HomeMy WebLinkAboutD- 4 Approval of Non-Exclusive Franchise Agreement for City Towing Services si:avicorwpft,i5,;.1 _
AZUSA
AGENDA ITEM
TO: THE HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: BOB GARCIA, CAPTAIN
ROBERT K. PERSON, ASSISTANT CITY MANAGER
VIA: RICK COLE, CITY MANAGER
DATE: FEBRUARY 4, 2002
SUBJECT: APPROVAL OF NON-EXCLUSIVE FRANCHISE AGREEMENTS FOR CITY TOWING
SERVICES
RECOMMENDATION
It is recommended City Council approve the attached towing service franchise agreement
and authorize its execution with Johnny's Towing, Freeman's Towing, Cities Towing and
Jan's Towing.
BACKGROUND
On June 4 and August 6, 2001 , City Council deliberated the issue of awarding exclusive
versus non-exclusive franchise agreements for the City's towing services. At the latter
meeting, staff was directed to abandon the concept of an exclusive franchise in favor of
multiple non-exclusive franchise agreements for four tow companies. Those companies
are listed in the recommendation above.
A working group consisting of Mayor Pro-Tern Chagnon, Councilmember Stanford and
staff met to revise the exclusive agreement into a non-exclusive agreement. This was
completed and the working group met with representatives of all four towing companies
on two occasions to discuss any issues that would pose problems for the City or the
companies. The attached agreement has the approval of all parties involved.
the Franchise Agreement
The attached agreement emphasizes accountability, customer service, fairness to all the
tow operators and revenue enhancement for the City.
To achieve accountability, the tow operators have agreed to have periodic inspections
of their facilities to insure they are meeting all requirements of the franchise. City staff
will develop a "report card" with objective criteria and standards to perform these
inspections. Should any franchisee fail to uphold the requirements of the franchise and
not correct deficiencies, the City retains the right to terminate the agreement. That share
of the business would then be equally divided among the remaining operators. Customer
service is addressed by requiring that the franchisees, their employees and agents, treat
the general public with the utmost courtesy, cooperation and professionalism when
performing towing services, releasing a vehicle or otherwise performing under the terms
of the agreement. All tow operators were invited to participate in the creation of the
agreement in order to not create hardships or undue requirements. Finally, revenue
generation for the City was addressed by increasing the percentage of gross revenues
due to the City from 10% to 17%. City staff had sought to obtain a percentage of gross
revenues related to lien sales, however, the complexity of accounting for the operators
as well as the question of legal authority of the City to impose such a fee resulted in the
7% increase in tow operation gross revenue as a compromise agreeable to all parties.
FISCAL IMPACT
Each franchisee has agreed to pay the City a one-time administrative fee of $1,250 to
reimburse the City for costs associated with the development of this franchise
agreement. Each franchisee has agreed to pay the City an amount equal to 17% of the
franchisee's gross revenues attributable to the towing and storage services provided in
connection with an official request for service from the Police Department. Under the
terms of the previous franchise agreement this amount was 10%. All tow operators
agreed to the increase as an alternative to assessing a percentage of their lien sales
(explained above). The average number of police ordered tows are approximately 75
tows per month in Azusa. Coupled with the administrative release fee collected at the
Police Department at the time a towed vehicle is authorized to be released (currently
$54.00 for regular tows and $178.00 for DU1's), it is expected that these franchise
agreements will generate approximately $52,000 per year, not including the one time
administrative fee noted above.
Attachment: Non-Exclusive Franchise Agreement