Commission recommends $140,125 purchase of CAT 420 backhoe, approves trade-in financing

The Grosse Hill Township Public Services Commission voted to recommend the township board approve the purchase of a new CAT 420 backhoe-loader at a total cost of $140,125.26, with the existing unit declared surplus and credited as a trade-in to Michigan CAT.

The recommended procurement used Sourcewell, a national cooperative purchasing contract, which staff said allows the township to buy off a competitively solicited federal contract. The commission voted to forward the purchase recommendation to the township board by voice vote.

Derek, township manager, explained the financing: "The interest rate through CAT is 5.49%. It's over a 5-year period of time. The initial payment of $33,000 would basically just be our trade in, so there won't be a payment in the first year," he said, and described the scheduled annual payments of about $30,554.97 for the following four years and total financing interest of roughly $15,095.

Staff said the existing backhoe (a 416 model) is about 17 years old and that repair costs and reliability concerns made replacement a budgeted priority. Operators at the Department of Public Services preferred the CAT 420 over a smaller model because it offers greater capability for nearly daily water and sewer work.

Commissioners asked whether other manufacturers were considered. John, head of field operations, said the department has long used Caterpillar equipment, has local service from Michigan CAT and existing staff experience with Cat preventative maintenance; switching to Deere or Case would require different local service arrangements. For disposal of the old unit, staff said a trade-in with Michigan CAT was competitive; the commission discussed auction and sealed-bid options and the administrative costs of auctions and staff time.

Key facts disclosed at the meeting:

- Purchase price: $140,125.26.
- Financing structure: financed purchase (not lease) through Michigan CAT/Sourcewell contract; five-year term; interest rate 5.49%; trade-in value applied as the initial credit resulting in no first-year cash payment. Annual payments for years 2-5 were described as approximately $30,554.97.
- Rationale: current unit is ~17 years old and maintenance-heavy; the backhoe is used frequently by water and sewer crews; staff prefers keeping equipment consistent with existing fleet for maintenance and service advantages.

The commission approved forwarding the purchase recommendation to the township board. Commissioners left open the disposal option for the old unit and asked staff to provide details if the board prefers an auction rather than a trade-in.