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ITEM 3.c. TOWN OF FOUNTAIN HILLS STAFF REPORT Meeting Date: 2/24/2026 Meeting Type: Town Council Work Session (Budget Retreat) AMENDED Submitting Department: Public Works Prepared by: Justin Weldy, Public Works Director Staff Contact Information: Phone: 480-816-5133 Email: jweldy@fountainhillsaz.gov Request to Town Council Regular Meeting (Agenda Language) PRESENTATION: Street repairs related to potholes and small asphalt repairs Staff Summary (background) Staff evaluated the feasibility of performing pothole repairs and small asphalt restoration projects using in-house forces versus contracting the work to a qualified paving contractor. The analysis considered capital equipment costs, staffing requirements, and ongoing operational expenses. In-House Operations – Capital & Staffing Requirements To perform pothole and small asphalt repairs internally at an acceptable standard, the Town would need to procure specialized equipment, including: • Double Drum Smooth Vibratory Compactor – $63,271.97 • Cold Planer with Integrated Water Tank (Skid Steer Attachment) – $26,910.04 • Tack Trailer – $36,256.65 • Trailer-Mounted Crack Filling Unit – $32,500.00 • Asphalt Hot Box – $57,204.00 Total Estimated Capital Investment: $216,142.66 This does not include: • Skid steer ownership and replacement costs • Equipment maintenance and repair • Fuel • Storage • Insurance • Depreciation and lifecycle replacement Additionally, a typical crew would require: • 1 Supervisor • 1 Equipment Operator • 3–4 Laborers The Town would incur ongoing salary, benefits, retirement, workers’ compensation, and overtime costs for this staffing level, regardless of daily production needs. Contractor Pricing Structure Contractor pricing is equipment- and labor-based with 4-hour minimums and includes supervisory oversight. Representative rates include: • Dump Truck – $152/hr • Skid Steer – $90/hr • 3-Ton Roller – $90/hr • Grade Tractor – $98/hr • Plate Compactor – $25/hr • Supervisor – $95/hr • Equipment Operator – $72/hr • Labor – $42/hr • Asphalt Material – $162–$187 per ton (market-adjusted quarterly) • Crack Seal – $38 per gallon • Dump Fees – $250 per load Under this model, the Town only pays for services when work is performed. There are no capital expenditures, no long-term staffing obligations, and no equipment maintenance liabilities. Cost Effectiveness Considerations 1. High Upfront Capital Cost: The Town would need to invest over $216,000 in specialized equipment before performing the first repair. 2. Utilization Risk: Pothole and minor asphalt repair work is often reactive and seasonal. Equipment may sit idle for extended periods, reducing return on investment. 3. Ongoing Maintenance & Replacement: Pavement equipment requires regular service and eventual replacement, adding long- term financial obligations. 4. Staffing Burden: Maintaining a full asphalt repair crew increases permanent payroll and benefit liabilities. 5. Market Flexibility: Contractor services allow the Town to scale work up or down based on need, weather events, or funding availability. 6. Risk Transfer: Contracting shifts equipment breakdown risk, labor shortages, and material price volatility to the contractor. Conclusion Based on the required capital investment, ongoing maintenance costs, staffing obligations, and limited utilization of specialized equipment, performing pothole and minor asphalt repairs in-house is not cost effective at this time. Utilizing qualified contractors provides operational flexibility, eliminates significant capital expenditures, and allows the Town to pay only for services as needed. This approach represents the most fiscally responsible method for addressing pothole and small asphalt repair needs. Related Ordinance, Policy or Guiding Principle Town Procurement and Contracting Authority The Town’s purchasing and procurement policies allow the use of outside contractors when doing so is in the best interest of the Town and provides the most cost-effective delivery of services. Contracting for specialized pavement repair work is consistent with these principles. Risk Analysis N/A Recommendation(s) by Board(s) or Commission(s) N/A Staff Recommendation(s) N/A Suggested Motion N/A FISCAL IMPACT Fiscal Impact: Budget Reference: Funding Source: ATTACHMENTS 1. Public Works Pavement maintenance and small asphalt repairs