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HomeMy WebLinkAbout04 - Privatization of Tree Maintenance• TO: Mayor and City Council FROM: General Services Director SUBJECT: Privatization of Tree Maintenance i City Council Agenda Item No. € November 22,1993 NOV 2 ?_ 199(3 e -2966 a) Approve a renewable five -year tree maintenance contract effective January 1, 1994 with West Coast Arborists in the amount of $348,540 per year. b) Approve a corresponding budget amendment transferring $174,270 (half of the annual private contract cost) from the salary accounts of the Street Tree Maintenance Division to the Professional /Technical Services account of the same Division. c) Convert the existing Street Tree Supervisor position to an Urban Forester billet. d) Retain one Tree Trimmer 11, one Tree Trimmer I, and one Laborer of the Street Tree Division after February 1, 1994. e) Approve /ratify an MOU with the Newport Beach Employees' League resolving the labor relations issues with the impacted employees. f) Authorize the sale by private bid of the surplus City tree trimming equipment after February 1, 1994. g) Approve a Resolution authorizing the City to utilize the bidding process from the City of Tustin for the provision of tree trimming services by West Coast Arborists. Background Attached for information is the staff report prepared for the October 11 Study Session regarding the privatization of the street tree ma! ;, tenance function. At fiat meeting, tht • City Council requested additional information about this proposal. Such information is provided in this report. The information request included: 1) the actual cost savings; 2) the details of the bid received from West Coast Arborists; 3) the quality of the services presently provided by West Coast Arborists, Inc. to other government entities; 4) the financial stability, qualifications of personnel, and equipment inventory of the contractor; and 5) the impact on the current City employees in the Street Tree Division. # • 1 Costs and Savings The FY 93-94 budget provides for 11 full-time employees and 20 items of rolling stock at • a total cost of $727,665. There are, however, 13 employees on the Street Tree Division roster, including two employees on lengthy contested injury leaves. If this Division continues at its current productivity level, approximately 7,500 park and street trees will be pruned during this fiscal year. Additionally, numerous other operations such as tree removal, root pruning, and planting will be completed. The private tree trimming industry has become extremely competitive over the past several years in Orange County. Public sector personnel simply cannot compete as reflected by cost tables in the consultant's report presented on October 11. This pattern is expected to continue in the future. At present, 27 of 31 Orange County cities contract out some portion of the tree maintenance functions. Of the 27 cities using contract tree services, 15 contract out 50% or more of the workload. The following table shows the savings to be achieved by utilizing a private firm to perform the same level of production expected to be performed by the Street Tree Division this year: ' FY 92 -93 City crew production The Department proposal is to enter into a contract with a private tree - trimming firm for the major portion of the City Street Tree Division's functions while retaining three existing positions and converting one other position. The three positions to be retained would be a Tree Trimmer II, a Tree Trimmer I, and a Park and Tree Laborer position. Additionally, the converted position would be an "Urban Forester" position replacing the existing Tree Maintenance Supervisor. The Urban Forester would have the responsibility of directing the activities of the three- person crew aT we'll as inspecting ±he work of the private contractor, managing tiie contract, and meeting wi h the contractor on a frequent basis. E Ie would report to the Park and Tree Superintendent, and as minimum qualifications, would be required to hold a bachelor's degree and be a • certified arborist. Under this scenario with the four person Division, the salary, benefits, equipment, and M & O cost would be approximately $289,404 per year and, when combined with a tree contract of $337,476, would total $626,880, representing an annual savings of $100,785 over the current year's budget. The latter figure does not reflect an approximately Contractor *Units Cost/Unit Annual. Cost Tree Pruning 7,480 $39.00 $291,720 Tree Removal 168 $130.00 $21,840 • Root Pruning 279 $60.00 $16,740 Tree Planting 192 $95.00 $18,240 Total $348,540 Street Tree Division FY 93 -94 Budget $727,665 Annual Production Savings from using private contractor $379,125 ' FY 92 -93 City crew production The Department proposal is to enter into a contract with a private tree - trimming firm for the major portion of the City Street Tree Division's functions while retaining three existing positions and converting one other position. The three positions to be retained would be a Tree Trimmer II, a Tree Trimmer I, and a Park and Tree Laborer position. Additionally, the converted position would be an "Urban Forester" position replacing the existing Tree Maintenance Supervisor. The Urban Forester would have the responsibility of directing the activities of the three- person crew aT we'll as inspecting ±he work of the private contractor, managing tiie contract, and meeting wi h the contractor on a frequent basis. E Ie would report to the Park and Tree Superintendent, and as minimum qualifications, would be required to hold a bachelor's degree and be a • certified arborist. Under this scenario with the four person Division, the salary, benefits, equipment, and M & O cost would be approximately $289,404 per year and, when combined with a tree contract of $337,476, would total $626,880, representing an annual savings of $100,785 over the current year's budget. The latter figure does not reflect an approximately 0 $19,000 further savings associated with the avoidance of a 8% pay increase in this fiscal year for the seven positions proposed for elimination nor green waste disposal costs of IS $16,000 per year which would also be avoided by privatization. The total savings of these factors would exceed $135,000. Additionally, in this fiscal year, the City would gain approximately $64,000 from the sale of the surplus Street Tree Division equipment. • • Bidding Process At the October 11 Study Session, various Council members also voiced concern about "piggybacking" off the Tustin RFP and bid process. In January of this year, the City of Tustin developed bid specifications and solicited bids to qualified tree trimming firms, ultimately awarding the contract to West Coast Arborists of Buena Park. West Coast Arborists is allowing our City to enter into a contract under the same terms as offered the City of Tustin. The Cities of Orange and Costa Mesa have piggybacked this year on the Tustin bid process and awarded tree trimming contracts to West Coast Arborists (WCA). The table below compares the costs of the Tustin contract with recently awarded contracts in the cities of Buena Park, San Bernardino, and Garden Grove. The latter three cities wrote RFPs and undertook separate formal bid processes, and each ended up with a higher- priced contract than would have been achieved from "piggy- backing' off the Tustin contract. Operation Tree Pruning (Per Tree) Tustin Costa Mesa Orange $39.00 *Buena Park $48.00 Tree Removal $130.00 $220.00 (10 inch stump diameter) Root Pruning $60.00 N/A (10 ft. average) Tree Planting $95.00 $115.00 (15 gallon tree with root barrier) + Cities that opted for the formal bid process *San *Garden. Bernardino Grove $53.00 $47.00 $180.00 $170.00 N/A N/A $95.00 N/A If the City were to go to formal bid and a $48 per tree was the lowest acceptable bid, the increased cost to the City for 7,480 trees would be $67,320 in the first year alone and :$336,600 over a five year period. It is the strong opinion of staff that the potential increase in the unit cost of going to formal bid is not worth the risk. Certainly the above three examples represent the consequences. A brief staff study identified 9 partial contracts that various cities have awarded recently for tree trimming. WCA was low bidder on 2, second lowest bidder on 2, and third lowest bidder on 1 among 10 total bidders. The low bids per tree ranged from $43.58 to $121.00 per tree. Of the 10 bidders, WCA was the most consistent bidder with first or second lowest bids. An attached Department memo documents the staff study. 3 0 0 Aside from lower costs, piggybacking off the Tustin contract is advantageous due to the time savings in being able to begin private tree trimming in a short timeframe. If, in the alternative, privatization of the street tree trimming is approved and staff is directed to write an RFP and evaluate bids, the earliest a proposed contract could be brought to the • Council is the second Council meeting in January. The City Purchasing Procedures allow the City Council to waive formal bidding procedures for purchases of materials and services. An attached resolution is proposed for adoption permitting the City to award a contract based upon the bidding process for tree trimming services conducted by Tustin in February of this year. A proposed contract with West Coast Arborists has been prepared and is attached. It is of one -year duration, with an option to extend the contract for an additional four years on a year -by -year basis. Cost increases or decreases would be limited to the consumer price index each year. Contractor Qualifications (Services. Financial, Personnel, Equipment) West Coast Arborists has been in business in Southern California since 1972. At present the firm services 60 local government entities including 16 cities in Orange County. City staff contacted representatives of Los Angeles County and the cities of Buena Park, Cypress, Tustin, Mission Viejo, Santa Fe Springs, Orange, and Garden Grove regarding the quality of services provided by West Coast Arborists. Each person contacted had • only positive comments concerning the firm. The Contractor has an excellent financial history over the past 21 years of service as evidenced by a Dunn and Bradstreet financial rating of 2A2. The Finance Director has attached an analysis of the financial status of the contractor. Staff has further investigated the company in regards to safety practices. During calendar year 1992, with 79 contracts in effect in the amount of $3,977,000, only one workday loss incident totaling four work days was noted. In addition, the Contractor received special recognition in September 1993 for one year of accident free driving by employees operating a fleet of 80 vehicles. The West Coast Arborists organization in the City would be led by a project supervisor who would provide overall supervision and coordination of their activities. This supervisor would be the central contact between City staff and the contractor. The contractor estimates he would have approximately ten employees working full-time in the City, with a differing mix of trimmers and groundsworkers, depending o:a the types of trees being trimmed. The proposed contractor has 14 Certified Arborists and 32 Certified Treeworkers on their staff of 98 :Full time employees. The City has no certified tree workers of either type at the present time. • The Contractor operates a modern fleet of 98 pieces of equipment (80 vehicles) including 23 aerial lift trucks, 34 chipper /dump trucks, 18 brush chippers, and 23 support vehicles. Maintenance is performed by 5 mechanics or support technicians. 4 In summary, the contractor has not only been performing well for other local governments for a substantial period of time, but has demonstrated a sound financial capability, volunteered a Quality Control Plan, provided letters of reference and • financial statements, and identified suitable personnel qualifications and equipment inventory to perform a full range of all contracted activities. The reference documents are located in the contractor proposal which is an appendix to the contract. Impacts on Current Employees The Newport Beach Employees' League has reached agreement with the City as evidenced by the attached MOU regarding the continued employment of the personnel in various positions in the Street Tree Division. The proposed MOU states that affected employees would be reassigned elsewhere in the City. These personnel would have Y- rated salaries, meaning they would retain their current pay rate, but not be eligible for any increases to their basic wage until that time when the rate of the position they are filling exceeds their existing wage. The MOU further states that the League will withdraw its protest of this privatization proposal. There are enough vacant or potentially vacant positions in the General Services Department to provide billets for the six remaining employees facing job loss. At present there are six billets vacant: two Parks Maintenance Laborer positions, a Refuse Worker I, a Refuse Worker 11, the Refuse Inspector, and the Transfer Station Operator • positions. Since none of the Street Tree personnel would have the experience necessary for the higher -level positions in the Refuse Division, the employees could encumber entry level positions in the Refuse Division until attrition provides openings. In addition, if the automated refuse collection proposal is rejected, four refuse positions will have to be restored to provide adequate full -time staffing and eliminate the extensive amount of overtime now used to maintain current operations. The President of West Coast Arborists still offers a position at the same City pay level to any affected City employee. This offer is good only during the January 1, 1994 to January 31, 1994 time period. sum Privatizing the street tree maintenance function while retaining four personnel will save at least $100,000 and up to $135,000 per year with an anticipated increase in overall productivity. The City will retain the flexibility to respond quickly to emergency situations at the lowest cost using retained City employees. West Coast Arborists has offered the City an outstanding opportunity to piggyback on the r ity of Tustin contrazt which has a basic tree trimming cost of $39.00 per tree. Staff • believes that the rates for service on the proposed contract, are lower than may be achieved by the City going out to bid, a fact that has been demonstrated three times in other cities in 1993 and supported by the recent staff study wherein partial tree contracts varied in low bids from $43.58 to $121.00 per tree. With approval of the MOU, the affected employees will be reassigned, and maintain their current wage rate and level of benefits. As such, the negative effects on personnel 5 will be minimized. With these conditions the League will not protest privatization of the tree trimming functions. I recommend the Council approve the contract with West Coast Arborists to commence • operations on January 1, 1994, and further, approve the following secondary recommendations listed at the beginning of the report: a budget amendment shifting funds within the Street Tree Division; the reclassification of the Street Tree Supervisor position; the MOU with the Newport Beach Employees' League; the sale of surplus tree trimming equipment; and the resolution authorizing the City to utilize the City of Tustin bidding process for tree trimming services. Very respectfully, n David E. Niederhaus DEN /mp Attachments Contract Contractor Proposal for Tree Trimming Budget Amendment MOU (Employees Agreement) Resolution (Authorization for Piggyback Bid Process) Council Study Session Agenda Item (October 11) Basic Assessment of Street Trees Maintenance Division Staff Study (Other Tree Trimming Contracts) Finance Director Memo (Contractor Financial Stability) 0 • •