TO:Andrew P. Powers, City Manager
FROM:Clifford G. Finley, Public Works Director
DATE:September 10, 2024
SUBJECT: Amendments to Transit Operator Agreements with MV Transportation, Inc.
RECOMMENDATION:
1. Approve Fourth Amendment with MV Transportation, Inc. (MV) (Dallas, TX) for a two-year agreement extension through June 30, 2027, for Contract No. 12072- 2019 Transit Operations for Fixed Route Bus and Dial-A-Ride (DAR) demand response services, increasing the not-to-exceed amount by $14,859,914.75 for a total not-to-exceed amount of $43,038,278.75.
2. Approve budget appropriation and expense in the amount of $1,578,364 from A/C #651-0000-341-9900 (Transportation Fund, Net Position) as follows:
$500,000 to A/C #651-5550-682-5650 (Transportation Fund, Contracted Services, Private) and $1,078,364 to A/C #651-5540-682-5650 (Transportation Fund, Contracted Services, Private) for FY 2024-25.
3. Approve Second Amendment to Thousand Oaks Transportation Center Lease with MV for a two-year lease extension through June 30, 2027, for Contract No. 12073-2019.
4. Approve Second Amendment to Municipal Service Center Ground Lease with MV for a two-year lease extension through June 30, 2027, for Contract No. 12074- 2019, with MV.
5. Find that this action is not a project as defined under the California Environmental Quality Act (CEQA).
LEVINE ACT ITEM: Yes
Amendments to Transit Operator Agreements with MV Transportation, Inc.
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FINANCIAL IMPACT:
$1,578,364 Increase to Adopted FY 2024-25 Transportation Fund Budget. $1,578,364 increase to the FY 2024-25 Transportation Fund Budget is requested. The additional funds for the remaining contract term will be requested during the upcoming biennial budget process. Services performed for other agencies under contract are reimbursed at full-cost recovery, with no City subsidy.
Increased contract costs are not anticipated to negatively impact Thousand Oaks Transit (TOT) Program funding support for street and road maintenance.
BACKGROUND:
TOT was established in 1981 with fixed route bus services, which were eventually expanded to include Dial-A-Ride (DAR) and Americans with Disabilities Act (ADA) paratransit services for Thousand Oaks residents. TOT currently utilizes 11 Compressed Natural Gas (CNG) buses for five fixed bus routes that annually serve approximately 175,000 riders. TOT also has 17 DAR vehicles that serve approximately 100,000 riders per year. Contracted transit services are also provided to the cities of Agoura Hills, Moorpark, Westlake Village, County of Ventura, (Oak Park and select unincorporated areas) and an InterCity DAR service through the East County Transit Alliance (ECTA).
In 2014, the City conducted a Transit Operator Request For Proposals/Qualifications (RFP/Q) and awarded MV a four-year agreement for DAR demand response and fixed-route bus services. MV is one of the largest public transit operators in the nation, which includes a large portion of Los Angeles County, Antelope Valley, and Ventura County. Locally, MV also provides DAR services for the Gold Coast Transit District (Ojai, Oxnard, Port Hueneme, and Ventura) and the Ventura County Transportation Commission (VCTC) for fixed- route bus and DAR services in the Heritage Valley (Fillmore, Santa Paula, and unincorporated Piru).
In 2015, ECTA, a collaboration between Thousand Oaks, Simi Valley, Camarillo, and Moorpark, was formed, which designated TOT as the ECTA Fiscal Agent and MV as the Transit Operator. The MV service area and billable hours have tripled as a result of assuming the transit operator responsibilities for six public agencies.
In 2019, the City conducted another RFP/Q, and MV was again awarded a four- year agreement (Contract No. 12072-2019), including extensions for DAR demand response and fixed-route bus services through June 30, 2023, in a not-to-exceed amount of $26,600,000. Shortly after the execution of this agreement, the COVID- 19 pandemic began, severely disrupting operations nationwide, creating turmoil in labor markets, increasing labor costs, and significantly impacting program costs.
Amendments to Transit Operator Agreements with MV Transportation, Inc.
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On June 1, 2020, in response to COVID-19, City Council approved a First Amendment to the MV Agreement to address operational challenges and make interim changes to address the need for higher employee wages and revise billing procedures for unreimbursed overhead expenses. The First Amendment to the MV Agreement did not include an increase to the contract not-to-exceed amount.
On December 17, 2021, City Council approved a Second Amendment to the MV Agreement to increase billing and employee wages resulting from severe staffing shortages and to retain and recruit qualified personnel. The Second Amendment to the MV Agreement did not include an increase to the contract not-to-exceed amount.
In May 2023, MV replaced its General Manager and made other staffing changes, including filling vacant positions. The new MV management team includes staff with new experience and expertise that contributes to strengthening the overall transit operations.
On June 6, 2023, City Council approved a Third Amendment to the MV Agreement to extend the agreement term an additional two years to June 30, 2025, to run concurrently with an office space lease at the Thousand Oaks Transportation Center (TOTC), and a ground space lease at the Municipal Service Center (MSC).
Additional revisions were made to the agreement regarding the fee structure, vehicle lease rates, and charges for transit program technologies. The third amendment to the MV Agreement did not include an increase to the contract not- to-exceed amount.
DISCUSSION/ANALYSIS:
Staff evaluated the option to extend the current MV Agreement for the final two- year extension versus issuing a new RFP/Q. After evaluating the challenges that impacted MV operations and the recent improvements implemented, staff is recommending a final two-year extension to the current agreement, to June 30, 2027, based on the following factors:
•COVID-19 impacted transit services nationwide, and the ability to meet performance standards was severely affected. In June 2023, MV updated their management team with new staff and has since demonstrated significant improvements in all operational areas. Staff is confident the MV management team will continue to improve and exceed existing operational standards.
•MV, as the local operator, currently provides leased vehicles. A new transit operator would likely need to acquire new or additional vehicles, resulting in a six-to-twelve-month delay, potentially disrupting local transit operations.
Amendments to Transit Operator Agreements with MV Transportation, Inc.
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Extending the MV Agreement allows the City to maintain existing vehicle leases, provides additional time for the vehicle market to recover from pandemic supply chain issues, and allows for manufacturers to stabilize and scale up production to meet the state-mandated zero-emission market demand.
•The timing of VCTC’s countywide Transit Integration and Efficiencies (TIES) Plan that addresses transitional regional transit planning would be a challenge for a new transit operator. The TIES Plan is an approved regional document that includes recommendations for consolidating DAR services in eastern Ventura County. The TIES Plan also references other studies underway that may be incorporated in a future TOT services bid. The TIES Plan implementation process will take several years to complete, but the timeline to consider potential consolidation will likely coincide with the end of the recommended MV Agreement extension in 2027.
Typically, an extension to an agreement would not be executed this far in advance of the expiration of a contract; however, staff has also been negotiating some key revisions to the contract and an amendment to formalize those new terms was necessary. Therefore, it made sense to include the time extension as well. Below is a summary of the key revisions in the recommended Fourth Amendment in addition to the term extension.
Vehicle Lease and Amortization Schedule: The original agreement was revised to allow up to 60 months and 200,000 miles for active in-service leased vehicles. The Fourth Amendment reduces thresholds back to the original 48-month and 150,000- mile standard for active leased vehicles. Language has also been added that provides the City with the option to require new or replacement battery-electric- powered leased vehicles. The rates for leasing vehicles will also be limited to no more than 1/60 of the total vehicle purchase price per month during the extension period.
Customer Service: To ensure customer service standards are achieved, language requiring MV to increase staffing levels upon failure to meet minimum customer service standards has been added. Any added customer service personnel will be provided at no additional cost to the City.
DAR Productivity: COVID-19 has had a long-term effect on ridership as many medical facilities have increased remote visits, adult daycare facilities have reduced maximum occupancy, and seniors and ADA passengers have changed their commuting habits. Realizing conditions have changed, the agreement decreases the Rides per Hour Productivity Rates (RPH) to 2.35 for DAR from 2.44, and 1.65 for ECTA from 1.70. Since June 2023, the RPH for MV has averaged a
2.28 RPH rate for DAR and 1.60 for ECTA.
Amendments to Transit Operator Agreements with MV Transportation, Inc.
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Technology: MV has agreed to adopt and utilize a new dispatching software that VCTC is procuring. The date and transition to the new software are to be determined, but VCTC will pay the service costs. Once in place, MV will eliminate all existing software and technology costs.
Annual Rate Adjustment: The annual rate increases provided for in the contract are to be adjusted to a fixed increase of four percent for FY 2025-26 and four percent for FY 2026-27. The rate increase for leases shall also be modified to fixed four percent adjustments for both FY 2025-26 and FY 2026-27. The total increase to program costs, under the same billing hours, is expected to be approximately four percent and will be reflected in the FY 2025-26 and FY 2026-27 Transportation Fund Budgets.
All TOT contracted agencies have been advised of the agreement extension with MV and are aware of the need to update their agreements for City Council adoption later this year. Additionally, since a portion of MV services is supported by federal funding, VCTC concurrence, and pricing analysis have also been completed.
When the current two-year extension through June 30, 2025, was approved by City Council on June 6, 2023, the contract amount was not increased for the additional two extension years. As a result, the total contract costs are projected to exceed the original contract approved not-to-exceed amount of $26,600,000 in January 2025, and therefore, an additional appropriation of $1,578,364 is required for the remainder of FY 2024-25. In addition, for the proposed extension through June 30, 2027, an additional appropriation of $14,859,914.75 is required for a total not-to-exceed contract amount of $43,038,278.75.
Running concurrently with the Transit Operations Agreement are two space lease Agreements. The first is the TOTC lease where the City leases office space at the TOTC to MV. MV uses the office space as the TOT call center, sells bus passes, maintains a customer counter, and houses Customer Service Agents and Dispatch staff. The second is the MSC lease where the City leases space in the MSC for a MV-owned office trailer. MV uses the office trailer for their operations management staff, administrative staff, and lead position staff offices as well as for their employee lounge.
Staff recommends City Council approve the two-year agreement extension and revised terms with MV, and the two associated lease extensions (Attachments #1, 2, and 3) as outlined in this report. Staff will also be working on a Route Optimization Study and potential rollout of expanded service via a 6th Route in 2025 to help improve overall efficiency and improve on-time performance.
Amendments to Transit Operator Agreements with MV Transportation, Inc.
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LEVINE ACT (California Government Code § 84308):
This item is subject to the Levine Act. City Councilmembers who have received a campaign contribution of more than $250 (aggregated) within the preceding 12 months from a party or their agent/representative, or a financially-interested participant involved in this proceeding may do either of the following: (1) disclose the contribution on the record and recuse themselves from this proceeding; or if applicable (2) return the portion of the contribution that exceeds $250 within 30 days from the time the official knew or should have known about the contribution, and participate in the proceeding.
All parties and their agents/representatives must disclose on the record of this proceeding any aggregated contribution of more than $250 made to any Councilmember within the preceding 12 months. Councilmembers are prohibited from accepting, soliciting, or directing a campaign contribution of more than $250 (aggregated) from a party, their agent/representative, or a financially-interested participant during a proceeding and for 12 months following the date a final decision is made. In addition, a party, their agent/representative, or a financially- interested participant is prohibited from contributing more than $250 (aggregated) to a Councilmember during a proceeding and for 12 months following the date a final decision is made.
COUNCIL GOAL COMPLIANCE:
Meets the following City Council goal:
C. Operate City government in a fiscally and managerially responsible and prudent manner to ensure that the City of Thousand Oaks remains one of California's most desirable places to live, work, visit, recreate, and raise a family.
PREPARED BY: Tyler Nestved, Assistant Transit Planner
Attachments:
Attachment #1 – Fourth Amendment MV Operator Contract No. 12072- 2019
Attachment #2 – Second Amendment MV TOTC Lease
Attachment #3 – Second Amendment MV MSC Lease
DPW 940-10\tn\ev\Council\2024\091024\Transit Operator Agreement Amendment staff report.docx