City of Gonzales
CITY ATTORNEY
STAFF REPORT
TO: Honorable Mayor Rios and City Council
DATE: September 3, 2024
FROM: Michael Rodriquez, City Attorney
THROUGH: Carmen Gil, City Manager
SUBJECT: Adoption of Ordinance No. 2024-146 Amending Chapter 3.16 -Purchasing Procedures of Title 3- Revenue and Finance of the Gonzales City Code to Increase the Bidding Requirement Threshold for the Purchase of Supplies and Equipment from $5,000 to $50,000
RECOMMENDATION
It is recommended that City Council consider waiver of reading, adoption and reading by title only of Ordinance No. 2024-146, An Ordinance of the City Council of the City of Gonzales Amending Chapter
3.16- Purchasing Procedures of Title 3- Revenue and Finance of the Gonzales City Code to Increase the Bidding Requirement Threshold for the Purchase of Supplies and Equipment From $5,000 to $50,000.
BACKGROUND
Although municipalities such as the City of Gonzales are required by law to adopt policies and procedures governing the purchase of supplies and equipment, including bidding regulations, they have considerable latitude to tailor purchases to meet local needs. See Gov. Code Section 54202; Davis v. City of Santa Ana (1952) 108 Cal.App.2d 669. Such policies and procedures create transparency regarding City purchases and provide the citizenry with reassurance that public funds are being properly spent. Most policies are structured to require purchasing by soliciting bids unless the purchase falls within an identified exception that allows staff to forego bidding.
The City of Gonzales’ purchase provisions are found in Chapter 3.16 of Title 3- Revenue and Finance of the Gonzales City Code (“GCC”). Pursuant to current GCC Section 3.16.050, purchases of less than five thousand dollars ($5,000) are exempt from bidding.
REVIEW AND ANALYSIS
AGENDA
ITEM
9 As staff has pointed out on several occasions with the City Council while discussing City projects and finances, the cost of supplies and equipment has increased dramatically in recent years due to supply chain constraints, general inflation, and strong demand for consumer goods and materials. The Producer Price Index, the metric reflecting the price that manufacturers charge dealers and distributors for their products, indicates that prices for machinery and equipment increased by 19% between January of 2020 and March of 2023. There was a significant increase in such costs during the Covid-19 Pandemic and although the impacts of the Pandemic are largely considered to be under control in the U.S., there has not been a corresponding decrease in the price of supplies and equipment.
As noted above, GCC Section 3.16.050 currently provides that purchases of supplies and equipment totaling less than $5,000 are exempt from bidding requirements. This threshold has been in place since at least 1972. It is clear that this threshold no longer covers the costs of the majority of purchases made by various City Departments. For example, the costs of the purchase of a single new or used automobile, software and related service agreements, and specialized equipment needed for use in variety of City Departments frequently exceeds the threshold and requires bidding and formal Council action. As a result, normal business in the City is often disrupted due to delays caused by compliance with formal bidding procedures.
In light of the foregoing, both the City Manager and staff have requested an increase in the bidding requirement threshold in order to allow the City to make necessary purchases to address City needs in an efficient and timely manner without bidding. It is worth noting that such purchases will still be subject to Council approval unless subject to another exception or within the City Manager’s spending authority and will always appear on the warrants list provided for approval at each Council meeting.
The City Attorney prepared an ordinance for Council consideration that will increase the current bidding threshold from $5,000 to $50,000. The effect of this change will be that supplies and equipment costing less than $50,000 will be exempt from bidding requirements and procedures. Ordinance No. 2024-146 was before the Council on August 19, 2024, and was introduced and set for hearing this evening.
Ordinance No. 2024-146 is before the Council this evening for waiver of reading, consideration of adoption and reading by title only.
At the August 19th meeting, the Council raised the issue of whether there was enough specificity in the proposed GCC amendment to Chapter 3.16 to ensure that the new spending authority was limited to the City Manager. As written, authority to use the purchasing procedures in Chapter 3.16 are vested in the City’s “purchasing officer.” By default in Gonzales, and as allowed by GCC Section 3.16.020 B, the City Manager has historically acted as the Purchasing Officer and has had oversight of all expenditures. As such, the new bidding threshold can only be used by and with the consent of the City Manager. We will bring an amendment to the City Manager’s Contract to this effect for Council consideration at the next Council meeting to reemphasize the limits of this authority.
The proposed Code amendment is not considered a project as defined by the California Environmental Quality Act (CEQA) (CEQA Guidelines Section 15378) because it will not result in or cause a direct or foreseeable indirect physical change on or in the environment.
Explain Recommendation and How it Supports the Vision.
Gonzales will continue to be a safe, clean, family-friendly community, diverse in its heritage, and committed to working collaboratively to preserve and retain its small town charm.
Explain: Adjusting the no-bid spending threshold will assist City staff and management in ensuring that the City’s Vision will continue to be supported by efficient and timely purchases of necessary equipment and supplies.
Explain how the Recommendation Directly Implements the Mission The City Council and Staff of the City of Gonzales will realize our Vision by providing the leadership, commitment and resources necessary to provide excellent services that enhance the quality of life of our diverse community. X Yes ____No ____NA
Explain: See above.
City services will be delivered in a cost-effective, respectful and friendly manner to ensure the safety and well being of the residents and the promotion of business, recreational, housing and employment opportunities in an environmentally sustainable manner. Yes ___No _X_NA Explain: See above.
Strong fiscal policies allow us to provide appropriate infrastructure for:
• Public Safety Yes ____ No X NA
• Housing Yes ____ No X NA
• Recreation Yes ____ No X NA
• Environment Yes ____ No X NA
• Education Yes ____ No X NA
Explain: NA.
ALTERNATIVES
• Adopt Ordinance No. 2024-146.
• Do not introduce the proposed Ordinance increasing the City’s bidding requirement threshold and provide staff with direction.
BUDGET IMPACT
There is no direct financial impact associated with the proposed modification of the GCC. All purchases will still need to be made within approved budgets.
CONCLUSION
It is recommended that City Council consider waiver of reading, adoption and reading by title only of Ordinance No. 2024-146, An Ordinance of the City Council of the City of Gonzales Amending Chapter
3.16- Purchasing Procedures of Title 3- Revenue and Finance of the Gonzales City Code to Increase the Bidding Requirement Threshold for the Purchase of Supplies and Equipment From $5,000 to $50,000.
PUBLIC NOTICE
A public hearing for this evening’s meeting was published in accordance with legal requirements.
Attachments:
1. Public Notice
2. Ordinance No. 2024-146