Regional District of Nanaimo opts to purchase landfill compactor

NANAIMO – Rising costs have directors decide pay off vehicle rather than purchase new.

Directors have approved a measure that will see the Regional District of Nanaimo borrowing $313,700 to pay off a vehicle used at the landfill.

The regional district spent $620,647 on a CAT 826 landfill compactor in 2011, with an option for the dealer to buy it back for $293,000 come August. While the plan was to exercise that option and purchase a new vehicle, the district said the cost has risen about 45 per cent and staff recommended keeping it.

The regional district will borrow from the Municipal Finance Authority of B.C. over a 30-month term.

At the June 23 board meeting, Paul Thorkelsson, chief administrative officer, estimated changes in the exchange rate could mean a compactor is now approximately $900,000.

“In our analysis, it indicates that we would save ourselves approximately $30,000 a year on that basis and would remove ourselves from the necessity of having to go out to purchase what is now nearing a $1-million piece of equipment,” Thorkelsson said.

The vehicle has about 7,000 hours on it and is estimated to have a remaining service life of 30 months before any major repairs, like engine and transmission, are expected.

A rebuild of all major components would cost about $280,000 and would extend the compactor’s life by five years, said the district.

A warranty on major components will expire in August.

Thorkelsson said the expectation is the compactor has 2.5 years left “before any kind of rebuild is necessary.”

Alec McPherson, regional district Area A director, was opposed to the motion, wondering if purchasing a new compactor might be a better economic decision than keeping the current one for the remaining 30 months of in-service life.

McPherson, also a chartered professional accountant, said he compared costs of new versus current and the differential was approximately 15 per cent.

“When compared against the risk associated with the future potential for higher financing costs, further devaluation of the Canadian dollar against the U.S. dollar, and the risk of major repairs being required to the old compactor within the 30-month period, I was of the opinion that the better choice was to buy new now,” said McPherson.

“Obviously, a sufficient number of directors did not share this opinion,” he said.

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