Visalia City Council
August 12, 2024

Visalia City CouncilStaff ReportVisalia City Council707 W. AcequiaVisalia, CA 93291File #:24-0264Agenda Date:8/5/2024Agenda #:3.Agenda Item Wording:Award Contract for Visalia Transit Management, Operations and Maintenance- Authorize theCity Manager to award a 5-year base contract to RATP Dev not to exceed $109,000,000, with theoption to have five (5) single option years up to ten (10) years, appropriate an additional $6,000,000from the Transit Operational fund balance, and hear the first reading of Ordinance 24-08 as isrequired by the City Charter for lease agreements with a duration of longer than five (5) years.Deadline for Action: 8/5/2024Submitting Department:Administration - Transit DivisionContact Name and Phone Number:Angelina DeRossett, Transit Manager,[email protected](559) 713-4591, John Lollis,Assistant City Manager,[email protected], (559) 713-4323Department Recommendation:Staff recommends that the City Council authorize the City Manager to award a 5-year base contractto RATP Dev not to exceed $109,000,000, with the option to have five (5) single option years up toten (10) years, appropriate an additional $6,000,000 from the Transit Operational fund balance, andhear the first reading of Ordinance 24-08 as is required by the City Charter for lease agreements witha duration of longer than five (5) years.Background Discussion:In the Summer of 2023, the City’s Transit Division began preparing the Request for Proposals (RFP23-24-14) for Transit Management, Operations and Maintenance in an effort to have a new contractimplemented by October 1, 2024. Historically, the Transit Management, Operations and MaintenanceContract is effective October 1st to September 30th of each year.The RFP was released at the beginning of April 2024. There was an extended questions andanswers phase, and the close date of the RFP was also extended through four (4) addendums, toMay 21, 2024. Staff received four (4) proposals, including Keolis, MV Transportation, RATP Dev, andWeDriveU. The City’s evaluation committee individually scored the four (4) proposals with Keolis, MVTransportation and RATP Dev being the top three (3) proposers. In-person evaluations wereconducted of the top three (3) proposers and RATP Dev was the selected top vendor. RATP Devwas the top proposal for both the proposal evaluation and interview process.The current Operations and Maintenance Contractor, Transdev (previously First Transit), did notsubmit a proposal on the RFP.In accordance with the Federal Transit Administration (FTA) Best Practices Procurement Manual, thisRFP process employed the “best value” approach which is defined as follows:Visalia City Council Printed on 8/2/2024Page 1 of 6powered by Legistar™ File #:24-0264Agenda Date:8/5/2024Agenda #:3.“Best Value describes a competitive, negotiated procurement process in which the recipientreserves the right to select the most advantageous offer by evaluating and comparing factorsin addition to cost or price such that recipient may acquire technical superiority even if it mustpay a premium price.”During the RFP process, the proposers were evaluated and scored based on merit, but all priceproposals remained sealed. Pricing proposals were not opened until a top proposer had beenselected.The City’s evaluation committee consisted of John Lollis, Assistant City Manager for the City ofVisalia, Angelina DeRossett, Transit Manager for the City of Visalia, Caleb Bowman, TransitManagement Analyst for the City of Visalia, Carmen Quevedo, Transit Financial Analyst for the City ofVisalia, Rich Tree, Transportation Director for the City of Porterville and Giancarlo Bruno, RegionalPlanner for the Tulare County Association of Governments (TCAG).The evaluation process began on May 22, 2024, and concluded on June 19, 2024, following in-person interviews with the three (3) top proposers. On Monday June 24th, Transit staff, along withJohn Lollis (Assistant City Manager) and Melody Murch (City Assistant Finance Director) begandiscussions with RATP Dev regarding their cost proposal. The official Best and Final Offer (BAFO)request was submitted to RATP Dev on Friday, July 12, 2024, with a deadline of Friday, July 19,2024.The pricing proposed by RATP Dev in their BAFO for the first five years of this contract is shownbelow in Table 1: RATP Dev Pricing and Visalia Transit Projections - Years 1-5, as follows:Table 1: RATP Dev Pricing and Visalia Transit Projections - Years 1-5Total Combined Main Service CostYear 1 Year 2 Year 3 Year 4 Year 5 Total53,059,302$ 5,656,314$ 3,990,369$ 9,355,726$ 122,454$ Sub-Total13,517,786$ 14,019,010$ 14,515,051$ 14,611,126$ 15,521,190$ 72,184,164$ Total Combined Fixed Cost Year 1 Year 2 Year 3 Year 4 Year 5 Total30,089,134$ 1,026,602$ Sub-Total6,650,356$ 5,747,575$ 5,941,693$ 6,249,402$ 6,526,710$ 31,115,736$ Total Combined Additional Services and CostsYear 1 Year 2 Year 3 Year 4 Year 5 Total3,251,002$ 1,300,000$ 860,593$ Sub-Total1,470,861$ 1,510,100$ 1,553,312$ 432,564$ 444,758$ 5,411,595$ Not to Exceed21,639,003$ 21,276,685$ 22,010,057$ 21,293,092$ 22,492,659$ 108,711,495$ The Table 1, shown above has three (3) line items that are over and above what’s included in theRATP cost proposal, which are discussed below.Microtransit:Visalia City Council Printed on 8/2/2024Page 2 of 6powered by Legistar™ File #:24-0264Agenda Date:8/5/2024Agenda #:3.At the time of the RFP, Transit did not have a set microtransit implementation plan so proposers wereasked to provide only an hourly and mile rate as part of the bid process, whereas all other serviceswere calculated out in the yearly fees based on the miles and hours of the exiting routes. Themicrotransit service will start as a three-year pilot funded by the Tulare County Association ofGovernments (TCAG) through SB125 grant funding. This funding request goes before the TCAGBoard of Governors at its scheduled meeting on August 19, 2024. TCAG has also budgeted$140,000 for Visalia Transit to hire a consultant to perform a reimagining study. The consultant willuse data collected through the microtransit pilot to assist Visalia Transit in creating efficiencies withinthe existing Fixed Route services and replacing routes with microtransit where beneficial. This willallow staff to utilize existing operations funding to support microtransit where service efficiencies arecreated and underperforming Fixed Routes are eliminated. The microtransit item will be broughtbefore the City Council later this fall for appropriation of microtransit funds to the operations budgetafter TCAG Board approval.Since this is a three year pilot program, table 1 only includes costs for this program in years 1 thru 3.If this program continues beyond the three years, staff will return to Council to increase the annualcontract not to exceed amount.Major Components:The major component replacement amount included is an assumption made by Transit staff basedon a yearly average. Within this future contract, the current contract, and previous contracts forTransit operations and maintenance, the City is responsible for the replacement of major components(engines, transmissions, differentials etc.) on an as needed basis. Transit assumed $260,000 basedon an average from previous years. These major component replacements are reviewed andapproved by Transit staff, then paid directly to the contractor (in this case, RATP) and are thereforeincluded in the costs above.Incentives:The proposed contract includes an allowance of 1.5% of the total Revenue Service Hour payments,in addition to the contract amount to provide for employee incentive programs for the purpose ofimproving performance and customer service. This incentive amount is included in the Table 1Additional Services and Costs section above. This assumption is based upon the total incentivesthat the contractorcouldearn from the contract based on meeting specific goals that are outlinedwithin the scope of work. The transit industry standard is to cap incentives at 1.5% as a “not toexceed”.Facility Lease Information:Additionally, RATP Dev will be required to lease the Transit-owned Maintenance and Operationsfacility located at 525 N. Cain Street in Visalia to perform the duties of this contract, and the lease ofthe facility is specifically included in the contract per Federal Transit regulations. The lease of thefacility is include in the service cost and is not broken out separately.Per the Visalia City Charter, any lease agreement with a duration longer than five (5) years requiresthe adoption of an Ordinance with two public readings. The second reading must be completed priorto execution of the contract. The first reading will take place on Monday, August 5, 2024, and thesecond reading will take place on Monday, August 12, 2024. Following the second reading, theVisalia City Council Printed on 8/2/2024Page 3 of 6powered by Legistar™ File #:24-0264Agenda Date:8/5/2024Agenda #:3.contract documents will be ready for signature and execution.Fiscal Impact:The contract associated with this agenda item is an ongoing and budgeted annual expense in the451 Transit Operations Fund. Based upon the $14,863,200 currently budgeted for this contract in the2024/2025 Fiscal Year budget, Transit will have a shortfall of approximately $6,000,000 within the firstcontract year that needs to be appropriated from Transit’s fund balance.The Transit Operational Fund (451) ended the 2023/2024 Fiscal Year with a fund balance of over$40,000,000. This is an estimated number and may change once the 2023/2024 Fiscal Year audit iscompleted. Many of the funding sources used for Transit operations are provided on areimbursement basis, and the Transit Fund has built up this large balance to provide cash flow tooperate from until annual reimbursements are received. It is estimated that half (up to $20 million) ofthis balance may be used to supplement funding for the RATP Dev contract award without affectingTransit cash flow. The use of fund balance will allow Transit staff time to evaluate and adjust servicelevels to bring the cost of this new operations and maintenance contract within the limits of theannual funding received on an ongoing basis.Transit intends to evaluate the budget and service on a year-by-year basis and make adjustments tothe operating budget by creating efficiencies within the bus route service. Service and Routechanges require a public process to achieve, and it is estimated that Transit will require up to three(3) years of supplemental funding drawn from fund balance prior to completing these serviceadjustments. Table 2 below shows a depiction of Transit’s funding sources and uses for this contract,and Transit’s goal is to trim down operations costs within the first three (3) base contract years sothat existing operations, along with an estimated $17.4 million of available fund balance dollars payentirely for the contracted bus service. Beginning in year four (4) of the contract, service levels areexpected to stay within the available annual funding limits with no additional use of fund balance. Inthe meantime, Transit will retain the remainder of the fund balance to be used for operational cashflow.Visalia City Council Printed on 8/2/2024Page 4 of 6powered by Legistar™ File #:24-0264Agenda Date:8/5/2024Agenda #:3.Description Year 1 Year 2 Year3Total Years 1-3Sources:VT Annual Bus Contract Funding 12,245,900$ 12,222,400$ 12,234,200$ 36,702,500$ National Park Service Annual Contract 1,508,600 1,510,000 1,511,400 4,530,000 Annual Ticket Sales 1,108,700 1,130,800 1,153,300 3,392,800 TCAG Micro Transit Funding Year 1 1,063,973 1,098,716 1,137,078 3,299,767 Total Funding Available Year 1 15,927,173 15,961,916 16,035,978 47,925,067 Uses (RATP Dev Bid):Fixed Route Service (10,027,049) (10,292,184) (10,571,979) (30,891,212) Paratransit Service (946,740) (1,029,730) (1,123,442) (3,099,913) V-Line (637,260) (673,723) (704,350) (2,015,333) Sequoia Shuttle (1,883,414) (1,999,577) (2,090,911) (5,973,902) LOOP (23,322) (23,797) (24,369) (71,488) Fixed Administration Cost RATP Dev (5,623,754) (5,747,575) (5,941,693) (17,313,022) Startup Cost (Year 1 Only) (1,026,602) - - (1,026,602) Total Annual Service Bid (20,168,142) (19,766,585) (20,456,744) (60,391,472) Other Uses - Optional and Projected: - Micro Transit Pilot Year 1 (1,048,249) (1,082,479) (1,120,274) (3,251,002) Major Component Replacement Year 1 (260,000) (260,000) (260,000) (780,000) Maximum Incentive Available Year 1 (162,611) (167,621) (173,038) (503,271) Total Optional and Projected (1,470,861) (1,510,100) (1,553,312) (4,534,273) Net Sources/Uses - Projected Fund Balance Use(5,711,830)$ (5,314,769)$ (5,974,079)$ (17,000,678$ Table 2: RATP Dev Contract - Summary of Sources and Uses As shown in Table 2 above, the first contract year will require an additional $5.7 million from Transitfund balance. This amount has been rounded up to an estimate of $6.0 million. The $6,000,000appropriation proposed in this item will be added to the Bus Services and Equipment Repairs budgetline items as follows:Contracts-Bus Service: 4551-55350, $5,929,000Contract Equipment Repairs: 4551-55390, $71,000Prior Council Action:06/04/2018 City Council award of a 5-year base contract to First Transit for Management,Operations and Maintenance.Other:N/AAlternatives:noneRecommended Motion (and Alternative Motions if expected):Visalia City Council Printed on 8/2/2024Page 5 of 6powered by Legistar™ File #:24-0264Agenda Date:8/5/2024Agenda #:3.I move to authorize the City Manager to award a 5-year base contract to RATP Dev not to exceed$109,000,000, with the option to have five (5) single option years up to ten (10) years, appropriate$6,000,000 from the Transit fund balance to operational budget funds, and hear the first reading ofOrdinance 24-08 as is required by the City Charter for lease agreements with a duration of longerthan five (5) years.Environmental Assessment Status:N/ACEQA Review:N/AAttachments:RATP Dev ProposalDraft Agreement: Exhibit L - National Park Service Cooperative AgreementDraft Agreement: Exhibit M - Liquidated Damages and IncentivesPublic Notice - RATP Dev Contract OrdinanceDraft Ordinance 24-08Attachment 3 - Scope of Word as NegotiatedAttachment 6 - RFP 23-24-14 Exhibit F as NegotiatedContract AgreementContract Attachment 1 - City of Visalia RFP 23-24-14Contract Attachment 4 - Contract Fees & Cost Information24-0264 Transit Operations and Maintenance RFP 23-24-14 Slideshow Visalia City Council Printed on 8/2/2024Page 6 of 6powered by Legistar™