HomeMy WebLinkAbout1998-03-10 - AGENDA REPORTS - AMEND CONTR ATC VANCOM TRANSIT (2)QUWA 11I.�i`I I.Y.9
DATE:
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DEPARTMENT:
CITY OF SANTA CLARITA
AGENDA REPORT
City Manager Approval:
Item to be presented by: Ron Kilcoyne
March 10, 1998
AMEND CONTRACT WITH ATC/VANCOM FOR THE PROVISION OF
TRANSIT SERVICE
Transportation & Engineering Services
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The City Council (1) Approve and authorize the City Manager to execute an amendment to the
contract with ATC/Vancom, subject to City Attorney approval, and to adjust the rates paid by the
City for the provision of transit service; and (2) Appropriate $468,000 from Transit Fund Balance
to Account No. 4600-8081.
BACKGROUND
On August 5, 1996, the City entered into a five-year contract with ATC/Vancom to operate all City
transit services. The method of compensation to the contractor is the cost per revenue vehicle hour
for each of the three transit services provided by the City. For the first full year of the contract, these
rates were the rates submitted by ATC in their proposal to the City. In each subsequent year, the
rates would be adjusted based on the Los Angeles County Consumer Price Index (CPI).
The contract provides that if total revenue vehicle hours increase or decrease by more than
20 percent, the City will negotiate with the contractor to adjust the contract rates. The initiation of
Sunday service in October 1996, the improvement of frequency on three routes in September 1997
(partially offset by reduction in school tripper service), and the extension to Stevenson Ranch
requested and funded by Los Angeles County in September 1997, resulted in a 25 percent annualized
increase in service hours. In September 1997, ATC requested an increase in rates to cover losses
they are now incurring to provide service.
City staff briefed the Council on this issue at a study session on February 3, 1998, indicating that
ATC was losing money in providing service to the City, and they have made many improvements
to transit service. Council instructed staff to negotiate adjusted rates with ATC. Financial
statements indicate that ATC is currently losing $50,000 to $60,000 per month. Due to a tightening
of the labor market, labor costs are anticipated to increase higher than the CPI in future years in order
A-clenda Item- ai
APPROVED E5
AMEND CONTRACT WITH ATC/VANCOM
FOR THE PROVISION OF TRANSIT SERVICE
March 10, 1998 - Page 2
to hire and retain quality employees. As a result of negotiations with ATC, the following
adjustments are proposed:
• ATC would receive an additional $50,000 per month retroactive to September 1997, the
date service hours increased more than 20 percent.
• Reduce this amount to $42,000 per month effective March 1998, to reflect savings
resulting from the placing of four new express busesintoservice in February 1998.
• Increase payments to ATC by an additional $25,000 per month in August 1998, in lieu of
the CPI adjustment that would normally take effect at that time.
• Reduce monthly payments by $30,000 per month once the following occurs: six additional
new express buses are placed into service, an on-site fueling station is constructed at the
Field Services facility, and an automated bus wash is constructed at the Field Services
facility. All three items are anticipated to be in place by March 1999.
City Council approved procurement of the six new express buses at the January 13, 1998 Council
meeting. The on-site fueling station and automated bus wash are long planned projects, originally
anticipated to be constructed in 1997, but postponed due to a delay in receiving approval for a
Federal Transit Administration grant. This grant was finally approved in December 1997, allowing
the City to proceed with these projects.
ALTERNATIVE ACTIONS
1. Rebid the contract. This option contains several risks: A low -ball bidder may promise to
deliver high-quality service at a much lower cost, then fail to deliver; or all the proposals may
come in at a higher cost than the City negotiated with ATC. Staff time would be diverted from
customer service to the rebidding process. If a new contractor is chosen, service disruption
would most likely result during the transition period.
2. Other action as determined by City Council.
An increase in the transit operating costs by $468,000 in fiscal year 1997/98, and by approximately
$500,000 in fiscal year 1998/99. The exact amount will be determined by how quickly the cost
savings identified above can be in place. This assumes a March 1999 date for all three items.
Approximately 20 percent of these costs would be offset by increased payments received from Los
Angeles County for services provided in unincorporated areas.
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