STAFF REPORT
Meeting Date:
May 12, 2026
BUSINESS
18 SUBJECT: CONTRACT SERVICE AGREEMENT FOR TROLLEY AND ON-DEMAND
TRANSIT SERVICES AND OPTIONS TO REDUCE OFF-SEASON SERVICE
COSTS AND IMPLEMENTATION OF ON-DEMAND PASSENGER FARES
RECOMMENDATION: It is recommended that the City Council:
1. Authorize the City Manager to execute a five-year Professional Services Agreement, in a form approved by the City Attorney, with LAZ Parking California, LLC (“LAZ”) for trolley and ondemand transit operating services for the period of July 1, 2026, through June 30, 2031, in an amount not to exceed $19,102,790;
2. Consider approving reductions to certain off-season trolley and on-demand transit services, as reflected in Figure 4, in order to reduce Transit Fund subsidy requirements while maintaining compliance with Orange County Transportation Authority (“OCTA”) Measure M2 Project V grant requirements;
3. Authorize implementation of up to a $5 per passenger fare for Laguna Local on-demand transit services, as reflected in Figure 6; and
4. Find the action exempt under the California Environmental Quality Act under CEQA Guidelines Section 15061(b)(3).
SUMMARY OF THE MATTER
This report recommends that the City Council authorize the City Manager to execute a five-year agreement, in a form approved by the City Attorney, with LAZ Parking California, LLC (“LAZ”) for continued operation of the City’s trolley and on-demand transit services, with targeted reductions to certain off-season trolley and on-demand services as reflected in Figure 4. The report also recommends that the City Council authorize implementation of up to a $5 per passenger fare for Laguna Local on-demand services, as reflected in Figure 6. Should Council and the community desire it, staff can consider a monthly pass or similar discount rate for certain users of Laguna Local. Fares would take effect on or after September 1, 2026.
Staff considered the merits of applying a fare to the trolley system, but the collection and administration of that appears to be higher than the possible revenue collected. Further, the goal of the trolley is for people to leave their cars at area lots, and a fare may be a disincentive to that, bringing more vehicles into town.
The City operates a year-round trolley and on-demand system that supports the City’s parking management and traffic reduction strategies by providing transportation options for residents and visitors. Pursuant to Orange County Transportation Authority (“OCTA”) Measure M2 Project V grant requirements and the City’s procurement procedures, the City must issue a Request for Proposals (“RFP”) every five years to maintain eligibility for grant funding. Following an RFP process, a selected committee evaluated proposals submitted by LAZ and Propark Mobility and determined that LAZ was the highest-ranked proposer based on the operational experience, staffing approach, project understanding, and costs considerations.
CONTRACT SERVICE AGREEMENT FOR TROLLEY AND ON-DEMAND TRANSIT
SERVICES AND OPTIONS TO REDUCE OFF-SEASON SERVICE COSTS AND
IMPLEMENTATION OF ON-DEMAND PASSENGER FARES
May 12, 2026
The proposed agreement would maintain the City’s transit operations at an estimated annual operating cost of approximately $3.7 to $3.9 million, depending on service levels. To reduce ongoing Transit Fund subsidy from the Parking Fund, while maintaining compliance with OCTA grant requirements, staff evaluated options to reduce service level and increase transit-related revenues. Staff’s recommended service reductions are estimated to reduce annual operating costs by approximately $211,500, and the proposed on-demand passenger fare is estimated to generate approximately $206,314 annually (at $5 per passenger). Transit operations will continue to be funded through a combination of OCTA Project V grant funding, Transportation Development Act (TDA) revenues, passenger fare revenues, and parking revenue via transfers from the Parking Fund.
Accordingly, City staff is recommending that the City Council (1) authorize the City Manager to execute a contract, in a form approved by the City Attorney, with LAZ for a five year term with scope of services at existing levels except for a reduction in (a) off season trolley services (i.e., Thurston, Weekend Coastal and Canyon) and (b) off season on demand service, as both are reflected in Figure 4; and (2) authorize the City Manager to initiate a program whereby the City charges for on demand services (Laguna Local) in the amount of up to $5 per passenger, as reflected in Figure 6.
DISCUSSION
Background:
The City operates a year-round trolley and on-demand system that provides free, environmentally friendly transportation for both residents and visitors. The trolley system is an integral part of the City’s parking management plan and helps reduce downtown parking demand and traffic congestion by allowing visitors to utilize peripheral parking lots and ride the trolley throughout the City. Until 2021, the trolley system services were provided by City employees. Due to COVID-19 and the resulting shutdown of the trolley system, on August 11, 2020, the City Council directed staff to prepare an RFP to solicit bids for a contracted operator1. In May 2021, LAZ was awarded a five-year contract to provide trolley services for a total compensation amount of $10,621,219. In Fall 2021, the City added on-demand services as a pilot program.
Since that time, the City Council has made a number of modifications to the services. In December of 2024, the City Council approved all of the amendments into one contract amendment for a total compensation amount of $16,010,219. The following table identifies the contract changes and the City Council approval dates.
1 The contract model involves the contractor providing all drivers, dispatchers, and administrative staff supporting the trolley and on-demand services and the City providing a Transit Supervisor, trolley ambassadors during the summer months, and part-time fuelers/washers. The contract model has reduced the administrative burden on the Administrative Services Department (consisting of Finance and Human Resources) as there is no longer the City responsibility of hiring and administering 90-100 seasonal employees. The contract model also provides the City with flexibility to meet service demands and reduces the City’s risk related to accident, injury, and workers’ compensation claims.
CONTRACT SERVICE AGREEMENT FOR TROLLEY AND ON-DEMAND TRANSIT
SERVICES AND OPTIONS TO REDUCE OFF-SEASON SERVICE COSTS AND
IMPLEMENTATION OF ON-DEMAND PASSENGER FARES
May 12, 2026
Figure 1
Contract Scope Modifications
Date Scope Modifications
May 27, 2021 Original Contract
July 27, 2021 Laguna Local On-Demand Program
April 12, 2022 Summer Beach Trolley
September 20, 2022 Expanded Laguna Local On-Demand Program March 21, 2023 Expand trolley and on-demand service
April 23, 2024 Expand Laguna Local On-Demand service hours from June 28, 2024 to September 2, 2024
October 22, 2024 Laguna Canyon Service, Off-Season Trolley and one month of Summer Breeze December 10, 2024 First Amendment to Agreement – restated costs to cover Fiscal Year 2021-22 through Fiscal Year 2025-26
Based on the City’s receipt of OCTA Measure M2 Project V grant funding, the City is required to competitively procure transit operating services every five years to maintain the eligibility for grant funding.
In October 2024, the City Council executed two Cooperative Agreements with OCTA totaling $7.24 million in Measure M2 grant funding through Fiscal Year 2030-31. Project V grants funds for the Laguna Canyon Road/El Toro Road Laguna Local Service for a 50% match and expanded trolley service for an 11% match.
As part of the cooperative agreements, the City must continue to provide Summer Breeze, Winter Express, Weekend Coastal, and Canyon On-Demand as shown below:
Service Line Grant Amount
Through 2030-31
Off-Season Weekend and Seasonal Service (includes Summer Breeze, Winter Express and Coastal) $5,212,250
Laguna Canyon Road/El Toro Laguna Local Service $2,024,489 Total $7,236,739
Procurement Approach
On March 2, 2026, staff issued an RFP for contracted trolley and on-demand services electronically via PlanetBids. A total of 50 bidders were invited to participate in the bidding process. The City also held a non-mandatory pre-proposal conference on Thursday, March 19, 2026, which four bidders attended. The City responded to all questions submitted both in writing and during the pre-proposal conference. The RFP requested that the prospective contractors propose a budget and work plan to provide drivers, dispatchers, and administrative staff necessary to operate the City’s trolley system and on-demand model.
On March 26, 2026, two proposals were received by the deadline. An evaluation committee consisting of four City employees met to review all proposals received. Proposals submitted are listed below in alphabetical order:
CONTRACT SERVICE AGREEMENT FOR TROLLEY AND ON-DEMAND TRANSIT
SERVICES AND OPTIONS TO REDUCE OFF-SEASON SERVICE COSTS AND
IMPLEMENTATION OF ON-DEMAND PASSENGER FARES
May 12, 2026
Proposals Received
Firm Location
LAZ Parking Costa Mesa, CA
Propark Mobility Bellflower, CA
The Evaluation of the Proposals. The proposals were evaluated based on the work plan (30%), past performance (20%), staffing3, project organization, and management plan (30%), and cost (20%). On April 8, 2026, the committee reviewed the proposals based on the evaluation criteria listed above. Below is a brief summary of how the proposals differ in terms of work plan, past performance, staffing, project organization, management plan, and cost.
Figure 2
Summary of Proposals
Topic LAZ Propark
Work Plan The workplan was strong and
clearly identified how the vendor
would provide the service, deal
with changes in service levels
and work with the city.
The workplan did not take into
consideration the unique
characteristics of Laguna Beach
and the two services which were
requested by the City. The plan
was not clear on how they would
provide services.
Past Performance The City has firsthand experience
with LAZ and how it manages
the operations and staff felt they
have provided excellent service
to the community.
Propark has provided fixed route
services, and a dial-a-ride
program, however staff did not
believe this fit as well with the
community.
Staffing, project organization,
and management plan
The staffing plan and ability for
LAZ to keep staffing available
for the City and manage the
operations is effective.
There are currently few staff
members who could staff the
contract. All employees would
have to be hired.
Cost The cost of this proposal is
aligned with current fees.
Lower costs but with other
concerns with the other
categories, staff believes this is
not the most important criteria.
Based on the evaluation of the written proposal, the evaluation committee selected LAZ as the highestranking firm. 3 In California, public transit agency RFPs include a 10-percentage point bonus for proposers who comply with California Labor Code Sections 1070–1074. This requirement specifically relates to the retention of employees from the previous contractor during service transitions. Although Propark Mobility indicated it would retain employees from LAZ during a service transitions, a 10- percentage point bonus did not tip the scale to recommend awarding the contract to Propark Mobility.
CONTRACT SERVICE AGREEMENT FOR TROLLEY AND ON-DEMAND TRANSIT
SERVICES AND OPTIONS TO REDUCE OFF-SEASON SERVICE COSTS AND
IMPLEMENTATION OF ON-DEMAND PASSENGER FARES
May 12, 2026
LAZ is the second-largest parking and transportation company in the United States, and currently operates in 33 states and 400 cities, including multiple locations in Orange County. LAZ proposed an experienced project team with relevant experience providing similar local transportation services, as well as experience complying with OCTA's Project V grant requirements and other state and federal reporting requirements.
LAZ's experience with trolley operations in Orange County is one of its strongest qualifications. LAZ operates trolley services for the cities of Dana Point, San Clemente, San Juan Capistrano, Newport Beach, and Mission Viejo. It also operates shuttle services for Kaiser Hospital, UC Irvine Medical Center, and the Orange County Fairgrounds, as well as airport services at LAX airport.
The LAZ proposal clearly demonstrated the team's knowledge and understanding of the City of Laguna Beach's trolley operation and reporting requirements and emphasized their commitment to providing superior customer service while meeting or exceeding performance metrics. The evaluation committee also gave LAZ high marks for their on-demand proposal to replace hourly neighborhood trolley service, which would utilize the City's Laguna Beach Trolley app to allow residents to request a ride and track the progress of their vehicle. Staff will return to the City Council to provide additional details on the proposed ondemand pilot program this summer, following discussions with the selected contractor. LAZ also had the strongest plan for recruitment and retention of trolley drivers to ensure sufficient staffing, particularly during peak periods, and will bring a well-established safety and training program. LAZ offers a competitive salary and benefits package
The annual cost proposed by LAZ for the five-year term is included in the table below. This analysis is based on the trolley and on-demand services operating at the same hours as was most recently approved by the City Council on December 10, 2024.
Figure 3
Five-Year Cost at Current Services Levels
Contract Year Trolley Service On-Demand Service Total Cost Year 1 $2,382,037.67 $1,370,513.43 $3,752,569.10
Year 2 $2,382,037.67 $1,370,513.43 $3,752,569.10
Year 3 $2,382,037.67 $1,370,513.43 $3,752,569.10
Year 4 $2,561,121.00 $1,370,485.00 $3,931,606.00
Year 5 $2,659,412.00 $1,254,065.00 $3,913,477.00
Total $12,366,646.00 $6,736,144.00 $19,102,790.00
Options to Reduce Off- Season Services and Increase Revenues As a result of the RFP process and the resulting cost proposals associated with maintaining service levels at the current operation, City staff has researched some options to reduce service levels and reduce costs, including the following: (1) reduce off season trolley service (i.e., Thurston Charter, Weekend Coastal and Canyon); and (2) reduce off season on demand service (i.e., On Demand and Canyon On-Demand). Such proposed reductions would reduce the expense by $211,540.
The off-season is defined here to be from after Labor Day to mid-June. Please note that as to the Thurston Charter, the City intends to reach out to the Laguna Beach Unified School District to see if some partnership or subsidy from the District could assist in funding this program, which benefits its students.
CONTRACT SERVICE AGREEMENT FOR TROLLEY AND ON-DEMAND TRANSIT
SERVICES AND OPTIONS TO REDUCE OFF-SEASON SERVICE COSTS AND
IMPLEMENTATION OF ON-DEMAND PASSENGER FARES
May 12, 2026
See below:
Figure 4
Recommended Reduction in Services and Costs for Trolley and On Demand Services
CONTRACT SERVICE AGREEMENT FOR TROLLEY AND ON-DEMAND TRANSIT
SERVICES AND OPTIONS TO REDUCE OFF-SEASON SERVICE COSTS AND
IMPLEMENTATION OF ON-DEMAND PASSENGER FARES
May 12, 2026
Summary of Recommended Services Modifications
Service Proposed Modification
Estimated
Annual
Savings
Thurston Charter Service Reduce off-season operations $45,000 Weekend Coastal Service Reduce off-season frequency/service hours $68,500 Canyon Service Reduce off-season operations $42,000
Laguna Local On-Demand Service Reduce off-season service levels $56,040 Total Estimated Annual Savings $211,540
The recommended operational modifications were developed to maintain compliance with OCTA Measure M2 Project V grant requirements. Staff evaluated the proposed reductions to ensure the City would continue operating the minimum qualifying transit services required under the cooperative agreements, including Summer Breeze, Winter Express, Weekend Coastal, and Canyon On-Demand services. As proposed, the recommended service reductions would not impact the City’s eligibility for existing Project V grant funding. Staff will continue to monitor ridership, service performance, and grant compliance requirements throughout the term of the agreement.
City staff has also research some options to increase revenues by charging for On-Demand services, including the following alternative options: (1) charge a fee for the on demand service per passenger ($2, $3, $4, or $5 at current services levels; and (2) charge a fee for the on demand service per passenger ($2, $3, $4, or $5 at reduced on-demand service levels, discussed above.
Figure 5
Increased Revenue for On-Demand at Current Service Levels Fare Amount Estimated Annual Revenue
$2.00 per passenger $156,622.00
$3.00 per passenger $234,933.00
$4.00 per passenger $313,244.00
$5.00 per passenger $391,555.00
Figure 6
Increased Revenue for On-Demand at Reduced Service Levels Fare Revenue Estimated Annual Revenue
$2.00 per passenger $82,525.43
$3.00 per passenger $123,788.15
$4.00 per passenger $165,050.87
$5.00 per passenger $206,313.59
FINANCIAL ANALYSIS
The proposed agreement with LAZ Parking California, LLC (“LAZ”) for trolley and on-demand transit services has a total not-to-exceed compensation amount of $19,102,790 over the five-year agreement term
CONTRACT SERVICE AGREEMENT FOR TROLLEY AND ON-DEMAND TRANSIT
SERVICES AND OPTIONS TO REDUCE OFF-SEASON SERVICE COSTS AND
IMPLEMENTATION OF ON-DEMAND PASSENGER FARES
May 12, 2026
from July 1, 2026 through June 30, 2031. The agreement provides for continued operation of the City’s trolley and Laguna Local on-demand transit services at current service levels.
As part of the operational review process, staff evaluated opportunities to reduce ongoing Transit Fund subsidy requirements while maintaining compliance with Orange County Transportation Authority (“OCTA”) Measure M2 Project V grant requirements. Staff is recommending targeted reductions to certain off-season trolley and on-demand services, including reductions to Thurston Charter, Weekend Coastal, Canyon, and off-season Laguna Local services. These recommended service adjustments are estimated to reduce annual operating costs by approximately $211,540 annually. Staff also evaluated the implementation of passenger fares for Laguna Local on-demand services. Based on the recommended reduced service model, implementing a $5 per passenger fare is estimated to generate approximately $206,314 in additional revenue annually.
Figure 7
Five-Year Estimated Financial Impact
Contract
Year
Current
Service Cost
Reduced
Service Cost
Estimated
Annual
Savings
Estimated
Fare
Revenue*
Estimated Net
Reduction to
Parking Fund
Subsidy
Year 1 $3,752,569 $3,541,029 $211,540 $206,314 $417,854 Year 2 $3,752,569 $3,541,029 $211,540 $206,314 $417,854 Year 3 $3,752,569 $3,541,029 $211,540 $206,314 $417,854 Year 4 $3,931,606 $3,720,066 $211,540 $206,314 $417,854 Year 5 $3,913,477 $3,701,937 $211,540 $206,314 $417,854 Total $19,102,790 $18,045,090 $1,057,700 $1,031,570 $2,089,270 *Estimated fare revenue based on implementation of a $5 per passenger fare under the reduced service model.
The proposed Fiscal Year 2026-27 Transit Fund budget, which is currently under review and subject to change, includes approximately $6.4 million in expenditures associated with trolley and on-demand transit operations, including contracted operating services, transit administration, maintenance, fuel, technology, and related operational costs.
Fiscal Year 2026-27 Proposed Transit Funding Summary Amount LAZ Operating Contract Services $3,752,569
Other Transit Operating Costs $2,626,142
Total Transit Fund Expenditures $6,378,711
OCTA Project V Grant Revenue ($1,033,900)
TDA Revenue ($1,480,411)
Estimated Passenger Fare Revenue ($206,314)
Other Transit Revenue ($654,086)
Estimated Parking Fund Transfer $3,004,000
CONTRACT SERVICE AGREEMENT FOR TROLLEY AND ON-DEMAND TRANSIT
SERVICES AND OPTIONS TO REDUCE OFF-SEASON SERVICE COSTS AND
IMPLEMENTATION OF ON-DEMAND PASSENGER FARES
May 12, 2026
Transit operations will continue to be funded through a combination of OCTA Project V grant funding, Transportation Development Act (“TDA”) revenues, passenger fare revenue, and transfers from the Parking Fund. The Parking Fund transfer amount will be incorporated into the Fiscal Year 2026-27 budget adoption process. Funding for future years of the agreement will remain subject to annual City Council budget approval.
The City would not propose these changes in services as well as the fare if costs were not so significant.
Many difficult decisions have had to be made in regards to the City’s overall operational budget, and this is another area where the change is consequential.
ENVIRONMENTAL ANALYSIS
The recommended action is exempt under the California Environmental Quality Act under CEQA Guidelines Section 15061(b)(3) because it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment. Here, the recommended action meets the exemption because it involves authorizing the City Manager to execute an agreement for services that are currently provided or services less than those that are currently provided. Upon taking the recommended action, City staff will cause to be filed within five calendar days a notice of statutory exemption with the County and State Clearinghouse.
ATTACHMENTS
1. Professional Services Agreement with LAZ Parking California, LLC for Trolley and On-Demand Transit Services (Pgs. 10-57)
Submitted By: Alexis Braun Approved: .David A Kiff
Alexis Braun, Acting Director of
Transit and Community Services
Dave Kiff, City Manager
Report Prepared By: Coordinated With:
Carol Jacobs, Management Specialist Alexis Braun, Acting Director of Transit and Community Services