Council Communication

Title:	Authorization to Declare the Belt Press Equipment (Wastewater Treatment Plant Equipment Inventory) as Surplus and Offer for Sale
Dept:	Public Works and Finance Department
Date:	May 20, 2003
Submitted By:	Paula Brown, Lee Tuneberg
Approved By: ...........................	Gino Grimaldi, City Administrator

Synopsis:	With the completion of the Centrifuge Building, the new centrifuge equipment makes the current Ashbrook belt press (for biosolids dewatering) obsolete and not useful for future City needs. This equipment is valued over $10,000 and as such, the Ashland Municipal Code section 2.52.070 requires "that disposal of personal property having a residual value of more than $10,000 shall be subject to City Council authorization." Staff has been using Carollo Engineers as our industry experts and has made several informal inquiries looking for an opportunity to sell the equipment. The City of Cottage Grove needs a belt press and is willing to purchase the City's used Ashbrook unit for our offering price of $75,000.
Recommendation:	It is recommended that the City Council declare the Ashbrook Belt Press as surplus and authorize its sale to the City of Cottage Grove for $75,000.
Fiscal Impact:	Selling the belt press, which has no current value or use at the plant, for $75,000 recovers nearly 85% of the current value, which is excellent on used equipment. The $75,000 can return to the wastewater treatment plant to offset costs of the original purchase. The City will receive a clean sale receiving the full $75,000 as all of the transportation costs and unloading charges will be born by the City of Cottage Grove.
Background:	The Ashbrook Belt Press was purchased on October 27, 2000 as a lease option to buy for a total of $214,120, which included a 10% down payment and monthly payments of $9,170 for 24 months. The equipment was purchased rather than using a long-term lease so that the City could potentially sell the equipment and recover a portion of the costs. The unit was paid in full in September 2002. The financed amount was charged at 13% interest but the total cost was less than we initially anticipated for a long term lease without the option to purchase. The principal cost of the equipment was $157,033. With an anticipated life of 8-10 years, 25% life expended the first year and straight-line depreciation for 8 years there after; the current "value" of the equipment is approximately $88,332. Selling the belt press for $75,000 recovers nearly 85% of the current value, which is excellent on used equipment.

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