City Council Memorandum
TO: HONORABLE MAYOR AND CITY COUNCIL DATE: FEBRUARY 15, 2022 FROM: FINANCE DEPARTMENT WARDS: ALL
SUBJECT: APPROVE PROFESSIONAL CONSULTANT SERVICES AGREEMENT WITH LANCE, SOLL, LUNGHARD, LLP FOR LEASEQUERY GASB 87 AND LEASE MANAGEMENT SOFTWARE SOLUTION, IN THE AMOUNT OF $205,801 PLUS A 25% CONTINGENCY, FOR A TOTAL OF $257,251 FOR THE INITIAL TERM THROUGH DECEMBER 31, 2024, WITH THE OPTION TO EXTEND FOR TWO ADDITIONAL ONE-YEAR TERMS FOR A TOTAL AMOUNT OF $366,102 ISSUE:
Approve Professional Consultant Services Agreement with Lance, Soll, Lunghard, LLP for LeaseQuery GASB 87 and Lease Management software solution, in the amount of $205,801 plus a 25% contingency, for a total of $257,251 for the initial term through December 31, 2024, with the option to extend for two additional one-year terms for a total amount of $366,102.
RECOMMENDATIONS:
That the City Council:
Approve Professional Consultant Services Agreement with Lance, Soll, Lunghard, LLP for LeaseQuery GASB 87 and Lease Management software solution, in the amount of $205,801 plus a 25% contingency, for a total of $257,251 for the initial term through December 31, 2024, with the option to extend for two additional one-year terms for a total amount of $366,102; Authorize the City Manager, or designee, to execute all term extensions in the total amount of $87,081 plus a 25% contingency in the amount of $21,770 for a total of $108,851; and Authorize the City Manager, or designee, to execute the Professional Consultant Services Agreement with Lance, Soll & Lunghard, LLP and any other documents necessary to effectuate the agreement, including making minor non-substantive changes and all optional contract extensions.
BOARD RECOMMENDATIONS:
This report is published on February 3, 2022, for the February 15, 2022 City Council meeting.
On February 14, 2022, the Board of Public Utilities will hear this item for consideration.
That the Board of Public Utilities:
Approve an expenditure for a total amount not to exceed $88,369 for the Riverside Public Utilities portion of cost associated with RFP 2086 for software to support the implementation of GASB 87 and lease management, with Lance, Soll & Lunghard, LLP, for a three-year term with the option to extend for two additional one-year terms through December 31, 2026.
Therefore, if the Board and Committee approves the expenditure, staff requests that the City Council approve this item at the February 15, 2022, City Council meeting.
BACKGROUND:
The Governmental Accounting Standards Board issued GASB Statement No. 87, Leases, essentially eliminating the concept of off-balance sheet financing, requiring organizations to recognize equipment and real estate type leases as assets and liabilities on the balance sheet. Under GASB 87, a lessee government is required to recognize: (1) a lease liability; and (2) an intangible asset representing the lessee’s right to use the leased asset. A lessor government is required to recognize: (1) a lease receivable; and (2) a deferred inflow of resources. A lessor will continue to report the leased asset in its financial statements.
The requirements of GASB 87 are effective for the City’s fiscal year beginning July 1, 2021 (fiscal year 2021/22). The City is party to lease agreements as both a lessee and lessor for various types of property, including real estate and equipment. The City has estimated approximately 450 leases citywide spanning across multiple departments; however, it is likely a significant portion of these leases are not GASB 87 relevant, but instead will be recorded and monitored in the new software solution for lease management purposes. Current lease information is stored in a variety of ways across the City including electronic and printed contracts retained by the departments, Microsoft Excel worksheets, and ePropertyPlus, which is currently used by the City’s Real Property Services division to manage property leases; the actual number of City-wide leases is unknown at this time.
The current software solutions utilized by the City do not offer the capability to record and track leases that adhere to the new accounting standard. Finance staff met with Riverside Public Utilities and Community & Economic Development staff to determine the needs and capabilities required for a new lease software solution to help ensure one single software could meet the City’s lease recording and tracking reporting requirements. In order to streamline the lease recording and tracking process and to adhere to the new GASB 87 standard, it was determined that a new software solution would be required. Additionally, given the COVID-19 pandemic, current staffing levels and workloads, it was determined that a consultant would be needed to obtain, analyze, and record the 450+ leases under the new standard.
DISCUSSION:
On April 6, 2021, RFP No. 2086 was posted on PlanetBids to solicit proposals from qualified consultants to submit proposals for a GASB 87 and Lease Management software solution. A total of 35 prospective vendors registered for the RFP. Of those 35 vendors, seven elected to respond. The RFP closed on May 10, 2021, and proposals were received from seven consultants in response to the RFP; five were found to be responsive.
On August 30, 2021, seven staff members from the City’s Finance Department, Community and Economic Development Department, Riverside Public Utilities Department, and Innovation and Technology Department completed the review, interviews, evaluation and scoring of the proposals on qualifications, pricing, experience, professional references, and approach and methodology. Consultants were evaluated on the basis of the following criteria:
Qualifications (25%)
Pricing (15%)
Experience (Projects of similar size and scope) (30%)
Professional References (10%)
Approach and Methodology (20%)
Lance, Soll & Lunghard, LLP (LSL) received the highest scores and was chosen as the most qualified. Although Lance, Soll & Lunghard, LLP’s pricing was not the lowest, the combination of the weight factor for pricing and the higher scores in qualifications, experience, professional references, and approach and methodology established them as the most qualified consultant to complete this project.
LSL will assist the City with implementing LeaseQuery GASB 87 and Lease Management software solution with the end goal of being in compliance with Governmental Accounting Standards.
The staff is requesting a 25% contingency to cover the cost of unknown transactions that could potentially meet the GASB 87 standard. Any transactions that fall within the contingency will be charged to the correct fund. The contract costs are associated with the number of leases owned by each fund.
The Purchasing Manager concurs that the recommended actions are in compliance with Purchasing Resolution 23812.
STRATEGIC PLAN ALIGNMENT:
This item contributes to Strategic Priority 5 – High Performing Government and Goal No. 5.2, utilize technology, data, and process improvement strategies to increase efficiencies, guide decision making, and ensure services are accessible and distributed equitably throughout all geographic areas of the City.
The item aligns with each of the five Cross-Cutting Threads as follows:
Community Trust – The consulting services and new software will enhance transparency regarding the number of leases and corresponding assets and liabilities associated with those leases.
Equity – This report is neutral towards this cross-cutting thread.
Fiscal Responsibility – The consulting services and new software provide fiscal responsibility and accountability by tracking the amounts of the City leases and will further enhance the City’s ability to track its finances.
Innovation – The new software is the most to up to date software available to track and report on all of the City’s leases mandated by the new GASB 87 standards. This will enhance efficiency and financial transparency related to these leases.
Sustainability & Resiliency – The consulting services and new software will enhance the City’s ability to track and maintain lease obligations and rental assets. With the new tracking, the City will have better tools available to make sound financial decisions.
FISCAL IMPACT:
The total fiscal impact of this action is $257,251. The cost for year one, including the 25% contingency, is $159,125. Sufficient funds for initial contract year are budgeted and available in the accounts listed below. Future years’ funding will be included as part of the biennial budget process. * Includes 25% Contingency
Prepared by: Nancy Garcia, Controller
Certified as to
availability of funds: Edward Enriquez, Chief Financial Officer/City Treasurer Approved by: Kris Martinez, Assistant City Manager
Approved as to form: Phaedra A. Norton, City Attorney
Attachments:
Professional Consultant Services Agreement
Request for Proposal
RFP Award Recommendations
Presentation
GASB 87 and Lease Management Software Solution ● Page 5