March 4, 2025
Finance Department
DATE: March 4, 2025
TO: Mayor Martinez and Members of the City Council
FROM:
Andrea Miller, Director of Finance
Mubeen Qader, Deputy Director of Finance
Jerry Gurule, Accounting Manager
Antonio Banuelos, Accounting Manager
Subject:
(This will appear on the agenda)
DebtBook Management Software Contract Amendment
No. 2
FINANCIAL IMPACT: The proposed funding expenditure is included within the Finance Department’s approved Fiscal Year 2024-25
budget (01175715-400201).
PREVIOUS COUNCIL
ACTION:
March 16, 2022
STATEMENT OF THE
ISSUE:
The Finance Department is seeking approval to exercise
the option for a one-year contract extension for DebtBook to aid staff in meeting Governmental Accounting
Standards Board (GASB) reporting requirements for
Debt, Lease and Subscription Based Information
Technology Arrangements
RECOMMENDED ACTION:
APPROVE second contract amendment with DebtBook
for software using the National Cooperative Purchasing
Alliance (NCPA) contract, to aid the City in meeting
Governmental Accounting Standard Board (GASB) 87
Accounting for Leases and GASB 96 Subscription-based
Information Technology Arrangements for a term of one
year beginning March 15, 2025, through March 15, 2026,
and increasing the payment limit by $14,581, for a total contract amount not to exceed $55,081 – Finance
AGENDA
REPORT
March 4, 2025
Department (Andrea Miller 510-620-6790/Mubeen Qader
510-412-2077/Jerry Gurule 510-620-6591).
DISCUSSION:
Every year, the Governmental Accounting Standards Board (GASB) issues accounting standards that affect how the City reports its financial information. DebtBook provides software to aid the City in meeting Governmental Accounting Standard requirements for GASB 87 Accounting for Leases and GASB 96 Subscription-Based Information Technology Arrangements reporting as well as Debt Management.
GASB 87, was issued to put the value of leases that a government has on its balance sheet and amortize those leases over the term of the lease. The standard applies to any lease agreement where the present value of the future lease payments is greater than $5,000. It also applies to leases, regardless of whether the City is the lessee or lessor.
The only exception is if both parties can terminate the lease within one year. If the lease can be terminated within one year, the lease is considered short-term, and short-term leases are not subject to this standard. GASB 87 also requires the City to work with the vendors to determine the implicit interest rate they are charging on the leases. If the vendor cannot provide the implicit interest rate, the City needs to use the lessee's incremental borrowing rate.
In combination with GASB 87, GASB 96 changes the way that Subscription-Based Information Technology Arrangements (SBITA), are reported on the financial statements, requiring governments to recognize a subscription liability and an intangible asset representing the government's right to use the subscription asset at the commencement of the subscription term.
Additionally, this software comes with the ability to track the City debt. Currently, the City's debt is tracked in several spreadsheets, and all debt-related documents are stored on a City’s network drive. This software allows much more dynamic debt reporting and the ability to store and track all debt documents in a secured centralized location.
On June 8, 2021, the National Cooperative Purchasing Alliance (NCPA) issued a competitive solicitation for Debt and Lease Management Software and Consulting Services. The contract was awarded to Debtbook on August 16, 2021. This purchase is in compliance with the Richmond Municipal Code Section 2.52.328, Cooperative Procurement, which allows the City to use cooperative solicitations if it is in the best interest of the City of Richmond.
City staff recommend that the City Council approve the Debt Book second contract amendment to exercise a one-year option to extend the contract with DebtBook and
March 4, 2025
take advantage of discounts. Increasing the payment limit by $14,581, for a total contract amount not to exceed $55,081 (Attachment 3).
DOCUMENTS ATTACHED:
Attachment 1 – Standard Contract
Attachment 2 – Amendment #1
Attachment 3 – Amendment #2