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AGREEMENT WITH LAZ PARKING CALIFORNIA, LLC FOR MANAGEMENT AND OPERATIONAL SERVICES OF THE DOWNTOWN PARKING DISTRICT
recommended action
RECOMMENDATION
It is recommended that the Parking Authority adopt a resolution to:
1. Approve findings pursuant to Stockton Municipal Code section 3.68.070 in support of an exception to the competitive bidding process.
2. Award an Agreement in the amount of $302,508 in year one, escalating by 3% each year thereafter to LAZ Parking California, LLC., for Management and Operational Services of the Downtown Parking District.
It is further recommended that the Executive Director be authorized to take necessary and appropriate actions to carry out the purpose and intent of this resolution.
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Summary
On December 5, 2019, the City received three proposals for the Downtown Parking Management and Operation Services in response to the City’s Request for Proposal (RFP) (PUR 19-035). LAZ Parking California, LLC (LAZ) has been selected as the parking management and service provider that most meets the needs of the Parking Authority, and staff recommends that an operating agreement be awarded.
If approved, this action will authorize the award of an Agreement in the amount of $302,508 in year one, escalating by 3% each year thereafter, (term includes initial 5-years, with two additional 3-year renewal options), to LAZ Parking California, LLC. (Exhibit 1 to the Resolution)
DISCUSSION
Background
In 2013, the City contracted with Kimley-Horn and Associates, Inc. to conduct a comprehensive review and evaluation of the current parking programs and operations. The findings of the review recommended outsourcing operations to an experienced parking firm to improve operational efficiencies and services. In December 2013, the City Council established the Parking Authority, as a separate entity, to protect the general fund and to improve the quality and efficiency of parking operations (Attachment A - Resolution No. 2013-12-17-1209). The Parking Authority issued an RFP for Parking Operator Services in September 2014 and awarded the contract to SP+ in December 2014, following an open RFP process. SP+ has managed and operated the parking facilities and on-street parking for the past five years.
Present Situation
The current contract with SP+, Inc., for management and services for the downtown parking operation, expires on March 31, 2020. While there are two additional one-year extension options available, there have been some operational concerns. It was decided that it was in the City’s best interest to solicit proposals to ensure the highest quality services and competitive pricing.
On October 24, 2019, RFP No. PUR 19-035 was issued for the procurement of a company that could provide management and operational services for the downtown parking district, including five garages, sixteen lots, and on-street paid spaces.
Three (3) proposals were received on December 5, 2019. A selection panel made up of representatives from the County, Downtown Stockton Alliance, and City staff reviewed and scored the proposals based on criteria including experience, management plan, references, and pricing. After thorough review, LAZ was selected as the parking management and operating company that best meets the needs and priorities of the Parking Authority’s operations; most notably in customer service, personnel training, fiscal processes and automated auditing practices.
LAZ is the second-largest parking and mobility company in the US, operating 1.2 million parking spaces in 420 cities. Formed in 1981, LAZ is headquartered in Hartford CT, with regional offices in San Diego, Los Angeles, and San Francisco. Their parking portfolio includes major on and off-street operations in addition to mass transit, event and entertainment, residential, central city, and valet parking services. The company was founded by three people who are still deeply involved in the US operations. Current local agency clients include City of Walnut Creek, County of Alameda, City of Berkeley, and the Valley Transit Authority in the Bay Area.
Under the management agreement, LAZ will manage and operate all the parking facilities in the Downtown Parking District, including garages, surface lots, and parking-payment machines. LAZ will be responsible for all activities, including billing of monthly parking permit holders, collecting hourly and event revenues, and providing maintenance and other necessary services for day-to-day operations. In addition, LAZ will evaluate parking needs and services in the Downtown Stockton area and make changes to improve efficiencies and customer service. LAZ will make recommendations and assist the Parking Authority with equipment and capital improvements to the facilities. The cost of any capital improvements will be the responsibility of the Parking Authority, though LAZ will invest a one-time amount of $50,000 in the first year of the initial term, subject to the City’s directed purpose. Monthly and annual financial reporting will be submitted to the Parking Authority for performance review and auditing. The proposed agreement is a 5-year term with two, 3-year extension options.
The initial 5-year term of the current agreement with SP+ expires on March 31, 2020; while there are two additional one-year extensions, the agreement also allows for continued services on a month-to-month basis, if agreeable to both parties. The City has requested, and SP+ has approved, an additional month of services through April 30, 2020, to allow for a smooth transition to LAZ.
Both the Local Employment Ordinance (Stockton Municipal Code, Section 3.68.095) and the Local Preference Ordinance (Stockton Municipal Code, Section 3.68.090) were applied to the financial portion of the selection process. The Current operator, SP+ Corporation, was the only proposer who qualified for the preferences. Despite the preferences, SP+ was not rated high enough in other selection criteria areas to warrant the recommended award.
Findings
Pursuant to Stockton Municipal Code Section 3.68.070(A), City Council may award contracts for $75,000 or more without competitive bidding where findings are approved, which support and justify an exception. The following findings support and justify an exception:
1. Due to the specific nature of the project and industry, use of the RFP process is appropriate since it relies on evaluation of a service provider’s established professional experience, conduct, and performance as it relates to the management and operations of parking facilities and programs.
2. The project involves a very specialized field, and its success requires an experienced professional who has successfully implemented and performed such projects.
3. Use of a strictly cost-competitive bidding process to select a firm for this project may lower the quality and thoroughness of the services.
FINANCIAL SUMMARY
The annual operating budget submitted by LAZ in the proposal process is within range of the operating budget currently under review in the FY2020/21 budget approval process. LAZ anticipates start-up costs of approximately $29,000 for items such as staff uniforms, removal/replacement of signage, equipment, etc. during the transition period. These expenses will be included in the current operating budget, as necessary. The annual management fee will increase from the current fee or $185,00 to $302,508, however the overall impact is anticipated to be much less due to changes in allowable operating expenses. Specifically, new contract language prohibits charges for items such as computer support, supply mark-up, and administrative overhead beyond personnel present in the Stockton office, previously allowable under the past operating contract. This change was made to improve the clarity of funds received by the management company. Also within the financial terms of the proposed agreement, LAZ will contribute a one-time investment of $50,000 into the Parking operation during the first year of the initial term. These funds will be used within the parking operations and/or capital needs, as approved by the City.
Operating revenues are sufficient to cover the cost of operating the parking facilities. Annual operating revenues over the past three years have averaged $3.8 million, despite these numbers being down due to meter thefts in 2017/18. The revenues continue to increase with the installation of the on-street payment machines in early 2019, which have restored the on-street revenue stream.
The proposed agreement has no impact to the General Fund, as the Parking operation is within the Stockton Parking Authority.
Attachment A - Resolution Number 2013-12-17-1209