Memorandum

City of Lawrence

City Manager’s Office

TO:	David L. Corliss, City Manager
FROM:	Diane Stoddard, Assistant City Manager
CC:	Cynthia Boecker, Assistant City Manager Bob Nugent, Transit Administrator
Date:	July 29, 2009
RE:	Joint Transit Maintenance Facility Options

Please place the following item on the agenda for the August 4, 2009 City Commission meeting:

Provide Direction and Feedback regarding Joint Transit Maintenance Facility with KU

Background:

The KU-City Transit Planning Team has been meeting for approximately one year.  One of the issues that has been discussed during our meetings is the continued need for a joint transit maintenance facility.  Specifically, the group has been thinking about future facility needs and ways for the City and KU to continue and expand its transit cooperation success.  This discussion requires the need to examine longer-term options for a joint maintenance facility. 

Currently, the City and KU contract through MV Transportation for the facility at 31^st & Haskell.  By having the facility lease as a part of the transit management contract with MV, which is a five year agreement, the facility lease has been a shorter duration, which likely escalates the annual cost.  Currently, the City and KU are spending over $265,000 combined annually on facility cost.  When facility property tax is added to this figure, it is over $340,000 combined annually. MV’s lease for the KU and City part of the facility will expire at the end of 2010. Therefore, it is now an advantageous time to examine facility options, particularly in light of enhanced coordination efforts that are ongoing.

Why a Joint Transit Maintenance Facility is Important:

It is important to maintain a shared transit maintenance facility in order to enable enhanced coordination, which reduces costs in the following areas:  coordination of paratransit services, dispatchers, software, drivers and equipment for greater efficiency in operations, safety and training; shared use of facilities and equipment necessary for fuel storage and dispensing, bus washing, farebox vault storage and processing, and vehicle parking and maintenance; elimination of duplication of capital investment in maintenance facility and equipment, including such items as vehicle lifts, generators, compressors, bulk fluid storage and containment, welding, tire, computer diagnostic, AC recovery and other specialized equipment; one telephone system; and allows KU and the City to provide a facility designed to best protect long-term capital investment in rolling stock.  Our most recent management contract solicitation revealed the overall operational savings gained by coordination, of which facility cost is a portion.

Service Provider Cost Proposal Comparisons
	Combined	KU Only +	Combined
	Contracts	City Only	Savings
Contract Year 1	$5,614,542	$5,912,980	$298,438
Contract Year 2	$5,840,997	$6,130,599	$289,602
Contract Year 3	$6,068,601	$6,380,927	$312,326
Contract Year 4	$6,311,296	$6,656,557	$345,261
Contract Year 5	$6,571,766	$6,932,593	$360,827
TOTAL			$1,606,454

Additionally, having a shared maintenance facility allows the City and KU to do more cooperatively. In short, a joint transit maintenance facility is a must for our coordination efforts. 

Joint Facility RFP:

While discussing facility options, members of the KU-City Transit Planning Team have identified numerous scenarios and possibilities regarding a joint maintenance facility.  Because of KU’s “charter” bus service and the fact that Federal Transit Administration rules strictly prohibit the intermingling of federal funds with such activity, it is more advantageous for KU to take the lead with evaluating facility alternatives and eventually leading the implementation of the chosen alternative. 

In order to fully explore options and alternatives regarding the joint facility into the future, KU is planning on issuing a Request for Proposals (RFP) to solicit responses on options including:  Lease, Lease-Purchase, and Purchase.  Lease options would include 10, 15, and 20 year terms. The responses to the RFP will enable the City and KU to evaluate alternatives and recommend the best solution.  KU and the City will need to enter into one or more supplemental agreements to address the responsibilities of KU and the City with regard to the selected option.  It is anticipated that the RFP would be released early-mid August, with responses due back around the late part of September, or early part of October. 

As this issue has been discussed amongst the Transit Planning Team, the Team believes that the ownership option is likely to be the most preferable option for the long term.  City staff and KU representatives have identified the possibility of utilizing the remaining federal grants and earmarks to address KU’s fleet needs, which in turn may free up some funds to be utilized toward the ownership option. 

Representatives from KU will be on hand at the meeting to further discuss any of the issues shared in this memo.  

Requested Direction from the City Commission:

The KU-City Transit Planning Team would appreciate direction and feedback from the City Commission regarding the following items:

· Does the City support the concept of a joint transit maintenance facility?

· Does the City support the issuance of the RFP as described?