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HomeMy WebLinkAboutAgenda Statement 1978/05/09 Item 16CITY OF CHULA VISTA _ COUNCIL AGENDA STATEMENT Item No._ For meeting of 5/9/78 ITEM TITLE Resolution Approving Fifteenth Amendment to the Agreement between City and Aztec Bus Lines, Appropriating Funds, and Authorizing Mayor to Execute the Amendment SUBMITTED BY Director of Public Works/City Engineer J, ~ ITEM EXPLANATION (4/5TH'S VOTE REQUIRED YES x NO ) Aztec Bus Lines has requested payment from the City for additional costs incurred in the operation of Chula Vista Transit during Fiscal Year 1976-77 and Fiscal Year 1977-78. After lengthy discussions with Aztec and a review of their audited operations cost, staff has deter- mined that earlier agreements for compensation by the City to Aztec fall short of the actual costs of operation. Staff has, in fact, found that Aztec Bus Lines has operated at a loss based upon the pre- viously agreed upon formula. Staff recommended to the Council at their April 25th meeting that payment of $42,786 be made to Aztec for reimbursement of additional justified operating costs incurred in the previous and current fiscal years. The Council stated that they did not believe the City should pay for additional costs incurred in ful- filling a contract which expired almost one year acJo and which the~~ had no legal obligation to pay. Council also directed staff to come back to them at a future meeting with another resolution detailing revised cost figures for the current fiscal year only if staff feels it is appropriate. Staff, therefore, is now recommending that the existing transit service contract be amended to provide for payment to Aztec of an additional sum of $28, 249 based on the follow-• ing: 1. $13,712, or $.028/mile, which is the estimated additional cost incurred by Aztec in the operation of CVT during the current fiscal year. When the 1977-78 agreement was negotiated, the audited costs for Fiscal Year 1976-77 were not available; therefore, negotiations were based upon estimated costs. The estimated FY76-77 costs were determined to be $14,537 less than JAB: h: Y 2 EXHIBITS (continued on supplemental paael Agreement, Resolutions Ordinance Plat Notification List Other ENVIRONMENTAL DOCUMENT: Attached Submitted on FINANCIAL IMPACT Appropriate from the Unappropriated Balance of both the General Fund and the Transit Services Fund a total of $28,249 to Account No. 235- 2350-5271. $14,249 from the Transit Service Fund to be reimbursed by LTF and $14,000 from the General Fund as a City subsidy. STAFF RECOMMENDATION Adopt resolution. BOARD/COMMISSION RECOMMENDATION COUNCIL ACTION Continued to Council Conference on June 8, 1978 AGENDA ITEM NO. 16 Supplemental Page 2 May 9, 1978 the actual operating costs based on a financial audit received by the City in February, 1978. Therefore, staff believes it is fair and equitable to reflect that difference plus 7 percent for inflation in this year's payment. Had we the real costs during the earlier negotiations, I believe this is what we would have done. Operating costs estimated for the current fiscal year, based on actual cost figures for the first three quarters supplied by Aztec, exceed this 7 percent inflation rate or the $13,712 figure that staff recommends paying Aztec. The CVT contract costs for Fiscal Year 1977-78 would thus be increased to about $.76 per mile without profit. 2. $14,537, or $.03/mile, which is the profit not realized because of higher Aztec operating costs than estimated in the current contract. The current contract includes as a component of total payment, a $.03 profit figure. Staff recommends the payment of this justifiable as well as reasonable profit figure to Aztec. The appropriate amendment to the agreement has been prepared which lists the amended CVT FY1977-78 total contract price of $.79/mile (as opposed to the existing contract price of $.73/mile) for the 484,563 miles to be traveled in the current fiscal year. Thus, an additional payment of $28,249 to Aztec is recommended to be paid before the City's current fiscal year CVT contract expires. The staff of CPO, the designated administrator of all Transportation Development Act (TDA) or LTF monies for San Diego County, highly recom- mends this payment to Aztec. They view the additional costs as legiti- mate and justifiable expenses on the part of Aztec Bus Lines in the actual operation of the City's local transit system and thus are con- sidered eligible costs to be partially reimbursed under existing TDA guidelines. Staff believes that even though there may be no strict legal obligation for the City to pay Aztec, the $28,249 (half of which would be appro- priated from the City's General Fund), it would be a matter of fairness and equity on the part of the City to make such payment. We believe that Aztec has provided a valuable (and efficient) service to the City over the years at costs that have been significantly lower than any other available contract service provider. Payment of these additional costs will maintain the effective relationship the City has had with Aztec in the past. It is staff's recommendation that payment of the $28,249 be made at this time rather than being worked into next year's bus service con- tract because of the following two primary reasons: 1. Aztec has constantly reported to the City that they are losing money on their Chula Vista contract and they need these funds at this time in order to cover higher than anticipated CVT operating costs. 2. It would be easier, from an accounting viewpoint, if payment of these additional costs would be made to Aztec in this fiscal year due to the reporting requirements of the various Regional, State and Federal agencies involved in the financing of Chula Vista Transit. Also, if payment would be made next fiscal year, then transit operating costs for next year would be inflated, as well as the operating costs for the current year would also be distorted (i.e., lower than actual). Staff anticipates that with the implementation of the new cost ac- counting and reporting system, the proposed (estimated) operating costs for next year's CVT contract would be much closer to Aztec's actual operating costs for this time period. Fifteen percent, or $4,237, will be withheld from the payment until Aztec provides the City with the first quarter reports (of calendar year 1978) of the CVT cost accounting and reporting system unless the City receives the aforementioned reports by June 30, 1978. Aztec AGENDA ITEM NO. 16 Supplemental Page 3 May 9, 1978 would forfeit the $4,237 if these reports are not submitted to the City prior to June 30, 1978. $750 will also be withheld from the $28,249 payment due to 22 missed trips (per Article 11 of the current year's bus service contract), which resulted in a deficit of 953 ser- vice miles operated by Aztec during the current fiscal year.