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Staff Report
City Council
Item No. 3.E
Meeting Date: June 28, 2023
From: George Crum, Police Chief
Title: Vehicle Tow Service Franchise Ordinance
City Council
RECOMMENDATION:
To conduct second reading and adopt an Ordinance adding Chapter 12.78 to the Cathedral City Municipal Code. (Attachment 1)
BACKGROUND:
California Vehicle Code Section 12110 (b) authorizes the city to grant franchises to companies that provide certain towing services and to collect a franchise tow service fee to offset actual and reasonable costs incurred in connection with administering its towing program.
The Cathedral City Police Department utilizes the services of private towing companies to store and remove vehicles in emergency situations, vehicles that are abandoned, involved in an accident, constitute an obstruction to traffic, or vehicle owners are arrested.
Between 2000 and 2022, franchisees towed on average, 848 vehicles per year at the City’s request. This does not include tows that the Police Department has referred to the franchise tow operators at the request of a constituent who has been in a collision and did not know of a local tow company to call.
Historically, Cathedral City (“City”) has had Vehicle Tow Service Agreements with Mohica Towing and South West Towing. The current contract, which was entered into on January 15, 2014, expired on January 31, 2023, and has most recently been extended to July 31, 2023 to allow the Cathedral City Police Department (“Police Department”) to develop, in cooperation with the City Attorney’s Office, a new RFP process, including a tow franchise ordinance and model tow franchise agreement.
On April 26, 2023, a proposed ordinance and model agreement governing the City’s tow program was presented to the City Council. The City Council directed that the ordinance be brought back at a study session with additional information.
At the May 23, 2023 study session, staff presented the City Council with three policy
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questions that they sought the Council’s guidance on in considering a new franchise agreement and to discuss a possible ordinance:
1. Should the City have an ordinance that codifies the process for selecting non- exclusive tow contracts to provide towing services on behalf of the City?
2. Does the City Council wish to continue to operate a tow rotation franchise with tow operators? If so, does the City Council want to recover the entire cost of operating a tow rotation program?
3. Does the City Council want to eliminate the requirement that tow operator must have a tow yard within the city limits? If so, what reasonable distances or metrics does the City Council wish to adopt?
The City Attorney’s Office has drafted proposed Ordinance No.____, based on the directions and policy considerations provided by the City Council at the May 23, 2023, study session.
At the June 14, 2023 council meeting, the City Council introduced and provided first reading to an Ordinance adding Chapter 12.78 of the Cathedral City Municipal Code.
DISCUSSION:
The proposed ordinance, which would add Chapter 12.78, to the Cathedral City Municipal Code, establishes a Tow Rotational Program that provides for safe, efficient and rapid removal of vehicles that helps maintain safety on the roadways and throughout the City.
Based on feedback from the City Council, the proposed ordinance removes the requirement from the current franchise agreement that a tow operator’s place of business and storage yard must be located within the boundaries of the City. The proposed ordinance provides that a tow operators storage yard must be located no greater than approximately 30 minutes driving distance from the center point of the City. (12.78.060 (A)(6).)
Additionally, the ordinance provides that during the request for qualifications (RFQ) process, preference will be given to (1) tow operators with a place of business and vehicle storage facility within the boundaries of the City; (2) tow operators with a place of business and primary storage yard less than 30 minutes driving distance from the center point of the City; and/or (3) operators that possess or are able to obtain a Class C and/or Class D tow truck. (12.78.050 (E).)
To codify the governing procedures for the Tow Rotation Program, the following provisions are included in the ordinance:
•Selection criteria for tow operator applicants (12.78.050); •Operational requirements for tow operators (12.78.060); •Disciplinary actions against tow operators for violations (12.78.130, 12.78.140,
12.78.150, 12.78.160, and 12.78.170;
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•The City reserves the right to contract with other vendors for special towing services on an as needed basis outside of the tow franchise program (12.78.040 (C).); and
•The City will recover the fully burdened cost of operating the tow rotation program, i.e., as provided by resolution or by the approved rate sheet in the franchise agreement (12.78.090 (A).) The City Council has asked staff to bring back two options: a franchise rate as well as a per-tow rate that would be charged to each tow operator.
Tow Program Cost Recovery
During the study session, the City Council asked staff to bring back two options to recover the costs of the tow program: a franchise fee option similar to what has been done in the past and a per-tow option.
OPTION 1: Franchise Fee
At the City Council’s request, staff gave a final review of the proposed costs incurred for the tow program and made some minor modifications. The franchise fee is based on the total program costs, based on an average of 848 tows per year, minus any revenues the City receives in vehicle release fees (paid by the registered owner), revenues the City receives from lien sales, or collected Vehicle Impound Cost Recovery fees from the prior year. This amount would be divided by the number of tow contractors approved by the City Council to be awarded a rotation tow service agreement. Historically, the tow contractors have paid a monthly franchise fee to the city in the amount of $5500.00. Once the contract expired and a 90-day and 120-day extension was executed, the tow operators paid a per tow fee to the city of $148.00.
Once new tow service agreements are authorized by City Council, Police Department and Finance staff will conduct a bi-annual audit of the tow franchise agreement and costs.
This bi-annual audit will ensure the City is receiving the correct amount of reimbursement for its cost recovery and that the tow contractors are not overpaying the City.
For FY 2023/2024, the proposed franchise fee is $125,802, or $10,483.53 per month. This total would be divided by the total number of operators selected through an RFQ process.
Personnel Costs
Police Officer (80% of total Police tows)
Hourly rate
$ 174
Hours (per tow)
0.5 Tows
580
Total Cost 2022
$ 50,460
Community Service Officer (20% of total Police tows)
Dispatcher
$ 104
$ 127
0.5 0.25
145
848
$ 7,540
$ 26,924
Records Clerk
Code Compliance Officer
$ 118
$ 133
0.75 0.5
848
36 $ 75,048
$ 2,394
Citizens On Patrol (COP)
# of tows requiring 180 form*
$ -
848
0.5 Total Personnel Cost
87 $ -
$ 162,366.00
Program Administration
Professional Services -Legal (hrs/yr) $ 290
Annual
12 $ 3,480.00
Sergeant (hrs/yr)
Police Chief (hrs/yr)
$ 248
$ 369
48 0
$ 11,904
$ -
Commander (hrs/yr)
Analyst II (hrs/yr)
$ 287
$ 146
12 24
$ 3,444
$ 3,504
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Building Maintenance
Information Systems
2.50%
2.50%
$
532,775
$
763,641
$ 13,319
$ 19,091
Supplies $
-
Total Administrative Costs
$ -
$ 54,742
Total Tow Program Costs
Revenues FY 21/22
$ 2
17,108
$ (
91,306)
Total Franchise Cost FY 2023/24
Monthly Cost
$ 1
25,802
$ 10,483.53
The example below is purely for illustrative purposes and does not indicate the number of operators to be selected:
FY 2023/24
Franchise
Cost
#of
Operators
Total Annual
Cost Per
Operator
Total
Monthly
Cost Per
Operator
$ 125,802 2 $ 62,901 $ 5,241.75
$ 125,802 3 $ 41,934 $ 3,494.50
$ 125,802 4 $ 31,451 $ 2,620.88
OPTION 2 Per Tow Fee:
The City can require contractors to pay a flat rate for each vehicle towed. This rate is currently only slightly higher ($0.35) than the franchise operators are currently paying through the current 120-day extension.
Franchise Fee (FY 2023/24) #of Tows Per Tow Fee
$125,802 848 $148.35
Tow and Storage Fee Rates
As part of the RFP process, the City will also establish the rates that the operators can charge the registered owner for tows and for vehicle storage. The tables below highlight the history of these rates for Cathedral City. Staff is proposing the 2023 rates to be used. These rates are consistent with other Coachella Valley cities.
Yearly
Rates
Tow Class A tow
Trucks
Special Duty
Hourly Rate
Heavy
Hourly
Class B
Duty
Rate
Heavy Duty
Hourly Rate
Class C and D
2014 $170 $250 $250 $350
2015 $170 $250 $250 $350
2016 $170 $250 $250 $350
2017 $195 $250 $300 $400
2018 $205 $250 $300 $400
2019 $215 $250 $300 $400
2020 $215 $250 $300 $400
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2021 $215 $250 $300 $400
2022 $215 $250 $300 $400
2023 $245 $250 $300 $400
Storage Rates Charged by Contractor 2014 – 2023
Year
Storage
Fees
Outside
storage:
Motorcycles,
passenger
cars
and trucks
20' or less
Inside
storage:
Motor-
cycles,
passenger
cars
and trucks
20' or less
Trailers 15'
or less
Trucks,
Trailers, and
other
vehicles 20’
to 30’
Trucks,
Trailers, and
other
vehicles of
30’ or more
2014 $50 $80 $50 $80 $80
2015 $50 $80 $50 $80 $80
2016 $50 $80 $50 $80 $80
2017 $62 $100 $50 $80 $90
2018 $67 $100 $50 $80 $90
2019 $72 $100 $50 $80 $90
2020 $72 $100 $50 $80 $90
2021 $72 $100 $50 $80 $90
2022 $72 $100 $50 $80 $90
2023 $80 $100 $50 $80 $90
Once an ordinance is adopted by City Council, governing the process and selection of rotational tow services in the city, the Police Department will issue a Request for Qualifications (RFQ)
Selection of Franchisees:
A. The selection of the franchisees shall be done through a competitive selection process. Upon any opening(s) on the rotation list, the Police Chief, in cooperation with the City Manager, shall issue a notice of request for qualifications (RFQ) to solicit interested tow truck operators. The RFQ shall be posted on the City's website and posted on a website devoted to procurement services, bid and vendor management such as Planetbids.com. Responses to the RFQ shall be due no earlier than 20 days following posting of the notice as required herein.
B. The Police Chief, in coordination with the City Manager or their designee, shall evaluate the qualifications of the tow truck operators responding to the RFQ. No later than 60 days after receipt of the responses to the RFQ, the Police Chief shall submit to the City Council for consideration the qualifications of the tow truck operator(s) that they deem most qualified together with a franchise agreement pursuant to the Rotation Tow Services Program.
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C. With respect to the selection process as provided herein, the Police Chief shall determine the number of franchisees needed to provide towing services to the Police Department. In determining the required number of franchisees, the Police Chief may consider the following factors:
1. The operational needs of the Police Department;
2. Population growth;
3. The number of currently authorized franchisees and their average response time;
4. Administrative burdens imposed by the number of franchisees to be included in a rotation list; and
5. Such other reasonable factors as determined by the Police Chief.
D. With respect to evaluating the qualifications of the tow truck operators responding to the RFQ, the Police Chief shall consider the following factors:
1. Whether the applicants can satisfy the insurance, business license, and tow operator permit requirements of the franchise agreement;
2. Whether the applicants are qualified on the basis of prior experience in the towing operation business and financial responsibility;
3. Whether the tow operation applicants can provide service calls for the police department twenty-four hours a day, including holidays;
4. Whether the applicants will accept all tows requested by the city, including tows of abandoned or dismantled vehicles and/or tows requiring special equipment;
5. Whether the applicant, or any person involved with the applicant has been refused a towing permit or contract or had a towing permit or contract suspended or revoked by this city or any other city;
6. Applicants’ rates, fees and other charges when the tow is initiated by a call from the city, including, applicants standard tow rate; impoundment rates for day and night and whether an after-hours release fee is charged; hourly rates for extended service, based on a thirty-minute maximum normal time after arrival at the location for the tow; and daily storage fees and list of other miscellaneous tow operation fees; and
7. Whether applicants are able to meet the maximum response time as determined by the Police Chief.
E. With respect to selecting qualified tow truck operators responding to the RFQ, preference will be given to tow truck operators that meet the following criteria:
1. Tow truck operators with a place of business and primary storage yard within the boundaries of the city and/or;
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2. Tow truck operators that possess or are able to obtain a Class C and/or Class D tow truck.
Selection Process
Submittals received by the deadline will be reviewed by a selection panel specified by the Chief of Police and City Manager or designee. The selection panel will be comprised of police staff who have relevant knowledge and experience of the specified duties and processes. The panel will score the proposals based on the materials submitted according to the following criteria:
Category Criteria Maximum Points
1 Whether the applicants can satisfy the insurance,
business license, and tow operator permit
requirements of the franchise agreement;
1-10
2 Whether the applicants are qualified on the basis of
prior experience in the towing operation business
and financial responsibility;
1-10
3 Whether the tow operation applicants can provide
service calls for the police department twenty-four
hours a day, including holidays;
1-10
4 Whether the applicants will accept all tows requested by the city, including tows of abandoned or
dismantled vehicles and/or tows requiring special
equipment; The City’s experience (if any) with the
bidders
1-10
5 Whether the applicant, or any person involved with
the applicant has been refused a towing permit or
contract or had a towing permit or contract
suspended or revoked by this city or any other city;
1-10
6 Applicants’ rates, fees, and other charges when the
tow is initiated by a call from the city, including,
applicants standard tow rate; impoundment rates for
day and night and whether an after-hours release fee
is charged; hourly rates for extended service, based
on a thirty-minute maximum normal time after arrival
at the location for the tow; and daily storage fees and list of other miscellaneous tow operation fees
1-10
7 The City’s experience (if any) with the bidder and
the general reputation of the bidder within the
community
1-10
8 Facility and Equipment Inspections
Inspections of all equipment the bidder proposes to
use in the execution of the contract, to include all
trucks/ business office, business location, storage,
and evidence areas
1-10
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9 Tow truck operators with a place of business and
primary storage yard within the boundaries of the
City;
15 10 Tow truck operators that possess or able to obtain a Class C and/or Class D tow truck.
5 Total Points:
FISCAL IMPACT:
The budget recently approved by City Council includes recovering 100% of the incurred cost to maintain a Franchise Tow Service Agreement.
FIVE-YEAR STRATEGIC PLAN:
GOAL C: FISCAL STABILITY AND SUSTAINABILITY
Objective: Cathedral City has economically prospered by facilitating the investment of private dollars in high quality development which benefits the community. We remain financially solvent by instituting prudent fiscal policies and transparent financial practices.
ATTACHMENTS:
6.14.23 - Ordinance re Rotation Tow Services