The city will not use an acre of property for which they paid
$200,000 for a vehicle impound lot.
The city will not use an acre of property for which they paid $200,000 for a vehicle impound lot.
Faced with steady opposition from local towing companies, and after months of negotiations between the city and the private businesses, the council unanimously voted Wednesday to abandon a police department proposal to take over the storage of vehicles that are subject to mandatory impound.
Instead, the city will now look into entering a franchise agreement with four local towing companies that have traditionally been called upon to transport and store vehicles whose owners have violated state laws, or have been abandoned or damaged in accidents.
Based on discussion among city staff and council members, the terms of this agreement will allow the full recovery of public dollars spent on police-ordered towing, impound and storage of vehicles in Morgan Hill. At the same time, it will improve the level of related police services.
The companies – California Tow Company, Ponzini’s Community Garage, Bracco’s Towing & Transport, and All Day & Night Towing – complained that a police proposal submitted to the council in June would drown their businesses by taking the profits they now receive from tows and vehicle storage requested by the police. The companies even filed an injunction against the plan. The injunction failed in Santa Clara County Superior Court in July.
The city’s initial proposal would have still used the local companies for towing, but vehicles subject to mandatory impound would be stored on a lot next to the police station. The lot would have been staffed by police department employees, and the city would collect the storage fees.
“Small business has always been important to me,” Councilwoman Marilyn Librers said Wednesday. It was Librers’ idea to table a vote on the police proposal two weeks earlier so that city staff and the tow-truck companies could negotiate further.
Under the terms of the agreement, the companies will pay the city 20 percent of all revenues they receive from the storage of impounded vehicles, and the sale of unclaimed vehicles ordered to be impounded by police. The agreement would guarantee that the city is fully repaid for staff costs associated with calling the tow companies and processing impounded vehicles.
According to city staff, that annual cost is about $107,255. However, the city and the companies negotiated a guaranteed minimum annual total reimbursement to the city of $102,654.
City Manager Ed Tewes said the smaller figure is based on the tow companies’ projection of how much a city-owned impound lot that collected storage fees would make in a year.
Furthermore, the companies get an “exclusive franchise agreement” to be the only towing companies to be called by Morgan Hill Police when a vehicle removal is ordered. The initial agreement will be two years in length.
Brooks Ellison, an attorney representing the tow companies, spoke at length Wednesday about how impressive a compromise the tow truck operators’ proposal was.
“These were some of the quickest, most in depth negotiations I’ve ever been a part of. They have made this their No. 1 priority, to make sure the city is able to get its full cost recovery,” Ellison said.
Mayor Steve Tate said at the Oct. 14 meeting that when the towing companies were offered a similar franchise agreement in Nov. 2007, they were stridently opposed.
The terms of the agreement still have to be finalized, according to city attorney Danny Wan.
As for the property on Vineyard Boulevard that the city purchased for the impound lot concept in September, staff will not immediately recommend trying to sell the one-acre parcel. The property could be used in the future for police-related purposes, Tewes said.
Towing agreement
The city gets:
-20 percent of revenues from four local tow-truck companies, related to all police-ordered tows (impounded vehicles, abandoned vehicles, and vehicles damaged in accidents);
-20 percent of daily storage fees ($57 per day) on police-ordered tows recovered by their owners;
-20 percent of lien sale price from unclaimed vehicles sold at lien sales;
-20 percent of lien fees paid;
-At least a total of $102,654 per year from the companies, if the above fees are less than this amount designated for recovery of public costs.
The tow-truck companies get:
-$180 per tow;
-Exclusive two-year agreement with the city to only call them when Morgan Hill police order the towing of any vehicle.
By the numbers
-$57: Daily storage fee for vehicles that are impounded due to their owner’s violation of vehicle codes.
-418: Average number of cars impounded by police per year, over the last three years.
-21: Average number of days each vehicle was in storage.
-$102,654: Minimum guaranteed amount city will collect from private tow-truck operators to recover the costs associated with police-ordered towing.
-$107,255: Estimated annual cost of ordering vehicles to be towed and impounded, including officer and dispatch staff time.
-$200,000: Price the city paid in September for land on Vineyard Boulevard they thought they would use for a publicly-owned impound lot.
