Administrative
Report
H.6., File # 23-6013 Meeting Date: 6/13/2023
To: MAYOR AND CITY COUNCIL
From: TED SEMAAN, PUBLIC WORKS DIRECTOR
TITLE
APPROVE AN AGREEMENT WITH THE REDONDO BEACH UNIFIED SCHOOL DISTRICT FOR THE PURCHASE OF FUEL FROM THE CITY FOR THE TERM JULY 1, 2023 THROUGH JUNE 30, 2026
EXECUTIVE SUMMARY
The current fuel purchase Agreement with the Redondo Beach Unified School District (RBUSD) will expire on June 30, 2023. Staff has reviewed the Agreement and concluded it is in the City’s best interests to extend it for another three-year period. The attached Agreement would allow the School District to continue purchasing fuel at the City’s direct cost plus a $0.34 per gallon administrative/overhead charge. The cooperative purchase Agreement allows the City to seek more competitive pricing through increased volume and buying power.
BACKGROUND
For over 20 years, the City has maintained an agreement with the RBUSD for the purchase of fuel at the Public Works fueling facility at 531 N Gertruda Avenue. The School District benefits from having convenient access to fuel and the ability to purchase fuel at below-market rates. The City benefits from more favorable fuel pricing through increased purchasing power and the collection of overhead charges. The current Agreement expires on June 30, 2023, and RBUSD would like to renew the Agreement for another three years. Historically, this arrangement has not presented any operational or capacity issues for the City.
The City’s fuel costs vary throughout the year. The Agreement stipulates that the School District purchases fuel at the City's actual cost plus an overhead charge of $0.34 per gallon. The overhead charge compensates the City for administrative costs and depreciation of fueling station equipment.
Based on past usage figures, it is estimated that School District vehicles consume approximately 20,000 gallons of unleaded fuel each year and minimal gallons of CNG as they have only one CNG vehicle.
All terms and conditions of the prior Agreement will remain unchanged. Both parties have the ability to terminate the Agreement by providing a 30-day notice.
Staff expects to bring a fuel purchase agreement extension for the City of Hermosa Beach to the Council for consideration in the coming weeks. Hermosa Beach has evaluated other fuel purchase alternatives, but is expected to renew the current Agreement for another three years. Projected fuel
H.6., File # 23-6013 Meeting Date: 6/13/2023
alternatives, but is expected to renew the current Agreement for another three years. Projected fuel purchases and revenues resulting from a continued arrangement with Hermosa Beach are included in the proposed budget for FY 2023-24.
COORDINATION
The Public Works Department coordinated this item. The City Attorney’s Office prepared the Agreement.
FISCAL IMPACT
Estimated revenue to the City resulting from the overhead charge applied to fuel purchases would be approximately $7,000 per year.
APPROVED BY:
Mike Witzansky, City Manager
ATTACHMENTS
· Agreement - RBUSD Fuel Purchase Agreement