STAFF REPORT TO THE CITY COUNCIL
DATE: Meeting of October 11, 2022
TO: Honorable Mayor and Members of the City Council
VIA: Dante Hall, City Manager
SUBMITTED BY: Edwin Gato, Director of Finance
SUBJECT: Cost Allocation Plan, Comprehensive User Fee and Development Impact Fee Studies Contract Award RECOMMENDED ACTION:
Staff recommends that the City Council:
Adopt a resolution authorizing the City Manager to execute a Professional Services Agreement between the City of Hercules and Revenue & Cost Specialist (RCS) in an amount not to exceed $75,400 to prepare a Cost Allocation Plan, Comprehensive User Fee Study and Development Impact Fee Study and approving a budget amendment to increase the FY 22-23 General Fund budget by $75,400.
FISCAL IMPACT OF RECOMMENDATION:
The General Fund will fund the recommended consultant award for not exceeding $75,400 for the Cost Allocation Plan, Comprehensive User Fee Study, and Development Impact Fee Study. There are sufficient funds in the General Fund to absorb the cost.
EXECUTIVE SUMMARY:
Cities can charge fees for the services they provide as long as the fee does not exceed the reasonable cost of providing services. The proposed agreement will enable the City to complete an updated fee study to verify and substantiate defensible and reasonable costs of providing services to the public. Completing the plans will allow the City to determine the appropriate fees that would recover the total cost of providing services and compare the City’s fees with other communities. It is a best practice to periodically update fee studies to reflect changing practices and costs.
BACKGROUND AND DISCUSSION:
On August 4, 2022, the City issued a Request for Proposal (RFP) from qualified consultants to provide the City with a Cost Allocation Plan, a Comprehensive User Fee Study, and Development Impact Fee Study. The RFP was closed on September 8, 2022.
The purpose of the RFP is to find and select a qualified vendor to update the City’s Cost Allocation Plan, User Fee, and Development Impact Fee. The proposed work plan includes the following primary components:
The development of a comprehensive Cost Allocation Plan includes an updated methodology that will ensure an equitable allocation of expenses related to administration and internal services. The City allocates administration and internal services costs to other funds and departments.
The User Fee study aims to accurately calculate the direct costs of providing services and, in conjunction with the identification of indirect costs in the Cost Allocation Study, determine the total costs of providing those services. This phase will also work with each department of the City to determine an appropriate fee structure. If a change to the current fee structure for any program is proposed, the Study will explain how the new proposed structure is legally compliant. Additionally, it will identify the maximum amount of fees for each system that is also fair, appropriately documented, and legally defensible.
The City assesses various development impact fees on new development and redevelopment to help the City pay for the new development activity's infrastructure. The City's impact fee program must comply with the Mitigation Fee Act (California Government Code Section 66000 et seq., also known as Assembly Bill 1600). The City is now seeking services from a qualified firm to update the general public facilities, parks and recreation facilities, and police facilities. The study shall provide sufficient information and the necessary findings to help the City determine the appropriate amount of development impact fees based on the proposed infrastructure requirements to support the City's General Plan growth projections and the City's Capital Improvement Plan. The City's impact fee program must comply with the Mitigation Fee Act (California Government Code Section 66000 et seq., also known as Assembly Bill 1600). The consultant is expected to work with City staff to determine other supporting infrastructure (i.e., equipment, vehicles, etc.) or other operational services that could rightfully be included in the fee program to ensure the costs of such supporting infrastructure are paid by development. The City would also like feedback from the consultant on recommended best practices to help provide better collections and any adjustments to municipal code if necessary.
The City received four responses to the RFP; below is the list of those firms and their proposed costs:
A selection committee for evaluation of the proposals was formed and consisted of the following members:
Mike Roberts, Public Works Director/City Engineer
Tim Rood, Community Development Director
Edwin Gato, Finance Director
The selection committee met and made their final selection on September 21, 2022. It evaluated the proposal based on criteria from the RFP, including experience with government agencies, price, timeline factors, and approach to the scope of work. Three of the firms were invited for an interview. During the interview process, the firm representative was asked to present the qualifications of their firm and assigned staff, as well as a summary of how they would conduct the studies. Each firm was then asked questions based on their submitted proposals. Although the selection committee determined that every bid came from a qualified firm, RCS has offered the most comprehensive level of service and best value in terms of fee.
From these results, staff recommends that the City Council award a contract to the Revenue & Cost Specialist (RCS) and authorize the City Manager to execute an agreement for the Cost Allocation Plan, Comprehensive User Fee and Development Impact Fee Studies.
ATTACHMENTS:
Attachment 1 – Resolution
Attachment 2 – Request for Proposal (RFP)
Attachment 3 – Professional Service Agreement