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Home My WebLink About05/03/2005, C2 - CONTRACT AMENDMENT NO. 3- WITH FIRST TRANSIT, INC. TO PERFORM TRANSIT SERVICES FOR FY 2005-06. i. counat `.W oD�S13 L'Ir j ac Enda Repom hw Numb. L^.2- CITY O F SAN LU I S O B I S P O FROM: Jay Walter, Director of Public Works, ULA Timothy Scott Bochum,Deputy Dire or of Public Works Prepared by: Austin O'Dell,Transit Manager SUBJECT: CONTRACT AMENDMENT NO. 3—WITH FIRST TRANSIT, INC. TO PERFORM TRANSIT SERVICES FOR FY 2005-06. CAO RECOMMENDATION: Approve contract Amendment No. 3 to the First Transit Inc. FY 2005-05 transit service contract. DISCUSSION Background On April 13, 2001, the Council awarded a contract to First Transit, Incorporated, to provide transit services for SLO Transit bus and trolley operations for the three-year period from July 2001 — June 2004. The Agreement also contained two one-year options to extend the contract. The Council approved Amendment No. 1 to the transit services contract on October 15, 2002. Amendment No. 1 restructured the compensation method by separating fixed costs and variable costs to provide a mechanism for First Transit to better recover their fixed costs and stabilize City expenses. Amendment No. 1 also exercised the first option to extend the agreement from July 1, 2004 to June 30, 2005. The City benefited by paying a lower revenue vehicle mileage rate and controlling variable costs when service changes were enacted. The Council approved Amendment No. 2 to the transit services contract on February 11, 2004. That amendment simplified the fuel reimbursement process and allowed the City to directly compensate First Transit for purchased fuel without a tedious fuel price adjustment process that was initially structured in the original contract. Why is There a Need for Amendment No. 3? The City contracts for transit service labor and vehicle maintenance for our SLO Transit system. As the purchased transportation services contractor, First Transit has honored the terms of the agreement and has provided the City's transit passengers with above average service. Safety of our transit system has improved dramatically over previous contractor operations and day-to-day operations of the transit system have been stable. As part of considering this amendment proposal, staff reviewed First Transit's proposed cost increase (3.6% avg.) in relation to other indicators such as the Consumer Price Index, Worker's Compensation and other transit contracts. The proposed increase was within acceptable range for current annual cost increases. For this reason, staff is recommending that we enact the final contract year extension of the current First Transit, Inc. contract. Contract Amendment No.3 Page 2 The Contract extension will require First Transit to continue to provide operating and maintenance services for the City's public transit service from July 1, 2005 to June 30, 2006. During the course of next year, staff will prepare a procurement document and request City Council to solicit for proposals for operating and maintenance services. Detailed conditions of Amendment No. Table 1 3 arerovided in Attachment 1. Table 1 Cost item 2005 Rate 2006 Rate %change p SCurrena_. (Proposed) illustrates the change in the current Monthly monthly management fee, cost per Management Fee $63,182.08 $6..481 91 364 revenue vehicle mile, monthly utility Cost vehicle Mile er Revenue $1.93 $1.997 3.47 allowance, and the maximum obligation -Monthly utility for this amendment. Based on the Allowance $1,483.6 $1.537.60 3.64 __ ----- --. ._. _......... proposal from First Transit, the change Maximum $1,836100 $1,902,934 364 in rate ranges from 3.47% to 3.64%. Obligation FISCAL IMPACT Amendment No. 3 will not impact the General Fund. Staff performed a financial capacity analysis for July 1, 2005 to June 30 2006, and determined that the Transit Program can support Amendment No. 3 within existing transit funding levels. CONCURRENCES The terms and conditions of Amendment No. 3 are consistent with the financial assumptions in the adopted Short Range Transit Plan. ALTERNATIVES Alternative 1. The Council could choose to enter into a month-to-month agreement with First Transit while the City solicits proposals. The consequence of this action would be that a decrease in quality of service, driver retention, and costs to the Transit program would increase. As part of Amendments No.1 and 2, the City restructured the compensation method with First Transit that included fixed rates for insurance and variable costs. Month-to-month contracts would be more expensive because First Transit would not be able to benefit from annual rates, which are lower than short-term rates (e.g. insurance, fuel). The Transit Program budget projections assume a least cost approach. Another consequence would be that the City would have to reduce service to reduce costs as a result of the month-to-month contract. ATTACHMENTS: City of San Luis—First Transit, Inc. Service Contract, Amendment No: 3 I:\ Council Agenda Reports\2005 agenda reports\Transportation and Development Review(Bochum)\Transit(O'Dell)\Transit CAR Fust Transit Amendment No.3-PRODUCTION.doc 2 ea z ATTACHMENT 1 AMENDMENT No. 3 TO THE AGREEMENT BETWEEN CITY OF SAN LUIS OBISPO AND FIRST TRANSIT INCORPORATED WHEREAS, on May 15, 2001, an agreement was made and entered by and between the City of San Luis Obispo (hereinafter referred to as "City"), and First Transit Incorporated (hereinafter referred to as "Contractor") for the provision of transit operations and maintenance of public transit fixed route services in the City of San Luis Obispo, California (hereinafter referred to as "Agreement"); and WHEREAS, on November 12, 2002, the City and Contractor executed Amendment No. 1 to the Agreement; and WHEREAS,the City and Contractor exercised the first option year in Amendment No. 2 to the Agreement to extend the term to June 30, 2005;and WHEREAS, the Contractor is desirous of amending the Agreement and the revenue vehicle mileage rates in Amendments No. 1 and No. 2, and City is agreeable to such amendment; and WHEREAS, the City and Contractor desire to exercise the final option year to extend the term of the Agreement to June 30, 2006. NOW THEREFORE, in consideration of the mutual covenants and promises herein, City and the Contractor agree to amend the Agreement including Amendment No.I and Amendment No. 2, as follows: 1. Modify Billing Structure to Cover Fixed Costs. 1. Inclusion of Monthly Fixed Fee includes the following elements: Incremental GFI Reimbursement, Insurance Costs, and management costs. The monthly fixed The schedule is as follows: - FY 2006 $65,481.91 2. Monthly Utility Expense Allowance. The City will pay a fixed monthly allowance to First Transit. In the event that First Transit exceeds the Utility Expense Allowance, First Transit will be responsible for the difference. The monthly reimbursement schedule is as follows: - FY 2006 $1,537.60 C,2 -3 Amendment No. 3 —First Transit 3. Modify Revenue Vehicle Mileage Rate. a. City shall pay Contractor a revenue vehicle mileage rate in accordance to the following schedule: - FY 2006 $1.997 4. Term of the final option to extend the Agreement is exercised, and the term of the Agreement is extended through June 30, 2006 5. All other terms and conditions of the Agreement, as amended in Amendment No. 1 and Amendment No. 2, remain in full force and effect. IN WITNESS WHEREOF, CITY and CONTRACTOR have caused the Amendment No. 3 to the Agreement dated May 15, 2001, to be executed on this day of 2005. ATTEST: CITY OF SAN LUIS OBISPO Audrey Hooper, City Clerk David F. Romero, Mayor APPROVED AS TO FORM: FIRST TRANSIT Jon han . Lowell, City Attorney President 2 c2-y