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Home My WebLink AboutSS3 - Towing Fees and ServicesQ ��W PpRT CITY OF s NEWPORT BEACH cIt,FORCity Council Staff Report January 12, 2016 Agenda Item No. SS3 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: Dave Kiff — City Manager PREPARED BY: Rob Houston — Assistant to the City Manager PHONE: 949-644-3033 TITLE: Towing Fees, Towing Services ABSTRACT: The Purchasing Agent and the Police Department have conducted a Request for Proposal (RFP) process to seek providers of towing services. The City also conducted a fee study and is proposing a new fee for City Council approval that reflects the costs incurred by staff to administer the City's official police tow service program. RECOMMENDATION: Discuss and provide staff with any additional direction in regards to the fee as well as to the towing providers. FUNDING REQUIREMENTS: Not applicable at this time. DISCUSSION: The Newport Beach Police Department utilizes the services of towing companies to remove vehicles from roadway incidents. The City is also charged with overseeing the fees charged by towing companies in the City. A recent fee study was conducted to determine the appropriate fee to charge for towing services. In addition, the terms of the existing towing providers' contracts came due which generated a need to seek new proposals for towing services. In the five-part discussion below there is an explanation of: 1. A general overview of towing in Newport Beach; 2. The fee study process, which includes the new calculated cost recovery fee and a request to approve a municipal code language change; SS3-1 Towing Fees, Towing Services January 12, 2016 Page 2 3. The Towing Services Request for Proposal (RFP) process and the rankings for towing company selection; 4. The revised towing charge schedule; and 5. Comparison of a typical towing bill now alongside a bill that would include the proposed rate increase. Towinq Overview The California Vehicle Code regulates towing procedures for both public and private property. The City oversees towing actions on public property, including roadways, alleys, and public parking lots. The Police Department initiates the tow and calls one of the two approved towing operators the City has under contract to tow and impound the vehicle. The City periodically conducts a request for proposals from interested towing operators and picks two operators to be on call for police -initiated towing action. Private property towing, known as private party impounds (PPI), is handled by property owners and private towing operators. Any towing operator wishing to provide service for PPI action must first seek review and approval from the City's Attorney's office. The Auto Club also provides towing services with Auto Club approved towing operators that are requested by members of the Auto Club. The fees charged for both public towing and PPIs must adhere to the City's fee schedule. Towing fees are collected for both public and private towing by the towing operators to reimburse the operators for towing and storage costs. The City also charges an additional "Impound Release Fee" fee for public property tows. The impound release fee is collected in order to recover staff costs incurred for each towing action Reasons for towing from public property include; • The collection of the vehicle driven by a person arrested under the suspicion of committing a crime • For evidentiary purposes (the car was either the focus of the crime, used in the commission of the crime, or in the instance of fatal collision, the instrumentality of the crime) • To move a disabled vehicle from the roadway in the event of a traffic collision • To remove vehicles parked illegally within the City (blocking alleys, driveways, excessive citations, etc.) • When a vehicle is impounded due to driver having expired registration, an unlicensed driver, or a driver with a suspended license SS3-2 Towing Fees, Towing Services January 12, 2016 Page 3 There were 1,117 public property tows in Newport Beach in 2014. Towing volume has gone down over the last number of years due to changes in the vehicle code and police practice. Number of NB Public Property Tows YEAR # of Tows FY 2012 1345 FY 2013 1311 FY 2014 1117 FY 2105 1185 Vehicle towing volume also varies over the course of a year. It can be higher in months such as August and October when more visitors and special events occur here. November and January are lower volume months. Towing records also indicate that on average 15% of vehicles towed are owned by Newport Beach residents and 85% of vehicles towed are owned by visitors to the community. Fee Study Process California Vehicle Code Section 12110(b) allows a public entity to impose a franchise fee for towing a vehicle, so long as such fee does not exceed "the amount necessary to reimburse the public entity for its actual and reasonable costs incurred in connection with the towing program." The City currently charges both an "Impound Release Fee" of $38 to the towing customer, and requires the Towing companies under contract to remit 10% of their gross towing revenue as a "franchise fee". All cities in Orange County charge the customer a fee but Newport Beach is the only city in the county that requires the towing operators to contribute a portion of their revenues back to the City. The chart below shows the total revenue derived from these two fees over the last 4 fiscal years. SS3-3 City Impound Fees Tow Franchise TOTAL (Customer Paid) Fees (Contractor Revenue Paid) FY 2012 $45,419 $58,025 $103,444 FY 2013 $23,899 $71,608 $95,507 FY 2014 $42,982 $65,239 $108,221 FY 2015 $31,761 $62,427 $94,188 SS3-3 Towing Fees, Towing Services January 12, 2016 Page 4 The City requested that MGT of America, Inc. ("MGT") study the City's cost -of -services related to a vehicle tow. MGT found the full cost to be the equivalent of $130 per tow for City service costs associated with processing the tow. This cost was determined by adding up the time involved in processing a towing action, which includes; 1. Police Dispatch time to summon the tow company to the scene and to forward the information to Records; 2. Community Service Officers' time to inventory the vehicle, enter information into the appropriate systems, complete and mail a letter to the registered owner, fax vehicle reports to the tow companies, and complete report approval; and 3. Administrative and citywide overhead. Municipal Code Section 5.15.095 currently requires tow operators to pay 10% of their gross receipts from tow services on a quarterly basis. Staff recommends that the tow operators continue to pay the equivalent 10% amount, or $55 per tow, to the City. The equivalent of the 10% franchise fee received by the City was calculated by dividing the total franchise fees received for the last three years by the total number of tows for the last three years. The average fee per tow is $55. In order for the City to properly collect the $130 to recover the cost of service, we recommend that the revenue collection be revised in order to reduce the impact to the customer being towed. Instead of the $38 Impound Fee charged to the customer increasing to $130, we recommend that the contractor contribution (Franchise Fee) of $55 per tow be used to reduce the $130 fee down to $75. The City will still receive the $130 to repay the cost of service but the customer will only pay $75 to the City at the time of vehicle pick up. The table below shows a comparison of towing fees charged in a sampling of Orange County cities as well as the date they last studied and updated their fees. It can be noted that some cities have not reviewed their fees for many years and have lower fee rates than cities that have reviewed their fees more recently. SS3-4 Tow Franchise Fee # of Annual Tows Annual Total (10%) Average Cost Per Tow FY 2013 $71,608 1311 $55 FY 2014 $65,239 1117 $58 FY 2015 $62,427 1185 $53 3 Year Average $55 The equivalent of the 10% franchise fee received by the City was calculated by dividing the total franchise fees received for the last three years by the total number of tows for the last three years. The average fee per tow is $55. In order for the City to properly collect the $130 to recover the cost of service, we recommend that the revenue collection be revised in order to reduce the impact to the customer being towed. Instead of the $38 Impound Fee charged to the customer increasing to $130, we recommend that the contractor contribution (Franchise Fee) of $55 per tow be used to reduce the $130 fee down to $75. The City will still receive the $130 to repay the cost of service but the customer will only pay $75 to the City at the time of vehicle pick up. The table below shows a comparison of towing fees charged in a sampling of Orange County cities as well as the date they last studied and updated their fees. It can be noted that some cities have not reviewed their fees for many years and have lower fee rates than cities that have reviewed their fees more recently. SS3-4 Towing Fees, Towing Services January 12, 2016 Page 5 Comparison Table - Current Tow fees of Orange County Cities Explanation of Tiered Tow Fee Rates* *City of Irvine charges the higher $150 rate if the vehicle is towed pursuant to a DUI arrest or driving with a suspended or no license. The higher fee is charged to cover the added cost of police time to complete paperwork related to those infractions. *City of Santa Ana also charges a higher $190 release fee to cover the costs of added paperwork and police time for the DUI arrests, driving without a license or a suspended license. *City of Fountain Valley has a six tier fee schedule. The vehicle release fee is $130 for any tows other than DUls and arrests. Vehicle release fees related to arrests are $225 if arrested and released; $408 if arrested and booked. The vehicle release for a DUI arrest is $425. The updated Municipal Code language attached would appropriately reflect the City's cost -of -services fee recommendation as described above. RFP Process — Towing Contractor Selection Code Review The procurement procedures that govern Police towing services are found in Municipal Code Section 5.15. This code section details the methods used in administering these solicitations; minimum qualifications criteria such as storage lot space, fleet size and proximity to city limits; and specifically calls for the City to retain exactly two (2) towing operators. Solicitations regarding vehicle towing and impounding services must adhere to this code section. The City occasionally reviews this code section to determine if updates or revisions are required. For example, in 2013, the City updated section 5.15.110 to require tow operators to be located within three (3) miles of Newport Beach City limits. The previous language called for tow operators to be located within three (3) miles of the Newport Beach City Hall. During the latest solicitations for proposals, the City considered possible changes to code sections addressing: outdoor and indoor vehicle storage SS3-5 Proposed City Laguna Irvine Costa Huntington Fountain Santa Newport Beach Mesa Beach Valley Ana Beach Fee Tow Fee $20 $130/ 0 to client $40 /$30 $200 $150 $425* 1 /$190* $ $75 /$150* Feeslast reviewed 2002 2005 2008 2009 2015 2015 2015 Explanation of Tiered Tow Fee Rates* *City of Irvine charges the higher $150 rate if the vehicle is towed pursuant to a DUI arrest or driving with a suspended or no license. The higher fee is charged to cover the added cost of police time to complete paperwork related to those infractions. *City of Santa Ana also charges a higher $190 release fee to cover the costs of added paperwork and police time for the DUI arrests, driving without a license or a suspended license. *City of Fountain Valley has a six tier fee schedule. The vehicle release fee is $130 for any tows other than DUls and arrests. Vehicle release fees related to arrests are $225 if arrested and released; $408 if arrested and booked. The vehicle release for a DUI arrest is $425. The updated Municipal Code language attached would appropriately reflect the City's cost -of -services fee recommendation as described above. RFP Process — Towing Contractor Selection Code Review The procurement procedures that govern Police towing services are found in Municipal Code Section 5.15. This code section details the methods used in administering these solicitations; minimum qualifications criteria such as storage lot space, fleet size and proximity to city limits; and specifically calls for the City to retain exactly two (2) towing operators. Solicitations regarding vehicle towing and impounding services must adhere to this code section. The City occasionally reviews this code section to determine if updates or revisions are required. For example, in 2013, the City updated section 5.15.110 to require tow operators to be located within three (3) miles of Newport Beach City limits. The previous language called for tow operators to be located within three (3) miles of the Newport Beach City Hall. During the latest solicitations for proposals, the City considered possible changes to code sections addressing: outdoor and indoor vehicle storage SS3-5 Towing Fees, Towing Services January 12, 2016 Page 6 space; standards for tow truck equipment; and the number of official towing service providers. Police Department staff determined that the language concerning indoor and outdoor vehicle storage space should remain unchanged as the square footage requirement for outdoor vehicle storage (44,000 square feet) ensures that the City's tow operators can effectively store the City's impounded vehicles in addition to vehicles for any other municipalities serviced by the same tow operators. Also, the square footage requirement for indoor vehicle storage (1,000 square feet) is crucial for vehicle collisions involving bodily injury or death. In these instances, the vehicle must be placed in storage until the matter at hand is fully adjudicated. Having ample indoor vehicle storage space ensures that these vehicles can be stored properly without affecting business for the tow operators. The code section also details specific requirements for the tow truck equipment. The Police Department deemed these requirements remain unchanged due to the various areas throughout the City such as beach areas and small alleyways requiring special access. The City also regularly impounds a number of exotic cars, requiring specialized tow truck equipment to handle these impounding needs. The City also reviewed the code section calling for the City to retain exactly two (2) tow truck operators. Currently, the City's tow operators are on a weekly rotation to ensure ample coverage. Having two operators is a benefit to the City as it gives the City access to two sets of storage yards for vehicle impounding purposes. However, over the last number of years the law governing the storage and impounding of vehicles has changed resulting in new limitations as to when towing is permitted. These changes have caused a reduction in annual towing numbers in the City, and less economy of scale benefits to the towing companies as they attempt to provide all the standards the City requires while receiving reduced revenues from the lower tow volume. In looking at these declining tow numbers over the last number of years there was a question as to if there was now only enough volume to merit a single operator, but it was felt that we have not yet reached that point and the two operator requirement was maintained. The review of this code section ensures that the specifications used in a solicitation for proposals reflect the most current needs of the City and the scope of services requested by the City represents actual working standards as set forth by the Police Department. RFP Prnracc In April 2013, the City published Request for Proposal ("RFP") 13-45, soliciting proposals for vehicle towing and impounding services. The City received three (3) proposals in response to this solicitation, from G&W Towing, MetroPro Towing, and SS3-6 Towing Fees, Towing Services January 12, 2016 Page 7 Southside Towing. The City completed site visits at each proposer's tow yard and proposal evaluations, but it put the evaluation process and RFP award on hold due to a pending City fee study that had potential implications on the rate structure of the City's vehicle towing and impounding services contracts. The City informed all proposers that the City would not make an award decision until the fee study concluded. As the new compensation and fee structure represented a significant change to the project scope and contractor requirements, the City canceled RFP 13-45 and issued a new solicitation in May 2015 reflecting these changes, RFP 15-67. However, staff overlooked a provision of Municipal Code Section 5.15 requiring advertisement in the local newspaper for procurement solicitations of vehicle towing and impounding services. The City rescinded RFP No. 15-67 and re-released the solicitation as RFP No. 16-07, with staff ensuring this latest RFP complied with all advertising and publication requirements set forth in the Code. RFP No. 16-07 closed on September 4, 2015 and the City received three (3) proposals from the same proposers that have engaged the City since the 2013 RFP: G&W Towing, MetroPro Towing, and Southside Towing. Proposal Evaluation and Selection The evaluation panel for this procurement consisted of staff from the Newport Beach Police Department. The panel evaluated the proposals, using selection criteria such as experience, qualifications, references and operational adherence to requirements as set forth in the Code. The following narrative provides a comparison of the three proposers with regard to the selection criteria. Experience and Qualifications: G&W Towing and MetroPro Towing have provided satisfactory tow services to the City for many years, with G&W Towing providing services to the City since 1980 and MetroPro Towing providing services since 1963. Both companies have extensive experience working with municipalities and currently are the official police tow for several local agencies (G&W currently services four (4) municipalities; MetroPro currently services six (6) municipalities). Southside Towing has been providing official police tow services in the area since 2008, and it currently is the official police tow provider for three (3) local agencies. G&W Towing and MetroPro Towing have a history of consistent, exemplary service to the City and other agencies; Southside Towing does not have a towing history with the City nor the same municipal agency towing experience of G&W Towing and MetroPro Towing. Fleet Requirements: Section 5.15.100 of the Code details specific standards for tow truck equipment. The Code calls for tow operators to have a minimum of 12 tow trucks with a minimum SS3-7 Towing Fees, Towing Services January 12, 2016 Page 8 one -ton tow capacity. Other parts of this section mandate the appearance of tow trucks, lights and additional equipment to be carried on board tow trucks. All three proposers meet or exceed the minimum fleet requirements called for in the Code. Proximity to the city; security fencing. The Code calls for tow operator storage lots to be located within three (3) miles of City limits and for storage lots to be fenced at least six (6) feet high. All three proposers operate lots that meet these proximity and security requirements. Indoor and Outdoor Storage: The amount of storage space each company is able to provide is of significant concern to the Police Department. Both G&W Towing and MetroPro Towing have outside storage space (69,600 and 47,000 square feet, respectively) that exceeds the minimum requirements (44,000 square feet) set forth in the Code. Southside Towing's outside storage space (38,940 square feet) is less than the minimum set forth in the Code. Further, while the inside storage space at each company meets the minimum set forth by the RFP, Southside Towing has significantly less inside storage (1,300 square feet) than either G&W Towing (6,000 square feet) or MetroPro Towing (5,090 square feet). The amount of total storage in general, and inside storage in particular, is of significance as we (and other municipalities who we share the space with) have to store numerous vehicles for evidentiary purposes following fatal traffic collisions. The amount of inside storage is vital, as vehicles can be stored for years pending the outcome of criminal court proceedings. The importance of ample space is highlighted by the fact that despite having five times the minimum amount of inside storage required by the Code, the City's current tow providers are nearing their capacity with regard to inside storage. Recommended Towina Companv Selection Scoring Results From Towing RFP Review G&W Towing MetroPro Towing Southside Towing Evaluation Score (Out of 100): 76.00 75.00 55.00 Overall Rank: 1 2 3 Southside Towing did not score as high as the other two proposers, due largely in part to their outdoor vehicle storage space. Also, Southside Towing cites seven (7) years of police tow experience in their contracts with various local public agencies. G&W Towing and MetroPro Towing cited decades of experience in dealing specifically with our community. SS3-8 Towing Fees, Towing Services January 12, 2016 Page 9 The scoring noted above results from staff's belief that G&W Towing and MetroPro Towing have an extensive history of providing consistent, reliable service to the Police Department and the City as a whole. They meet or exceed each of the requirements of the Code, including the outside towing space requirement, and both companies have more experience in providing police tow services than Southside Towing. If the Council desires to add a third towing company under contract the Council should direct us to come back with appropriate contracts and a change to the municipal code allowing for three companies. Updating the Tow Rates Schedule The two recommended towing companies also provided a proposal to update the towing rate schedule as is allowed in the municipal code. Although this schedule is increased annually by the CPI, the towing operators stated that that workers compensation, liability insurance premiums, and vehicle purchase cost increases have greatly outpaced this CPI increase rate. Staff reviewed their proposal and felt the proposed increase of over 17% to the rates was too high compared to the rates of the neighboring communities. Staff negotiated a lower rate adjustment that would reduce the towing schedule charge increases to 5%. The new schedule with the 5% increase is shown below and recommended for approval. NB towing Rates Current Towing Rates Proposed Rates (5% increase) Towing LT. Duty $163 $172 Med. Duty $178 $188 Hv . Duty $310 $327 Flatbed $178 $188 Motorcycle $178 $188 Storage Car Outside $43 $45 Car Inside $51 $54 Truck Outside $50 $53 Truck Inside $60 $63 Motorcycle $24 $25 SS3-9 Towing Fees, Towing Services January 12, 2016 Page 10 Typical Towing Bill Comparison A typical towing bill would be for a regular passenger car being towed to the yard and held for one day. This would result in the collection of a Light Duty Tow fee, a One Day Storage Fee, and a City Impound Release Fee. The table below compares the current Tow Fees and Impound Release Fee charges with what the proposed new Tow Fees and Impound Release Fee would be. Current Fees Proposed Fees Labor $163 $172 Labor $163 $172 Driveline $29 $31 Dollies/Go-Jacks $57 $60 Haz.Mat $45 $47 Winching $73 $78 Rollover $73 $78 On -scene release $81 $85 After hours Release -Lt. Duty $56 $59 Medium Duty $56 $65 Heavy Duty $56 $75 Service Call -Minimum $112 $118 Typical Towing Bill Comparison A typical towing bill would be for a regular passenger car being towed to the yard and held for one day. This would result in the collection of a Light Duty Tow fee, a One Day Storage Fee, and a City Impound Release Fee. The table below compares the current Tow Fees and Impound Release Fee charges with what the proposed new Tow Fees and Impound Release Fee would be. Depending on Council's direction, here is what staff has planned for formal recommended actions when this comes back on a regular session meeting's agenda: SS3-10 Current Fees Proposed Fees Basic Tow light Duty $163 $172 1 Day Outside Storage $43 $45 City Impound Release Fee $38 $75 Total Bill $244 $292 Depending on Council's direction, here is what staff has planned for formal recommended actions when this comes back on a regular session meeting's agenda: SS3-10 Towing Fees, Towing Services January 12, 2016 Page 11 DRAFT RECOMMENDATIONS FOR A REGULAR SESSION MEETING: 1. Conduct first reading of Ordinance No. 2016- amending Newport Beach Municipal Code Chapter 5.15 and pass to second reading on , 2016; 2. Adopt Resolution No. 2016-_, adding the franchise tow fee to the City of Newport Beach's Fee Schedule; 3. Authorize the Mayor and City Clerk to execute the contracts for and (towing company names), which include a proposed tow rate schedule. ENVIRONMENTAL REVIEW: This action is not subject to the California Environmental Quality Act ("CEQA") pursuant to Sections 15060(c)(2) (the activity will not result in a direct or reasonably foreseeable indirect physical change in the environment) and 15060(c)(3) (the activity is not a project as defined in Section 15378) of the CEQA Guidelines, California Code of Regulations, Title 14, Chapter 3, because it has no potential for resulting in physical change to the environment, directly or indirectly. Alternatively, the City Council finds the adoption of this action is not a project under CEQA Regulation Section 15061(b)(3) because it has no potential for causing a significant effect on the environment. NOTICING: The agenda item has been noticed according to Government Code Section 66018(a) (two publications with at least five days intervening between the two dates), Government Code Section 66016(a) (notice mailed at least 14 days prior to the meeting to any interested party who files a written request). This notice includes notices to the Building Industry Association of Southern California, AT&T, and Southern California Gas Company who are all notified when a fee change occurs even if the fee changed does not directly apply to them. They were notified on November 10, 2015, and the Brown Act rules were followed (72 hours in advance of the meeting at which the City Council considers the item). ATTACHMENTS: Attachment A - Redline Draft of Municipal Code Chapter 5.15 Attachment B - Proposed Revised Towing Charge Schedule SS3-11 ATTACHMENT A Redline Draft of NBMC Chapter 5.15 5.15.080 Service Agreements. Tow truck operators selected by the City Council to provide official police tow services shall enter into an agreement with the City that shall contain eligibility requirements, operating regulations, and a fee schedule as adopted by the City Council. Every official police tow service operator shall post in a conspicuous place in the interior of each tow truck an approved rate schedule in a form and location approved by the Chief of Police. The rate schedule will automatically be adjusted on its anniversary date based on the percentage change in the cost of doing business as measured by the United States Department of Labor, Bureau of Labor Statistics, Not Seasonally Adjusted, consumer price index, for All Urban Consumers for the Los Angeles -Long Beach Area, All Items, (19871982-1984 = 100) for the preceding twelve (12) months. The City may require and revise the fee schedule by mutual agreement at any time upon a finding that a rate adjustment is justified. The term of all official police tow truck service agreements shall be five years with an option to extend the term for one additional five-year period. Any official police tow truck operator whose service agreement with the City will expire or has expired may bid on subsequent notices inviting bids for official police tow truck services. 5.15.095 Contract Services Fee. The City Council may establish by resolution a fee(s) for the award of an agreement under this chapter to reimburse the City for its actual and reasonable costs incurred in connection with official police tow services. Om I!Ge tGW SerV!Ge previders shall pay quarterly te the City during thp- te.rrn of the agreement, a fixed perGentage of the grOSS reGeiptS of the SerV!Ge. The perGentage shall be at least ten (10) . Terms and provisions for payment of the fee shall be established by the City Council in the agreement set forth in Section 5.15.080. Official police tow service operators shall provide the City with an annual audited income statement of their official police tow services. SS3-12 ATTACHMENT B City of Newport Beach Towing Rate Schedule NB towing Rates Current Towing Rates Proposed Rates (5% increase) Towing LT. Duty $163 $172 Med. Duty $178 $188 Hvy. Duty $310 $327 Flatbed $178 $188 Motorcycle $178 $188 Storage Car Outside $43 $45 Car Inside $51 $54 Truck Outside $50 $53 Truck Inside $60 $63 Motorcycle $24 $25 Labor Labor $163 $172 Driveline $29 $31 Dollies/Go-Jacks $57 $60 Haz.Mat $45 $47 Winching $73 $78 Rollover $73 $78 On -scene release $81 $85 After hours Release- Lt. Duty $56 $59 Medium Duty $56 $65 Heavy Duty $56 $75 Service Call -Minimum $112 $118 SS3-13