City of Corona
Staff Report
400 S. Vicentia Ave.
Corona, CA 92882
File #: 22-0314
REQUEST FOR CITY COUNCIL ACTION
DATE: 04/20/2022
TO: Honorable Mayor and City Council Members
FROM: Community Services Department
SUBJECT:
Fourth Amendment to the Maintenance/General Services Agreement with MV Transportation, Inc. to increase revenue hour rate compensation for the operation of the Corona Cruiser and Dial-a-Ride services.
EXECUTIVE SUMMARY:
MV Transportation, Inc. is in year four of a six-year contract providing the City with wrap-around fixed route and paratransit transit services. Wrap around services include dispatchers, drivers, mechanics, utility workers, and administrative and management staff. Due to the pandemic, the transit industry has experienced a nationwide loss of experienced workers. To address staff shortages impacting MV Transportation, Inc., it is requesting an increase in hourly rates to prevent further staff losses and to assist with employee attraction and retention. This proposed Fourth Amendment will increase the per hour rate but is budget neutral due to contract savings realized during the past two years of the pandemic.
RECOMMENDED ACTION:
That the City Council:
a. Approve the Fourth Amendment to the Maintenance/General Services Agreement with MV Transportation, Inc., to modify the total compensation to an amount not to exceed $11,804,968 for the six-year contract.
b. Authorize the City Manager, or his designee, to execute the Fourth Amendment to the Maintenance/General Services Agreement with MV Transportation, Inc., in the amount of $ $11,804,968 for the six-year contract and approve necessary change orders and/or amendments up to the amount provided by the Corona Municipal Code Section 3.08.060(J). c. Authorize the issuance of a Purchase Order to MV Transportation, Inc., in accordance with the City of Corona Page 1 of 4 Printed on 4/14/2022
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File #: 22-0314
c. Authorize the issuance of a Purchase Order to MV Transportation, Inc., in accordance with the duly authorized and executed agreement and amendments.
d. Authorize the City Manager, or his designee, and City Attorney to negotiate and execute any amendments to this agreement which are either non-substantive or are otherwise in compliance with the City Council's actions hereunder.
e. Authorize the Finance Department to approve additional budgetary adjustments required for completion of this contract.
BACKGROUND & HISTORY:
The City of Corona Transit Service operates the Dial-A-Ride and Corona Cruiser fixed-route services.
The Corona Transit Services operation has been contracted out since the inception of the Corona Dial -A-Ride Service in 1977 and launch of the Corona Cruiser fixed-route service in 2001. MV Transportation was awarded the City of Corona Transit Services contract on July 18, 2018. The City Council authorized the original contract for up to a 5-year term in the amount of $5,787,341 for the initial three-year period, and an additional $4,196,743 for two (2) one-year extensions, for total compensation of $9,984,084. The Agreement has subsequently been amended three times as follows:
• First Amendment, executed on August 13, 2018, reduced the total compensation to $9,681,468 to reflect the decrease in number of months of service in Year 1, down from 12 months to 10 months of service.
• Second Amendment, executed on June 23, 2021, implemented the first extension option for Year 4 from July 1, 2021 through June 30, 2022.
• Third Amendment, executed on August 4, 2021, authorized an additional one year to the Agreement Term for a total of six years, through June 30 2024, and increased the total compensation to $11,887,476.
ANALYSIS:
On December 21, 2021, MV Transportation, Inc. informed staff of impending staff shortages. To mitigate impacts, MV Transportation, Inc. requests contract rate adjustment to account for hourly wage adjustments to align their salaries with current market trends in order to retain, as well as attract an experienced workforce to continue providing uninterrupted transit services to the Corona residential and business communities.
MV Transportation, Inc. requests the rate adjustment be approved retroactively to February 1, 2022 through June 30, 2024, which is the end of the Agreement Term. This adjustment will result in a contract increase of $1,138,343. However, due to the decrease in ridership the past two years, the underutilization of MV Transportation, Inc. services has resulted in a current contract savings of $1,220,851, which would offset the proposed increase. These unspent contract funds will capture the proposed salary increases, leaving an overall net contract savings to the City of $82,508.
The following is an explanation on MV Transportation, Inc.’s contractual service hour payment structure to illustrate how its reduction in services resulted in the current savings.
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File #: 22-0314
Service Hour/Service Operation
In accordance with the Agreement, MV Transportation, Inc. is paid a per revenue service hour rate based on services to operate and provide the City of Corona Transit Service, i.e., Dial-A-Ride and Corona Cruiser Fixed Route service. Revenue service is earned when the transit vehicle is providing public transportation and is available to carry passengers. The Corona Cruiser service operates along a fixed schedule; as such, revenue service hours are consistent with little fluctuation. On the other hand, Dial-A-Ride service is demand based, and more difficult to anticipate. When the scope of work was written from the current contracted services in late 2018, there was an expectation that the demand would increase year-to-year, thereby increasing the revenue service hours. However, during the second year of the contract, the demand for Dial-A-Ride Service decreased starting March 2020, due to the pandemic. The table below outlines the Revenue Service Hours versus actual Utilization. There is roughly 25,500 unused Revenue Service Hours.
Revenue Service Hours
Per Contract Utilization
FR DAR FR DAR
Year 1 2019 12,165 12,663 11,990 12,116
Year 2 2020 14,753 15,955 14,558 11,703
Year 3 2021 14,723 16,753 14,471 6,344
1st 3-year total 41,641 45,371 41,019 30,163
Year 4 Option 1 2022 14,723 17,591 14,402 8,000
Year 5 Option 2 2023 14,753 18,470 14,753 18,470
Year 6 Option 3 2024 14,753 18,470 14,753 18,470
44,229 54,531 43,908 44,940
TOTAL 85,870 99,902 84,927 75,103
% Change -1% -25%
FR = Corona Cruiser Fixed Route
DAR = Dial-A-Ride
When the City of Corona Transit Service scope of service/compensation was approved, MV Transportation, Inc. presented a reasonable proposal that included annual hourly rate escalators. If not for the extraordinary factors caused by the pandemic with regard to staffing demands, staff would not support a rate increase request. However, the factors contributing to MV Transportation, Inc’s staff retention and attraction issues are unforeseen and an industrywide problem impacting transit operators nationwide. Therefore, if hourly rates are not increased, there is a high probability that MV Transportation, Inc. will not be able to sustain its service levels. The ramifications will be continued attrition of their current workforce as current MV Transportation, Inc. employees seek higher wages from competitors and within adjacent industries, as well as an inability to hire qualified, reliable candidates to support ongoing and future service demands. In an attempt to mitigate further losses and to encourage new qualified recruits, MV Transportation, Inc. is requesting an increase in revenue hour rates as follows:
Service Year Current Contract Rate Requested New Rate
FY22 Year 4 $63.58 $73.78 (retroactive to
Feb2022)
FY23 Year 5 $64.48 $77.84
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File #: 22-0314
Service Year Current Contract Rate Requested New Rate
FY22 Year 4 $63.58 $73.78 (retroactive to
Feb2022)
FY23 Year 5 $64.48 $77.84
FY24 Year 6 $66.40 $83.17
Staff supports MV Transportation, Inc’s request and recommends approval of the Fourth Amendment to the Maintenance/General Services Agreement with MV Transportation, Inc.
FINANCIAL IMPACT:
This Fourth Amendment is budget neutral and will be paid for from contract savings realized during the past two years of the pandemic. The current total compensation of MV Transportation, Inc.’s sixyear contract is $11,887,476. If the Fourth Amendment is approved, the total compensation for the Term of the Agreement will be reduced to $11,804,968. Sufficient funds are programmed in the appropriate budget year through the Short-Range Transit Plan process. Operating revenues that support the transit program consist of Local Transportation Funds administered by Riverside County Transportation Commission, Federal Transit Administration funds, Low Carbon Transit Operations Program funds, Coronavirus Aid Relief, and Economic Security Act funds and fare revenues.
Approval of the Fourth Amendment to the Agreement will not impact the General Fund other than what is normally programmed to meet the required farebox ratio contribution. The General Fund usually contributes approximately 3% towards the entire transit program each fiscal year in order to meet the required farebox recovery ratio. However, additional General Fund contributions could be necessary to close funding gaps due to an increase in operating expenses and potential decreases in fare revenues.
ENVIRONMENTAL ANALYSIS:
This action is exempt pursuant to Section 15061(b)(3) of the Guidelines for the California Environmental Quality Act (CEQA), which states that a project is exempt from CEQA if the activity is covered by the commonsense exemption that CEQA applies only to projects that have the potential for causing a significant effect on the environment. Where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment, the activity is not subject to CEQA. This action merely awards the amendment in compensation for operating the City’s transportation services. Since there is no possibility that adopting this action will have a significant effect on the environment, no environmental analysis is required.
PREPARED BY: CYNTHIA LARA, COMMUNITY ASSISTANCE MANAGER REVIEWED BY: ANNE K. TURNER, COMMUNITY SERVICES DIRECTOR Attachments:
1. Exhibit 1- Fourth Amendment to the Maintenance/General Services Agreement with MV Transportation, Inc
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