DATE:
September 20, 2022
TO:
Mayor and City Council Members
Chair and Board Members, Hesperia Water District
FROM:
Nils Bentsen, City Manager
BY:
Casey Brooksher, Director of Administrative Services
SUBJECT:
Postal/Mailroom Equipment, Software, and Maintenance Lease
RECOMMENDED ACTION
It is recommended that the City Council and Board Members of the Hesperia Water District authorize the City Manager to execute an agreement with Quadient Leasing for postal/mailroom equipment including a document folder/inserter, postage meter, software, and maintenance for a five (5) year lease agreement for a total not-to-exceed amount of $69,185 (tax included).
BACKGROUND
The City/Water District’s existing lease agreement for postal/mailroom equipment is nearing its life expectancy, and the current five (5) year lease agreement is scheduled to conclude in November 2022. Due to the transition within Utility Billing to print/mail services for utility bills, the postal/mailroom equipment needed for other City services can be substantially downsized into a lease that is suited to the City’s remaining postal/mail needs.
ISSUES/ANALYSIS
Similar to the previous lease, the proposed new lease for postal/mailroom equipment includes a postage meter and folder/inserter, along with the related software and maintenance. However, the cost of the proposed new lease is approximately 60% less than the previous lease due to the substantial reduction in the capacity needs of the equipment, since Utility Billing has transitioned to print/mail services for utility bills.
While smaller in capacity due to the reduced needs of the City, the equipment in the proposed new lease is consistent with the previous system in that it will continue to weigh, measure, classify, and rate mail pieces at 75 letters per minute, and can also auto adjust the postage amount for extra thick envelopes or boxed packages. An additional software feature contains a component for certified mail pieces, which provides operational efficiencies in the processing of certified mailings by eliminating the need for writing and applying USPS return receipt cards to envelopes, saving approximately $1.20 per letter by providing a USPS digital signature in place of the card. The system also generates the USPS Form 3877 for documented proof of mailing.
Further, the shift to print/mail service for utility bills has enabled a substantial reduction in the capacity of the folder/inserter equipment, resulting in Animal Control and Building and Safety now becoming the primary users. The equipment is needed for animal licenses, business licenses renewals, and rental housing letters. Code Enforcement also utilizes the equipment to a lesser extent, and Finance/Utility Billing will also use the new equipment as part of the notification process for property liens resulting from delinquent utility bills.
Though there will be a reduction in overall equipment capacity, the new folder/inserter equipment will continue to accommodate the needed sheets of paper and return envelopes currently used by the above departments in their correspondence; the capacity will simply be reduced to more appropriate sizing for the City’s current needs. The new equipment offers functionality, utilizing three (3) tray feeders, to collate and fold up to eight (8) pages for insertion into a standard envelope, or up to ten (10) pages into a 6” x 9.5” envelope for situations where a larger quantity of information needs to be communicated.
A new lease is proposed as a cost effective alternative to purchasing equipment, as technological advancements that arise over the five (5) year lease period, along with the consistent use in the lifespan of the equipment, would result in the equipment having little to no value to the organization at the end of the lease term.
The City’s Information Technology (IT) Manager has reviewed the proposed postal/mailroom equipment and software specifications and concurs that the solution is consistent with the City standards and IT staff can continue to support the interface with existing City software/equipment. Entering into this lease agreement will provide needed continuity for City’s outgoing mail needs.
FISCAL IMPACT
The total cost of the five (5) year lease for the postal/mailroom equipment, software, and maintenance is $69,185 (tax included), with $10,378 due during FY 2022-23. The cost of the proposed new lease is approximately 60% less than the previous lease due to a substantial reduction in the capacity needs of the equipment. A five (5) year lease is recommended over an outright purchase of the equipment, as the lease agreement is approximately $24,900 less than the overall purchase cost, with estimated annual maintenance costs. As has been experienced with previous postal/mailroom equipment leases, due to the consistent use over the five (5) year life of the equipment and the technological advancements that arise during the lease period, the equipment will have little to no value to the organization at the end of the lease term.
Along with the reduction in the cost of the new lease resulting from the change in projected usage, the proposed allocation of cost is also shifting to general City operations to a greater extent, reflecting the substantial reduction in usage for Water operations. As such, the proposed cost allocation for the new lease is 74% City, with 24% allocated to Water. The Citywide projected usage analysis was conducted after the preparation of the FY 2022-23 Budget and, if the lease is approved, funds will be requested during the FY 2022-23 Midyear Budget Review for the first year of the lease where budgetary savings are not otherwise achieved.
ALTERNATIVE(S)
Provide alternative direction to staff.
ATTACHMENT(S)
None
City of Hesperia STAFF REPORT City of Hesperia STAFF REPORT City of Hesperia
STAFF REPORT
City of Hesperia
STAFF REPORT
Staff Report to the Mayor and City Council Members and Chair and Board Members of the Hesperia Water District Postal/Mailroom Equipment, Software, and Maintenance Lease September 20, 2022