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Home My WebLink About02/04/1997, C-6 - REQUEST FOR PROPOSALS TO FURNISH FIXED ROUTE TRANSIT SERVICES SPECIFICATION NO. 9733 Council "�""2'14 j acEnaa nEpout 1� N C -�O C I T Y OF S AN L U IS O B 1 S P 0 FROM: Michael D.McCluskey, Public Works DirectoiPw�_ Prepared By: Al Cablay,Public Works Manager David Elliott,Administrative Analyst ` Reinie Jones,Transportation Technician Harry Watson,Transit Manager -� SUBJECT: Request for Proposals to Furnish Fixed Route Transit Services Specification No. 9733 CAO RECOMMENDATIONS 1) Approve the"Request for Proposals to Furnish Fixed Route Transit Services, Specification No. 9733" 2) Authorize Public Works to distribute the request for proposals DISCUSSION Background The City now contracts with Laidlaw/Mayflower to provide all vehicle operations and vehicle maintenance for SLO Transit, using City-owned buses and the City-owned bus operations and maintenance yard. The existing contract for these services expires on June 30, 1997 and cannot be extended because of federal limitations on the length of contract periods. The request for proposals covers the next four-year contract term, which will start on July 1, 1997 and run through June 30, 2001. This term will align the contract with the City's financial plan periods and allow easier budgeting. Specification Changes As explained to the Council at three recent Council meetings, the City expects permanent reductions in federal transit operating assistance and Cal Poly contributions for transit operations. Recent fare increases and a one-time reprieve from the federal cutbacks(described in the"Fiscal Impact" section of this report)will soften the effect of these reductions temporarily. But SLO Transit will eventually face substantial operating budget shortfalls, which will require service reductions. To limit service cutbacks as much as possible, the specification tries to reduce contract costs by a)allowing more staffing flexibility for the contractor and b)lifting some of the capital cost required of the contractor. Allowing Staffing Flexibility. The existing specification requires the contractor to provide a full- time site supervisor dedicated to SLO Transit operations. But the contract does not specify exactly what this employee should do other than"monitoring all aspects of the system operation and maintenance". The new specification describes the contractor's duties and responsibilities in detail, but it does not specify a staffing plan or staffing level and in particular does not specify the need for a full-time site supervisor. The contractor may be able to manage the contract with a supervisor visiting the site only once or twice a week or with no supervisor at all. This strategy could result in overhead cost savings of up to $60,000 each year, which could be more productively applied to preserving transit service. C � �'1 Council Agenda Report - RFP to Furnish Fixed Route Transit Services Page 2 To further moderate the contractor's need for site supervision, Public Works is considering plans to relocate the Transit Manager from 955 Morro to the bus operations and maintenance yard. Lifting Capital Costs. The existing specification requires the contractor to furnish the following equipment: • a passenger van for transporting drivers at shift changes • a service truck for responding to breakdowns and picking up parts • a radio base station • two-way radios on buses plus three portable radios The new specification requires the City to furnish this equipment so the contractor can avoid expensive startup costs which would have to be passed on to the City. This approach is particularly appropriate because the City currently has surplus money for transit which is restricted to capital outlay and cannot be used for operations. It is difficult to estimate how much cost savings might accrue from this change. FISCAL IMPACT SLO Transit receives nearly all of its annual revenue from four sources.- State ources:State Transportation Development Act (TDA) allocations • Federal Transit Administration (FTA) grants • In-lieu fare contributions from Cal Poly • Cash and pass fare revenue As mentioned, reductions in FTA operating assistance grants and in-lieu contributions from Cal Poly will cause future budget shortfalls and require service cutbacks. Two recent developments should allow the City to postpone service reductions until July 1998. First,FTA representatives advised the City to expect only$180,000 in FTA operating assistance grants for 1996-97. But because other cities in other states did not claim their full operating apportionments in the past, grant administrators made this unclaimed money available for small California cities in 1996-97, and San Luis Obispo received one-time approval for $440,000. Second, the annual audit required for TDA recipients found that there was $436,600 in TDA allocations from previous years available for 1996-97. Over the last three years the City has used TDA allocations to temporarily cover operating costs pending receipt of FTA operating assistance, which typically arrives in a lump sum after the end of the fiscal year. The auditors pointed out that once the FTA assistance is received, the TDA allocations become excess revenue available during the following year. These two one- time revenue windfalls should allow the City to continue operations at current service levels for the first year of the four-year contract period. The table on the following page estimates operating revenues and expenses for SLO Transit from 1996-97 to 1998-99 based on current information and the following assumptions: • FTA operating assistance grants will fall to their ongoing expected levels in 1997-98. • TDA allocations for operations will increase three percent each year. • Cal Poly in-lieu contributions will remain at current levels. • Cash fares and pass sales will increase as the 111197, fare increases take effect over a full year. • The bus operations and maintenance contract prices will increase three percent each year. • Direct and indirect administration costs will increase three percent each year. C�6_Z Council Agenda Report - RFP to Furnish Fixed Route Transit Services Page 3 Projected Estimated Estimated 1996-97 1997-98 1998-99 Revenues: FTA Operating Assistance Grants $440,000 $180,000 $1802000 Deferred TDA Allocations from Previous Year 436,600 221,600 29,400 TDA Allocations for Operations 131,500 606,600 6551400 Cash Fares and Pass Sales 120,800 159,800 159,800 Cal Poly In-lieu Fare Contribution 169,000 1699000 1697000 Other Sources (mostly interest) 2,600 2,600 200 Unused TDA Allocations from Current Year 221,600 29,400 $1,522,100 $1,369,000 $1,196,200 Expenses: Bus Operations and Maintenance Contract 989,800 $1,019,500 866,500 Direct Administration 122,100 125,800 129,600 Indirect Administration 188,600 194,300 2002100 TDA Allocations Deferred to Next Year 221,600 29,400 $1,522,100 $1,369,000 $1,196,200 Projections in the table show that one-time recognition and use of deferred TDA allocations should allow postponement of service reductions until 1998-99. If strong competition and the specification changes described earlier in this report result in lower contract prices, service reductions could be postponed even longer. On the other hand, a lack of competition could result in higher contract prices and the necessity to reduce service in 1997-98. Although the annual Cal Poly in-lieu fare contributions are projected to remain constant at $169,000, Cal Poly has stated that without some new revenue sources it may be able to contribute only$126,000 each year. In that case, some service reductions might be necessary in 1997-98. The proposed contract is structured so that each month the contractor is paid: • a lump-sum amount to cover fixed costs • an amount per hoar operated to cover vehicle operation costs • an amount per mile operated to cover vehicle maintenance costs This arrangement allows the City unlimited flexibility to add or reduce service without unduly hurting or benefiting the contractor. A copy of the request for proposals is available-for review in the City Clerk's office. C - 6 -3