January 24, 2023
Finance Department
DATE: January 24, 2023
TO: Mayor Martinez and Members of the City Council
Members of the Rent Board
FROM:
Shasa Curl, City Manager
Nicolas Traylor, Executive Director
Mubeen Qader, Acting Director of Finance
Subject:
Contract for Cost Allocation Plan
FINANCIAL IMPACT: The Matrix Consulting Group proposes to perform the tasks and services associated with developing a Cost
Allocation Study and Internal Service Charge Review for a fixed-price not-to-exceed fee of $17,290. Half of the fee will be paid from the City of Richmond General Fund
(01173415-400201) and the other half from the Rent
Program Operating Budget (11850065-400201).
PREVIOUS COUNCIL
ACTION:
N/A
STATEMENT OF THE
ISSUE:
City staff members are requesting that the members of
the City Council and the Rent Board review and approve
a contract to develop a Cost Allocation Plan with the
Matrix Consulting Group.
RECOMMENDED ACTION:
APPROVE a contract in the amount of $17,290 with
Matrix Consulting Group to develop a Cost Allocation
Plan to direct staff from the Finance Department and
Richmond Rent Program to prepare the Full Cost
Allocation Plans that adheres to both Government Code
Section 50076 and Richmond Municipal Code Section
11.100.060(l), for a term beginning January 18, 2023
through January 17, 2025 – Finance Department (Shasa
Curl/Nicolas Traylor/Mubeen Qader 510-412-2077). This
item was continued from the January 17, 2023,
meeting.
AGENDA
REPORT
January 24, 2023
DISCUSSION:
Background
In accordance with Section 11.100.060(l) of the Richmond Fair Rent, Just Cause for Eviction, and Homeowner Protection Ordinance, the amount of the Residential Rental Housing Fee will be determined by the City Council after a recommendation by the Rent Board is provided to the City Council. Prior to July 1, the Rent Board is required to hold a public hearing on a proposed budget and adopt an annual budget for the ensuing fiscal year (“FY”).
While developing the FY 2022-2023 Budget and Fee Study for the Rent Board to review, Rent Program staff members examined and analyzed the Fringe Benefits percentage (for Worker’s Compensation), Cost Pool for General Liability Insurance, Administrative Charges, and Civic Center Allocation provided by the City’s Finance Department (Budget). As these charges significantly impact the Residential Rental Housing Fee calculation, Rent Program staff met with Finance and the Human Resources Department in February 2022 to receive further guidance and clarification of the City-wide Cost Pool allocations and Workers Compensation - Fringe Benefits methodology. Rent Program staff was advised by the Finance Department that the Cost Pool amounts were anticipated to increase significantly.
The City issued a request for proposal in October and received bids from four vendors:
MGT of America Consulting, LLC
Matrix Consulting Group, LTD.
Maximus US Services
Willdan Financial Services
The Decision to award the contract to Matrix Consulting Group, LTD. was based on the proposal and the costs fitting the scope of the work.
Worker’s Compensation and General Liability Insurance
In late February 2022, the Worker’s Compensation and General Liability Insurance Cost Allocations were provided to the Rent Program. The amounts charged for each allocation were significantly more than the prior year. The Rent Program staff had requested for the methodology, calculation, Actuary Report, and Confidence Level support from Human Resources and Risk Management. The allocation and amounts were expected to be finalized in late May 2022. The Worker’s Compensation and
January 24, 2023
General Liability Insurance Cost Allocation methodology from Risk Management with the supporting Actuary Report required additional research and validation. Rent Program leadership engaged in on-going discussions with the City Attorney’s Office, City Manager, Human Resources, and Finance Department and agreed to engage a consultant to review the Worker’s Compensation and General Liability Insurance Cost Allocation methodology and charged amounts.
January 24, 2023
Cost Pool for Administrative Charges
The Finance Department provided the Rent Program the Cost Pool for Administrative Charges derived from the Cost Allocation Plan Report produced by NBS Consulting (“NBS”) in late March 2022. The allocation charged to the Rent Program for the Administrative Charges increased considerably from the prior fiscal year. The NBS Cost Allocation Plan Report is a “Title 2 CFR Part 200 Annual Cost Allocation Plan” as opposed to a “Full Cost Allocation Plan”. The NBS Cost Allocation Plan Report was intended to obtain reimbursement of overhead costs associated with State and Federal grants, not reasonably identify administrative overhead costs to receivers of services within an organization. In May 2022, the Finance Department provided a revised Cost Pool for Administrative Charges amount with an amended Cost Allocation Plan Report produced by NBS. The Rent Program staff had requested for the City to provide a Full Cost Allocation Plan that adheres to both Government Code Section 50076 and Richmond Municipal Code Section 11.100.060(l).
Rent Program leadership engaged in on-going discussions with the City Attorney’s Office, City Manager, Human Resources, and Finance Department and agreed to hire consultants for the development of a “Full Cost Allocation Plan” for proper allocation of Cost Pool for Administrative Charges that complies to both Government Code Section 50076 and Richmond Municipal Code Section 11.100.060(l).
Discussion
The City of Richmond issued a Request for Proposal (RFP) seeking a qualified firm/consultant to work with the Finance Department and Rent Program staff to prepare the Full Cost Allocation Plans that adheres to both Government Code Section 50076 and Richmond Municipal Code Section 11.100.060(l) (Attachment 1). The City’s goal is to establish and maintain well-documented, defensible, and legally consistent Plans that can be used to recover indirect administrative costs.
The City received four (4) vendor Proposals for review and consideration. The Request for Proposal Committee was comprised of staff from the Finance Department, City Manager’s Office, and Rent Program. The Committee completed the assessments and ratings for all four proposals. The proposal submitted by the Matrix Consulting Group (Attachment 2) to perform the tasks and services associated with developing a Cost Allocation Study and Internal Service Charge Review was rated the highest among the four consultants. The Committee is requesting for Members of the City Council to review and approve the proposal submitted by the Matrix Consulting Group.
Financial Impact
The Matrix Consulting Group proposes to perform the tasks and services associated with developing a Cost Allocation Study and Internal Service Charge Review for a fixed- price not-to-exceed fee of $17,290. Half of the fee will be paid from the General Fund and the other half from the Rent Program Operating Budget.
January 24, 2023
DOCUMENTS ATTACHED:
Attachment 1 – Request for Proposal – Full Cost Allocation Plan Attachment 2 – Contract - Matrix Consulting Group