City Halts Parking Lot Contract Decision Following Discussion

Bids to be reviewed following discovery that winning company had been involved in revenue fraud case in Boston

Published : Tuesday, July 25, 2017 | 5:08 AM

In a dramatic, last-minute decision, the City Council Monday evening rejected a recommendation by the Transportation Department to award a $9 million-plus contract to LAZ Parking Services, a Hartford, Connecticut-based company, to manage and operate The Paseo Subterranean, Marengo, Los Robles, Holly Street, Del Mar Station, School House, Delacey, and Marriott parking garages, in and around Old Pasadena.

The Council decided not to act on the Transportation Department’s recommendation following the presentation of additional information alleging that the selected company had been released from its contract with the Metro Boston Transit Authority in 2016, following an MBTA investigation into possible parking revenue fraud. Employees of LAZ were reportedly fired, and the MBTA contract was then put out to bid again.

In a statement Tuesday, attorney Chris C. Tsouros said any references to criminal wrongdoing by LAZ Parking are not true.

“As the attorney who as been representing LAZ Parking from the beginning of this matter, any statement that LAZ Parking has been convicted or even charged with any criminal wrongdoing is just plain wrong,” Tsouros said. “This matter involved alleged thefts by a few low- level rogue employees at a limited number of cash lots. LAZ has committed to making full restitution to the Massachusetts Bay Transit Authority (MBTA) for these unwarranted acts and the case has recently been settled.”

The three Old Pasadena garages—Schoolhouse, DeLacey, and Marriott—are currently operated by Parking Concepts, Inc., under a contract with the Old Pasadena Management District on behalf of the City. Five of the six Civic Center garages (Holly, Paseo Subterranean, Los Robles, Marengo and Del Mar) are operated by Modern Parking, Inc., under contract with the City.

On October 20, 2014, a city audit recommended that the City should directly oversee garage revenue functions, both transient and monthly, to prevent any revenue loss. Currently, the City only oversees the revenue functions for the Holly, Paseo Subterranean, Los Robles, Marengo and Del Mar garages.

On February 27, 2017, the Department of Transportation released a Request for Proposals (RFP) to solicit proposals for parking garage management, operation and maintenance services at the eight City-owned garages for three years with an option for two additional one-year terms at the discretion of the City Manager. The new contract was expected to begin October 1, 2017.

On March 29, 2017, five companies submitted their proposals: LAZ Parking (LAZ), Los Angeles CA; Modern Parking, Inc. (MPI), Los Angeles CA; Parking Company of America (PCAM), Los Angeles CA; and Parking Concepts, Inc. (PCI), Los Angeles CA.

Parking Concepts, Inc. currently operates and manages the Schoolhouse, De Lacey, and Marriott City-owned garages under a contract with the Old Pasadena Management District. In the interest of ensuring impartiality in the selection process, the proposals were reviewed and evaluated by a committee made up of staff representatives from peer agencies. Both of the current operators, who both proposed on this RFP, have worked in their current capacities in Pasadena for many years.

An all-outside panel was used to reduce the potential for perceived bias in the selection process. The evaluation committee consisted of staff representatives from the Los Angeles County Metropolitan Transportation Authority (Metro), the City of Beverly Hills and Los Angeles County Department of Beaches and Harbors.

These proposals were evaluated based on the criteria outlined in the RFP, and weighted as follows: Criteria Weight Management, Operation and Maintenance Program, 30%; Price, 10%; Proposer’s Attributes/References/Experience, 20%; Cash Management, Reporting, and Audit Program, 30%; Local Pasadena Business Preference, 5%; Small and Micro-Business Preference, 5%.

The City of Beverly Hills currently employs PCI and LA County Beaches and Harbors employs MPI. All four companies were invited to participate in an interview to determine the final rankings. City staff from the Department of Transportation participated in the interview process, but did not score the proposals.

The proposal by LAZ Parking was rated highest on the basis of the firm’s comprehensive Management, Operation and Maintenance Program and Cash Management, Reporting and Audit Program. LAZ Parking was also awarded the highest score by each of the evaluation committee members. City Transportation staff recommended the award of the contract to LAZ.

Following a two-hour-plus discussion in which the appropriateness and qualifications of the “raters” of the various proposed parking companies were repeatedly questioned, the Council ended its discussion.

Then, during the public speaker portion of the agenda item, Gary Pitt, president of Modern Parking, Inc., one of the losing bidders, complained about the selection process, and claimed that the factors the RFP was structured upon were not adhered to by the raters involved. Pitts also claimed that one of the raters was a beach parking lot company, and had no knowledge or experience with regard to city parking structures.

Then Pitt took direct aim at LAZ, giving the Councilmembers two recent articles in which the LAZ operations in Boston were reportedly accused and then sued for fraud in their management of several parking lots owned by the Metro Boston Transit Authority (MBTA). [Editor's Note: see statement from Tsouros above.]

An article in the Boston Globe in April, 2016, said, “The Massachusetts Bay Transportation Authority (popularly known as “The T”)  is investigating missing parking payments after officials discovered discrepancies between how many cars were parking in some of its lots managed by a contractor and how much money officials should have been collecting.”

According to the article, “the MBTA, Transit Police, and the state Department of Transportation are focusing on three lots managed by LAZ Parking, a national parking management company that owns several large lots in the Boston area, MBTA officials told the authority’s fiscal control board Monday. If the T is able to document that money is missing, LAZ would have to repay the T double the amount, plus fines, according to the T’s contract.”

“According to officials, T employees identified missing parking payments at three of the T’s parking facilities managed by LAZ: North Quincy/Hancock, Lechmere, and Riverside. LAZ was alerted to the discrepancy in April and has fired two employees for not following proper procedures, according to John Englander, general counsel for the state transportation department and the MBTA.”

An August 12, 2016 article in Commonwealth Magazine said that the MBTA had formally notified (LAZ Parking) that the company eventually breached its contract by failing to reimburse the transit authority for money stolen by employees.

“The notification, which came in a letter dated Thursday from MBTA General Counsel John Englander to LAZ Parking, is the first time the T has publicly identified employee theft as the cause of ‘revenue discrepancies’ at the agency’s parking lots,” the article read.

“The letter also implied that the theft could be massive in scope,” said the article, adding that “In the past, officials have indicated the revenue discrepancies were confined to one or possibly two lots and involved relatively minor amounts of money. In his letter, Englander demanded that LAZ hire an independent auditor to track down missing parking revenue at 13 facilities going back to the beginning of 2013.”

The City Council then stopped what would have been a routine vote.

Based on a recommendation by City Manager Steve Mermell, the City will now conduct an “internal review” of all the bids and proposals as well as the RFP itself.

According to Mermell, the City could, based on the review, “start all over again,” or select a new contract winner, or go with the City staff’s original recommendation. Mermell said that the internal review could take “about three months.”


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