ADMINISTRATIVE REPORT

Date: August 21, 1998

Author/Local: CWyatt/7254

CC File No. 1805

TO: Standing Committee on Planning and Environment

FROM: General Manager of Engineering Services and

General Manager of Corporate Services

SUBJECT: Towing Services Contract Restructuring

RECOMMENDATION

THAT Council adopt the policy of setting rates for the towing of impounded vehicles and equipment to reflect that of the ICBC rate schedule for non-accident tows.

COUNCIL POLICY

The policy of Council is to issue a tender or request for proposal for all acquisitions in excess of $100,000.

PURPOSE

This report seeks Council's approval to restructure the City's towing contract to improve unsatisfactory service response.

It is proposed that the City set towing rate for impounded and abandoned vehicle tows according to the ICBC non-accident tow rate currently in effect and as it changes over time. This will require violators to pay a tow rate of $37 (higher for large trucks or long tows) versus the current rate of $23 regardless of size of vehicle or mileage involved.

Further, it is proposed that towing companies competitively bid the "license fee" for the rights set out in the contract. The increase in tow rate in combination with the Contractor's right to tow vehicles involved in accidents make this a lucrative contract to the towing companies, one which towing companies are willing to pay a substantial fee for. Previously, the City set the license fee for the rights under the contract and the towing companies bid the towing rates.

BACKGROUND

The current practice has been in place for at least twenty years and whereby the award is made to the bidder who submitted the lowest tow rate. Over the years, this has resulted in the towing companies bringing the price of City tows down to the point that it is no longer in the contractor's best economic interest to respond to the City's calls. Consequently, the contractor appears to first direct his resources to other more lucrative business such as private tows and accident tows.

The current tow rates of $23 per tow regardless the size of the vehicle, mileage involved or equipment required, is 50% lower than the lowest commercial rate and 38% lower than the lowest ICBC rate. Given the higher return the contractor can make on non-City tows, the City has been receiving deficient, and at times, nonexistent service.

This is a significant problem for violations which creates safety hazards such as corner clearances, bus stops, etc., and results in residents complaints arising from blocked driveways or lane access. Further, Police officers have sat in disabled vehicles waiting up to three hours for a tow and City owned trucks have sat in back alleys for up to two days waiting for a tow.

DISCUSSION

Staff from Parking Enforcement, Equipment Branch, Police and Financial Services came together to review and analyze the problems, identify the causal agents, and determine the best possible solutions to the towing problems.

The review revealed that there were several deficiencies contributing to the unsatisfactory service level besides the lack of adequate compensation to the contractor. These included the lack of performance standards in the contract and lack of a contract administrator to enforce the contract. The restructured contract includes performance standards and remedies should the contractor not meet the standards. The Manager-Parking Enforcement will administer the contract and ensure these standards are enforced.

The ICBC towing rate schedule is in widespread use around the region by ICBC and a number of other municipalities, specifically, Surrey, Delta, Burnaby and Richmond. Most of the other lower mainland municipalities plan to institute ICBC rates as soon as possible. The rate is reasonably compensatory, negotiated annually and is well understood by the general public. Although higher than the City's current non-compensatory rate, it still compares favourably with typical private rates for towing, which was found to be approximately $50.

Surrey, Burnaby and Richmond require the contractor to pay part of its tow revenue to the city in return for the towing rights set out in the contract. This fee does not include the use of a storage site and was set by a competitive bid process. When the fee requirement was initially implemented by Surrey approximately five years ago, it was highly contentious. However, Burnaby, which issued its bid last year, reported no vendor complaints regarding the fee requirement.

(Unlike the City of Vancouver, the other municipalities do not have storage sites for its impounded and abandoned vehicles and thus require that the contractor have a lot within its city boundaries in order to be awarded a contract. This greatly reduces the number of towing companies capable of providing the service.)

During their discussions with other municipalities, staff also learned that the rights fee and the higher tow rates alone did not necessarily assure a high level of service. Consequently, in addition to the inclusion of performance standards, the request for proposal has been structured so that staff can analyse the likely financial return to the proponent to ascertain that it is retaining enough profit to make the City's business attractive.

The City is presently examining the development of a new parkade as a replacement for the current impound lot. This replacement was reported to Council in March and November 1997. One of the funding sources proposed for the new parkade was towing fees. Although the revenues to be generated from the change in the towing contract will not completely satisfy the funding needs for the new parkade, it is proposed that any additional revenue from the new arrangement be considered as part of the overall parkade funding package to be reported back to Council prior to proceeding to the construction phase.

The storage fees that accrue from vehicles not being picked up within 24 hours should also be used for the impound lot replacement. Given that most violators pick-up their vehicles the same day as it is towed, this amount is small ($3,500 per year) at present.

Staff propose awarding a five year contract with an optional five year extension. Given the high capital outlay required in the towing business, it is felt that a contract of five years would allow companies who might otherwise be unable to consider a contract as large as the City's, to participate in the process.

IMPLEMENTATION

Conditional upon Council's approval of the recommendations, the Request for Proposal will be issued by the end of September 30, 1998 with the new contract effective January 1, 1999.

CONCLUSION

The City's current practice of awarding the towing services contract based on low bid has resulted in a poor service level that does not serve the needs of the City, its taxpayers or the public.

We are, therefore, recommending restructuring of the contract, in a manner which will allow the towing contractor a financial incentive to meet the City's required service level.

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(c) 1998 City of Vancouver