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SR-112707-1N~_ ~;tYof City Council Report Santa Monicam City Council Meeting: November 27, 2007 Agenda Item: ~- N To: Mayor and City Council From: Mona Miyasato, Deputy City Manager Subject: Authorization to Negotiate and Execute a Professional Services Agreement on Financial Strategies and Operations Analysis for the Big Blue Bus and Appropriation of Funds for the Agreement Recommended Action Staff recommends that the City Council: 1. authorize the City Manager to negotiate and execute a professional services agreement with TransTrack Systems, Inc. in the amount of $91,501 on financial strategies and operations analysis for the Big Blue Bus; and 2. approve appropriate of funds in the amount of $91,501. Executive Summary Over the past few years, due to increasing operating and capital expenses coupled with unstable subsidy funding from the Los Angeles County Metropolitan Transportation Authority (Metro), the Big Blue Bus has shown a projected structural budget deficit. To guide future forecast and service assumptions, an independent analysis of the financial capacity of the Big Blue Bus is proposed. This analysis will include a financial review to look at operating cost growth, infrastructure needs, and regional funding trends. The study will also review service productivity and efficiencies and benchmark key performance indicators with other peer operations. The information provided by this study will guide forecasting assumptions that are used during the annual budget process. Discussion Transit systems in the Los Angeles regional area have three major revenue sources for day-to-day operations: locally -generated revenues (passenger fares, charter and advertising revenues, lease revenues, etc.); countywide sales tax revenues (Proposition A Discretionary funds); and state transit subsidies (Transportation Development Act, 1 and State Transit Assistance Funds). Countywide and state subsidies are distributed by Metro on a formula basis. While formula funds may be used for operating or capital sources, the Big Blue Bus also receives transit capital funding from Federal Transit Administration which is also allocated through Metro. Similar to other transit systems, Big Blue Bus experienced operating cost growth outpacing the revenue growth in recent years, while the demand for services has increased. This trend has resulted in the Big Blue Bus increasing its use of federal funding for its capital needs and seeking more discretionary funding sources for both operating and capital needs. To gain a more thorough understanding of the financial capacity of the Big Blue Bus a study by consultants to analyze current financial trends and operating strategies is proposed. In addition to reviewing current trends, the project will examine Big Blue Bus operating efficiencies, service productivity and infrastructure needs. The study will also benchmark Big Blue bus key performance indicators with other peer operations. Contractor/Consultant Selection In May 2007, a Request for Proposals was issued and sent to thirteen vendors. Subsequently three proposals were received by the deadline in June. Finance,. Big Blue Bus and City Manager staff reviewed the proposals and recommended TransTrack Systems, Inc. as the firm most qualified to meet the needs of the City. TransTrack showed excellent project understanding and analytical approach, strong operational knowledge, expertise in process re-engineering and change management, and extensive knowledge of transit financing in Los Angeles County. Financial Impacts & Budget Actions The study will provide a basis for future financial forecasting assumptions that are used during the annual budget process. 2 An appropriation of $91,501 is required from Proposition A Local Return grant funds at account 20640.555060 for this professional services agreement with TransTrack Systems, Inc. Prepared by: Carol Swindell, Finance Director Stephanie Negriff, Transit Services Director Approved: Mona Miyasato Deputy City Ma Forwarded to Council: 3 Reference Contract Nos. 8863 (CCS)