Finance and Personnel Committee of the Lee s Summit City Council Minutes Tuesday, September 30, 2008 5:45 p.m. City Hall Chambers Councilmembers: Councilmember Ed Cockrell, Chair Present Councilmember Randy Rhoads Present Councilmember Kathy Hofmann Present Councilmember Jim Hallam - Present Staff: Conrad Lamb Finance Director Robert Handley City Attorney Brian Scott Assistant City Manager Darlene Pickett Assistant Finance Director Bill Ward Purchasing Manager Mark Stinson Fleet Manager Chairman Cockrell opened the meeting at 5:45 p.m. Attendance was taken. Item 1 Approval of Minutes from August 12, 2008 Minutes from August 12, 2008 were approved with Councilmember Rhoads abstaining due to his absence at that meeting. Item 2 Award of Bid #08-173 for a One Year Contract with Two Possible One Year Contract Renewals for Legal Notices and Advertisements for various City Departments to all four responsive bidders: Lee s Summit Journal, Lee s Summit Tribune, The Pulse Legal Ad, and The Daily Record based on the Unit Prices Reflected in the attached bid tabulation. Bill Ward presented the Award of Bid #08-173 stating for years the Lee s Summit Journal was the only publication that met all the requirements of the various state statues pertaining to publication of legal notices for the City. In 2007 the Jackson County Circuit Court qualified several news publications as per state statues to be authorized to run public notices. The Purchasing Department mailed the bid to 11 potential bidders and 33 additional potential bidders were notified through the e-procurement system. Four bids were received by the July 15, 2008 opening date. The bids were evaluated by staff from the Legal Department, Codes, Parks, City Clerks Office, Human Resources and Purchasing Division for the best responsive bid that met all specifications. Due to the unique needs
of each department, staff determined that it would be in the best interest of the City to award to all four responsible vendors. The team recognized that not all of the City s needs will be met by just these four vendors and there will be situations when various departments will need to use other papers to reach specific markets. By awarding to multiple vendors, departments will know pricing up front and will be able to choose the paper(s) that best suit their needs. Councilmember Rhoads asked how it is determined which paper to advertise in. Mr. Ward stated each department would determine which one of the publications would best suit their needs. Councilmember Cockrell stated the City spends approximately $130,000 for all notices and advertisements and wanted to know what the City saves by going through this process. Mr. Ward stated he s not sure what the City saves, but now there is a locked in price whereas before there was not. Councilmember Cockrell then asked should the advertising copy that any one of these papers carries drops off can the City get better rates than these. Mr. Ward stated these were the caps at the time of the bid. Mr. Handley stated after looking at the bid forms that went out these are non-exclusive contracts that will lock in a price at which they will agree to do the work for. With flexibility of a non-exclusive contract, the City has the ability to go outside the vendor the City is working with and can find a better price with someone else. Councilmember Cockrell asked what the contract reads in terms of price and could the City not have just called these vendors up and gotten a price. Mr. Handley stated the contract serves as a lid on pricing. Mr. Ward stated the City has not had a cap before and different departments would pay different prices. Councilmember Hofmann asked if Mr. Ward knew where legal notices, i.e. rezoning notices, would be published. Mr. Ward stated they would be handled by the Planning Department and would probably be published in the paper previously used. Councilmember Hofmann stated she has received several complaints from citizens who do not take the paper that is commonly used for legal notices. And then must make a special effort to purchase this particular paper. Councilmember Hofmann then asked if legal notices were only published once a week. Mr. Ward stated the department would determine how many times they would like it published in the paper. Councilmember Rhoads asked if in the bid documents there was a minimum time that items will be advertised. Mr. Ward stated there are no minimums listed it is on an as needed basis. Councilmember Hallam made a motion to recommend Award of Bid #08-173 for a One Year Contract with Two Possible One-Year Contract Renewals for legal notices and advertisements for various City departments to all four responsible bidders: Lee s Summit Journal, Lee s Summit Tribune, The Pulse Legal Ad and The Daily Record 2
based on the unit prices reflected in the bid tabulation. Councilmember Rhoads seconded the motion. The Committee voted unanimously to recommend approval. Item 3 Award of Bid #08-178 for T-Shirts, Sweatshirts, Jackets & Specialty Items for various City Departments to Carter Creations based on unit prices reflected in attached bid tabulation. Bill Ward presented the Award of Bid #08-178 for T-Shirts, Sweatshirts, and Jackets & Specialty items stating various City departments will use this contract. Shirts are ordered and the department name and logo is either screen printed or embroidered onto the shirts in order to identify City employees easily. Bids were mailed to 35 potential bidders and an additional 112 were notified by Demand Star. Eleven bids were received and were evaluated by staff from Airport, Codes, Fire, Fleet, Parks and Recreation, Public Works Operations, Solid Waste, Water Utilities and the Purchasing Department for the lowest and best responsive bid that met all specifications stated in the Invitation to Bid. Factors considered in the evaluation process were delivery time, various additional charges for set ups and one time charges for screen printing and embroidering. Based on these factors, staff determined it would be advantageous and cost effective to award to Carter Creations. Councilmember Rhoades asked if the City had this type of a contract before. Mr. Ward stated he thought it did, but could not say who it was with. Councilmember Hofmann asked when the last contract was renewed. Mr. Ward stated it was within the past year as this was the reason for the new bids. Councilmember Cockrell asked if these services are costing more or less than three years ago. Mr. Scott stated he did not remember. Councilmember Hallam made a motion to recommend the Award of Bid #08-178 for T- Shirts, Sweatshirts, Jackets and Specialty Items for various City departments to Carter Creations based on unit prices reflected in attached bid tabulation. Motion was seconded by Councilmember Hofmann. The Committee voted unanimously to recommend approval. Item 4 Award of Bid #09-019 for Wix Manufactured Automotive Filters for the Fleet Division to Carquest based on unit prices reflected in attached bid tabulation. Bill Ward presented the Award of Bid #09-019 for Wix Manufactured Automotive Filters for the Fleet Division to Carquest based on unit prices reflected in attached bid tabulation. The Fleet Division needs a contractor to provide Wix Manufactured Automotive Filters. This contract will provide the needed filters for daily maintenance and repairs of city vehicles and equipment. 3
The bid was advertised and mailed to 11 potential bidders. An additional 94 potential bidders were notified through the City s e-procurement system, Demand Star. Three bids were received by the bid opening date and were evaluated by staff from the Fleet Division and the Purchasing Department for the lowest and best responsible bid that met all specifications stated in the invitation to bid. The bid from Carquest offered the lowest responsive bid that met all minimum specifications. Councilmember Rhoads made a motion to recommend the Award of Bid #09-019 for Wix Automotive Filters for the Fleet Division to Carquest based on unit prices reflected in attached bid tabulation. Councilmember Hallam seconded the motion. The Committee voted unanimously to recommend approval. Councilmember Cockrell stated he would like in the future to see included in the information for approval the price paid in the past and what the cost is of a new contract. Item 5 Award of Bid #09-011 for the Purchase of a Trash Compactor and the Sale of One 1998 Caterpillar 826G Trash Compactor for the Solid Waste Division to Dean Machinery Co. in the amount of $618,522.00 Bill Ward presented the Award of Bid #09-011 for the purchase of a trash compactor and the sale of one 1998 Caterpillar 826G trash compactor for the Solid Waste Division to Dean Machinery Co. in the amount of $618,522.00. This equipment will be used for compacting solid waste in the City s landfill and the funds for this unit will come from the VERP (Vehicle & Equipment Replacement Program). The bid was advertised and mailed to 20 potential bidders with an additional 39 potential bidders notified through the City s e-procurement system, Demand Star. One bid was received and evaluated by staff from the Fleet Division, the Solid Waste Division and the Purchasing Division. Consideration was given to the sale of one used 1998 Caterpillar 826G Trash Compactor as well as the total maximum cost. This cost reflects the actual cost of the item at the end of its life cycle. This cost reflects the grand total base bid plus guaranteed maximum repair less the guaranteed minimum repurchase price. A savings cost is not available due to competitive manufacturers not producing this type of equipment at this time. The proposed award is based on the Grand Total Base Bid. Upon award of the purchase by the City Council, a contract in the form of a purchase order will be placed with Dean Machinery for this purchase. A bill of Sale/release form will also be issued upon receipt of funds from Dean Machinery Co. for the sale of the used compactor. Councilmember Hallam asked why there was only one bid received from the fifty-nine sent. Mark Stinson stated this equipment is very specialized and a large piece of equipment and currently there are only two companies who manufacture this equipment. The other company has currently suspended manufacturing this equipment. 4
Councilmember Rhoads wanted clarification that this expense was more than budgeted and that the VERP Fund Balance will fund the remaining balance in subsequent years. Mark Stinson stated that was correct and the payments would be adjusted over four years to recoup the VERP balance so there is enough for other purchases in this department. Councilmember Cockrell asked if the guaranteed minimum repurchase price is higher than was expected. Mark Stinson replied yes. Steve Arbo stated in regard to Councilmember Rhoads question with the four new annual payments the City will increase the amount above the normal VERP amount to replenish the money that was borrowed from the VERP. Councilmember Rhoads made a motion to recommend approval of Award of Bid #09-011 for the Purchase of a Trash Compactor and the sale of one 1998 Caterpillar 826G Trash Compactor for the Solid Waste Division to Dean Machinery Co. in the amount of $618,522.00. Councilmember Hofmann seconded the motion. The Committee voted unanimously to recommend approval. Item 6 Award of Bid #09-010 for the Purchase of a Track-Type Tractor Dozer with Waste Handling Package for the Solid Waste Division to Dean Machinery Co. in the amount of $292,075.00 Bill Ward presented the Award of Bid #09-010 for the purchase of a Track-Type Tractor Dozer with Waste Handling Package for the Solid Waste Division to Dean Machinery Co. This equipment will be used for dozing and earthwork at the City s landfill. The funds for this unit will come from the VERP. The bid was advertised and mailed to 44 potential bidders with an additional 84 bidders notified through the City s e-procurement system, Demand Star. Three bids were received and were evaluated by staff from the Fleet Division, Solid Waste Division, and the Purchasing Division. The overall lowest and best bid was determined to be the alternate bid from Dean Machinery. Considerations made in the selection of the alternate bid from Dean Machinery included the total maximum cost. This cost reflects the actual cost of the item at the end of its life cycle. This cost reflects the grand total base bid plus guaranteed maximum repair less the guaranteed minimum repurchase price. Taking these issues into consideration, the alternate bid from Dean Machinery is the best overall value. Upon award of the purchase by the City Council, a contract in the form of a purchase order will be placed with Dean Machinery for this purchase. Councilmember Cockrell asked what an alternate bid was. Bill Ward explained an alternate bid is a bid where a firm says it will give a price on (a) and also a price on (b) for consideration. Mr. Ward stated the original Dean Machinery bid was $160,575 which was better than the original bid from Murphy Tractor of $170,520. Mr. Stinson 5
stated Dean Machinery s standard (alternate) bid was for a 2009 Caterpillar D6T WHA and their original bid was for a 2009 Caterpillar D6T XL WHA. Councilmember Hallam just wanted to clarify that the alternate bid from Dean Machinery was the one that met our specifications and the original bid from Dean Machinery was for a machine that was above the City s specifications. Mr. Stinson stated that was correct and could not say why the company had bid this way. Councilmember Hofmann asked if Murphy Tractor had also given an alternate bid. Mr. Stinson stated the 2009 John Deere 850J from Murphy Tractor was the only one that this company made and did not meet the City s specifications. Councilmember Rhoads asked about the guaranteed maximum repair expense listed on the Bid Sheet. Mr. Stinson stated that anything except general maintenance and/or misuse of the machine is covered under the guaranteed maximum repair expense. Councilmember Rhoads then asked if the City tracks the repair expense and Mr. Stinson replied yes. Councilmember Hallam made a motion to recommend approval of Award of Bid #09-010 for the purchase of a Track-Type Tractor Dozer with Waste Handling Package for the Solid Waste Division to Dean Machinery Co. in the amount of $292,075. Councilmember Hofmann seconded the motion. Councilmember Cockriel just wanted to note that this item is also over budget and will be purchased with VERP funds. The Committee voted unanimously to recommend approval. Item 7 Presentation of an outline of the scope of services for the additional work requested to be included in the Airport Business Plan Steve Arbo stated this was a follow up to an earlier discussion regarding the Airport Business Plan where the Mayor and Council directed staff to proceed with the drafting of an Airport Business Plan based upon the Airport Expansion Plan that was previously adopted by the City Council. The idea was to see what kind of economic impact and projected positive revenue could be created by a professionally written business plan for the airport. When the airport business plan was completed for the proposed expanded version of the airport it generated additional questions for example, what would be the economic benefit of the remaining 70 acres adjacent to the airport that is not used for aviation purposes. Mr. Arbo stated that another question raised was if the airport was either relocated or not within the City of Lee s Summit what economic benefit to the City would there be if the 400+ acres of property currently used for the airport was used for other purposes. Mr. Arbo stated these are very good questions because this property is considered a resource as economic development property becomes more and more valuable to our community. Mr. Arbo stated staff has tried to make a very strong effort at trying to address these questions and before additional time and money was spent on consulting 6
fees, staff wanted to make sure they were in agreement with the scope of the Finance and Personnel Committee. Mr. Arbo referred to a graph included in the Committee s packet. The first thing staff looked at was the current airport without the expansion plan and determine what its economic benefit is today, both indirect and direct impact. This is possible through our current consultant Clough Harbour, who did the airport business plan. Councilmember Hallam asked if the indirect would be broken down into categories so different values could be applied to those indirect assessments, not just one big number listed. Mr. Arbo stated yes it will. For the airport expansion plan staff already has an implementation plan which generated significant discussion. The next step staff would like to do is an analysis on the economic development benefit on the 70 acres that is non-airport related but is adjacent to the airport. Then the economic benefit from the airport itself. Airport Expansion Plan: Elements of this analysis would include the absorption rate, type/square footage of uses, and establish values: buildings/personal property, personnel/job creation, direct revenue, and indirect benefit to taxing jurisdictions. Councilmember Cockrell asked for clarification that these were related to the 70 acres. Mr. Arbo stated yes. Mr. Arbo stated none of these things can be done without creating infrastructure costs. No Airport Economic Development Plan: This analysis would include cost of replacement airport, analysis on developing airport site, i.e. cost of dismantling airport; paying back the FAA and projected economic development of 400+ acres. Elements of airport analysis include absorption rate, type/square footage of uses, establish values: buildings/personal property; personnel/job creation; direct revenue; and indirect benefit to taxing jurisdictions. Councilmember Hallam stated he thought the cost of dismantling the airport and the cost of a replacement airport would be connected when doing the analysis. He also stated he did not see any element in the presentation in relation to environmental issues; i.e. the cost of gas, jet fuel; or the economy in general. Councilmember Hallam stated he would also like to see the amount of jet travel in comparison to a Class A office building; i.e. which is impacted more in a good economy and which is impacted more in a bad economy as related to various cost factors. Councilmember Rhoads asked what absorption rate meant. Mr. Arbo stated absorption rate is a projection over a 20-30 year timeline that it takes to fill your space with development. Mr. Arbo stated the next step would be to finish the scope of review and submit it to the consultant and when a fee has been negotiated, it will be brought before this Committee for consideration and then on to the Council for approval. 7
Councilmember Cockrell asked if the cost would be more than $60,000 and if this was something that staff could do. Mr. Arbo stated he was sure the cost would be more and that there was a desire to have an independent third party do this study. Item 8 Discussion of Policy for Use of City Council Discretionary Funds Brian Scott stated $5,000 is budgeted a year in a line item account known as the City Council Discretionary Fund for the purpose of tracking incidental expenses related to Council activities. On average the yearly expenditures have been approximately $5,000. Some suggested guidelines are: flowers or small gifts of gratitude; tables at banquet dinners or luncheons of community organizations; postage for mailings to constituents; incidental cost related to constituency gatherings, or travel for city related business other than a conference. Councilmember Rhoads stated he had asked for more clarification on this issue as he found there were no guidelines on this policy. Councilmember Hallam stated postage for mailings could use up the entire fund. Councilmember Cockrell agreed that postage should not be included in the list. Councilmember Hofmann stated she e-mails many of her constituents, but a lot of them may not have computers. Councilmember Cockrell recommended the guidelines only include tables at banquet dinners or luncheons, incidental cost related to constituency gatherings and travel for city related business. Then in next year s budget it could be discussed about expanding the fund to include mailings. Councilmember Hallam also suggested that staff look at including mailings in City Scope or the water bills which would be a more logical way to inform citizens. Steve Arbo stated the City does purchase a table for Hope House as there is a domestic abuse shelter in Lee s Summit and a table at The Community Heartland fund raiser as the City is recognizing the Citizen of the Year at this event. Since banquet tickets could use up a lot of the money the Council may want to consider a guideline for the Mayor Pro-Tem regarding table requests. Councilmember Cockrell suggested this item be put on hold and let the Mayor Pro-Tem work with staff to come up with some recommendations to present to the Committee and then the Council. Item 9 Review of Fleet Division s Efforts for Greater Fuel Efficiency Brian Scott stated with the rising cost of gasoline and diesel fuel, the Finance and Personnel Committee inquired during the budget presentations this spring what steps are being taken to insure that the City s fleet is as fuel efficient as possible. The Fleet Division s position has been to gain efficiencies through proven methods that have little or no impact on operating costs. As new technologies are developed and become 8
accepted, the Fleet Division will certainly consider their merit when evaluating future needs. Vehicle Engine Selection For the past several years the Fleet Division has worked with departments at the time of vehicle replacements to evaluate and select a more fuel efficient vehicle that is appropriate for the job. As a result, several large vehicles have been replaced with more fuel efficient vehicles. This right sizing of the fleet has resulted in less expensive, more fuel efficient vehicles that are appropriately matched for the job they are intended to perform. Hybrid Engines The Fleet Division worked with Codes Administration to purchase a hybrid, compact sedan in 2004. While this vehicle gets an average of 39 miles per gallon the cost of this unit was 48% more than a comparable non-hybrid vehicle. With the rising cost of gas the demand for hybrid vehicles has increased dramatically, thus limiting the number of hybrid vehicles available. Also the current selection of hybrid vehicles is limited to compact sedans and a compact SUV. These two types of vehicles have limited use in the City s fleet. The Fleet Division has begun discussion with the Police Department about possible use of the compact SUV for non emergency use, i.e. school resource officer or DARE vehicles. Hydrogen Engines Hydrogen engines are the latest technology to be in development for vehicles. To date, production is limited to only demonstration models. Hydrogen cell engines are very fragile and not able to withstand the typical rigors of road driving. Hydro engines also produce water, which can freeze in low temperatures and cause the engine to break upon start up. The infrastructure to produce, transport and store hydrogen is still very much in the developmental stage. Diesel Engines A question was raised whether it would be more fuel efficient to have all City owned pick up trucks operate with diesel engines. Currently a total of 159 units or 43% of the fleet utilize diesel engines. A diesel engine must be consistently pulling or hauling a load at least 50% of its operational time for it to be efficient. Most City owned pickup trucks are used to haul light loads for as much as 80% of their operational time. In addition, a diesel engine is a $5,000 upgrade per truck. Alternative Fuels Bio-diesel is a fuel produced from vegetable oils and/or animal fats blended with straight petroleum diesel. Currently Lee s Summit is purchasing a 2% blend of bio-diesel fuel and has plans to increase this to a 20% blend by this summer. However, the cost for bio-diesel has taken a sharp increase making it prohibitive to purchase anything above a 2% blend. This will be reviewed on a regular basis and if possible a more aggressive blend will be purchased when feasible. D-85 This is a blend of unleaded gasoline and ethanol. Ethanol is similar to bio-diesel in that it is a fuel produced from grain products and then blended with straight unleaded gasoline. As vehicles are replaced the Fleet Division will continue to evaluate adding E- 85 as a standard fuel for unleaded vehicles. However, consideration must be given to 9
the efficiencies of E-85. It takes approximately 1.56 gallons of E-85 to go as far as one gallon of unleaded gasoline. Compressed Natural Gas and Liquefied Petroleum Gas - The use of compressed natural gas and liquefied petroleum gas has become very popular in California. While these two alternative fuels are typically less expensive than traditional petroleum based products, their real appeal is in the fact that they have virtually zero emissions of green house gases. The primary obstacle with such alternative fuels has been in the cost of installing and maintaining the necessary fueling station and converting vehicles to this type of alternative fuel. At the present time only one sedan manufacturer is producing a vehicle that will run on natural gas. Other Efforts Towards Greater Fuel Efficiency Regular preventive maintenance efforts have proven to be the best way to maintain the optimal fuel efficiency of a vehicle. The Fleet Division instituted a No Idle policy in the summer of 2005. This policy requires that with the exception of emergency vehicles, employees are not to leave their City vehicles idling for longer than five minutes. Employees are to avoid unnecessary warm-up times, avoid carrying excess weight in their vehicles, drive with windows closed to reduce drag and take advantage of opportunities to reduce trips or car pool. Use of Technology The Fire Department has begun utilizing a video conferencing system allowing for daily briefings and training. Foot and Bicycle Patrols The Police Department has instituted traditional foot and bicycle patrols in the downtown area and neighborhoods allowing for better interaction between police and residents as well as saving on fuel usage. Green Fleet Policies A number of cities across the country have instituted Green Fleet Policies. These policies call for municipal fleet managers to institute a number of steps toward a more fuel efficient and greener fleet. Although the City does not have a formal Green Fleet Policy, many of these steps are already being taken by the City Of Lee s Summit s Fleet Division. Conclusion - The Fleet Division has purposely approached green initiatives in a slow and methodical matter in order to insure that the City does not incur unnecessary costs or that equipment is meeting the needs of departments. The Fleet Division will continue to work toward reviewing alternative fuel options and utilize where appropriate; reviewing the replacement of vehicles that effectively utilize alternative fuels and, developing partnerships with other entities to explore alternative solutions that can be utilized in a joint matter to save on costs of distribution. Mr. Scott suggested a recommendation to the Council to adopt a Green Fleet Policy. 10
Councilmember Cockrell thanked Mr. Scott for the very thorough report. Councilmember Cockrell stated from his observation going Green is very expensive in the initial investment but fears the City will be trailing the world as long as the City uses its normal return on investment analysis. Councilmember Cockriel feels this policy needs to be presented to the 360 Group and see what their advice would be. Councilmember Hallam and Hofmann agreed. Roundtable: It was decided that future F&PC meetings would be held on the first Tuesday of the month at 5:45 p.m. Councilmember Cockrell suggested putting up a sign at the new recycling center so citizens will know what is being built there. Councilmember Hofmann suggested making the drive by water payment drop off box more noticeable stating people still do not know where it is located. Councilmember Cockrell asked Conrad Lamb to address the topic of credit as the City does need credit on occasion. Mr. Lamb stated the City has three bond issues in the works. The first one is a general obligation debt the City hopefully will be awarding on October 16. The City has been told that hopefully the market will settle down and we will be able to issue that debt. The other two issues are TIF obligations one is for the Strother Road Interchange which will be a Transportation Development District Issue and the second one will be the Summit Fair TIF obligations. There is no market for these two at the present time and until the financial markets settle down the City is looking at options in the case of the Strother Road financing this also involves $8M of federal money. The City is hoping to be able to use the federal money first which would buy the City six months putting us into the new calendar year and hopefully by then the markets have resumed more traditional rates and acceptability by the public. If not, the City may have to break some of these down into smaller issuance. In the case of the Strother Road TDD issuing the full $12M needed to construct the interchange; the City might only issue a portion of that amount and then in a year issue the rest. This would have an additional expense due to the additional issuance costs. Regarding the Summit Fair project Mr. Lamb stated the City would have to discuss this more with the City s financial advisor on what the best way to keep this project moving was. Mr. Lamb stated he would keep the Council updated on this matter. Meeting was adjourned at 7:30 p.m. 11