HomeMy WebLinkAbout2003-09-17 Finance Committee MinutesFINANCE COMMITTEE
September 17, 2003
zZlt;3
Councilor Attendance: Tremble, Palmer, Greene, Allen
Staff Attendance: Farrar, Comeau, Cammack, Pellegrino, Cyr, Barrett,
Hupp, Bates
Others: Representatives of Enterprise and Budget Car Rentals
1. Bids/Purchasing
a. Roof Replacement- Golf Course Clubhouse- Kenduskeag Engineering -$8,299
A motion was made and mounded to approve staffs recommendation.
It. Lamp Contract - City Wide -Standard Electric (Wesco Distributors) -$10,153
A motion was made and seconded to approve staffs recommendation.
c. Ambulance -Fire- Autotronics/FND Inc. -$89,000
A motion was made and seconded to approve staffs recommendation.
d. Uniform Contract - Fire - Ben's Uniforms, Inc -$18,405
A modon was made and seconded to approve staffs recommendation.
e. Request to Waive Purchasing Regulations - Parking Garage Clip Repair
A motion was made and seconded to approve staffs recommendation.
f. Request to Negotiate Parking Services Contract with Republic Parking
Services. A motion was made and seconded to approve staffs
recommendation.
g. Award of Contracts for Car Rental Services at BIA. Pellegrino
explained that Enterprise came In slightly higher than Budget by
$21,000. Budget Is the only Maine owned and operated firm and has
been at the Airport for many years with goad service. Pellegrino
explained that staffs recommendation is to stay with Budget. Hupp
said there are wrrentty four rental agencies at BIA. The Airport does
not have sufficient space to offer a fifth rental agency. Palmer asked
about consideration of a Maine or a non -based proposal. Pellegrino
said If the City receives two bids that are the same amount then
preference should be given to the local vendor.
Ray Moss, Regional Vice President of Enterprise Rent -a -Car addressed
the Committee. Enterprise respectfully disagreed with the staffs
recommendation. Moss Indicated that the Enterprise proposal was not
rejected on qualifications of being able to perform the business and
met the necessary criteria for the proposal:
I) Experience and past performance. Enterprise is the largest car
rental company In North America. Enterprise ranks nationally at
100 and Budget Rental is second to the lowest. Enterprise is the
most profitable rental company In North America.
2) Capital imresonent Enterprise is willing to do whatever necessary
at B1A. Also willing to improve the facility for prepping vehicles.
3) Proposed general policy and affirmative adlon program.
Enterprise's affirmative anion is acceptable.
4) Marketing. Enterprise has over 5,000 locations within 15 -minutes
of approximately 90% of North America's population.
5) Minimum Annual Guarantee. Enterprise guaranteed $20,000 more
than Budget.
6) D/B participation? Enterprise's plan was deemed to be acceptable.
Their systems are believed to be the elite of the industry. They
have Invented and patented a system that enables companies to tie
directly into Enterprise's computer system to make reservations,
payment, etc. Their customer service levels are very high because
of their price service quality Index whereby customers are called
and provide numerical rankings on their experience with Enterprise.
It is a criterion for employee promotion.
The reasoning provided for rejection of Enterprise's proposal include:
Enterprise's proposal was slightly higher by approximately 2% over the
Ove -year term is minor. Enterprise doesm4 think that 2% is a minor
percentage as it translates into a minimum of $20,000. Additionally,
Enterprise also registers over 1,000 vehicles annually in Maine.
Enterprise is not Maine owned but It is Maine operated. Enterprise has
over 130 employees In Maine, Enterprise purchases annually at least
1,000 vehicles locally, Enterprise raises on average about $12,000 for
the Special Olympics, Enterprise contributors $5,000 annually in
college scholarships, $10,000 each year to the United Way of Maine.
Enterprise collects $1.2M in sales taxes paying excise tax in excess of
$1M per year as well as or rental fees of $110,000 due to having
Maine plates on their vehicles. Enterprise hires on average 18 full-time
employees annually in Maine. The vast majority of the employees are
recent college graduates from Maine universities starting with an
average $30,000 annual salary with full benefits. Moss said that
Enterprise has earned the right with its customer service to be a
contender on the airport site. The Enterprise representative asked the
Committee to look at what Enterprise provides, look at the faimess,
and to allow Enterprise to be part of the Airport.
Tremble asked if there could be a clause contained in any car rental
agency contract at BIA that the vehicles be registered in the City of
Bangor. Hupp said it Is a legal question and would need to be negotiated.
If it is too late for inclusion now, she felt It should be included in the next
round. Greene asked whidi rentals are currently at the Airport, and Hupp
Indicated Hertz, Avis, Budget and Alamo National. She Is recommending
that the Airport stay with the current four providers. Palmer asked about
Enterprise's history in Bangor. Enterprise is currently located on Hogan
Road and in Brewer. They have purchased their vehicles locally and have
the vehicles serviced locally. Regarding the RFP process, Moss mid the
City reserves the right to reject any proposal and Invite new proposals or
enter Into negotiations for new proposals. if It was required that the
vehicles that are at the Airport be registered in Maine and the excise tax
paid to Bangor, Enterprise would be more than happy to comply. Hupp
said the Airport currently has an off -premise agreement with Enterprise
for them to rent cors m passengers at BIA. The Airport recebves a
percentage of that which is a relatively minor amount.
Scott t.anpher of Budget Rem -a -Car spoke to the committee. He
purchased the Budget franchise in Bangor in 1987. Bangor is the hub of
Budgets main operation. Budget has 10 fulltime and 5 part time positions
at BIA. Budget has an on -premise operation. 40% of Budget's total
revenue is local market business to local residents. Being an off -premise
rental, Enterprise dcesnt have to pay a concession fee. The Butlget
representative talked about an audit of car rental services which would
show how much business is being taken out of BIA. Budget specializes in
truck, van and SW rentals and doesn't compere well with regular car
rentals as Budget is a small Maine company and cant afford to buy the
vehicles as competitively as larger companies can do. Butlget is the only
rental company in the state that offers activity buses. The RFP did not
require that the agency have a "rent it here, leave it mere" pregrem. It Is
a large percentage of Budget's revenue. Enterprise does have a one way
program. Budget bid up to a 29% market share which they felt would be
very competitive. It shows how committed and competitive Budget Is in
the Bangor market One of the other criteria in the bid was being active
in the Eastern Canadian market. Budget meets that specific criterion.
Budget suggested that staff check with the Trenton Airport regarding their
experience with Enterprise. Under Maine Slate law, Budget feels there is
no way to require the rental agencies to pay excise tax to the community.
If an agency does 50% of Its business in Maine, it is required to register
50% of its vehicles in Maine. In January, Budget will take on a one-way -- -_ -
truck rental program out of the Airport and pay commissions to the
Airport. The trucks can be parked at the Airport. Budget brings people
and business to the BIA. Budget feels the Airport staff made a sound
recommendation.
Palmer recommended postponing the item for a couple of weeks for
further consideration by staff. Hupp indicated it is possible to extend the
lease out to October. She mid It is an extremely complex issue. She
doesn't feel the Airport needs five rental agencies and perhaps in five
years the situation might change. Hupp still recommended Budget. Allen
asked why not open it to five agencies. Hupp mid that In looking at
Budget being the low proposer, bid based on 29% market share with only
four proposers, the math recognizes that someone somewhere has
overestimated revenue. That's why a performance bond is required to
cover in the event that a company isnt able to meet its minimum annual
guarantee. Pellegrino said that Vanguard has purchased National,
National/Alamo is In bankruptcy. Vanguard is taking over and is not in
bankruptcy. If five agencies are in place, it dilutes what Avis, Hertz are
expecting. There is just so much business in Bangor. Pellegrino urged
the Committee not to consider Five agencies. He recalls when there were
five agencies at BIA and some stopped business during the winter
months. Allen said that Enterprise is still an active company in Bangor so
they are somewhat part of the market. Hupp said Enterprise's market is
mainly off-premise service.
Palmer asked to hear from each entity again.
Enterprise wants to be part of BIA and prefers to be one of the four on
site. If their option is to be off-premise, then they will be one of five with
a smaller percentage of the market share. Enterprise feels H they are on
site they will prove their service and will grow into a longterm relationship
with BIA. Enterprise feels they have earned to be one of four based upon
their bid. They can live with being one of five. To clarify earlier comments,
Enterprise has paid the proper concession fees in doing airport business,
and Enterprise does one way rentals. Enterprise is part of the IRP and
does pay the excise tax in Maine to specifc cities and does permit vehicles
in Maine. The vast majority of Enterprise vehicles In Maine have Maine
license plates. It would be different if someone chooses a one way rental.
Lanpher said that he and Ray Moss from Enterprise have had the issue
about registrations in the past. A car rental company can choose where
they wish to pay the excise tax based upon their headquarters in that
state.
Budget talked about the issue of 5 agencies at BIA. At ole point there
were six at BtA, two went bankrupt. The major players look at a
$8101/annual airport and feel there is not enough business for more than
four rentals and they cant competitively bid. Bangor is a very seasonal
airport. If a fifth car rental went into BIA, the other rentals will cut their
fleet and no additional revenue will be gained. In the peak months, rates
triple over the non -peak months and that is where revenue is realized. In
the future, he suggested the Airport consider a RFP for seasonal rental
agencies at BIA. The Trenton Airport has a seasonal rental agency
agreement.
Greene asked about maintenance and available space for a fifth agency at
BIA. Hupp said It is important to have the facility rental fees for the
airport. If off -premise rentals were allowed, other agencies might follow.
Greene asked Enterprise about its business from BIA passengers.
Enterprise said it has very few as customers like to rent directly at the
airport which is why Enterprise wants to be on site.
Palmer commended both presenters for their presentation on a complex
issue. Palmer moved the item be tabled to the upcoming Finanoe
Committee in two weeks. He would like to review the complex issues with
staff In order to be able to make the best -Informed decision. The motion
was seconded by Allen. Tremble supported the motion. Tremble would
like: (1) to review the seasonal rental program and (2) to review the
possibility of the City requiring the agencies to register their Fleet in
Bangor.
'h. Energy Service Agreement- Large Power Accounts. The Committee
unanimously approved staff's recommendation to go with the 36 -month
period of October 1, 2003 to October 1, 2006 at 0.0455/kwh through
Maine Pourer Options.