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Agenda Item
ASR
Control 18-000331 |
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MEETING DATE: |
04/24/18 |
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legal entity taking action: |
Board of Supervisors |
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board of supervisors
district(s): |
2 |
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SUBMITTING
Agency/Department: |
John Wayne Airport
(Approved) |
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Department contact
person(s): |
Barry A. Rondinella (949) 252-5183 |
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Mariane Teschner (949) 252-6072 |
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Subject: Adopt Resolution for Updated
Ground Transportation Fee
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ceo CONCUR |
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Clerk of the Board |
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Concur |
Approved Resolution(s) and Ordinance(s) |
Public Hearing |
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3 Votes Board Majority |
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Budgeted: N/A |
Current Year Cost:
N/A |
Annual Cost:
FY 2018-19 $156,597 |
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Staffing Impact: |
No |
# of Positions:
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Sole Source:
Yes |
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Current Fiscal Year Revenue: See Financial Impact Section
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Prior Board Action: 12/13/2016
#41, 03/03/2015 #32, 3/12/2002 #28 |
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RECOMMENDED ACTION(S):
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1. |
Find that the proposed project is Statutorily Exempt from the provisions of CEQA pursuant to Section 21080(b)(8) of the Public Resources Code and Section 15273 of the CEQA Guidelines as the establishment or modification, structuring, restructuring or approval of rates, tolls, fares and other charges by a public agency which are for the purpose of meeting operating expenses, including the purpose of meeting operating expenses, including employee wage rates and fringe benefits; purchasing or leasing supplies, equipment, or materials as set forth herein.
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2. |
Conduct Public Hearing. |
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3. |
Adopt the attached Board Resolution: |
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a. |
Find that the updated ground transportation fees are consistent with Resolutions No. 82-1539, 87-825 and 02-062 (John Wayne Airport Revenue Planning Policy); Sections 2-1-1(a) and (d) of the Codified Ordinances of the County of Orange and Article XIIIC, Sections 1(e)(1) and (e)(4) of the California Constitution. |
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b. |
Approve an updated ground transportation fee of $3.00 per pick-up and drop-off trip for implementation by the John Wayne Airport Director, with an anticipated start date of July 1, 2018. |
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c. |
Authorize Airport Director to amend ground transportation and Transportation Network Company permits to address the updated fee. |
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4. |
Authorize the County Procurement Officer or Authorized Deputy to execute a contract with Transcore LP in the amount of $156,597 for an additional fixed Automated Vehicle Identification antenna to track ground transportation transponders. |
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5. |
Read title of ordinance, “An ordinance of the County of Orange, California amending Section 2-1-42 of Article 4 of Division 1 of Title 2 of the Orange County Codified Ordinances regarding vehicles carrying passengers for hire at John Wayne Airport.” |
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6. |
Order further reading of ordinance be waived. |
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7. |
Consider the matter. |
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8. |
Direct that the ordinance be placed on the agenda of the next regularly scheduled Board meeting for adoption. |
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9. |
At the next regularly scheduled Board meeting, consider the matter and adopt the ordinance. |
SUMMARY:
Approving the update to John Wayne Airport's ground transportation fees will further the recovery of John Wayne Airport's infrastructure costs, costs of ongoing repairs and maintenance and security and operational costs, in order to maintain safety, security and quality of services to John Wayne Airport guests, while also responding to changes in the ground transportation landscape.
BACKGROUND INFORMATION:
On March 12, 2002, the Board of Supervisors (Board) approved a $2.25 ground transportation trip fee (Resolution No. 02-062), which has remained unchanged to this date. On March 3, 2015, the Board approved the Transportation Network Company (TNC) Charter Operating Commercial Ground Transportation Operating Permit and authorized the issuance of TNC Operating Permits to interested TNCs that met the permitting requirements. Three TNCs were granted permits to operate at John Wayne Airport (JWA): Uber and Wingz began operating on March 30, 2015, and Lyft began operating on April 4, 2015. TNCs are charged the same trip fee of $2.25 per pick-up as other ground transportation providers.
On September 21, 2017, the Board was provided with an update on JWA TNC activity for the last two fiscal years. TNC usage grew exponentially in the last two years, from less than 15,000 pick-up trips in July 2015 to over 55,600 trips in July 2017 (Attachment A). Current TNC activities continue to escalate, averaging 64,000 trips per month from August 2017 through January 2018. On October 10, 2017, the Board was provided with a Parking Analysis Report on the TNCs’ impact to Airport revenue (Attachment B) and was followed by a comprehensive Airport Parking and Ground Transportation Study completed by Frasca & Associates, LLP (the Frasca Study), which was presented to the Board on November 27, 2017 (Attachment C).
The reports illustrate the exponential increase in TNC trips at JWA and the adverse impact on JWA ground transportation (GT) revenues, with significant impact to parking revenues. Although some revenues were generated from TNC trips, the magnitude of the price differential between the $2.25 TNC pick-up trip fee (with no charge for drop-offs) and the average per-vehicle parking revenue of $32.42 translates to a potential loss of $30+ per parking transaction taken by TNCs. According to the Frasca Study, while TNCs have impacted all GT modes through reductions in volume, the largest reductions have been experienced in parking structure activity. Since FY 2015-16, GT and parking revenue growth has not kept pace with passenger traffic growth, due to the introduction of TNCs to JWA. TNCs are responsible for an estimated $5.3 to $6.0 million annual loss of GT and parking revenues (9.7% to 11.1% of FY 2016-17 GT and parking revenues). The erosive effect of TNCs on non-aeronautical revenues is expected to remain as TNC trips continue to increase. The Frasca Study compares TNC fees charged at JWA versus those charged at local competing airports as follows:
TNC Fee
Comparisons to Competing Airports
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Airport |
Pick-up Trip Fee and/or Drop Off Trip Fee |
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JWA |
$2.25 pick-up
trip fee |
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Los Angeles (LAX) |
$4.00 pick-up trip fee and $4.00 drop-off trip fee |
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Burbank (BUR) |
$3.00 pick-up trip fee and $3.00 drop-off trip fee |
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Ontario (ONT) |
$3.00 pick-up trip fee and $3.00 drop-off trip fee |
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Long Beach (LGB) |
$3.00 pick-up trip fee and $3.00 drop-off trip fee |
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San Diego (SAN) |
$3.86 pick-up trip fee (previously $4.06 through February 2017) |
The JWA TNC trip fee is significantly lower than those charged by competing local airports, based on data updated in the Frasca Study and differs from competing airports in two ways: (1) it is charged for pick-ups only; and (2) the fee rate is lower than that for all other airports. Of the competing airports, only SAN charges a one-way fee similar to JWA but at a cost higher by $1.61. Changes in the TNC fee structure would require changes to the TNC operating permit, which is currently issued on a month-to-month basis. TNCs are charged the same pick-up trip fee of $2.25 as other commercial GT providers at JWA to ensure a “level playing field” for all GT modes.
In order for JWA to capture two-way trip fees on all ground transportation, a new Automated Vehicle Identification (AVI) antenna needs to be installed on JWA's upper (departure) level roadway. Currently, the AVI system is only installed on the lower (arrival) level roadway and captures passenger trips by various ground transportation vehicles except TNCs. TNCs self-report to JWA using GPS technology and their own proprietary systems, which record each time a vehicle enters the restricted geofence around JWA to pick up a fare-paying passenger. The costs of the new AVI antenna system including equipment and parts, software upgrades, system engineering and configuration and testing and commissioning is $156,597, and will be provided to JWA by the sole source vendor, Transcore, LP (Transcore). A qualified electrical contractor is required to perform the installation of the AVI equipment and parts furnished by Transcore as a public works contract. JWA will seek Board approval to advertise that public works contract and solicit bids via ASR 18-000403 which is also scheduled for the Board meeting of April 24, 2018. The public works contract covers all items that are specifically excluded from Transcore's scope. There are no gaps or overlap in the scope of work between Transcore's provisions and those of the public works contract.
Because of the proprietary nature of the AVI system already in use at JWA, the proposed new AVI antenna on the departure level roadway will be provided by the same sole source vendor, Transcore. A completed Sole Source Request Form has been reviewed by the County Procurement Office and is attached to this Agenda Staff Report (Attachment D). JWA seeks Board approval for implementing the $3.00 fee per drop-off and pick-up once the AVI is installed on the upper roadway, with an anticipated start date of July 1, 2018.
The contract with Transcore does not currently include subcontractors or pass through to other providers. See Attachment I for Contract Summary Form.
Excluding JWA Yellow Cab (the exclusive taxi contract awarded by the Board on December 13, 2016), the various GT modes operating at JWA such as shared-ride shuttles, limousines, luxury car dealership shuttles, hotel courtesy shuttles and other prearranged transportation operators, operate under the terms of permits on a month-to-month basis, are equipped with AVI transponders and are subject to the same pick-up trip fee of $2.25. JWA has a moratorium, since August 2005 on shared-ride shuttle operators, with 19 operators as of June 2017. At that time, there were 21 such operators adversely impacting traffic on the roadways. JWA has not received recent requests for new shared-ride shuttle operators. All GT operators pay the same pick-up trip fee of $2.25, without regard to the number of passengers or vehicle type. Except TNCs, GT vehicles are equipped with AVI transponders and are assessed the same pick-up trip fee. The updated fees would apply to all modes of ground transportation at JWA with the exception of the Yellow Cab operators, since JWA is bound to the exclusive contract until December 31, 2022.
The table below compares shuttle and other commercial vehicle fees charged at JWA versus those charged at competing airports. The table indicates a wide variation in charging schemes. Most airports employ different fee structures based on vehicle type (e.g., prearranged limousines versus shared ride vans versus courtesy shuttles). The fee structures vary either based on revenue potential (i.e., revenues generated per trip by different type of operator) or policy goals (e.g., to support lower emission vehicles or to encourage multi-occupant vehicles).
Comparison of Shuttle and Other Commercial Vehicle Fees at Competing Airports
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Airport |
Fee |
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JWA |
• $2.25 pick-up trip fee. |
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Los Angeles (LAX) |
• Limos: $5.00 or $8.00 per-trip fee (depending on number of seats). • Shared ride: $1.81 (<25) or $2.72 (>25) per-pick-up fee plus privilege fees. •Hotel
courtesy shuttles: $2.57/$3.85, or $1.50 per-pick-up fee to |
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Burbank (BUR) |
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Fixed monthly fee – due to Ground Transportation Management System |
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Ontario (ONT) |
• Existing rates imposed by Los Angeles World Airports, new rates being evaluated with transfer of ownership to Ontario International Airport Authority. • Charter limousines, sedans, buses and vans: $543 annual permit fee. • Hotel/motel courtesy and off-airport parking shuttles: $7,732 annual permit fee • Single-use passenger loading pass for vehicles without permits: $12.00. |
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Long Beach (LGB) |
• Limos, buses, luxury SUVs,
etc. - based on vehicle size: five seats or fewer - • Non-reservation shared-ride
van/shuttles - $6.00 for each drop-off trip and • Courtesy vehicles (Hotel
shuttles, etc.) - $1.50 for each drop-off trip and $1.50 Shared-ride vans (on-call shuttles) pay an annual permit fee of $1,200. |
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San Diego (SAN) |
Lower rate applies to alternative fuel vehicle, otherwise higher rate applies, restricted to vehicles 10 years or newer: • Limos: $150/$400 annual permit fee. • Shared ride: $2.30/$5.36 per-pick-up fee. • Hotel courtesy shuttles: Shared ride: $1.41/$3.77 per-pick-up-fee. |
JWA’s current ground transportation pick-up trip fee was last reviewed and adjusted on March 12, 2002, by Board Resolution No. 02-062 consistent with the directives of Resolutions No. 82-1539 and No. 87-825 (John Wayne Airport Revenue Planning Policy). In addition, Orange County Codified Ordinance Section 2-1-1 directs JWA to be operated on an enterprise basis at no cost to taxpayers, through the imposition of fair and reasonable rentals, fees and charges and to develop rates based upon either market or cost recovery, whichever is higher. The Airport Bond Indenture Section 704 on Rate Covenant also requires periodic review and revision of rates, fees, rentals and charges. Furthermore, bond rating agencies consider it fiscally prudent for bond issuers to proactively and periodically review and revise rates, fees and charges.
Historically, ground transportation and parking revenues comprised half of JWA’s non-aviation revenues and have funded major portions of JWA’s ongoing non-aeronautical operations, debt service payments and capital expenditures such as parking facilities, ground transportation center, roadways and seismic retrofitting of elevated roadways and other JWA infrastructure to enhance the guests’ experience. The volume of TNC activities has resulted in increased traffic congestion and carbon footprint, added security monitoring and administrative burden and increased repairs and maintenance costs to JWA roadways. The dilutive effect of TNC business on revenues and expectations for cumulatively more revenue erosion in the future, if not managed, could adversely affect the County/JWA’s favorable bond rating, with significant long-term ramifications on JWA’s ability to maintain high service standards for JWA's guests and constituents and irreparable damage to JWA’s reputation as a world-class and best-in-class airport.
In summary, in collaboration with Frasca & Associates, LLP, JWA has reviewed the effects of TNCs on: (a) the demand characteristics of other GT operations; (b) JWA revenues; and (c) the existing fee structures for GT operations at JWA and as benchmarked with competing airports in southern California. Accordingly, JWA has determined that a revised TNC fee of $3.00 per drop-off and per pick-up trip will allow JWA to continue its “level playing field policy” in meeting customer demand for TNC services, preserve JWA’s financial performance and remain competitive among southern California airports. The adoption of the proposed ordinance (Attachment G) will amend the Orange County Codified Ordinances to prohibit the drop-off of passengers for hire without a contract authorizing the carrying of passengers for hire to and from JWA.
Compliance with CEQA: The subject activity is statutorily exempt from review under CEQA pursuant to Section 21080(b)(8) of the Public Resources Code and Section 15273 of the CEQA Guidelines as the establishment or modification of rates fees and charges which are for the purpose of meeting operating expenses, including employee wage rates and fringe benefits; purchasing or leasing supplies, equipment, or materials.
FINANCIAL IMPACT:
The revenue shortfall resulting from the exponential increase in TNCs and the effects of the proposed ground transportation fees were not projected in the FY 2018-19 Budget. The one-time cost of $156,597 to furnish the new AVI antenna for the upper roadway and the cost of the related public works contract to install the AVI equipment were also not included in the FY 2018-19 Budget. However, there are adequate funds in the Airport Operating Fund 280 to absorb the costs. The proposed ground transportation trip fees are estimated to potentially recover over $3,200,000 in annual future GT revenues.
The contract with Transcore contains language allowing JWA to immediately terminate the Contract without penalty for cause or after 30 days’ written notice without cause, unless otherwise specified.
STAFFING IMPACT:
N/A
ATTACHMENT(S):
Attachment A - Update on Transportation Network Companies
at JWA
Attachment B - John Wayne Airport Parking Analysis
Attachment C - Airport Parking and Ground Transportation Study by Frasca &
Associates, LLP
Attachment D - Sole Source Request Form
Attachment E - Transcore LP Contract
Attachment F - Draft Resolution
Attachment G - Proposed Ordinance
Attachment H - Redline Version of Proposed Ordinance
Attachment I - Contract Summary Form - Transcore LP