City leaders on Wednesday unanimously voted to increase fees
that impounded car owners will have to pay to get them back but
rejected a franchise tow program that would have charged fees from
towing companies.
MORGAN HILL
City leaders on Wednesday unanimously voted to increase fees that impounded car owners will have to pay to get them back but rejected a franchise tow program that would have charged fees from towing companies.
The Morgan Hill City Council voted 5-0 to raise the vehicle release fee by $101, from $64 to $165, in a move that city leaders believe will help the city’s bottom line and bring the fee closer to what other cities charge. The new fees go in effect immediately, said city Clerk Irma Torrez.
With the revised fees in place, the police department will recover the cost of contracting with four different towing companies, which cost the department an average of $57,664 during the past three fiscal years, according to the police department. The city doesn’t charge towing companies and its only revenue recovery is whenever registered owners pay to recover their cars. The city received $19,200 from owners in each of the past three fiscal years.
In a related matter, following comments from two local towing company owners and a brief discussion, the council rejected the police department’s proposal to implement the franchise tow program. The city currently doesn’t charge franchise fees, but under the program, it would have a more organized system through which it would legally contract with towing companies to move vehicles from city roads following a criminal violation, accidents or other situations to the police impound lot. Each company would have to pay the city a one-time application fee and a $60 franchise fee for each tow, according to a staff report.
Council member Larry Carr and Mayor Steve Tate, members of the Morgan Hill Public Safety Committee who reviewed the program before it came before the full council, voted to pass, while council members Marby Lee and Greg Sellers voted to reject. Council member Mark Grzan abstained, thus failing to pass without a majority vote.
Morgan Hill police Cmdr. Joe Sampson, who prepared the franchise proposal, told the council the franchise tow program would help the city’s finances.
“Recently many police departments have recognized the need to focus on cost recovery in order to meet increasing fiscal demands,” he wrote in a report.
At this time, four local tow companies haul away vehicles for the city under non-franchise agreements and they don’t pay any fees to the city. Under the proposed program, towing companies would pay an administrative fee to cover city expenses in preparing applications, contracts, and conducting facility compliance checks. According to estimates, the city would get about $100,500 revenue from the combined franchise and vehicle release fees.
Over the past three years, the police department has towed an average of 850 vehicles for criminal violations and about 35 percent or 300 owners pay the release fee to pick them up, according to Sampson’s report.
Dion Brocco and Gary Ponzini, whose towing companies do business with Morgan Hill, told the council they were against the franchise program. Due to low volume of cars towed in Morgan Hill compared to cities such as San Jose, Gilroy and Salinas, Brocco said he makes a minimal, “$2,000 profit a month” from the city. He also said the city should consider “the caliber of companies” that he thinks will attempt to contract with the city if the program is passed.
Ponzini, clad in blue overalls, told the council he averaged three tows a week for the city and it wouldn’t make sense for him to do business with the city if it had a franchise program.
“You want to become my partner, pay some of my bills,” Ponzini said.
Carr said the program would be good for the city because it would open the door for competition. He pointed out the city charges cable and phone franchise fees already.
“There is a competition factor that would bring efficiency and professionalism,” Carr said.
Mayor Tate said he was in favor of the program in part because he was wary that voters may not go for adding more police officers if they deem the city isn’t aggressive in getting revenue through other methods.
“We might ask for more cops but residents ask, ‘what have you done to recover cost?” Tate said. “Maybe (the franchise fee of) $60 is too much, but let’s try it.”
