Tow company owners say a city proposal to run its own impound
yard is overly optimistic, and the business the companies would
lose as a result could force them to lay off employees.
Morgan Hill
Tow company owners say a city proposal to run its own impound yard is overly optimistic, and the business the companies would lose as a result could force them to lay off employees.
At tonight’s Morgan Hill City Council meeting, city officials will hear input from the private sector before considering a proposal by the police department to implement a vehicle storage program. The program would allow the department to store vehicles that are subject to a 30-day impound – primarily because their owners have been suspected of driving without a license or with a suspended license – according to Police Cmdr. David Swing.
It would cost the city an initial $365,000 –including property purchase and improvements – to implement an impound program, Swing said. If the council approves the program, it would provide a new revenue source to eventually fund a new officer’s position, said Swing, who prepared a staff report on the proposal. Police would be permitted to charge vehicle owners daily storage fees while their cars are impounded and to sell vehicles that are not retrieved after 30 days. Police recommended a daily rate of $56.
“We are an understaffed department, and we’re looking for creative ways to recover costs for services that will allow us to increase our staffing, and this is one of the ways to do that,” Swing said. He noted that in some southern California cities, similar programs have been successful for more than a decade.
Currently, the city has a contract with four local towing companies to store impounded vehicles and the cars’ owners pay storage fees to those companies.
Those companies, however, think the city is getting in over its head. Dion Bracco, owner of Bracco’s Towing and Transport in Gilroy, said the city is not equipped or experienced to run a tow yard in compliance with state laws – which require 24-hour staffing and strict security and accountability measures.
“The city can’t do what private enterprise can. They’ll turn this thing into a fiasco,” said Bracco, who is also a Gilroy councilman.
If the city adopts the police proposal, Bracco would likely have to let go of at least one employee due to lost business and would stop serving the Morgan Hill area, Bracco said.
He added that the staff report is incomplete as it doesn’t account for scenarios where the program doesn’t make as much revenue as police predicted.
For example, one source of revenue anticipated in the staff report was the sale of vehicles that were not recovered after 30 days. Bracco said many unlicensed drivers use “junked cars” that are not worth paying nearly $2,000 in storage fees to retrieve. After 30 days, he said he might get $500 for each vehicle, and many he sells to scrap yards for less than that.
“What if the assumptions are wrong? Then it’s another expenditure that will be draining out of the general fund,” Bracco said.
In Colton, which runs its own impound yard, the revenues from the program consistently came in lower than expenses, he said.
Morgan Hill’s analysis projected the impound yard will make an average of $200,000 in profits its first four years. About $350,000 per year was expected from storage fees and about $80,000 was expected from the sale of unclaimed vehicles. These two revenues would make up the majority of the program’s income.
“The figures were taken from the tow companies themselves, (showing) how long (impounded) vehicles typically stay in their custody,” Swing said. “We feel these are accurate numbers.”
Since 2006, police have impounded an average of 418 cars per year, the report says.
The program would create a new traffic safety fund, where all revenue would be kept and which would pay for a new officer’s position as well as other initiatives to promote road safety.
The initial costs would consist of the $200,000 purchase of about a half-acre of property next to the police station on Vineyard Boulevard. The impound yard’s proximity to the station, and the use of a closed circuit security video system would provide adequate security, Swing said. Remaining startup costs would include about $165,000 for site improvements such as fencing and grading. The staff proposal recommended funding the startup costs out of the city’s reserves.
The program would be run by the equivalent of two full-time personnel, including a traffic corporal, according to the report. Annual personnel costs would amount to about $89,000 by the fourth year.
If council approves the proposal, the program could be implemented by December 2009, Swing said.
Bill Miner, owner of California Tow Company in Morgan Hill, said police tows currently account for about 30 percent of his business. If the department takes that business away, he might have to lay off two employees.
Plus, the city shouldn’t be “throwing around money” for endeavors they might not be prepared for, he said.
“They’re very naive. We’re barely making it now, and they’re not a tow company,” said Miner, who has been in the towing business for 50 years. “We’re professionals at what we do, and it’s not something you learn overnight.”
