City Council
Memorandum
TO: HONORABLE MAYOR AND CITY COUNCIL DATE: FEBRUARY 28, 2023 FROM: PUBLIC UTILITIES DEPARTMENT WARDS: ALL SUBJECT: PROFESSIONAL CONSULTANT SERVICES AGREEMENT, FROM RFP NO. 2230 FOR DELINQUENT DEBT COLLECTION AGENCY SERVICES, WITH CEDARS BUSINESS SERVICES, LLC, OF CALABASAS, CALIFORNIA, IN THE AMOUNT OF $300,000, FOR A THREE-YEAR TERM THROUGH DECEMBER 31, 2025, WITH THE OPTION FOR TWO ADDITIONAL ONE-YEAR TERMS, IN THE ANNUAL AMOUNT OF $100,000 ISSUE:
Approve a Professional Consultant Services Agreement from Request for Proposal No. 2230 for Delinquent Debt Collection Agency Services with Cedars Business Services, LLC. of Calabasas, California, in the amount of $300,000, for a term through December 31, 2025, with the option for two additional one-year terms, in the annual amount of $100,000.
RECOMMENDATIONS:
That the City Council:
Approve a Professional Consultant Services Agreement from Request for Proposal No. 2230 for Delinquent Debt Collection Agency Services with Cedars Business Services, LLC. of Calabasas, California, in the amount of $300,000, for a term through December 31, 2025, with the option for two additional one-year terms, in the annual amount of $100,000; and Authorize the City Manager, or designee, to execute the Professional Consultant Services Agreement with Cedars Business Services, LLC, included making minor and non-substantives changes and the contract extensions.
BOARD RECOMMENDATION:
On February 13, 2023, the Board of Public Utilities unanimously voted to recommend that City Council approve a Professional Consultant Services Agreement from Request for Proposal No. 2230 for Delinquent Debt Collection Agency Services with Cedars Business Services, LLC. of Calabasas, California, for a term through December 31, 2025, with the option for two additional one-year terms, in the annual amount of $100,000.
BACKGROUND:
Riverside Public Utilities (RPU) Customer Service Division collects payments for Electric, Water, Wastewater, and Refuse charges from customers for services provided. In the event that RPU staff members are unsuccessful with collecting the full amount due from inactive accounts, an external collection agency is used to collect the past due amounts. RPU has not used the same external collection agency as is contracted by the City’s Finance Department. The collection efforts involve specific scopes of work unique to the collection of unpaid utility amounts.
The first contract for professional collection agency services was approved by the Board on January 5, 2007. Since 2007, the contracts for collection agency services were determined to not require approval from the Board of Public Utilities or the City Council. An abbreviated history of RPU’s contracts for collection services is outlined in the following table.
Agency Name
Location
Contract Start Date
Term
Compensation (% of Debt Collected)
Board Approval
Progressive Asset Management
Simi Valley, CA
1/18/2007
Up to 5 years or 1/8/2012
25%
1/5/2007
Sequoia Financial Services
Glendale, CA
4/19/2009
Up to 5 years or 4/19/2013
23% or
27% if a suit is authorized
Not required
Sequoia Financial Services
Glendale, CA
7/31/2013
Up to 12/31/2017
23% or
27% if a suit is authorized
Not required
Sequoia Concepts dba Sequoia Financial Services
Agoura Hills, CA
10/1/2014
Up to 5 years or 10/1/2019
23% or
27% if a suit is authorized
Not required
Sequoia Concepts dba Sequoia Financial Services
Agoura Hills, CA
3/5/2018
To 12/31/2022
23% or
27% if a suit is authorized
Not required
DISCUSSION:
RPU has a greater need than in previous years for the services of an external collection agency. Many of the unpaid and inactive utility accounts have higher unpaid balances than before the COVID-19 pandemic. This may be a result of the economic challenges many experienced throughout the pandemic in addition to the pause placed on service disconnections for non-payment for several years. Under the Board and City Council approved Restart Program, all active customers with past due utility accounts continue to be offered payment plans and other assistance programs to help customers pay off any outstanding charges that occurred during the pandemic. RPU’s collection balances include amounts for the Public Works Department charges for wastewater and refuse services which are collectively billed with water and electric services.
On August 18, 2022, staff issued Request for Proposal (RFP) No. 2230 for full-service collection agencies to provide RPU revenue collection services for inactive and delinquent accounts. On September 21, 2022, proposals were received from 11 agencies.
The City’s Finance Department/Purchasing Division personnel provided oversight to the proposal review team of RPU Customer Service, Credit and Collections, Finance and Public Works staff who reviewed, evaluated and scored the proposals received based on the following criteria:
Approach and Methodology 30%
Experience 25%
Qualifications 20%
Cost Evaluation 15%
Professional References 10%
The three (3) highest rated consultants were then selected to participate in an interview with the proposal review team and were evaluated per the criteria above. The demonstration of the system model gave the consultant the opportunity to share their model and explain how it was developed and how to use it to meet the objectives of the City. The panel was looking for a complete and flexible model that was user friendly for customers to easily navigate while also being robust and comprehensive enough for a utility like RPU with clear reporting of the end results.
The table below includes the proposal amounts and rankings for RFP No. 2230:
Company
City, State
Compensation (% of Debt Collected)
Compensation if Suit authorized
Proposal Rank
Cedars Business Services, LLC
Calabasas, CA
16%
30%
1 Financial Credit Network, Inc.
Visalia, CA
21%
31%
2 Sequoia Financial Services
Agoura Hills, CA
19%
33%
3 I.C. System, Inc.
St. Paul, MN
18.5%
40%
4 RSI Enterprises, Inc.
Glendale, AZ
17%
30%
5 Ray Klein, Inc.
Springfield, OR
18%
25%
6 Collection Bureau of America, Ltd.
Hayward, CA
25%
35%
7 States Recovery Systems, Inc.
Rancho Cordova, CA
17%
24%
8 FEDChex Recovery, LLC
Orange, CA
16%
35%
9 Online Information Services, Inc.
Winterville, NC
21%
21%
10 Collection Service of Nevada
Reno, NV
22%
50%
11 Cedars Business Systems (Cedars) received the highest score and was chosen as the most qualified firm for the in-depth analysis and expertise needed for the project. The scores included a combination of pricing, proven experience in the tasks, professional references, demonstration of the system model, responses to questions from the review committee, and overall project approach.
Cedars was founded in 1991 and provides account receivable management solutions throughout the United States and across the globe. Cedars currently serves 68 government clients including cities, counties, state agencies and state-run universities focusing on debt categories including utilities, public universities, commercial debt, and miscellaneous accounts owed to city and county finance departments amongst others. Cedars’ average government client recovery rate is 27%. Cedars offers a consumer payment portal allowing individual management of tasks to resolve delinquent account(s) with the City, account reminders and a Putting People First approach to deliver excellent client service, while remaining on the forefront of technology and collection-techniques while looking to resolve debt.
The Purchasing Manager concurs that the recommended actions are in compliance with Purchasing Resolution No. 23914.
STRATEGIC PLAN ALIGNMENT:
This item contributes to Strategic Priority 5 – High Performing Government, and Goal 5.4 – Achieve and maintain financial health by addressing gaps between revenues and expenditures and aligning resources with strategic priorities to yield the greatest impact.
The item also aligns with each of the five Cross-Cutting Threads as follows:
Community Trust –The Delinquent Debt Collection Agency Services contract used a public RFP process, involving the Board and City Council, with timely and reliable information to serve the public interest.
Equity – The Delinquent Debt Collection Agency Services serves to collect unpaid dept from inactive accounts to keep the costs lower for current and future ratepayers.
Fiscal Responsibility – The Delinquent Debt Collection Agency Services is a prudent steward of ratepayer funds.
Innovation – The Delinquent Debt Collection Agency Services contract includes additional payment options for customers to meet their needs.
Sustainability & Resiliency – The Delinquent Debt Collection Agency Services helps maintain the commitment to maintaining the financial health of RPU for all ratepayers.
FISCAL IMPACT:
The total cost for the Professional Consultant Services Agreement is for a three-year term for a total sum not to exceed $100,000 annually. Consultant shall be paid 16% on amounts collected for City as Consultant’s compensation, on all second placement accounts referred (i.e. accounts previously referred and returned to City from other collection agencies), consultant shall be paid on amounts collected for City after suit is authorized by City. Consultant shall on a monthly basis and within 30 days of receipt, send the total amount of all payments received to City. City will then remit compensation payments to Consultant. Sufficient funds are budgeted and available in the Electric Fund, Public Utilities Admin, Professional Services account number 6015000-421000.
Prepared by: Todd M. Corbin, Utilities General Manager
Certified as to
availability of funds: Edward Enriquez, Interim Assistant City Manager/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
Award Recommendation
Presentation
RFP No. 2230 – Delinquent Debt Collection Agency Services ● Page 2