Starting New Year’s Day, the city will have a new contract in place to cover the dozens of police-initiated vehicle tows that occur across the island daily.
The city had to sweeten the deal to get a signed agreement with All Island Automotive Towing, which holds the current contract, which ends Sunday.
But the new deal is for only six months, giving the city time to come up with new terms to solicit bidders for a longer-term agreement that will begin in July.
Paul Perry, owner of All Island, could not be reached for comment after the new agreement was signed.
But prior to the signing, Perry told the Honolulu Star-Advertiser that the current deal had been a money loser for All Island for the past two years. Because of that, the company declined an option to extend the agreement for another 12 months, leading to negotiations for a revised six-month deal.
Perry said All Island could not continue under the existing agreement because it was costing him and his subcontractors thousands of dollars in extra expenses each month, prompting a couple of the subcontractors to drop out of the arrangement.
The contract gives All Island responsibility for police-ordered tows for accidents, parking violations, stolen vehicles and other incidents on Oahu. All Island and a group of subcontractors handle the tows.
The deficit problem stems from a confluence of factors, all of which happened around the time or after All Island took over the towing contract in January 2014.
Scrap metal prices have plummeted since then, meaning more car owners are simply abandoning vehicles that they once would have sold for the scrap value.
And the tow companies, which used to buy the junk vehicles to make money when metal prices were higher, now charge owners to dispose of the vehicles, according to Brian Kunishige, owner of Kuni’s Automotive & Towing.
“It costs us money to get rid of them,” Kunishige said.
Storage space scarce
The falling scrap metal prices have contributed to a rise in abandoned vehicles owned by military members who are transferred out of state.
Once the vehicles are towed from Oahu’s streets, the tow companies have had to store them for months or even a year or two because the city has had trouble reaching the military owners to get permission to dispose of the cars.
Perry estimated that the companies are spending roughly $50,000 extra a month to lease additional storage space to accommodate the military service member-owner vehicles — an expense they weren’t anticipating when the contract took effect in 2014.
“That’s the No. 1 problem,” Perry said.
To help address that problem, the city agreed under the six-month deal to pay All Island $200 for each active-duty military member’s vehicle that has been stored for more than 45 days and to remove it to open up more storage space at the tow company lots, according to Randy Leong, deputy director of the Department of Customer Services, which oversees the contract.
The city also agreed to pay $150 for each unclaimed towed vehicle that goes unsold at a public auction and that will continue to require storage space, Leong said in an email to the Star-Advertiser.
In addition, the current caps for a maximum tow fee ($210), off-road tow ($300) and maximum storage fee ($435) have been removed, according to Leong.
All other charges, such as a $65 hook-up fee and $7.50-per-mile tow charge, remain the same because they are the maximum allowed by state law.
The city is maintaining three auxiliary storage lots at the West Loch and Ewa Village golf courses and an old Ewa Beach fire station to help relieve some of the space pressure linked to the military member-owned vehicles.
It also updated its vehicle registration forms in August to collect more information from military owners so they can be contacted more easily.
The financial problems under the existing contract have been exacerbated by the city’s sporadic or slow payments, according to Perry and a subcontractor.
In early December, Perry said the city was behind at least a year in payments.
Leong said the city was working with the vendor to clarify past invoices totaling about $50,000, but otherwise all payments were up to date.
In 2012 the city began using a single vendor to oversee all police-initiated tows, which total about 1,900 each month. Before 2012 it divided the island into zones and issued contracts for each zone. But that led to inconsistent service and other problems and generated numerous consumer complaints.
Although the launch of the single-vendor system was plagued by problems during the first year under a different contractor, the city now says the system is more efficient to oversee and manage, provides more consistency in service, allows for smoother handling of billings and generates far fewer customer complaints about the tow companies.
Unlike under the old system, “there have been very few complaints related to errors in mileage charges, unexpected fees, questionable dealings, missing items or mismanagement of operations,” Leong wrote. “This was the reason we supported a single-vendor operation. The majority of complaints in the current period deal with the length of time it takes to respond to an abandoned vehicle.”