SR-9A (13)
9A
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Council Meet~ng: March 28, 1995
Santa Monica, California
MAR 2 8 1995
STAFF REPORT
TO: Mayor and City Council
FROM: City Staff
SUBJECT: Recommendation to Authorize the City Manager to Negotiate
and Execute a Contract with Five Star Parkin~ for the
Operation and Management of the Santa Mon~ca Beach
Parking Lots
INI'RODUCTrON
This report recornnends the selection of Five Star Parking to
operate the City I s 15 beach parking lots and requests authorization
to negotiate and execute a management seIVices agreement for a
three-year period beginning May 1, 1995.
The report further
outlines the selection and proposal review process, discusses the
key issues involved in operator selection and surrmarizes the maj or
contract tenns.
BACKGROUND
The City of Santa Monica is responsible for the operation of 15
surface parking lots located on the Santa Monica Beach, under a
long-term operating agreement with the State of California. Prior
to 1988, the City directly managed, operated and staffed the lots.
In 1988, the City Council approved the award of a multi-year
contract to Executive Parking Inc. (EPI) to manage and operate
these lots. EPI was required to make lease payments to the City
based on a minimum guaranteed payment and a
negotiated perc~~aAge
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of gross beach parking revenues over a specified amonnt. The
operator was responsible for covering all operating and management
expenses from net revenues after making the lease payments to the
City. Lease payments varied from year to year depending upon the
armual parking revenue realized from parking operations. This
contract with EPI has been extended by the City, on a month to
month basis, since the five-year tenn expired on July 1, 1993.
In February of 1994, the City issued a bid document inviting bids
from parking operators for operation of the beach parking lots. A
review of the submitted proposals resulted in a detemination that
all proposers provided incomplete information in specific areas
requested by the City which resulted in initiating another proposal
process. In July of 1994, the City retained a parking management
consultant to assist in evaluating the appropriate selection
process and proposal documents and to further refine the operating
standards and specifications to be included in these documents.
The City and consultant reevaluated the various ways to structure
the next contract in order to maximize revenue to the City's beach
fund as well as provide a quality, customer-oriented parking
operation. The Wlpredictable nature of beach parklng, which is
significantly weather dependent, makes it difficult to project
revenues over a multi-year period and a lease arrangement does not
necessarily ensure the best return to the Ci ty . A commonly
preferred option used by public agencies in the region is to enter
into management services agreements, where the operator and City
negotiate caps on operating and management expenses, including a
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set management fee. The operator deposits all gross revenues with
the City and is then reimbursed for actual documented expenses.
The City retains all revenues after these payments to the operator
instead of receiving only a percentage of these revenues.
Additionally, the risk to the operator in such an unpredictable
revenue climate is reduced with perhaps a smaller, but more
predictable, profit margin as a result.
A Request for proposals (RFP) was issued on February 9, 1995. The
RFP was sent to sixteen firms and was advertised in the Outlook.
A mandatory beach parking lot tour and pre-proposal conference was
held on February 21, 1995. Seven firms submitted proposals by the
February 27 deadline. These included: ACE Parking, Allright
Parking, APCOA, Executive Parking Inc., Five Star Parking, Parking
Company of America, and Parking Concepts, Inc.
Proposals were reviewed by an inter-departmental review corrrrrrttee
comprised of staff from the Departments of Conmunityand CUltural
Services, Plarming and Ccmnunity Development, Environmental and
Public Works Management 1 and Resource Management and an experienced
parking management consultant. Major review factors included: the
competitiveness of the proposed budget, including the proposed
management fee (budget proposals from the seven proposers ranged
from $11 061,391 to $1,824,153, for a three-year period); the
responsiveness of the proposed operating and management plan; the
experience of the management personnel proposed for the City's
operation; the ability to perfonn the required operations with an
emphasis on a history of successful contractual relationships with
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other public agencies i the f inn I s experience; and the fim' s
financial stability and credit history.
Based on a thorough review of the proposals against the rating
criteriat four firms were invited to participate in interviews with
the review committee which were held on March lOt 1995. Short-
listed firms included: Executive Parking Inc., Five Star Parking,
Parking Company of America and Parking Concepts, Inc.. Reference
checks, Dun and Bradstreet assessments of financial stability and
credit histories, and follow up discussions with proposers were
conducted as needed. The teclmical analysis as well as discussions
with each proposer resulted in the recommendation to enter into an
agreement with Five Star Parking.
DISCUSSION
It is important to note that the field of proposers for this
contract was highly competitive. Short-listed firms all exhibited
a high level of responsiveness to the RFP and were competitive in
most, if not all, of the areas reviewed. All firms had experience
contracting with public agencies and had therefore competed
successfully in rigorous public agency reviews. Consequently, the
city.s analysis required a critical assessment of the most
important factors that address priorities for beach operations in
the next five years. Comparative evaluations of proposed budgets
and staffing levels were conducted; reference and background
checking, and interviews provided additional information that aided
in the corrnnittee's decision-making. All proposals were evaluated
against the criteria outlined in the RFP. The following provides
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information on Five Star's strengths in those critical areas.
Budget: Five Star presented the most canpetitive cost proposal of
all seven firms -- including the lowest operating budget and
management fee -- totalling $1[061,391 for a three-year period.
Contributing to this was the most competi ti ve proposal for
management expenses (which includes the overhead and profit for the
firm). Given the overall decline in beach parking revenues in the
past several years and the increasing operations and capital
improvement demands on the beach fund, this is a critical factor in
evaluating proposals. The financial stability of the firm, coupled
with the competitiveness of the budget proposal [ results in the
most beneficial financial terms to the City without compromising
the level or quality of the service to be provided.
Management and Operations Plan: The City sought a parking operator
that could implement a management and operations plan that
addressed the priori ties of the City.
Five Star exhibited the
highest level of responsiveness overall in addressing those
priorities as follows:
(1) Staffing: Five Star presented a staffing plan that
includes the most experienced ansite manager and an
appropriate level of lot attendants. The plan includes a
strong supervision plan including a low supervisor to
employee ratio (a critical factor in the operation of
non-contiguous lots and in overseeing cash handling) I as
well as a strong maintenance staffing component.
(2) Maintenance : Five Star presented the stroTI;:rest plan to
improve and sustain the appearance and malntenance of
the beach lots with an appropriate maintenance budget.
This emphasis is important given the City1s decision to
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focus resources on improvement of the appearance of
public spaces. A large stock of supplies and equipment
enables the firm to respond quickly to ongol.ng and
emergency maintenance needs. References highlighted this
area as a strength of Five Star -- one that set them
apart from other competitors.
(3) CUstomer Service: Five Star presented a ~lan for
handling cOilluunity issues and customer camplal.nts that
involved not only the experienced onsite manager but the
firm1 s community relations staff person and their firm's
President. The finn's approach includes not only
individualized handling of co~laints and claims but the
development of public info:rmatl.on materials that clarify
beach parking policies to residents and other users.
(4) Cost Effectiveness: Five Star has achieved significant
efficiencies in the area of risk management, and in the
use of its la~e local employee pool. References fram
public agencies stressed the firm's diligence in
identifying opportill1ities for cost savings for its
clients. Having extensive experience with the current
struggles of public entities to sustain operationsl the
firm :presented a lean, yet justifiable I plan of
operatl.on.
(5) Cash Handling: Procedures are detailed and
comprehensive. Discussions with Five Star's management
indicated a high level of awareness of revenue control
issues and solutions. References typified controls as
"excellentl1 .
PersOIUlel:
A major factor considered during the reVl.ew of
proposals was the experience of the specific team assigned to the
City (i.e. I the City representative responsible for the contract
and overall management issues and the onsite project manager).
Five Star's designated City team was the strongest of all
proposers. The City representati ve has 29 years of parking
experl.ence and is General Manager of Five Star.
He is highly
regarded by staff of the public agencies with whom he works. The
onsite manager I responsible for daily operations, is Five Star's
most senior operations manager. His assignments have included
General Manager of both LAX operations and the Music Center. His
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experience in budgeting, cash handling, and supervision was
significantly stronger than other proposed onsite managers.
Ability to Perfo:cn: The ability of Five Star to perfonn corrplex
and challenging parking operations was confinned by those public
agencies who have contracted with the firm in the past or
currently. Highlighted were the finn 1 s responsiveness, ability to
staff efficiently and quickly given its large regional employee
pool, their emphasis on facility maintenance, and the extensive
cash handling and revenue control procedures currently in place.
Governmental clients identify the experience of top management as
an extremely valuable asset, including the firm's willingness to
present cost-saving and revenue-generating proposals even in the
absence of any financial gain by the finn.
Experience: Five Star, a Los Angeles-based fim, provides parking
management services at approximately 100 locations. Past and
current contracts with governmental agencies are the most extensive
of all proposers and include: the City of Los Angeles (Los Angeles
International Airport (lAX) and non-contiguous surface lots in the
City) i County of Los Angeles (Music Center, Courthouse lots) i
Memorial Coliseum; the Port of Los Angeles; the City of Pasadena
(Rose Bowl); the City of Long Beach (Convention Center); the City
of Culver City; as well as contracts with the County and City of
San Francisco and the Port Authority of New York and New Jersey
(JFK and La Guardia Airports). This extensive experience includes
the operation of non-contiguous parking lots, major event parking,
and locations with unpredictable parking demand requiring skill 1.TI
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staffing and scheduling of lots. The fim's experience includes a
broad range of supportive services to its governmental clientsl
including consultation on traffic and circulation, signagel revenue
control, public relations and revenue enhancements.
Financial Stability:
Review of financial statements and
information obtained from Dun and Bradstreet indicate that Five
Star Parking is in good financial condition with a documented
ability to sustain large and corrplex parking operations. The
firmrs credit worthiness has been verified.
TERMS OF THE CONTRAer
The proposed management services agreement with Five Star Parking
would be for a period of three years, beginning May 11 1995, with
a single two-year renewal option at the sole discretion of the
City. Major contract provisions lnclude:
(I) Deposit of all gross revenues fran parking operations
with the City on a daily basis.
(2) Reimbursement by the City to the operator for all agreed
upon ongoing operating expenses as outlined in the
contract. A fixed payment of management expenses not to
exceed $190,907 for the three year period. Payments
would be made to the operator on a monthly basis;
(2) An additional payment to the operator of 3% of any net
revenue increase (after ~enses) over the prior year.
This provides a financial lncentive for the operator to
work with the City to increase revenues throughout the
tem of the contract.
(3) Provision by the operator of the full range of services
needed to manage I operate, and maintain the City's 15
beach parking lots. Major responsibilities include the
collection of daily and permit parking feesl issuance of
parking permits, handling parking for special events and
filming I maintenance of lots as specified, providing
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adequate staffing to implement the agreed upon scope of
work, implementing appropriate cash handling and revenue
control procedures, monitoring, and auditing of parking
operations, expenditures and revenues.
BUD3ETARY /FINANCIAL IMPACT
The Beach Fund budget needs to be revised to include an
appropriation of $57,232 in account number 11-400-522-00000-4439-
00000 for May and June 1995 beach parking operations under the new
contract. The revenue budget for this flscal year already includes
an approximation of the gross revenues to be received under the
management services agreement.
REcavlMENDATlON
Staff recorrmends that the City Council (1) authorize the City
Manager to negotiate and execute an agreement with Five Star
Parking for management and operation of the city.s beach parking
lots in an amount consistent with their $1,061,391 proposal for a
three-year period, beginning May 1, 1995, and (2) approve the
appropriation for FY 1994-95 as specified in this staff report.
Prepared by: Susan McCarthy, Director
Department of Conmunity and 011tural Servlces
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