May 3, 2022
Finance Department
DATE: May 3, 2022
TO: Mayor Butt and Members of the City Council
FROM:
Delmy Cuellar, Acting Director of Finance
Antonio Banuelos, Accounting Manager
Subject:
Contract for Collection Services
FINANCIAL IMPACT: Approval of this contract will not have a direct impact on the existing budget. The service fees are deducted as a percentage of debts owed to the City for delinquent
accounts.
PREVIOUS COUNCIL
ACTION:
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STATEMENT OF THE
ISSUE:
The Finance Department generates hundreds of invoices
per year that requires a billing and revenue collection service to manage the delinquent accounts. City staff is requesting approval of a contract with Rash, Curtis &
Associates to provide these services to assist with
increasing revenue.
RECOMMENDED ACTION:
APPROVE a three-year contract with Rash, Curtis &
Associates to provide collection services in the Finance Department, with costs for services paid on a
contingency fee of revenue collected, with an option to renew the contract for two years based on the same
terms if approved by both parties – Finance Department
(Delmy Cuellar 510-620-6740/Antonio Banuelos 510-
620-6741).
AGENDA
REPORT
May 3, 2022
DISCUSSION:
The City of Richmond currently does not have a collection services contract. On an annual basis, the City generates approximately 350 invoices with an approximate dollar value of $3,500,000 for debts incurred by the general public. Currently, the City has approximately $275,000 in unpaid invoices dating 90 days old to several years old in the general accounts receivable module. Additionally, there may be other unpaid items such as fire permits, business taxes, and returned checks among other items that could benefit from the use of a collection agency to assist with increasing revenue collection.
The Finance Department will continue making efforts to collect the various items due to the City. The Administrative Manual—Policy Statement AP251 was established to provide guidance for assuring that accounts receivable are not misstated, that delinquent accounts receivable are identified, and that the delinquent accounts are removed from (written off) the books of the City as appropriate. Once items are written- off, City staff will then submit the items to the collection agency.
On July 19, 2019, the Rent Program issued a Request for Proposals (RFP) for Collection Services (Attachment 2). 924 vendors were notified of the solicitation, 15 vendors downloaded the proposal, and five responses were received. After careful consideration, Rash, Curtis & Associates was selected as the vendor most qualified to provide collection services. Finance staff reached out to 10 governmental agencies to research their contracts and rates with various collection agencies and received six responses. Of the six responses received, three agencies indicated that they are not using a collection agency. Finance staff concluded the proposed contract with Rash Curtis to be the most competitive. In particular, the contingency fee rate was the lowest Finance staff identified amongst the various contracts with public agencies - the maximum cap provision of $10,000 guarantees that if larger collection is secured, the most the City would be charged per account is $10,000. Finally, the pre-collection provision guarantees the City is not assessed a fee if the delinquent account is paid within the first fifteen days after being sent to collection.
This procurement is in compliance with the Richmond Municipal Code Section 2.52.330, Piggyback Procurement, which allows for the City to piggyback onto another agency’s solicitations if it is in the best interest of the City of Richmond. Thorough investigation of the current market was made, and it was determined that the Rent Program’s solicitation is the most advantageous.
Approval of this contract will provide the City with the necessary resources needed to collect delinquent accounts. City staff members are proposing that the City contract with Rash, Curtis & Associates to conduct this work.
DOCUMENTS ATTACHED:
Attachment 1 – Standard Contract
Attachment 2 – RFP for Collection Services