City-owned parking lots in Long Beach will soon be under new management after the city council voted unanimously Tuesday night to award a contract to LAZ Parking California, LLC that could be worth just over $9.4 million over the next three years.
LAZ, an East Coast-based business with roots in Connecticut, was chosen over the city’s current parking management company, Standard Parking Plus (SP Plus). The total contract includes $7.8 million in guaranteed money with an additional 20 percent contingency figure of over $1.5 million bringing the total to approximately $9.4 million. The city’s lots are expected to generate about the same amount in gross revenue in this fiscal year.
The approval of the contract, which will shift maintenance and upkeep of the 25 municipal-owned lots to LAZ at the end of March 2018, did not come without some controversy. Jason Johnston, senior vice president of operations for Standard Parking, noted that his company protested city staff’s recommendation that LAZ win the contract based on past indiscretions committed by members of the company.
Johnston detailed events from earlier this year involving LAZ’s operations in Massachusetts where its contract with the Massachusetts Bay Transportation Authority (MBTA) was eventually terminated due to theft. An audit showed that LAZ employees had skimmed millions of dollars from the MBTA, money that otherwise would have been reinvested into the MBTA.
Earlier this year the Boston Globe reported that LAZ reached a settlement with the state attorney general’s office to repay $5.6 million to MBTA and the company’s lawyer characterized the incident as “a few low-level rogue employees” taking advantage at a limited number of Boston-area lots.
In September 2016, The Chicago Tribune reported that a LAZ government relations representative was sentenced to jail time for accepting nearly $100,000 in kickbacks in steering a $22 million parking meter contract to a Tampa Bay, Florida-based company that would install the meters in Chicago where LAZ would manage them.
In July and October of this year the Pasadena City Council voted to decline the awarding of an RFP to LAZ which was suggested by Pasadena city staff. Instead, the council extended its incumbent’s contract by a year due to the “checkered track record” of LAZ.
“LAZ was the recommended vendor from staff…city council rejected that not once, but twice,” Johnston said. “They weren’t willing to take the chance on someone that has this significant theft in recent memory.”
John Svendblad, senior vice president of LAZ Parking’s Los Angeles region, said the company did not hide from the company’s past issues during the RFP process and that they look forward to serving the Long Beach community.
“We’ve been completely transparent and full of integrity throughout this process and we want to bring that same level of integrity and passion to the city of Long Beach if we’re so fortunate,” Svendblad said.
Long Beach Director of Public Works Craig Beck said that the city staff was made aware of LAZ’s past and that going forward the city of Long Beach is requiring its parking lot operators to have an insurance policy in place to protect the city in the event that this type of theft were to occur in the future.
“We really did our due diligence in reviewing and reached out to Massachusetts and talked to the people involved in this particular incident and every response that we received not only commended LAZ for their cooperation, but also pointed to an individual,” Beck said. “This was an act of an individual and not something that was indicative of the corporate environment or the service that LAZ provided to the organization.”
Beck also said that LAZ’s bid was on average about $380,000 less per year than SP Plus. The savings would amount to a little over $1.1 million over the life of the contract, or about $400,000 less than the 20 percent contingency that the city is allowing in the LAZ contract.
The contingency money is slated to provide “flexibility” for the city and the operator to make needed upgrades like unforeseen replacements of parking arms or to accommodate special events or other advanced costs. An amendment made by Third District Councilwoman Suzie Price will trigger a report to council if the contingency money is used so that council can examine why the proposed budget did not cover the costs.
Some of the improvements expected to be made once LAZ takes over control of the city lots are a mobile application that will allow customers to pay for and reserve in advance parking spots in city lots and installation of barcode scanners at the Aquarium of the Pacific parking lot that will allow patrons to simply scan in and out with prepaid cards.