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Home My WebLink About10/15/2002, C7 - CONTRACT AMENDMENT NO. 1 TO THE TRANSIT SERVICE CONTRACT WITH FIRST TRANSIT, INC. MCCLUSKEY/BOCHUMO council M. �D o �s oz [A] agenda Report k.N�e�7 CITY O F SAN LUI S O B I S P O C7. CONTRACT AMENDMENT NO. 1 TO THE TRANSIT SERVICE CONTRACT WITH FIRST TRANSIT, INC. MCCLUSKEYBOCHUMO'DELL) RECOMMENDATION: Pending. c� i council agenda CITY OF SAN LUIS OBISPO CITY HALL, 990 PALM STREET Tuesday, October 15, 2002 C7. CONTRACT AMENDMENT NO, 1 TO THE TRANSIT SERVICE CONTRACT WITH FIRST TRANSIT, INC. (MCCLUSKEY/BOCH U M/O'D ELL) RECOMMENDATION: 1) Approve contract Amendment No. 1 to the First Transit, Inc., FY 2001-03 transit service contract, execute the first year extension clause in the transit service contract for FY 2004-05 in the amount not to exceed $1,836,100, and authorize the Mayor to execute the amendment. 2) Appropriate an additional $66,900 from the working capital balance to the purchased transportation account in the Transit Program operating budget. ® Regular City Council meetings are broadcast on KCPR,91.3 FM and Charter TV Cable Channel 20. The City of San Luis Obispo is committed to include the disabled in all of its services, programs, and activities. Telecommunications Device for the Deaf (805)781-7410. Please speak to the City Clerk prior to the meeting if you require a hearing amplification device. For more agenda information,call 781-7103. council0i„-/0z j Agen6A Report CITY OF SAN LUIS O B I S P O FROM: Mike McCluskey, Director of Public Works Via: Timothy Scott Bochum, Deputy Director of Public Works Prepared By: Austin O'Dell, Transit Manager SUBJECT: CONTRACT AMENDMENT NO. 1 TO. THE TRANSIT SERVICE CONTRACT WITH FIRST TRANSIT, INC. CAO RECOMMENDATIONS: I. Approve contract Amendment No. I to the First Transit, Inc., FY 2001-03 transit service contract, execute the first year extension clause in the transit service contract for FY 2004- 05 in the amount not to exceed $1,836,100, and authorize the Mayor to execute the amendment. 2. Appropriate an additional $66,900 from the working capital balance to the purchased transportation account in the Transit Program operating budget. DISCUSSION Background On April 13, 2001, the Council awarded a contract to First Transit, Incorporated, to provide SLO Transit bus and trolley operations for the three year period of FY 2001-2003. The contract also allows for two, one-year contract extensions in FY 2004 and FY 2005 at the option of the City. As awarded, compensation to First Transit, Inc. is divided into two components. .For daily bus service, providing vehicles on the street, dispatching, road supervision, maintenance, fuel, training, management, etc., the City compensates First .Transit, Inc. based upon a revenue vehicle mileage (RVM) rate that was derived on anticipated revenue miles in the system. The City also compensates First Transit for the purchase and installation of electronic registering fare boxes on all City buses based upon a similar revenue mileage rate formula. The current contract also contains a maximum obligation provision for each year (a not to exceed amount), which protects the City from costs for purchased transportation exceeding approved budget amounts. Unfortunately, as changes in operations have been implemented, and First Transit, Inc. has performed operational efficiency improvements, a substantial reduction in necessary revenue vehicle miles (RVM) in the current system has led to a net operating loss to the contractor. At the request of the contractor, the City has negotiated a revised contract compensation rate structure that is both beneficial to the City and also First Transit, Inc. The revised contract structure allows for continued operations of the bus service along with financial stability for the City and the contractor. Council Agenda Report—Amendment No. 1 for Transit Services Contract Page 2 Finally, because of First Transit's excellent performance record, staff is recommending that the City implement a one year(of two possible) contract extension, for FY 2004-05. Both staff and First Transit have been negotiating this amendment since November 2001. First Transit notified City staff regarding their concern of operating losses in October 2001. In response to First Transit, staff analyzed the revenue vehicle miles and determined that the service would annually generate 400,000 revenue vehicle miles compared to the 478,000 revenue vehicles miles that First Transit submitted in their proposal. As a result, staff and First Transit have diligently negotiated an amendment that serves both of our best interests.. Why Is There a Need For a Contract Amendment? First Transit, Inc. has been performing SLO Transit service for the City since July 1, 2001. Their operations, appearance and performance have been a distinct improvement over previous contractor performance. However, beginning in November 2001, First Transit expressed concern to staff with their inability to generate sufficient revenue to meet their costs. This concern is based on two critical issues: 1) a distinct difference between actual revenue vehicle miles (RVM) performed and the estimated RVM used to negotiate the contract, and 2) reductions in RVM as a result of operational efficiencies instituted by First Transit, Inc., thus widening the gap between the actual and estimated RVM. Both issues are discussed in detail in subsequent sections of this report. To put it simply, while base transit service has continued, and First Transit, Inc. has improved operations and efficiencies, they cannot meet their costs for performing these services. Staff has been negotiating with First Transit to address these issues while at the same time working within the provisions of the approved contract. Reduced Revenue Vehicle Miles—Why the Difference? As mentioned above, the First Transit, Inc. contract is based upon RVM. Contract rates and reimbursement are based upon actual RVM driven by the contractor. Using RVM as a basis for transit contracts is standard in the industry. This, of course, requires that the projected mileage that established the RVM rate as part of the contract is very close to the actual miles to be performed. The "estimated mileage" in the SLO Transit requests for proposal (RFP) is sufficiently different from the actual mileage to cause a reimbursement deficit for the contractor. There are three primary reasons for this. First, based upon the prior contractor's operations the RFP issued for the transit contract estimated RVM at 478,000. During the RFP process, at least one contractor identified an error in the contractor's numbers and that the actual RVM was closer to 440,000. An amendment was issued that clarified that the RVM for the system was actually nearer 440,000, which became the revised RVM estimate for the RFP purpose. Second, because all proposals received had costs over estimated revenues, reductions in transit service (the pilot late night service program) needed to be implemented. Hence, additional RVM were further removed from the proposed service contract. Complicating these issues was the fact that First Transit, Inc. in their final calculations, inadvertently used the original RFP amount (478,000 RVM) to calculate their final reimbursement rate proposal. �7- Z Council Agenda Report–�,_.a'ndment No.,1 for Transit Services Co—act Page 3 Third, First Transit worked diligently in performing route optimization and on-time performance enhancement. As a result, almost all of the tandem bus service that was necessary under the prior contract is no longer necessary (tandem bus service is additional vehicles placed in system when routes get sufficiently behind schedule, a problem plaguing our prior contractor and schedule). All of these factors contributed to an actual RVM near 400,000 miles. This represents a 16.3% reduction (78,000/478,000) in RVM under that estimated by First Transit from the original RFP. The current transit contract allows for both the City and the contractor to request restructuring of the contract terms if there is sufficient evidence that inconsistencies in estimates or operational parameters can be identified. Staff concurs with the contractor's request for restructuring of the contract based upon the following two determinations. First, the City is receiving all contracted base level transit service. First Transit's diligence and operational efficiencies in reducing the need for tandem bus service should not affect their ability to recoup actual costs, with a fare profit margin. Second, while the City could take a hard line position on the actual line item reimbursement costs agreed to by First Transit and thereby have some cost savings in the three year life of the contract, it is unrealistic to believe that a contractor that is losing money in the system is going to continue these losses. An expected result would be cost cutting measures implemented by the contractor to limit loss. First Transit has been outstanding in appearance, operation and performance for the first year and a half of this contract and we hope to continue that reflection in our transit system. Attachment 1 includes a detailed description of the contract amendments and City parameters for the renegotiated contract. FISCAL IMPACT Execution of Amendment No. 1 (Attachment.2) will increase estimated contract payments to First Transit for 2002-03 and 2003-04 and allow them operate in the black. The following table shows the projected budget needed for contract payments: 2002-03 2003-04 2004-05 Estimated Contract Payments $1,799,900 $1,815,200 $1,743,600 Projected Budget for Purchased Transportation $1,683,600 $1,734,100 $1,786,100 Projected Budget for Capital Bus Maintenance 50,000 50,000 50,000 Total Projected Budget for Contract Payments $1,733,000 $1,784,100 $1,836,100 Additional Budget Needed $669900 $31,100 $0 Projected Working Capital Balance Available $468,600 $672,600 $237,000 Estimated contract payments are based on 400,000 revenue vehicle miles per year. First Transit operated 394,674 revenue vehicle miles in 2001-02. c'� -3 Council Agenda Report—it_.endment No.-1 for Transit Services Co.--act Page 4 The estimated contract payment shown for 2002-03 includes a retroactive $24,500 payment for 2001-02. The estimated contract payment shown for 2004-05 is lower than the 2003-04 payments for two reasons. First, payment of the monthly General Fare Incorporated (GFI) farebox installation fee will cease after 2003-04. And second, the mileage rate for 2004-05 should fall from $2.441 per mile to $2.407 per mile after completion of the Bus Washing Facilities. As shown in the table, projected working capital balances should be adequate to cover the additional contract payments in 2002-03 and 2003-04. The working capital balance is projected to drop sharply in 200405 because of money needed to replace three buses in that year. CONCURRENCES The Director of Public Works, the Deputy Director of Public Works, and the Transit Manager concur with the terms and compensation rates in Amendment No. 1. The MTC bylaws, however, do not include public contracting responsibilities (typically not within the purview of any City advisory bodies). ALTERNATIVES Alternative A - The Council could choose to deny Amendment No. 1. There could be several consequences for not approving the amendment. Since First Transit is already operating in the red, their most likely first step, if they wanted to continue with the contract, would be to implement substantial cost saving measures within the terms of the agreement. Such cost cutting measures by our previous contractor resulted in numerous customer and employee complaints. The City chose First Transit, in part, because of its reputation for quality service. The City does not have control over many of these issues and highly values good customer service. A second possible option of First Transit is to give notice that it is terminating the contract. The current contract allows either party that option. This would force the City to find an emergency service provider while it solicits for a new contractor. There would be no guarantee that costs to the City would be lower than anticipated with Amendment No. 1. First Transit claims to be loosing approximately eighty thousand dollars per month. Even though the City has a Letter of Credit for the sum of two hundred fifty thousand dollars, First Transit could determine that such an option would be its best interest. Such action is not unheard of as was the case when ATC Transit abruptly ceasing service with the Denver Regional Transit District because ATC Transit was not awarded the transit services contract. Alternative B. The Council may decide to solicit proposals for a new contractor. This process is commonly referred as re-bidding. By re-bidding, the City would authorize the CAO or his designee to solicit for proposals from qualified transit service contractors, including First Transit and the previous contractor. The consequence to this option is that proposals could be considerably higher than current transit services cost. As a result, the City would be forced to further reduce transit service, which would not serve the public or City's interest. The reason for the increase in transit costs would be directly related to the increase in insurance costs that occurred after the September 11, 2002 terrorist attack. It is important to understand that the costs in the current contract are "pre- September 11, 2001" and that Amendment No. 1 will protect the City from the current insurance rates. Council Agenda Report—A...,;ndment No. 1 for Transit Services Co.__dct Page 5 Attachments: Attachment 1 —Description of Proposed Amendment No. 1 Attachment 2—Proposed Amendment No. 1 I:\Council Agenda Reports\CAR First Transit Contract Amend 1-DEVELOPMENT.doc Attachment 1 DESCRIPTION OF PROPOSED AMENDMENT NO. 1 The City negotiated the proposed amendment with the,follo wing parameters. 1. Any new rate structure could not result in an increase to the overall costs and maximum obligation to the City. In essence, the maximum obligations established in the current transit, contract were a reflection of the available transit budget revenues that the City expects over the life of the contract. Therefore, any change in rate structure for reimbursement would need to be contained within the current maximums established in the contract. 2. Further stabilizing of the contract should be a result of the amendment to avoid similar issues in the future. In essence, the revised agreement should take advantage of now known issues and look to stabilize the contract further. Therefore, fixed cost reimbursements for known contractor costs should be isolated from costs that fluctuate (e.g. RVM). Also, miscellaneous items and costs not specified in the original contract terms should be resolved and included in the agreement. 3. Retroactive payments to the contractor will be limited. While the City concurred with the issue of retroactive payments to make the contractor "whole" for previous work performed, wholesale retroactive payments to the original start date of the contract (July 1, 2002) could not be supported. 4. The City should benefit as much as the contractor from the revised contract arrangement. For this purpose the City pursued and obtained a fourth year term of the contract based upon the newly formed contract arrangements. This fourth year extension will allow an additional year of service based upon the current annualized contract payments (and annual adjustments) without having to rebid the entire contract and test the market rates at that time. SLO Transit's New Deal-Description of Amendment No. 1 Amendment No.I modifies four components Table 1 of the current agreement. The following Fixed Monthly Fee paragraphs explain Amendment No. 1: Fixed Monthly Fee- Fixed Monthly Overhead Fee-Utility Exp 1. Compensation Structure. The first FY Current Amend Current Amend component revises the compensation 2001 NA $56,852.00 NA $1,330.00 structure of the contract. In the current 2002 NA $59,960.75 NA $1,406.83 contract, the compensation structure is 2003 NA $61,341.83 NA $1,440.39 based on two tiers. The City compensates First Transit by a revenue vehicle mile rate for operations and a revenue vehicle mile rate for the electronic fareboxes. Amendment No. 1 expands the compensation into a four-tier compensation structure. The first tier separates out the fixed costs and reimbursement rate for contractor overhead. The fixed monthly fee will compensate First Transit for all fixed costs for vehicle maintenance, administration and direct and indirect costs of establishing transit services for SLO Transit. First Transit has agreed that this fee will be retroactive to April 1, 2002 (eight months savings to the City from start date, July 1, 2001, of the ATTACHMENT 9 contract). All costs associated with the contract before this will be at the current contract reimbursement rate. Table 1 illustrates this modification. The second tier establishes a fixed monthly fee for utility expenses at the transit barn. This monthly fixed fee will compensate First Transit for all costs associated for electric and gas (non-vehicle fuel). This fee will be retroactive to July 1, 2001 when First Transit took on operations of the facility. Table 1 illustrates this modification. The third tier revises the revenue vehicle mile rate component of the Table 2 contract. This tier compensates First S per Revenue Vehicle Mile Transit for variable costs (e.g. fuel, Operation Electronic fluids, parts, etc.) Comparisons of Fareboxes the current RVM rate and amended Amend Current Amend RMV rate are shown in Table 2. The FY Current Amend w/ ($/RVM) (Monthly) amended revenue vehicle rate will Bus decrease since fixed costs (that are Wash part of the current contract revenue 2001 $3.62 $2.196 -- $0.24 $9,086.34 vehicle mileage rate) will be paid to . 2002 $3.82 $2.313 $2.279 $0.24 $9,086.34 First Transit as part of the monthly 2003 $3.91 $2.370 $2.336 $0.24 $9,086.34 fixed rate outlined above. RVM=Revenue Vehicle Miles In addition, the City has negotiated an additional decrease in the amended revenue vehicle rate to be enacted when the automatic bus wash facility (currently being designed by the City) at the City bus yard is completed in FY 2003. Buses are currently washed by hand, which requires two part-time workers. Upon completion of the bus washer, First Transit will be able to eliminate one part-time utility worker position. First Transit has agreed to pass on these associated cost savings to the City by further reducing the amended revenue vehicle mile:rate by an additional $0.034 cents per RVM when the washer becomes operational. Amended revenue vehicle mile rates for these purposes will be retroactive to April 1, 2002. The final tier revises the method of compensating First Transit for the purchase and installation of electronic fareboxes. Under the current contract, the City compensates First Transit by a revenue vehicle mile rate. The purchase of the electronic fareboxes represents a front-end cost and investment by First Transit. It has been the intention of the City to reimburse First Transit during the term of the Agreement. Because of the reduced RVM, the current compensation method does not guarantee repayment. Therefore, left over costs to the City would result if the contract is not extended past the original three year contact. For these reasons, the City has agreed to revise the reimbursement based upon a thirty-six (36) month basis instead of the RVM methodology. This approach is reasonable and will result in no additional costs to the City for this equipment purchase. The revised rate and method will be retroactive to the start of contract-July 1,.2001. 2. Performance Program. The second component being modified in this amendment is the Passenger per Revenue Hour Performance Standard. During preparation of the RFP, the best available information from the previous contractor was used to calculate new performance standards and penalties in the current contract including the average Passengers per Revenue Hour standard for the system. After one year of experience and similar boardings of passengers observed by staff, First Transit has not been able to maintain the baseline average of thirty-four passengers per revenue hour. c'7, 7 ATTACHMENT 1 First Transit's inability to achieve the baseline average is two-fold. First, staff believes there was an inaccuracy of Table 3 the operational statistics from the previous contractor in Passengers per Revenue Hour reporting passengers per hour. Staff has continually worked FY Current Amend with First Transit to have accurate operational statistics 1 during the current contract and believes their recorded System 34 34 passengers per hour to be the accurate baseline of our Average transit system. Second, due to the fluctuations in ridership Non-Peak NA 15.72 during non peak months and peak months (non peak Months months are defined as the period from July 1 to September Peak Months NA 23.53 30 and peak months are defined as the period from October 1 to June 30) non-peak month ridership drops dramatically below ridership benchmarks identified in the contract performance measures. Essentially, peak months coincide with the university academic calendar. As a result of the fluctuations in ridership, it makes sense to establish performance standards for both non-peak and peak month operations. These are outlined in Table 3. The purpose of establishing a passenger per revenue hour performance standard is to provide a reasonable benchmark for First Transit to achieve and exceed. The theory is that First Transit drivers and management will provide excellent service to encourage returning passengers and that First Transit will market the system to attract new passengers to meet or exceed this benchmark. If they exceed the benchmark they are rewarded; if they fail a penalty is assessed. First Transit is agreeable to this revision and looks forward to enacting the provision. 3. Contract Adjustment Clause. The third modification to the contract is to remove the contract adjustment clause Exhibit A, Section 3.24.1 of the original Agreement executed on May 15, 2001. The purpose of this clause was to include a provision for adjustment of the revenue vehicle mileage rate should the City or the Contractor need to increase or decrease the dollar rate per revenue vehicle mile. The City has made concession to First Transit by proceeding with this amendment without decreasing the maximum obligation of the contract. By the City agreeing to the terms of the amendment, it is reasonable for the City to require First Transit to lock in their rates for the term of the Agreement. In essence, a revision to the RVM rate of reimbursement becomes moot under the revised contract terms described in section 1 above. First Transit is agreeable to this revision.. The City still retains the right to terminate the agreement, upon proper notice, if contract conditions are not met by the contractor. The following clause has been stricken from the Agreement: 1-24-4 1 Revenue Vehicle Mileage Date At any time Git., may require the C ♦ ter- r A-F ,i tho mnvler tue h' 1 le miles, if the deGr-ease ef4he- &,eFagL2 q r.,t:,,,.. Speed DOES NQT a .i r P@FGenr /1110/1 or. if the f th rating speed rlQRS NOT exeeed five per-Goat /CO%\ Af the halie 04 gpeFafin� speed-, the reyel-N a mileage rate speeif ed in Paragraph 5(a) an the A t vpc,ru.-� .i', As a Fe-s It of an inereooe i ;Feveaue .ehiele ileo if the deerease of the aver-age oper-aft Speea EXCEEDS tem er,.ent (1 not) or- if thA f th opomting &peod >XCEZ DS-five nt /coil of--the z average t a r•t a the Contra 't — - ATTACHMENT 9 shall negotiate no.i, Yn.,nn„u rate based 11...,., the not ..hanrto hor.,. }ho 1... Wer- operating peed and the average opeFatiRog peed. Tho hnso ag speed for- fixe.l route se-iii:.-e- :s 12.0-9 n0yenueye-b-i.lo ..,:los Y. lion 4. Exercise First Option Year (FY 2004-05). The final modification under Amendment #1 is the City exercising the Table 4 first year option of the Agreement. As previously mention in the Option Year 1 Rates beginning of this report, the current Agreement is a three-year Item FY 2004 contract with two one-year options. By extending the agreement -05 one year at this time, staff believes that the City will realize Monthly Fixed- $63,182.08 overall savings on contract costs because they are based upon Operations adjusted FY 2001-02 costs. First, the rates provided in Table 4 Monthly Fixed- $1,483.6 will increase by only three percent (3.0%) over third year Utility contract costs. With the current increase in costs of insurance, $/Revenue fuel and wages, coupled with the fact of an unknown economy Vehicle Mile $2.407 in the fourth year of the contract, the rate increase of three •Includes reduction for one utility worker. percent provides a proactive cost control measure for the City. Another benefit is that the fourth year option allows the City to - - - continue with the current contractor without any disruption to service as result of a proposal process or new contractor turnover. Impact of Amendment No. 1 1. City Will Strengthen Cost Controls. The net impact of Amendment No. 1, in terms of financial compensation to First Transit, is that the City will strengthen its ability to control costs within the maximum obligation in the current agreement by agreeing on the rate for the first year extension and by eliminating the contract adjustment clause. For First Transit, Amendment No. 1 protects First Transit's ability to cover their fixed costs by excluding them in the revenue vehicle rate. 2. Maintain Contract Responsibilities and Conditions. The net impact of Amendment No. 1, in terms of the operational and service obligation conditions of the contract, is that they remain largely unchanged. First Transit will continue to be responsible for providing transit service and maintenance of the buses in accordance to the conditions of the current contract. As described previously in this report, there are several changes to performance program, the contract adjustment clause, and the term of the contract. The impact to the performance program is an equitable one to both the City and First Transit. For First Transit, it is an opportunity to attain the goal of passengers per revenue vehicle mile. This performance standard provides the incentive for First Transit to provide courteous and quality service to maintain current ridership. At the same time, this performance standard provides the incentive for First Transit to market the city bus service to attract new riders. For the City, the City should observe increase in ridership because First Transit has a financial motivation to maintain and encourage new riders by providing a realistic standard. 3. Maintenance of Quality of Service and Community Partnership. The net impact of Amendment No. 1 from a business perspective is that it will continue to foster a partnership ATTACHMENT 1 between the City and First Transit. First Transit does provide a superior service to the community over the City's previous contractor and does desire to be a partner in the community. Good business relations translate into quality service and satisfied passengers. However, City staff is not recommending First Transit's proposal without a cost. By the City accepting First Transit's proposal, First Transit's contractual ability to adjust future compensation rates will be eliminated. Staff has thoroughly analyzed these rates and determined that the City's transit program will remain in sound financial standing. As a result, staff confidently recommends the approval of Amendment No. 1 to City Council. 4. Minimize Service Disruption to Passengers. By exercising the first-year extension, the City will minimize any disruption to the City's transit passengers. In the event that the transit services agreement is awarded to another Contractor, there is transition period. Transition periods can be disruptive and confusing to passengers. Passengers who rely on the City transit service become insecure and apprehensive about how transitions will affect their lives (e.g. getting to work, medical appointments, class, etc.). By extending the current contract one-year, the City is delaying a possible need to transition to another contractor. Overall, both the City and First Transit will benefit by exercising the first year option. The City benefits from securing a lower rate; and First Transit benefits from having the contract extended a year. L\Council Agenda Reports\2002 agenda reports\CR First Transit Contract Amend 1-attachments.doc C,7-10 ATTACHMENT 2 AMENDMENT NOA TO AGREEMENT BETWEEN CITY OF SAN LUIS OBISPO AND FIRST TRANSIT INCORPORATED WHEREAS, on May 7, 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 as "Contractor") for the provision of transit operations and maintenance of public transit fixed route services in the City of San Luis Obispo, California; WHEREAS, Contractor is desirous of amending the aforementioned Agreement, and City is agreeable to such amendment. NOW THEREFORE, in consideration of the mutual covenants and promises herein, City and the Contractor agree to amend the aforementioned Agreement as follows: 1. Modify the method of compensation to include fixed monthly fees and a revenue vehicle mile rate. 2. City shall pay Contractor a fixed monthly fee.for operations, excluding utility expenses, retroactive to April 1, 2002, in accordance to the following schedule: • FY 2001-02 $56,852.00 • FY 2002-03 $59,960.75 • FY 2003-04 $61,341.83 3. City shall pay Contractor a fixed monthly fee for utility expenses, retroactive to July 1, 2001, in accordance to the following schedule: • FY 2001-02 $1,330.00 • FY 2002-03 $1,406.83 • FY 2003-04 $1,440.39 Contractor shall be responsible and shall pay all utility expenses over and beyond the fixed monthly fee for utility expenses hereinabove. 4. City shall pay Contractor a revenue vehicle mileage rate, retroactive to April 1, 2002, in accordance to the following schedule: • FY 2001-02 $2.196 • FY 2002-03 $2.313 • FY 2003-04 $2.370 e,2,11 ATTACHMENT 2 5. Contractor shall reduce the revenue vehicle mileage rate by $0.034 upon completion and implementation of the bus wash facility. Contractor shall honor the following schedule, and the City shall pay Contractor the adjusted revenue vehicle mileage rate upon the day of completion and implementation of the bus washer, in accordance to the following schedule: • FY 2002-03 $2.279 • FY 2003-04 $2.336 6. City shall pay Contractor a monthly GFI farebox reimbursement rate, retroactive to July 1, 2001, in accordance to the following schedule: • FY 2001-02 $9,086.34 • FY 2002-03 $9,086.34 • FY 2003-04 $9,086.34 City has paid the sum of$95,629.68 to the Contractor for the reimbursement of GFI Fareboxes in FY 2001-02. City shall pay Contractor the remaining reimbursement balance due in FY 2001-02 for the amount of$13,406.40. 7. In accordance with Paragraphs and 4 of the executed Agreement between City and Contractor,the City shall exercise the first option to extend the term of the agreement from July 1, 2004 to June 30,'2005. Based on the negotiated compensation rates as agreed to by Contractor in the letter dated August 27, 2002, incorporated in this Amendment No. 1 in Exhibit A, City shall pay Contractor the following rates for FY 2004-05: • Monthly Fixed Fee for Operations $63,182.080 • Revenue Vehicle Mileage Rate (with bus wash completed) $2.407 • Revenue Vehicle Mileage Rate (without bus washer) $2.441 • Monthly Fixed Fee for Utility Expenses $1,483.600 8. The Maximum Obligation costs (Paragraph 4 of the executed Agreement) to be paid by the City to the Contractor for the period from July 1,2001 to June 30,2004 shall not change from the executed contract. The Maximum Obligation cost to be paid by the City to the Contractor for the period from July 1, 2004 to June 30, 2005, shall not exceed, as follows: 0 FY 2004-05 $1,836,100.00 The City shall be responsible for planning public transit services that shall not exceed the contractual maximum obligation costs. ATTACHMENT 2 9. Deletion of Section 3.24.1 (Revenue Vehicle Mileage Rate), Exhibit A of the Agreement executed on May 15,2001. 10. Adjust the baseline total unlinked trips per revenue vehicle hour in Section 3.25.1.1 and Section 3.25.2.2, Exhibit A of the Agreement executed on May 15, 2001 as follows: • Non-Peak Months (July 1 through September 30) 15.72 riders/revenue vehicle hour • Peak Months (October 1 through June 30) 23.53 riders/revenue vehicle hour IN WITNESS WHEREOF, CITY and CONTRACTOR have caused the Amendment No. 1 to the Agreement dated May 15, 2001,to be executed on this day of 2002. CITY OF SAN LUIS OBISPO FIRST TRANSIT Mayor President ATTEST: City Clerk Lee Price APPROVED AS TO FORM: APPROVED AS TO FORM: City Attorney Contractor Legal Counsel JeffJorgensen C'7 .First Transit, Inc. ------ 1625 S.E.Hogan Road jO ;;:' 'IJ ' Gresham, Oregon 97080-9266 Tel 503-667-8090 Fax 503-666-2790 August 27, 2002 ,first si �• Mr. Michael McCluske via email& USMa// Director of Public Works City of San Luis Obispo 955 Morro Street San Luis Obispo, CA 93401 Dear Mr. McCluskey: Thank you for your response to our compensation issues. Your proposal is fair and a welcome relief after so many months of discussions. Resolution of these issues will allow First Transit to continue providing exemplary service to the City of San Luis Obispo. The solution also gives the City the freedom to adjust schedules to best serve its populace while allowing First Transit the opportunity to generate a profit needed to offset its risks. To clarify all of the points made in your letter dated August 16, 2002, we agree to: 1. Modify contract payments to a combination of a fixed monthly fee.and a revenue mile rate compensation format. 2. Establish a fixed monthly fee for operations, excluding utility expenses, retroactive to 4/01/02, as follows: FY 2002 $56,852.00 FY 2003 $59,960.75 FY 2004 $61,341.83 3. Establish a fixed monthly fee for utility expenses, retroactive to 7/01/01, as follows: FY 2002 $1,330.00 FY 2003 $1,406.83 FY 2004 $1,440.39 4. Establish a revenue mileage rate, retroactive to 4/01/02, as follows: FY 2002 $2.196 FY 2003 $2.313 FY 2004 $2.370 S. To clarify our offer to reduce the revenue mileage rate by eliminating a part-time utility worker, we are willing to reduce the rate by $0.034 upon completion and implementation of the bus washing facility. This would establish the revenue mileage rate at: FY 2003 $2.279 FY 2004 $2.336 A FrstGroup America rj Company (� e7 '�I Exp,b ►"t � 6. Adjust the"Passenger per Revenue Performance Standard"to:. Non-Peak Months (7/1 through 9/30) 15.72 riders per hour Peak Months (10/1 through 6/30) 23.53 riders per hour 7. Deletion of the Revenue Vehicle Mileage Rate found in Section 3.21.1 of the Contract. 8. A GFI farebox reimbursement rate of 36 monthly payments of$9,086.34, retroactive to 7/01/01. There is only point we need to have clarified by the City. With the City's maximum cost obligation including the farebox reimbursement, what happens if the City modifies the transit schedule with a resulting overage of the maximum cost obligation? We want to avoid responsibility for the budgeting of the project for the City. As to the offer of exercising the option to extend the contract for FY 2005, we are thrilled and honored to accept. Our goal is to provide the City of San Luis Obispo with transit services for many years to come. Your offer to extend means we are heading on the right path. We agree to the following rates for FY 2005: Month Fixed $63,182.08 Variable Rate with wash bay complete $2.407 (2.441 less 0.034) Monthly Utility $1,483.60 With this letter, we realize your next step is to have the City Council approve a contract amendment. We look forward to their approval, and sincerely believe that any remaining misgivings created by these protracted discussions will be eliminated as we move forward. Sincerely, M Don Swain, Region Vice President Cc: Austin O'Dell Tim Bochum Nick Promponas