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SR-06101986-6M~~~ JuN 10 196 GS:SES:JM:mh Council Meeting: 6/10/86 Santa Monica, California T0: Mayor and City Council FROM: City Staff Subject: Recommendation to Approve the Selection of Executive Parking as the Pier Parking Lot Operator and to Authorize the City Manager to Execute a Contract for Operation of the Pier Parking Lot Introduction This report requests that Council approve the selection of Executive Parking as parking management firm for the Santa Monica Pier and authorize the City Manager to execute a contract with Executive Parking for the management and operation of the parking lot. Background The Santa Monica Pier Parking Lot has been managed by various City departments over the years. Certain issues such as the rate structure, revenue controls, validation system, and pedestrian circulation have been continually debated and discussed by the City and the Pier lessees. A variety of methods and equipment have been tried with less than satisfactory results. During the initial period of organization of the Pier Restoration Corporation (PRC), the Board identified the shift to private operation of the parking lot as a desired objective for the Pier. The shift to a private operator is recommended as the best means to bring needed parking management expertise to the Pier operation. A parking management firm, such as Executive Parking, JUN 10 19' ~~` 1 - has the capacity to make marked improvements in the parking operation. The current operation has an inadequate system of revenue control; Executive Parking has some of the most extensive revenue control procedures in the industry. All income is recorded by computer and summary reports are generated which include average income per ticket, per shift, per employee, per day 365 days per year. Any fluctuation in revenues produced on day-to-day basis is immediately investigated. There is currently little training for parking lot. attendants. All Executive Parking employees undergo two week training period at the Corporate Office. Another benefit is the availability of a labor pool to provide for full automatic coverage in the event of sickness or absence. In April, 1985, the City issued a Request for Proposals (RFP) for the management and operation of the parking lot. The RFP was sent to twenty-five (25) firms; five (5) proposals were received. The proposals were reviewed by a Selection Committee which included the City's Parking and Traffic Engineer, Pier Manager, Executive Director of the Pier Restoration Corporation, and Serop Der Boghossin, a parking management consultant. The proposals were evaluated for completeness of the management and operational plan, the experience of the firm, the proposed validation, traffic flow, and revenue control systems, and the financial return to the City. The Selection Committee invited two (2) firms for interviews, Stock and Buckley Pacific Valet Service and Executive Parking. The Selection Committee judged Executive Parking to be the most qualified firm based upon the firm's - 2 - direct experience in parking management and parking security in the Santa Monica area far the past ten (10) years. Executive Parking currently operates 65 parking lots and garages; clients include Santa Monica Hospital, Bank of America, Campbell Men's Store, Paseo del Mar, and the cities of Beverly Hills and Newport Beach. The City of Beverly Hills is very satisfied with Executive Parking and is recommending renewal of its contract. Benefits gained by Beverly Hills include a large pool of employees, more economical operation, and a buffer to handle complaints from the public. Following the selection of Executive Parking in May, 1985, the decision to go forward with negotiation of a contract was delayed to allow for evaluation of this action with regard to long-term parking plans for the Pier. The Pier Parking and Traffic Circulation Study, undertaken by TDA, Inc., in June, 1985, has been completed. This study analyzed circulation issues, projected parking demand for future Pier development and looked at a number of alternative locations for a parking structure. The study has recommended a site for a parking structure located south of the Pier. Preliminary engineering and economic feasibility work is planned for the next fiscal year. The actual construction of a parking facility is at least three years away. Staff is recommending that a three-year contract be awarded to Executive Parking as the best means to improve the short-term operation of the parking lot and allow for transition to the more long-term offsite parking solution. Executive Parking will bring a professionalism and expertise to the management of the parking - 3 - lot which will serve to enhance the current efforts to upgrade and and revitalize the Pier. As indicated earlier, one of the main objectives of contracting with a professional parking management firm is to improve the system of revenue controls, traffic flow, and to provide a rate structure which will promote the use of the Pier and its businesses and provide a sound financial return to the City. Staff is recommending that Executive Parking manage the parking lot as it is currently run for a period of 60 days. During this time, the firm may gather information first-hand on parking lot usage patterns and other operational matters so that an informed analysis of the most efficient and best controlled operation may be made. Decisions on the rate structure, validation system, parking booth location, traffic flow, and equipment installation will be made fallowing direct involvement with the Pier parking operation. The PRC and the Santa Monica Pier Lessees Association will be consulted on the recommended program. Any proposed changes in parking rates will be submitted to Council for approval at a later date. Terms of the Contract The proposed contract provides for a three-year term commencing on July 1, 1986. Executive Parking has agreed to offer employment within its organization to the five (5) as-needed Parking Lot Attendants currently employed by the City. City staff has met and conferred with the employees and discussed the proposed change in management. The current employees are "as-needed" and receive no benefits. Under the agreement with - 4 - Executive Parking the employees will be retained and will receive benefits at the same or less cost to the City. Executive Parking will manage and operate the parking lot in accordance with the hours of operation and rates determined by the City. The contract provides for the City to receive a guaranteed amount of $165,000 annually. Payments will be monthly but in varying amounts so as to be consistent with cash flow normally generated by the seasonal nature of Pier parking usage. This amount of $165,000 is equal to the net profit the City would receive under City operation of the lot. The contractor will pay all expenses required for the operation and management of the lot. If annual gross revenues exceed $235,000, which is the approximate projected 1986-87 revenue, the City will receive 40% of gross revenues above $235,000 plus the $165,000 guarantee. The contract further provides that if gross revenues exceed $400,000, the City's share would increase to 60~ of gross revenues above $235,000. The City will continue to maintain the parking lot and provide security patrol. Budget/Financial Impact The projected 1986-87 revenues under City operation for the Pier parking lot are $233,600. The minimum net revenues to the City under the contract will be $165,000. Expenditures for personnel and supplies are included in the Pier Management Division operating budget. As a result of the switch to a private operator, the operating budget will be decreased by $46,015 the - 5 - amount of direct costs the City will no longer incur. Indirect costs of $25,235 which represent the costs for City management and supervision, workers compensation, self-insurance fund contribution, and administrative indirect charges associated with payroll and treasury, cannot be directly deducted from the Pier operating budget at this time. These reductions will appear in two years as administrative indirect charges and insurance contributions are adjusted to reflect the change in parking lot operation. Likewise, staff time currently devoted to parking lot supervision may be redirected to other priorities. Appropriate expense and revenue adjustments will be presented in the staff report submitted to Council requesting approval of the 1986-87 budget. Recommendation Staff respectfully recommends that Council approve the selection of Executive Parking as Pier Parking Lot Operator and authorize the City Manager to execute a contract for the operation of the Pier parking lot. Prepared by: Stan Scholl, Director of General Services Judith Meister, Pier Manager - 6 - Reference Contract No. 4694 (CCS).