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HomeMy WebLinkAboutIR 8278 INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 8278 11 October 10, 2000 anraaFO To the Mayor and Members of the City Council Page 1 of 4 �r FYw SUBJECT: THIRD AMENDMENT TO ZOO OPERATIONS CONTRACT Yeto In 1991, the City of Fort Worth contracted with the Fort Worth Zoological Association to manage the Fort Worth Zoo operations (City Secretary Contract No. 18454, M&C C-12867). This contract has been amended twice with City Secretary Contract Nos. 20826 (M&C C-14490) which established a parking operations management structure and 24455 (M&C C-17141) which provided for the Association to implement the 1998 Capital Improvement Program bond-funded projects. A third amendment to the zoo operations contract is being proposed at this time. The proposed changes to the contract include: 1) Reduction of the number of City authorized permanent positions through attrition effective Oct 1, 2000; 2) Deletion of all City authorized temporary positions by September 30, 2001; ) Provisions to make monthly contract payments to the Zoological Association based on the total contract amount due minus the personnel costs for the remaining positions and 10% retainage; 4) Provisions to make a final payment to the Zoological Association once the year end costs are verified and the final contract balance is determined; and 5) Provision for the Zoological Association to determine admission fees for the duration of the contract with notification of any fee changes to the City Council thirty days prior to the intended adjustment. City Authorized Permanent Positions The initial contract with the Zoological Association (Association)transferred the management of the daily operations of the Zoo to the Association including Zoo employees. The state purchasing law, Local Government Code Chapter 252, prevented the City from entering into a contract requiring public funds to be paid directly to the Association for zoo management without competitive bidding. The law did allow for the assignment of the zoo management responsibilities to the Association if the City's direct financial obligations to the Zoo were the payment of City Zoo employee salaries. Therefore, the City retained the responsibility for payment of the personnel costs related to City employees at the Zoo. The state taw has changed and now permits an exception to competitive bidding for cities when contracting management services with a non-profit entity like the Fort Worth Zoological Association (Sec. 252.022, Local Government Code). With the change in the law, it is now possible for the City to make straight contractual payments directly to the Association for the management of the zoo. The Association currently � nanages the Zoo with 62 City authorized permanent positions, a variable number of City temporary positions and over 116 Association permanent employees and an increasing number of temporary employees. ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 8278 01001111 October 10, 2000 To the Mayor and Members of the City Council Page 2 of 4 SUBJECT: THIRD AMENDMENT TO ZOO OPERATIONS CONTRACT Greater efficiency can be achieved with a change to straight contractual payments to the Association for the management of the Zoo. The proposed amendment provides for a conversion of permanent City positions through an attrition process. This change is being recommended because a one time conversion of all current positions to Association positions would require significant funds to pay all terminal leave for City employees and a layoff of all current incumbents in the authorized positions. The amendment would provide effective October 1, 2000, only the City authorized permanent positions that are currently filled to be retained. All other permanent City positions would be deleted and as the filled positions become vacant those positions would also be deleted. The incumbent City employees in permanent positions can remain City employees for as long as they remain in their current authorized position. They can retire as City employees or they may choose at a later date to be hired as an Association employee and leave City employment. There are currently 54 incumbents in the City authorized permanent positions. City Temporary Positions Me amendment would also provide effective September 30, 2001 for the deletion of all City temporary positions at the Zoo. The temporary positions are used to meet peak season service demands and to offset vacancies in the permanent positions. This change is proposed to take effect in 2001 to provide a year for the Association to prepare to meet the workers compensation insurance coverage costs for the increased number of seasonal employees that will be on the Association payroll. By September 30, 2001, the employees remaining in the City temporary positions will be terminated from City employment. The Association may choose to hire terminated temporary employees as Association employees to meet their seasonal service demands. Payment Stipulations Provisions are included in the proposed amendment to make monthly payments to the Zoological Association. The annual contract amount for the operation of the Zoo is specified by the current contract at a base of$2,400,000 with a yearly C.P.J. adjustment. The annual contract amount for FY 2000-01 is $2,838,609. As the permanent and temporary positions are deleted the portion of the contract amount not paid to direct salaries will be paid to the Association for the operation of the Zoo. When determining the monthly payments, the cost to fund the remaining positions will be deducted from the total. The remaining balance will be divided by the months remaining in the fiscal year and a 10% retainage will be kept until the end of the fiscal year to offset possible fluctuations in personnel costs due to overtime and performance pay. At the close of the fiscal year, the final contract payment will be reconciled to include ,total personnel costs and the balance remaining from the attrition of positions. Should the City owe the Association any monies, payment would be rendered by January 15"' of the following year. If the Association ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS INFORMAL REPORT TO CITY COUNCIL MEMBERS No, 8278 October 10, 2000 To the Mayor and Members of the City Council Page 3 of 4 SUBJECT: THIRD AMENDMENT TO ZOO OPERATIONS CONTRACT should owe the City for overexpending in personnel costs, a payment schedule is specified for this amount to be paid to the City. Historically, the Association has overexpended personnel costs in 8 of the 10 years of the contract for a total of$1,294,706.72 through FYI 998-99. The amount overexpended for FY 1999-2000 will be determined once the year-end payrolls are posted. Each time the Association has developed a payment plan to repay the overexpended amount and has met the agreed schedule of repayments. Currently, the Association is on a scheduled plan for the repayment of the FY 1998-99 overexpenditure of$183,172. With the close of the 1999-2000 fiscal year, another repayment plan schedule is anticipated once the final overexpenditure amount is determined. With the contract changes proposed with this amendment, the potential for overexpenditure is significantly reduced as attrition in the authorized and temporary positions occurs. Admission Fees not her provision in the proposed amendment will change the method of determining admission fees. Juring the first ten years of the contract the Association has adjusted to the maximum allowable amount provided in the contract and the Association would be severely limited in adjusting fees in the next ten years of the contract. Additional increases are needed to offset the costs of providing quality services to an ever- increasing volume of visitors. When the contract was executed in 1991 the Zoo had an annual attendance of 514,996 visitors. The volume of visitors has increased to over 1.2 million annually. During the contract period the Association has deeded 15 exhibits and improvements to the City at an added value of$26,135,517 along with a 5% endowment. Additional improvements include the Texas Wild! exhibit which is estimated to be valued over $40 million once it is completed in 2001. Admission fees by contract are retained by the Zoological Association to offset costs of managing the Zoo. These fees only provide a portion of the cost to operate the Zoo, the attraction's growth and costs of business is critical to the continuance and successful management of this venue. An increase is projected to occur in November 2000 based on the change in the Consumer Price Index in accordance with the current contract. Current fees are $7.00 for adults, $4.50 for children ages 3-12, free for children 2 and under, $3.00 for Seniors and on Wednesdays admissions are half price. As labor, materials, supplies, and utility costs increase, the Association seeks the ability to offset these costs with admission fee adjustments. The amendment will make it possible for the Association to set the admission fees and will require the Association to provide notice of any fee adjustments to the City Council at least 30 days prior to the change. With the addition of Texas Wild! to the Zoo exhibits and the time to view he full Zoo offerings, there is a strong potential for a variety of ticket options to customers. The current contract does not provide for this flexibility and therefore this amendment is being requested. ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS INFORMAL REPORT TO CITY COUNCIL MEMBERS NO. 8278 October 10, 2000 � saa To the Mayor and Members of the City Council �} Page 4 of 4 Y" SUBJECT: THIRD AMENDMENT TO ZOO OPERATIONS CONTRACT +ary Staff will present this proposal to the City Council at their Work Session on October 10, 2000. In the interim, should you have any questions please contact Libby Watson, Assistant City Manager or Richard Zavala, Parks and Community Services Director. Bob Terrell City Manager ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS