Council Will Finally Close Loopholes in Zipcar Contract – Nearly Five Months After Approving Program

Furthermore, the city staff put out information to the public that reflected their verbal agreements with Zipcar but not their written contract, meaning the released information had no force of law behind it.

Writes the city staff, “After the agreement was approved, and prior to the program launch event on September 22nd, city staff worked with Zipcar to clarify the City’s roles and responsibilities for marketing and managing the service. Adjustments to these responsibilities were all favorable to the City and have been applied since the program inception.”

There are four key changes.

First, the program start date is changed from August 15 to October 1.  Not sure what the implications are for this as the staff report does not elaborate.

Second, they clarify “that the program will be promoted to city as a whole, not only to students and employees, as inadvertently stated in the original language. Also, states that Zipcar, not the City, will maintain and fill postcard drop boxes at or adjacent to Zipcar parking locations.”

Third, “Clarifies and formalizes the practical working agreement between Zipcar and City regarding marketing roles and responsibilities. City will work with Zipcar by identifying strategies to assist in marketing and promotion of the Zipcar service to residents of the City. Zipcar will implement the marketing plan.”

Fourth and most important, it “removes the City’s responsibility for transporting vehicles to service.”

Writes the staff report, “Zipcar already had a contract employee providing this service for UC Davis Zipcars to service. The City and Zipcar agreed prior to the start date that the Zipcar employee would provide this service for the City vehicles as well. The amendment includes the removal of language regarding liability, as it pertains to the transportation of the vehicles for maintenance, as the City is not involved in this function.”

According to the staff report the city program includes two Honda Civics and two Honda Insight hybrids.

Writes the staff, “The agreement encouraged Zipcar to purchase the vehicles locally. Zipcar purchased 10 vehicles at University Honda in Davis; 4 for the Davis program and 6 for other California programs. Zipcar plans on using University Honda for future purchasing needs in California. The City received sales tax revenue for this transaction.”

Much has been made about the $72,000 price tag which is based on the maximum $18,600 cost per quarter for the use of the four vehicles, but “this amount is reduced by the amount of revenue received from member usage. A breakeven point, with no or minimal payment from the City, would be at approximately 40% utilization. If the City meets the minimum due for two consecutive quarters, Zipcar will remove the minimum payment requirement for the remainder of the agreement.”

The staff reports that “based on the October and November utilization, it is anticipated that the City payment to Zipcar for the first quarter of usage will be approximately $5,500. The actual amount may be slightly higher as December utilization may drop after the university goes on break. These payments will be made from funds set aside from developer deposits for environmental mitigation measures.”

The insurance issue has been a huge snafu.  Writes the staff report, “The only change included to liability is removing the provision that refers to City staff transporting vehicles.”

They continue, “As the agreement limits the City’s involvement to providing parking spaces and assistance with marketing, the City’s liability is minimal. It is similar to anyone driving on a public street in a private vehicle or in a traditional rental vehicle. The City Attorney and YCPARMIA/Risk Management [Yolo County Public Agency Risk Managemetnt Insurance Authority] are not requesting any other changes in liability coverage.”

This is a minimal program funded out of non-general funds.  The problem is that the city failed in its due diligence and allowed a contract to be at odds with their verbal understanding.

There are really two aspects of this that should be concerning.  First is the fact that the city put out a Fact Sheet that did not reflect the written contract.  Second, there was a lack of concern, and especially urgency, in attempting to ensure that the language in the contract matched with the language in their informal understanding.

This is largely on the city staff, who hung the council out to dry by failing to provide the council with adequate information. 

Council was basically told by City Staff and the City Attorney that this contract had been thoroughly reviewed, that it was fine and that they had nothing to worry about.  As a result, Council did what they ought to do, they trusted their professional staff and hired attorney and passed the item without a close read of the contract.  This was a huge mistake.

But it is also on Mayor Don Saylor, who rammed this item through along with a host of complex items, during his first meeting in which the council zipped through and finished by 8:30 pm.

In July, the Davis City Council quickly passed approval of a contract with Zipcar that would authorize roughly $74,000 from a non-general fund source to help get a Zipcar program off the ground.

At the next council meeting, Councilmember Sue Greenwald moved to reconsider that 5-0 vote on the grounds that she was concerned about language in the Zipcar contract that would potentially expose the city to liability.  She was joined by Rochelle Swanson, but the vote failed.

In the ensuing weeks, Davis Enterprise Bob Dunning began to hammer the city for the deal, arguing that this was a subsidy to a private company, that the city was advantaging an out-of-town car rental company over existing business, and that the city could face liability in the case of an accident.

After getting hammered for several weeks, the city eventually put forth a Fact Sheet and Joe Krovoza and Stephen Souza wrote an op-ed based on the Fact Sheet, defending the program.

On October 8, Bob Dunning returned from vacation and hammered them, calling it a series of “lies our leaders told us.”

Wote Mr. Dunning, “Council members Stephen Souza and Joe Krovoza repeat the lie that ‘Car-sharing is different because it is instant, hourly, friendlier to the environment and located near users who need short-term mobility.’ “

While I believe Mr. Dunning was inaccurate in this description, particularly on a subjective issue such as the issue of car-sharing, and I also believe even now that the city faced, at the very most, very limited liability on the contract, he was correct in pointing out the discrepancies between the claims that the two councilmembers made and the contract itself.

Bob Dunning reported this Sunday, quoting from Paul Navazio’s letter to Council which he apparently received on October 25.

In that letter to council, Mr. Navazio states, “Contract amendments are being worked out to essentially reflect the agreements reached with ZipCar – on selected program elements – after the Council approved the original contract, and prior to the roll-out of the program last month.”

Mr. Navazio continues with a shocking admission, “The need for the amendment(s) came to light as inconsistencies were identified between the current, executed contract and the ZipCar Program FACT SHEET that we have on our City website.”

Since this is now on the agenda, the public has the right speak out.  It is clear that the public was misled here and numerous citizens ought to come forward and demand explanation for why this happened the way it did and ask that those responsible be held accountable.

I am particularly concerned with the Fact Sheet that was put out by the city, knowing that their assertions were not backed up by the language of the contract. So the city, for nearly five months, has relied upon the verbal agreement and the trustworthiness of Zipcar rather than legally enforceable language to form the basis of their relationship.  This is poor practice and a breach of public trust.

The people have been misled on this and the city needs to be forthcoming and acknowledge it.

—David M. Greenwald reporting