ADMINISTRATIVE REPORT
Date: April 7, 2003
Author/Local: Bob Macdonald
604-873-7347
RTS NO. 03224
CC File No. 1805
Meeting date: April 24, 2003
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TO: |
Standing Committee on City Services and Budgets |
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From: |
General Managers of Engineering Services and Corporate Services |
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SUBJECT: |
Award of Contract for Parking Operating Services for Bentall Tower V, 550 Burrard Street, Vancouver BC - Proposal No. PS02048 |
RECOMMENDATION
A. THAT subject to the conditions set out in Recommendations B, C and D, an agreement be entered into between the City and Bentall Real Estate Services with Advanced Parking Systems for the operation and administration of on-site pay parking at the Bentall Tower V Parkade for a period of 5 years. The fee for service is based on 4% of net operating revenue with funding to be provided from the parking revenues of the Parkade.
B. THAT all legal documentation is to be in a form which is satisfactory to the Director of Legal Services and the General Manager of Engineering Services.
C. THAT upon approval of the legal documentation by the Director of Legal Services and the General Manager of Engineering Services, the Director of Legal Services and the General Manager of Engineering Services be authorized to execute and deliver the necessary legal agreement with Bentall as the co-operator and with Advanced Parking Systems as the parking services provider and that the Director of Legal Services be authorized to execute and deliver the necessary legal notice terminating the services of the existing parking services provider, Parking Corporation of Vancouver (EasyPark).
D. THAT no legal rights or obligations shall arise hereby and none shall arise or be granted hereafter unless and until all contemplated legal documentation has been executed and delivered by all parties.
COUNCIL POLICY
The policy of Council is to award contracts for the purchase of equipment; supplies and services that will give the highest value based on quality, service and price.
Contracts with a value over $300,000 are referred to Council for approval.
GENERAL MANAGERS' COMMENTS
Staff have conducted a detailed examination of the three submissions for operation of the Bentall parkade, in which the City has a 42% interest. After considering a number of factors including public service, maintenance, costs, and overheads, it is clear that the proposal from Advanced Parking Systems will give the highest value based on quality, service and price.
Bentall Real Estate Services, which has the remaining 58% interest in the revenue from the parkade, fully concurs with this recommendation. They have expressed the view ( which is supported by customer feedback) that the services provided by the current parking services provider (EasyPark) have not met the standards expected for this class of building and that the selected proponent will provide significantly improved levels of service, appropriate for this class of building.
In approving the staff recommendation, Council should be aware that the loss of the management contract for the Bentall Parkade by the Parking Corporation of Vancouver (EasyPark), the current service provider, could result in a financial loss to EasyPark in the short term of approximately $114,000. This loss is the result of a reallocation of overheads by EasyPark that will impact the other lots managed on behalf of the City. The management of EasyPark will have to make adjustments to their operations to mitigate the financial impact of the lost contract. In addition, the financial loss will be partially offset by lower anticipated operating costs and other benefits that the City will realize from the award of the contract to Advanced Parking Systems.
PURPOSE
The purpose of this report is to submit the results of the responses to a public process through Request for Proposal PS02048 (RFP) and recommend that the City enter into a five (5) year contract with Advanced Parking Systems to operate and administer on-sitepay parking for the Bentall V Parkade located at 550 Burrard Street in accordance with their submitted proposal.
BACKGROUND
In May 2002 Council instructed, A THAT Staff, with the support of Bentall Properties, issue a proposal call for the operation of the jointly owned Tower V parking facilities, and issue a proposal call for the operation of the parkade at Library Square, as required under the sharing arrangement with the Federal Public Works department". Both would be reported to Council for award of the contracts.
The Bentall Tower V parkade is a parking facility that is jointly controlled by Bentall Real Estate Services and the City of Vancouver (the Co-operators). The Parkade has been expanded from 630 parking spaces to a total of 952 spaces. The City has an interest in 400 parking spaces and benefits proportionately, receiving 42% of revenues after expenses. This parking expansion coincided with the construction of the first phase of the Bentall Tower V, which is now being occupied.
An RFP was issued on November 21, 2002 and closed on December 18, 2002. Proposals were received from the following proponents:
Advanced Parking Systems (Advanced) established in Vancouver in 1985, currently manages 76 parking locations. It was acquired by Imperial Parking in 1995. However, it continues to operate at arms-length from Imperial Parking with separate management. Its corporate offices are in Vancouver.
Imperial Parking, (Impark) established in Vancouver in 1962, is now Canada's largest parking management company and manages 1,599 parking locations. It has operations in 33 cities, with its corporate head office in Vancouver.
Parking Corporation of Vancouver (EasyPark), established in Vancouver in 1948 as the Downtown Parking Corporation, is a company controlled by the Downtown Vancouver Association with City of Vancouver participation. It manages 36 facilities, which are mostly leased from the City, and remits net revenues to the City.
RFP EVALUATION PROCESS
The evaluation of the proposals was undertaken using a standard evaluation format where the evaluation team identified and weighted the various aspects of the RFP prior to closing. The evaluation team was made up of 2 representatives from each of the City and Bentall Real Estate Services. The evaluation process was facilitated by the Material Management Division of Corporate Services for the City.
Evaluation criteria were as follows:
A) Proponents Qualifications
Consideration given to company profile, experience, key personnel, references and employees.
B) Service Approach
Consideration given to general operations, parking operations, equipment maintenance, general maintenance, consumables, additional services, site visit, employee standards, qualifications/competency, customer service, and revisions to the parking facilities.
C) Financial Offering and Parking Rates.
Consideration given to the financial offer, including the fee for service and operating and maintenance costs. Proponents were also asked to provide suggestions as to how the existing rate schedule could be changed to maximize the gross revenue.
PROPONENTS' QUALIFICATIONS
As noted above, all three companies have demonstrated experience in the management of parkades. References for all three proponents were received from a sample of their existing clients. References for Advanced rated them as "excellent", while the other proponents received a lower rating of "good", based on the rating scale used by the evaluators.
SERVICE APPROACH
All proponents demonstrated a commitment to customer service in their submissions through their staff training programs and operations manuals. However, site visits conducted by evaluators indicated that, for the lots visited at those particular times, Advanced personnel demonstrated better customer service skills. General attitude, helpfulness and demeanor all contributed to this evaluation.
In terms of proposed maintenance programs, Impark was less specific than the other proponents on suggested maintenance levels and approaches. Both Advanced and EasyPark, detailed and costed proposed maintenance programs. Subcontractors were considered as well.
FINANCIAL CONSIDERATIONS
As noted above, there were three components to the financial offer that were evaluated,
· fee for service,
· estimated operating and maintenance costs, and
· suggestions on parking rate changes.
"Fee for service" refers to the fee to be charged to the Co-operators for the operation of the parkade. Proponents were invited to propose a performance based and/or revenue based fee structure covering the anticipated 5 year term.
Proponents were asked to provide schedules of anticipated costs for supplies and general operating expenses normally paid by the parking services provider on behalf of the Co-operators. Although it is not expected that all operating expenses will be paid through the parking services provider, the proponents included in their estimates all normal expenses to give an indication of the expected total cost of operation for the parkade.
The proponents were also provided with copies of the current rate schedule for both transient (short-term) and contract (monthly) parking. They were then asked to make suggestions on changes to the rates that could contribute to higher revenues and better returns to the Co-operators.
The proponents took somewhat different approaches to the determination of the fees to be charged for the operation of the parkade. All proponents estimated the operating expenses they would incur and deducted those amounts from an estimated gross parking revenue figure to arrive at a net operating revenue. Two proponents, Impark and Advanced, tied their fees for service directly to the net operating revenue by expressing their fees as a percentage of net operating revenue. EasyPark chose to allocate a fixed amount of their head office overheads to the parkade.
A graphical representation of the impact of the these alternative approaches follows, comparing the level of the proposed fees to various levels of net operating revenue.
The Advanced and Impark proposals result in increasing fees as the net operating revenue increases. Conversely, should the net operating revenue decrease the corresponding fees will also decrease. The EasyPark proposal allocates a fixed portion of their head office overhead to the contract. As the fee for service is not tied to the net operating revenue amounts, it is constant for all net operating revenue levels.
Over the anticipated range of net operating revenue, Advanced and Impark indicate significantly lower fees for service than the EasyPark proposal. For reference purposes, the net operating revenue for the parkade in 2002 was approximately $740,000 (before overhead allocations).
As noted, the proponents were asked to estimate expected operating expenses. As two proponents tied their fees to a net revenue figure, an estimated level of net operating revenue ($1,675,000), ($2,000,000 gross), was selected to compare the impact of the expenses on the calculation of the fees for each proponent. The net operating revenue amount selected was the result of the evaluators' expectations for future years, based on the increase in parking stalls, the occupancy of the new tower and possible parking rate changes. It is uncertain that this level will be obtained, and has been used for comparison purposes only.
OVERALL COST COMPARISON:
Advanced |
EasyPark |
Impark | |
Stated operating expenses * |
$350,300 |
$380,300 |
$321,500 |
Allocation of Supervisory Cost |
0 |
84,400 |
0 |
Total Operating Costs |
$350,300 |
$464,700 |
$321,500 |
Management Fee (Administration) |
53,000 |
146,900 |
38,300 |
Total Costs (on an Annual Basis) |
$403,300 |
$611,600 |
$359,800 |
Difference between others and Advanced |
$208,300 |
($43,500) | |
* operating expenses include utility costs estimated at $51,000, which are generally out of the control of the parking services provider, and security costs estimated at $74,000, which are expected to be provided by the Co-operators. Advanced's operating costs also include $37,000 and $87,000 more for general maintenance than EasyPark and Impark respectively, which the Co-operators's feel is the appropriate need. Impark also does not include any equipment maintenance costs, which would be roughly $36,000.
