LTC 281-2016 High-Floor Trolley Vehicle Order Cancellation Fee Update MIAMI BEACH
OFFICE OF THE CITY MANAGER
NO. LTC # 281-2016 LETTER TO COMMISSION
TO: Mayor Philip Levine and Members !If the City o mmission
FROM: Jimmy L. Morales, City Manager
DATE: June 30, 2016
SUBJECT: HIGH-FLOOR TROLLEY VEHI ' E ORDER CANCELLATION FEE UPDATE AND
OPTIONS TO CONSIDER
The purpose of this Letter to Commission (LTC) is to provide updated information with respect
to the City's exposure due to potential cancellation of 7 modified/kneeling high-floor/rear end
wheelchair lift trolley vehicles as well as proposed options for moving forward that will be
presented as part of discussion item at the July 13, 2016 City Commission meeting.
On June 8, 2016, the City Commission directed staff to proceed with incorporation of partial low-
floor trolley vehicles on the North Beach Trolley loop, Middle Beach Trolley loop and Collins Link
to specifically improve accessibility for disabled passengers. At the meeting, staff advised that
this action would require the cancellation of 7 of the 14 modified/kneeling high-floor/rear end
wheelchair lift trolley vehicles currently in production. Pursuant to City Commission direction on
October 21, 2015, Limousines of South Florida, Inc. (LSF) had placed an order for 14 new
trolley vehicles in December 2015. Additionally, staff advised that the City would be responsible
for any cancellation fees and costs incurred to date on the production of the 7 trolleys being
cancelled.
Since the June 8, 2016 City Commission meeting, staff has been communicating with LSF in
regards to the City's exposure as a result of the cancellation of 7 of the 14 new trolley vehicles.
On June 24, 2016, LSF received a letter (attached) from Specialty Vehicles, Inc. (SVI) Attorneys
stating that there appears to be no economically effective way to decrease the order or to
mitigate for damages that would result from cancellation. The letter also states that the cost of
customized chassis and other parts and labor likely exceed $1.5 million as well as there are no
known buyers for disparate parts, most of which were special order and designed specifically for
our trolleys. Given cancellation of the 7 vehicles would cost equal or more than the purchase
price of 7 trolleys, on June 28, 2016, the Administration requested that LSF provide SVI with
adequate assurances that the City is not canceling the pending order and is moving forward
with production of all 14 trolleys originally ordered. Considering high cancellation cost of the 7
trolleys, staff will be presenting three (3) options at the July 13, 2016 City Commission meeting.
All options propose maintaining the current order of 14 modified/kneeling high-floor/rear
end wheelchair lift trolley vehicles. Summary of options is presented below.
Option 1. This option proposes proceeding with Commission direction from October 21, 2015. At
that time, the Mayor and City Commission adopted Resolution No. 2015-29194, approving the
use of 14 modified/kneeling high-floor/rear end wheelchair lift trolley vehicles for Middle Beach
LTC-High-floor Trolley Vehicle Order Cancellation Fee Update and Options to Consider
Page 2
Trolley routes (Middle Beach loop and Collins Link) and the North Beach loop in lieu of low-floor
trolley vehicles due to higher capital and operating costs of low-floor trolleys. Additionally, this
option would follow the City Commission direction from May 11, 2016. At that time, during the
discussion on South Beach Circulator Options, the City Commission directed the Administration
to proceed with the competitive procurement of Turnkey Trolley Operations and Maintenance
Services for the South Beach Trolley route using low-floor trolley vehicles only. Option 1 would
not require an Amendment to the current Agreement with LSF.
Option 2. This option is the same as Option 1 and additionally proposes providing an on-
demand service for passengers in wheelchairs. The City of Miami is currently providing similar
services and is in the fourth year of a contract with Transportation America (TA). Staff is
currently evaluating if it would be more advantageous to piggy-back on the existing City of
Miami contract or amend the existing contract with LSF to provide an on-demand service for
passengers in wheelchairs. Please note TA is a parent company of LSF.
Option 3. This option proposes waiving the competitive bidding requirement amending the
existing Agreement with LSF to include purchase of 12 low-floor trolley vehicles. These vehicles
would be used sparsely on all trolley routes to improve accessibility for wheelchair passengers.
It is likely that headways for the low-floor trolley vehicle would exceed 30 minutes on one or
more of 4 trolley routes unless additional low-floor trolley vehicles are purchased.
Options above will be further discussed at the July 13, 2016 City Commission meeting.
Please feel free to contact me if you have any questions or concerns.
Atta ent: SVI Letter
JL /K'B/JRG/MM
F:ITRANI$ALLILTCILTCs TrolleylMiddle Beach Trolley- Vehicle Production and CancellationlLTC - Trolley Vehicle Cancellation and Options to
Consider.docx
Attachment: SVI Letter
WILSON ELSER
WILSON ELSER MOSKOWITI EDEI.MAN ft DICKER LIP
June 24, 2016 J.Scott Burris
702.727.1265(direct)
J.Scott.Burris@wilsonelser.com
Limousines Of South Florida
c/o Mr. Mark Leavitt
3300 SW l lth Ave,
Fort Lauderdale, FL 33315
Re: Specialty Vehicle's Order for The City of Miami Beach
Our file number: 12644.000008
Dear Mr. Levitt
Our firm represents Specialty Vehicles,Inc. ("SVI"),and this correspondence concerns the order
("Order")of fourteen customized trolley vehicles("Trolleys")by your company,the Limousines of South
Florida("LSF"), which is on track for completion as discussed previously. As a threshold matter if LSF
has retained an attorney,then please forward this correspondence accordingly and provide us with your
attorney's contact information.
SW anticipates that all of LSF's Trolleys will be completed and delivered per the Order. Yet SVI heard
that a representative of your client,the City of Miami Beach, was attempting to persuade the City Council
to reduce the Order by seven Trolleys and, attempt to substitute those Trolleys with others from a
competitor trolley-distributor and manufacturer. If this is incorrect,then we would be happy to ask you to
ignore this letter. Indeed,as of today, SVI has received no written correspondence and no oral
communications from anyone asserting authority to request any material change to the Order. Instead,we
believe that one of SVI's competitors improperly obtained SVI's confidential/propriety trade-secret
information and unlawfully attempted to interfere with SVI's business relationships, which we are
investigating diligently.
Moreover, in the short run,there appears to be no economically effective way to decrease the Order or to
mitigate the damages from such a material change to the Order. Notably,the sunk costs for the
customized chassis and other parts and labor likely already exceed$1.5 million. And,there are no known
buyers for disparate parts, most of which were special ordered and designed specifically for the City of
Miami Beach.
We understand that SVI and the Limos of South Florida have enjoyed a long history of successful
transactions and vehicle acquisitions. And we hope that this relationship will continue.
Please let me know if you have any questions or comments.
Sincerely,
Wilson Elser Moskowitz Edelman& Dicker LLP
/s/J. Scott Burris
J. Scott Burris
JSB/nes
300 South 4th Street, 1 1 th Floor • las Vegas,NV 89101 • p 702.727.1400 • f 702.727.1401
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