it's also a right sizing of, you know, if we don't address the building deferred maintenance issues this year, which I wouldn't recommend this year, you'll have to address it next year. Um, and if you address the CIP this year, then you know you're right sizing that CIP. you're correcting um for known or unknown forces that have caused it to be imbalanced. For the building deferred maintenance part of it, we've never had a uh you know a study done on what's the age of our boilers and our ACs and you know roofs and parking lots and all that sort of thing. Having that study done, I think as we talked earlier, is a roadmap to this is known expenses that you're going to have. We have, you know, about $2.5 million worth of deferred maintenance over the next mayor, I forget, is it five years or >> Yeah, five years. >> Five years. So, if you have, if that's a true statement, if you have $2.5 million worth of known expenses that you're going to have to pay for, we were putting away $50,000 a year for building fund, you know, kind of work like replacing carpet or painting walls. I mean, little things. Um, we should have been building up a CIP for that, right? to manage this this um these known expenses now that are coming. Uh and so you have to rightsize that at some point. I just wouldn't right size it this year because otherwise you'll have a huge levy which I don't think folks will will appreciate very much. Nothing's free. It's weird, especially in the fire business. Wow. Anyways, so basically all on us basically on what we're comfortable with a levy figure. All of this, of course, is offset by commercial industrial development, which housing development. Uh, some of that's going to be coming online and will help to um offset some of that because more revenue will be coming in based on the new units coming online, but that takes a little while to build that. So, so Mike, which scenario increases the levy the least amount? transfers. >> Yeah, >> that's kind of question. So, it does get a lot There's a lot of considerations in this. So, >> and with this lease agreement, it's mandatory to get the second one in three years. >> It wouldn't be mandatory. It would just that would be the suggested route to get them on a 20-year plan. I I'm just thinking I probably won't be here in three years, but my thought is, well, what if something comes up and we need money for a big amount of money for something else, then we could put it off, but I wanted to make sure it's not tied into a lease where we have to buy it um no matter what. >> No. >> Okay. >> I think the whole reason why the CI was set up was to avoid certificates or all those other things >> finding ways to pay for stuff and this is replaced right next this one it becomes very I think the whole reason why this was set up >> and that's the best management practice. Unfortunately, the clock's been run on this topic. >> Yeah. Back back in the day when this was all set up, fire apparatus would only increase by 5% each year, not 18 to 24. And plus there was the 20 to 30. You know, there was this belief that they'll last for 30 years when in fact it's it's more likely 20 now. So, especially in this salty environment. I'm thinking with the 10-year lease and with other revenue coming into the city, hopefully we can pay that off before the 10 years >> and purchase another truck actually once that's paid off so we don't double payment stuff. We sometimes we have budgets, you know, at the end of the year which are to are not totally expended. Um those usually go back into the next year's budget discussion, but that might be a possibility for an early payment, extra payment, something like that. >> Even going with the 10-year plan, we still got to look at increasing the CIP somewhere, >> right? >> At what rate? I don't think you can get away from that one. >> No, I don't think we're going to We'll be fighting this every year. >> You don't want to set future councils up for the same discussion that's being had >> like we've been set up. >> Well, that's why we did that survey on the properties of the city, right? >> Want to know what we were facing or what any future council might face down the road. It's not uncommon to kick cans down the road for council. So, it's usually a little easier to do that than to make the hard decision. But these are hard decisions. There's no question about it. The proposed plan to purchase one now, one in 30, and one in 33 is a proposed plan. It it can be modified. We are trying to come into best practice, get the most use out of our apparatus while also coming onto a staggered plan getting the CIP to where it needs to be uh for the purchase of our major equipment within the fire department. Uh Nate has done a great job on the public works side, so we're trying to match his work. Um does that mean that they have to be purchased in that area? No. Uh, back to council member Urkl's point, can the next one be in 32, which gives, you know, five years, six years to build up that CIP a little bit better? And then instead of 33, is it 34 for the next one? They're a little bit closer maybe than we want them to be, but it does give time for that CIP to be increased a little bit more. There's ways to work it. Again, the the the now or the 27, 30, and 33 is a proposal. >> It's just a fluid plan, not set in stone. >> Correct. Now, we can't wait until something breaks and then say, "Okay, well, now we have to purchase it." That's the other part of this. Um, you know, if an engine goes down right now, that means that there's not a fire engine in that station. It's not a, you know, you go to the dealer and just buy one type deal. Not typically. you can uh typically you're settling for what's on the showroom floor type deal. Uh but uh the timeline can be adjusted as needed. Again, it's a proposal to to fall in line with what we're trying to get in. >> Yeah, I think we should do the lease option personally. >> I agree. anything that's save on the levy cuz we don't want to get rid of the cash that we have either in case we need it. And obviously we don't know what the purchase price or the value of engine 11 is. That is not currently in this. So to council member Mundle's point, that could potentially offset some of this >> early payment. >> What that ultimately means, I don't know. Um I'm not the I can't run numbers quite as fast as as Mike does and as uh as specific as he does. Uh you know, >> that might offset, but we put raised the CIP to two. That would help. >> Correct. So that forward back into the CIP and increase a certain amount right there just through that. >> Is it any um less expensive to purchase something that's not totally brand new off the manufacturer used, you know, two or three years old. Is that ever an option or those costs looked at? >> There are used apparatus out there. um there are typically costs that come with that. There's a reason that that's back on the market. Now, it doesn't mean that there's anything wrong with it, but a lot of uh due diligence and research would have to be done to make sure that that apparatus doesn't need a hundred or $200,000 in refurbishment or repairs or >> of course, >> you know, something else. Um that is an option. Um it has I have not explored that option. Um, but I I I I could um >> and I'm not talking about for the first one, but I am thinking maybe for the second one that might be an option to get something just a little bit older to reduce the cost for the especially if we're going to have to overlap. >> We can look at that. >> It could be explored. >> What kind of warranty comes with the the new ones? I believe the HME is a three-year warranty. Um, again, there's been some advancements in the frame technology. They're using galvanized frames versus the painted and and powder coated frames. So, that's supposed to help with the rust and the rust jacking that we talked about the last time. Um, but I I believe HME is offering a three-year warranty with it. Yeah, I think we going to almost go with the least and then the CIP issue we'll have to address towards the in the budget part somehow. I agree to I think the leasing is going to have the least amount of impact on our residents while protecting them at the same time can make some money back on the engine that we sail or sell. Um I think maintenance has got a lot to do with our equipment in the city. I know we keep very good care of our equipment and I think that almost has to stay at that level or go up to maintain that stuff if we're going to let it last a year or two longer. Um I worry a little bit about buying a used one because of the maintenance factor and what's been done to it and what it needs. It might need more than what we anticipate, but I like the idea. >> Well, it's just there's rich communities that >> replace them every year just because they can. I think it's a good idea to look into >> well and if we can verify the maintenance has been done, you know, if there's records, I mean, it's it's something that can definitely be looked into. And if there's records to justify, yep, it's been maintained by a reputable company year in and year out. And >> right, >> there might be a way to to verify it, but there's a place there's a couple of places that I know sell reconstructed apparatus, put it that way. >> Uh, that's not necessarily the ones you always want to try and go after. >> Understood. So, we pretty much have a consensus. Sounds like >> Yep. >> All right. I guess I would just put that on a couple. >> Uh yeah, >> yeah, I'll continue communicating with uh the uh the manufacturer and make sure we're staying on their timeline. Um, and uh, making sure it's all going to work. Sounds good. >> Okay. And then I I'll figure out the sale price part of it as well. And we'll have a better view of what that looks like. And we can even get the lease payment options updated with what our quote unquote down payment would be or our available cash would be to put down on it. >> Okay, sounds good. Okay, >> thank you, Chief. Thanks for all the time you put in with this. >> You and Mike both. >> Yeah, Mike and Nate. I'm sure Nate was involved. >> Yeah. >> All right. I've got one quick item, guys. Uh, this came to me last time. Well, this was an email. This is the same guy that facilitated the letter for the mayor to sign and everything earlier this year that got all the publicity. Um, but this one I I believe I can support fully being this uh paid family leave uh is part of our budget. $24,000 in our budget and it is mandated. I got that clarified by Mike today. So, if this something you want me to sign, I'll sign it. But it's uh put on by the same guy that facilitated the uh first letter that went out. Um the letter itself that he's facilitating is on the second page. The first page is the email he sent me. So this one I I I think I could support because it did affect our budget. I'm all for it >> as it uh doesn't need to be signed until the deadline Wednesday, May 13th. >> Right. Can we have this on the next agenda so we have some time to review? >> Yeah, just up to you guys. I, you know, this one I can back on this one. The first one I didn't because a lot of stuff they said in there wasn't mandated. >> Yes. >> If you think you can support it, I I would uh be more be inclined to support it. Just want a chance to review it. >> Yep. I just want to bring it to your attention. It came to me last night. >> Great. All right. That's all I got. Yep. This time we'll close the uh work session.