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Home My WebLink About3/21/2001 - STAFF REPORTS (26) DATE: March 21, 2001 TO: City Council FROM: Assistant City Manager- Special Projects TAXI REGULATOR AND PICKENS FUEL CORPORATION REQUEST FOR AIRPORT CLEAN VEHICLE INCENTIVES RECOMMENDATION: That the City Council concur with the Airport Commission recommendation that air quality incentives for all Landside commercial operators be reviewed as part of this coming year's Landside Fee Study. SUMMARY: SunLine and Pickens Fuel presented their program to bring 50 CNG taxis to the local fleet and ask for consideration by the City to establish Airport incentives to foster their program. Following a careful review, the Commission recommends no changes at this point and inclusion of a Landside Fee Study next year. BACKGROUND: On February 14, 2001, representatives from the Taxi Regulator (SunLine) and Pickens Fuel Corporation gave a presentation at the City Council study session. The highlight of the presentation was announcement that SunLine and Pickens have partnered to purchase 50 CNG taxicabs for use in the Coachella Valley. The initial financial burden of purchase will be born by this partnership. Vehicles will then be leased back to taxi operators forfive(5)years at an estimated cost of$400 per month with a $1 buyout at the end of the lease. The partnership has teamed up to offer incentives which include no vehicle registration fees (E plate), reduce federal and state excise tax and if operators buy fuel at a Pickens CNG fueling site, they will receive a rebate of $.23 per gallon for three (3) of the five (5) years the vehicle is leased. This partnership represents a continued effort by SunLine and Pickens toward Clean Air in the Coachella Valley. The Airport has also been extremely proactive promoting Clean Air Technology over the past 10 years. In 1994, the Airport was one of the first in the nation to partner with private enterprise(SunLine and Pickens)to have a CNG fueling station built on Airport property. Strategically,this public access site is an important location for CNG fueling throughout the Coachella Valley and, according to SunLine, is a high volume station. Because of the Airport's desire to remain active in Clean Air Technology and recognizing the importance of infrastructure development, this site has been functioning without requiring the operator(SunLine/Pickens)to commit to a land lease or fuel flowage fees. According to a recent appraisal, the land's fair market value is $7.00 per square foot; the Airport has provided an annual land incentive of$14,421. Proximity to this public access station has allowed the City of Palm Springs and Airport to convert numerous vehicles to CNG which has reduced emissions dramatically. It also allows for easy fueling access for all ground operators at the Airport. The Airport recently applied for a grant from the FAA that will provide funding for additional CNG vehicles. 42 Y04 Taxi Regulator and Pickens Fuel Corporation March 21, 2001 Page Two If the Airport is successful in acquiring funding, the Airport Operations Division, the Palm Springs Police Department-Airport Detail and Airport Administration will operate 100%alternative fuel vehicles. This is mainly CNG fuel but the Airport has committed to electric vehicles as part of a City of Palm Springs and Nissan electric vehicle pilot program. In addition to the annual land incentive provided to SunLine and Pickens, in November 2000, the Airport opened the Ground Transportation Center. As part of the approved Landside Multi-Modal Master Plan, this project was completed in three phases. The parking lot, building and Automatic Vehicle Identification (AVI) system were constructed at a cost of approximately $1,300,000, This substantial financial commitment led to a 75% reduction in vehicle emissions as a result of eliminating as many as 20 vehicle"cold starts"from the previous method of queuing. Ongoing costs of this facility include landscape and interior maintenance which is performed by the Airport maintenance staff at a cost of$15,000. In the future, the Airport will also need to look at a maintenance agreement for the AVI system which has been proposed to be in the neighborhood of$17,000 after the initial warranty period. The financial incentives and commitments made by the Airport overthe last seven (7) years total in excess of$1,400,000 when land lease, vehicle acquisition and facility improvements are combined. The Airport has not raised any Landside fees during this period. We have depended on non-airline revenue to fund both Clean Air Programs and Landside Operations. As a result of efforts by staff in 1997, the Palm Springs International Airport received the First Clean Airport Award from Airport Council International (ACI) and continues to gain praise from the local, regional, and national environmental organizations. The chart below shows the cost of the improvements and incentives currently being offered to taxi operators by the Airport: COST Annual Land Lease incentive $14,421. Building and Parking Lot (30 year depreciation) 74,340. AVI System (14 year depreciation) 16,600 PSP Maintenance Cost 15,000. Total Programmatic Costs $120,361. Number of taxi trips in 2000 63,915 If just 50% of the total program costs outlined above are attributable to Landside Clean Air Program,that translates to a$.94 per trip incentive from the Airport and that does nottake into accountthefuel savings realized by the cab driversfrom eliminating the cold starts. Airportstaff has had discussionswith SunLine and Pickens regarding ways the Airport may be involved in offering further incentives for operators of low emission vehicles. Two incentives under consideration involve an increase in fees for all classes of ground operators who operate vehicles other than ultra low emission vehicles (ULEV's), and a preferential queuing for operators who operate ULEV's. ayf: Taxi Regulator and Pickens Fuel Corporation March 21, 2001 Page Three While Landside operator fees have not increased during the construction of all the new facilities, a total reevaluation of Landside fees is currently in order. Any fee adjustments proposed on the Landside must pass the test of being equitable and fair to all classes of operators, so a simple adjustment to taxi fees is not possible. It should be noted thatthe Airport$1/tripfee is one of the least expensive in the country. The Taxi Operator(SunLine) sets all other rates and permits all taxi operators in the Valley. Due to budget restrictions at the Airport, any new incentive program tied to access fees must be,at a minimum,revenue neutral.Taxi Regulator and Pickens Fuel Corporation The second item under review was the preferential queuing option. The AVI system is capable of preferential queuing but requires a modification to the existing software. The AVI software supplier has estimated this addition to the system would cost $10,000. Pickens Fuel has offered to pay the $10,000 cost to upgrade the AVI software should a decision indicate the need. The Airport has not budgeted for this item. Staff feels that preferential queuing has a realistic possibility of creating a monopolistic environment in which one company may dominate taxi service at the Airport; this is not the current policy position of the City. Airport staff does not recommend preferential queuing and has met with SunLine and Pickens Fuel on this issue. The Airport is willing to work with all landside operators who utilize low emission technology in order to further the cause of Clean Air in the Coachella Valley. The Airport Commission discussed this issue at its March 7, 2001, meeting and unanimously recommends that priority queuing not be incorporated into any incentive program and that a complete study of the landside fee structure for all commercial operators,with the baseline principle being that clean air incentives that are revenue neutral are appropriate, be carried out during the next fiscal year. A Minute Order is attached for City Council consideration. ALLEN F. SMOOT, AAE Assistant City Manager-Special Projects APPROVE �N�/ City Manager Attachment: 1. Minute order REVIEWED BY DEn OF FINANCE it 3 MINUTE ORDER NO. 6832 CONCURRING WITH THE PALM SPRINGS REGIONAL AIRPORT COMMISSION'S RECOMMENDATION THAT INCENTIVES RELATED TO CLEAN VEHICLES AT THE AIRPORT SHOULD BE REVIEWED AS PART OF THE 2001- 02 AIRPORT LANDSIDE FEE STUDY. ------------------ 1 HEREBY CERTIFY that this Minute Order, concurring with the Palm Springs Regional Airport Commission's recommendation that incentives related to clean vehicles at the Airport should be reviewed as part of the 2001-02 Airport Landside Fee Study, was adopted by the City Council of the City of Palm Springs, California, in a meeting thereof held on the 21 st day of March, 2001. PATRICIA A. SANDERS City Clerk