CapMetro committee reviews split contracts
Thursday, June 11, 2015 by Courtney Griffin
Capital Metro’s Operations, Planning and Safety Committee reviewed two major, multimillion-dollar contracts Monday for area rail lines that could increase revenue for the transportation entity.
Melvin Clark, vice president of rail operations, said his staff reconfigured contractors’ responsibilities this year and sliced one contract into two. Instead of a single contractor overseeing operations and maintenance for CapMetro’s entire rail line — which runs from Giddings to Llano — staff decided to divvy up duties by train activity.
If the contracts are approved, one contractor will be responsible for CapMetro’s 32-mile MetroRail line, the portion of its larger line that runs from Leander to Austin. This portion is mainly used by commuters. The second contractor would be in charge of maintaining and operating CapMetro’s freight line, or all of the tracks outside MetroRail’s domain.
The contract was split mainly because of differing maintenance needs, Clark said. The MetroRail corridor runs on a tighter schedule, which hampers maintenance and increases overall costs.
“Since we are running more and more services, maintenance windows need to be done in limited hours,” he said. “Another (reason) was that the track standards are higher.”
MetroRail tracks are designed to handle faster speeds, so federal maintenance standards and regulations differ from slower-speed freight tracks. The two create different wear and tear as well, Clark said.
According to board documents, the second contract is also written to encourage CapMetro’s freight line contractor to begin expanding services and generating revenue based on its business and passenger use.
“The goal is for a freight operator to invest in the line and increase volumes,” Clark told the Austin Monitor. “We put out a long contract so they could make an investment and see a level of return.”
Staff does not have a final recommendation for the 20-year freight line operations and maintenance contract that begins Oct. 1, Clark said, but they have narrowed it down to three potential proposals.
One deal would grant CapMetro a 15 percent chunk of gross revenue from freight services; the second, a 3 percent chunk of gross revenue from freight services and a one-time $15 million capital investment; and the third, a 5 percent gross revenue chunk from freight services and a $17 million capital investment stretched out over time.
Clark said he could not comment on the amount of revenue CapMetro hopes to receive from the contract at this time.
Since 2009, Herzog Transit Services has held MetroRail and freight line operations and dispatches in a single contract. CapMetro receives 3.45 percent of gross revenue, Clark said.
“It comes out to about $30,000 per month,” Clark told the Austin Monitor.
Staff recommended Herzog Transit Services for its new $300 million MetroRail operations and maintenance contract, which includes acting as the area dispatcher over both its freight and rail lines. The seven-year contract with two four-year continuance options would begin Oct. 1.
Ann Stafford, board secretary and committee member, asked staff how the new MetroRail contract compares to the old contract, but they said it was not an “apples to apples” situation because of the mixed responsibilities.
“It’s a decrease in the vehicle variable cost from the existing contract,” Clark said, highlighting a key change.
MetroRail is currently contracted at $128.42 per vehicle hour with an average increase in costs of 3 percent over the seven-year span, Clark said.
The new contract limits vehicle hours to 18,000 within the first two years and decreases the amount of room CapMetro has to increase or decrease its services.
The past contract enabled CapMetro to have a 20 percent variable span of service hours that it could retract or provide; this contract allows only a 10 percent span, Clark said.
“So that reduced the risk on the contractor; if we decided to increase or decrease our services more than 10 percent, we’d be renegotiating the price rather than 20 percent,” he said.
Following a unanimous 3-0 vote, both contracts will now be listed for discussion and possible action on the board’s regular agenda June 22. Committee member was Delia Garza absent.
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