Timeline of Rochester City Lines contract

I asked Transit Manager (and incredibly nice guy) Tony Knauer for a timeline of our contract negotiates where the city was held hostage and forced into a bad contract.  I voted against the contract with Mark Bilderback but I do not fault the 4 that voted in favor because the felt they had to.

While RCL claims that they have never made a profit, that is hidden by generous salaries, sharing allocated overhead, and above market rate rental fees.

Here is the timeline.

Per your inquiry following is a summary of contract meetings. I am not sure who Rick Brown is. (He is the driver quoted in the PB). He was not invited nor participated in any contract meetings.

October 26, 2011- Operations meeting- briefly discussed the contract meeting  schedule and some contract issues.

November 7, 2011- Contract meeting- (5 RCL employees- 2 City Staff) Discussed $95k swing in 2010 audit due to misclassification of salaries by RCL. Discussed franchise as RCL is not happy  about a 6 month franchise. Informed them that  they should write a letter to the City with their concerns about the franchise. RCL indicated they had their attorney reviewing the contract regarding close out issues and were not ready to discuss. City staff noted that the City’s goal was to have a contract before Council on 12/5/2011.

November 15, 2011- Contract meeting- (5 RCL employees – 3 City staff) RCL indicated their attorney was still reviewing the contract. Agreed on changing the dates, reviewed some cost allocation formulas; shop personnel, awards program, training budget, fuel  and lubrication costs.

November 22, 2011- Contract meeting canceled day of by RCL. Two RCL staff could not attend – Jacobson and Donahoe)They indicated there would be nothing new to discuss as their attorney was still reviewing the contract.

November 23, 2011 –  Operations meeting. (3 RCL employees and 2 City staff) Reviewed current contract expenses and issues.  There was no discussion of the 2012 contract as the status had not changed and two of RCL staff were not available.

November 30, 2011- Contract meeting (5 RCL employees- 3 City staff including T Knauer on medical leave but participated via teleconference) RCL presented a budget and brought up the following issues; franchise, profit, costs beyond termination, purchase of parts, no maximum on monthly disbursements and elimination of retainage on final payment.  Staff asked for a description and estimate of termination costs. RCL indicated that was not possible.

December 1, 2011- Contract meeting with Administration and Public Works Director. (RCL staff ? and Administration) Main issues appeared to be; elimination of a contract maximum, profit clause and termination costs.

December 5, 2011- This Contract meeting was tentatively scheduled on 11/30. However, being superseded By 12/01/2011 the meeting was cancelled to allow staff to follow up on issues with RCL’s proposal  as of 12/01/2011  and consider risks and costs to City.

At this point the negotiations and exchange of contract language was transmitted via email, telephone etc. The main sticking points were still on the contract maximum and the need to have council approve any amendments, termination costs and referencing MNDOT and FTA guidelines. (A number of City staff meetings with Administration also occurred during this period.) The City thought most of the issues were covered except for FTA approval and therefore scheduled a contract meeting with RCL for 12/15/2011.

December 15, 2011- Contract meeting (5 RCL staff plus their attorney- 3 City Staff plus City Attorney) Four issues still identified by RCL- 1.) Purchase of 1995 model bus parts, 2.) Removal of maximum on contract operating deficit without amendment 3.) Inclusion of profit with no reference to FTA approval. 4.) A mediation process using a third party.

An RCA was prepared for 12/19/11 – the parts issued disappeared as RCL later reported they had no 1995 parts. The City agreed to allow 3% over the contract maximum without an amendment. The City held to FTA approval of costs including profit. (The profit per RCA was listed at $180,000.) The City and RCL agreed to use the auditor for a final decision on eligible costs. On 12/19/ 2011 more correspondence took place as well as staff meetings and exchanges between attorneys.  RCL would not agree to referencing FTA  approval. The RCA was tabled until 12/22/2011.

Staff continued to research and look for guidance from FTA. Staff met with the auditor to discuss profit rates and consulted with FTA. A report was prepared for Council  providing a recommendation as to profit and providing an analysis to show reasonability based on risk which was also shared with FTA. (The report was attached to the RCA.)

12/22/2011- Council acted on RCA. The contract removed the operating deficit maximum, provided a profit line item of $140,000.

Thank you,

Anthony Knauer
Transit and Parking Manager
City of Rochester

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