Memorandum

City of Lawrence

City Manager’s Office

 

TO:

David L. Corliss, City Manager

 

FROM:

Diane Stoddard, Assistant City Manager

Bob Nugent, Public Transit Administrator

 

CC:

Cynthia Boecker, Assistant City Manager

 

Date:

 

February 4, 2010

RE:

Joint Transit Maintenance Facility Update

 

Please place the following item on the agenda for the February 9, 2010 City Commission meeting:

 

Receive Update on Joint Transit Maintenance Facility

 

Background:

In June 2008, the City of Lawrence and the University of Kansas agreed upon a letter of intent, demonstrating a commitment toward increased cooperation and coordination between the University and City’s transit systems.  As a result of this letter of intent, a KU-City Transit Planning Team, consisting of representatives from the City and KU was established to further these goals.   

 

The KU-City Transit Planning Team has been meeting for approximately 18 months.  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 31st & 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 para-transit 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, fare-box 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. 

 

August 2009 Direction: 

In August 2009, the City Commission received a status report on the joint maintenance facility.  The memo presented prior to that discussion indicated that the members of the KU-City Transit Planning Team had looked at a number of scenarios and possibilities regarding a joint maintenance facility, including lease and ownership alternatives, and what entity should take the lead.  One of the key factors identified early on was the impact of federal funds and its restrictions.  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 was determined that it was more advantageous for KU to take the lead with evaluating facility alternatives and eventually leading the implementation of the chosen alternative.  The City Commission provided direction to proceed with the University issuing a facility Request for Proposals (RFP) to solicit responses on facility options including:  Lease, Lease-Purchase, and Purchase.  Lease options included 15, and 20 year terms. The RFP was released in August 2009 and responses were provided in early October 2009. 

 

As indicated in August, the Transit Planning Team believes that the ownership option is the most preferable option for the long term.  Also, the Team had 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. Based upon the information discussed at the meeting, the City Commission agreed that it was appropriate to pursue a joint maintenance facility, and that KU should take the lead in issuing its RFP. 

 

RFP Responses and Analysis: 

The University of Kansas took the lead regarding the RFP process.  A total of seven locations were proposed by five contractors. A procurement committee was established, formally consisting of University staff.  However, the University invited City participation in the review of the proposals.  Bob Nugent was involved in narrowing the responses to the three proposal sites/two development teams who were chosen as finalists and invited to interview on the project.  City staff members including Bob Nugent, Wendy Koerner and Diane Stoddard were invited to participate in the interview process. 

 

The University has provided the analysis regarding the responses that were received on this project.  Additionally, the University has provided copies of the contract award and associated purchase agreement related to the selected site and vendor.  The University’s purchasing process did not allow for public release of the documents and analysis until a contract was formally awarded to the vendor.  The analysis consists of a variety of documents:

r  Cover Letter from Don Steeples, Senior Vice Provost

r  Recommendation of the Procurement Negotiating Committee to Barry Swanson, Director of Purchasing and Strategic Sourcing;

r  The Bid Summary and associated information;

r  Comparison of Purchase vs. Lease vs. Lease Purchase and Comparison Matrix

r  Contract Award and Associated Real Estate Purchase Agreement

 

The University has awarded and executed the contract and real estate purchase agreement for the project at the site submitted by Advanco, at the Timeredge Industrial Park. The site is within the City of Lawrence and has easy access to all parts of the transit service area via North Iowa Street, Kasold Drive, Queens Road (E 1000 Road) and State Highway K-10 via Lakeview Road (N 1800 Road). The site is adjacent to the Reuter Organ manufacturing facility and Standard Beverage distribution facility to the south, and Westar Power Generating Station to the north. There are no residential properties located within a half mile radius of the site.

 

 

Possible Memorandum of Understanding with the University of Kansas:

The Transit Planning Team has been discussing a possible Memorandum of Understanding between the University of Kansas and the City of Lawrence regarding cooperation on the joint maintenance facility.  Of course, the MOU would be subject to City Commission and University authorization.  The MOU would set forth a variety of provisions regarding facility, envisioning that a more detailed lease would be negotiated between the parties in the near future.  The MOU is still under discussion.  However, the draft MOU indicates that the City would provide $2 million in ARRA funding toward the procurement of buses for the University.  These buses would be used on joint transit routes. The purchases of the buses for the University would free up funding for the University to front the necessary capital costs for the financing of the facility.  The MOU would also set forth the City’s lease payments to the University and how other costs would be shared between the University and the City.  The MOU will be on a City Commission in the near future for review and consideration.

 

Recap Regarding City Bus Fleet Purchases and Related Proposed Purchase for KU Related to the Joint Transit Facility

 

As the City Commission will recall, several actions have taken place over this last year relating to fulfilling the City’s transit fleet needs.  A number of buses have been ordered, utilizing earmark funding and ARRA stimulus funding (both didn’t require local match), and our traditional FTA grants, which require 17% local match.  The receipt of this earmark funding and the ARRA stimulus funding have saved on originally projected bus replacement cost, as a result of there being no local match required.  Below is a recap of our plans to replace the City’s 12 fixed-route vehicles. This is an important consideration to demonstrate how the City’s immediate fleet needs are being met and how the unexpected ARRA stimulus funding could be utilized to assist the University with purchasing replacement vehicles for their fleet, thus freeing up funding for facility purchase by KU.  Additionally, it should be noted that the City has additional funding for the replacement of paratransit vehicles that will be utilized to provide ADA or T-Lift service. 

           

          CITY FIXED-ROUTE FLEET

Three 40’ Heavy-Duty Hybrid Buses

We are currently in the process of purchasing three 40’ heavy duty hybrids for use in our fleet. These hybrid buses are approximately $600,000 a unit. Since the ARRA grants require no local match the total estimated cost to purchase these three buses is $1,800,000.

 

Three 30’ Heavy-Duty Buses

We are proposing replacing three of the existing fleet with heavy-duty 29-30’ buses. This size bus allows enough flexibility in operation that it can be used in both traditional and non-traditional applications of service. We are projecting a cost of $300,000 per unit for these vehicles. These three buses would cost approximately $900,000 ($815,000 Federal and $85,000 in local match) and would be funded using traditional grants.

 

Three 25’ Medium-Duty Buses

We are proposing to replace three buses of our fleet with 30’ medium-duty (cut-away style) vehicles. We are projecting the cost of a medium-duty bus to be approximately $150,000 per unit. The cost for three vehicles would be approximately $450,000 which would be funded through traditional grants. The Federal share of this would be $373,500 while the local share would be $76,500. We are anticipating the delivery of these would be in twelve months which would have them arrive as early as late 2010. 

 

Three 25’ Light-Duty Buses

The coordination of service will undoubtedly result in some form of non-traditional service. In order to provide this type of service smaller vehicles will be required. We are proposing the acquisition of three cut-away vehicles similar to those we currently use in our T-Lift operation. These buses are expected to cost approximately $50,000 per vehicle. The total estimated cost for the three buses would be $150,000. The Federal share would be $124,500 and the local share $25,500.

 

KU FIXED-ROUTE FLEET

Six 40’ Heavy-Duty Biodiesel Buses (KU)

With this plan we are anticipating that we will totally fulfill our needs and vehicle requirements for the City of Lawrence. With these requirements being met we would use the remaining funds from the two ARRA grants ($1,130,929) for the purchase of six 40’ biodiesel buses to be used by KU. These buses cost approximately $350,000 a unit which would amount to a total estimated cost of $2,100,000. After using the remaining ARRA funds we would propose using traditional grants to make up the difference ($969,071). KU would be responsible for the local match which would amount to $164,742. Utilizing these existing federal grants would allow KU to utilize there bus replacement funds for the purchase of a joint maintenance facility. In-turn, this would also allow KU to provide charter service out of the facility. 

 

 

 

 

BUS REPLACEMENT

 

 

 

 

City

City

KU

City

City

 

 

40' hybrid

30' bio

40' bio

25' medium

25' light

 

 

(3@$600,000)

(3@$300,000)

(6@$350,000)

(3@$150,000)

(3@$50,000)

Total

FTA

$1,800,000

$815,000

$1,935,258

$373,500

$124,500

$5,048,258

Local

$0

$85,000

$164,742

$76,500

$25,500

$351,742

 

$1,800,000

$900,000

$2,100,000

$450,000

$150,000

$5,400,000

 

 

 

FEDERAL GRANTS

 

 

 

FTA

Local

Total

KS-03-0044-00 (5309)

$996,000

$204,000

$1,200,000

KS-04-0010-00 (5309)

$147,000

$30,108

$177,108

KS-15-X002-01 (115)

$400,000

$0

$400,000

KS-90-X019-01 (JARC) 

$496,818

$101,758

$598,576

KS-96-X003-00 (ARRA)  

$1,930,929

$0

$1,930,929

KS-96-X005-00 (ARRA)

$1,000,000

$0

$1,000,000

Pending FY09 (5309)

$950,000

$190,000

$1,140,000

 

$5,920,747

$525,866

$6,446,613

 

 

Next Steps: 

The KU-City Transit Planning Team will have a proposed MOU on the City Commission agenda in the near future, seeking the City’s participation in the facility. 

 

Recommendation:

Receive the update regarding the joint transit maintenance facility and provide feedback, if appropriate.