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Home My WebLink About09/06/1994, C-2 - RFP FOR COST OF SERVICES STUDY ETI ,111 11111 011 city o f San LUIS OB�Spo M 9'- jf :Q = COUNCIL AGENDA REPORT ITEM NUMBER: FROM: Bill Statler, Director of Finance SUBJECT: RFP FOR COST OF SERVICES STUDY CAO RECOM3ff DATION Approve request for proposals (RFP) for the preparation of a comprehensive cost of services study and authorize contract award by the CAO if the selected proposal is within the approved budget for this project. DISCUSSION Background Under the City's user fee cost recovery policy (pages B-4 through B-8 of the 1993-95 Financial Plan), service charges should be reviewed and updated on an ongoing basis to ensure that they keep pace with changes in the cost-of-living as well as changes in methods or levels of service delivery. In implementing this policy, the Council has adopted a strategy of comprehensively analyzing service costs at least every five years, with interim adjustments annually based on changes in the consumer price index. The last "benchmark" analysis was performed by Vertex Cost Systems in 1988. Accordingly, it is time to prepare a comprehensive evaluation of service costs and related revenues. This work effort was identified in.the 1993-95 Financial Plan, and $45,000 has been appropriated for this purpose. Project Workscope There are three major goals for this project: ■ Identifying the total cost of providing various City services. ■ Determining current cost recovery levels. ■ Setting fees and charges based on this analysis in accordance with the City's adopted user fee cost recovery goals. The focus of this study is on General Fund services (such as public safety, development review, parks & recreation); however, selected services and related charges in our enterprise operations (such as setting meters, starting new accounts, disconnecting service for non- payment) which reduce general purpose rate requirements will also be included in the workscope. MY Of San WIS OBISPO i COUNCIL AGENDA REPORT Specific tasks identified in the RFP include: ■ Reviewing existing policies, plans and cost of service information, and offering comments and recommendations for improvement as appropriate. ■ Identifying the total cost of providing various City services at the lowest reasonable activity level. In preparing this analysis, existing policies, plans and service cost information should be used to the maximum extent feasible. ■ Comparing these costs with existing recovery levels. This should include service areas where the City is currently charging for services as well as areas where we aren't but perhaps should be in light of our cost recovery policies and practices of other cities. ■ Comparing existing and proposed fees in key benchmark areas with those charged by other agencies in San Luis Obispo County as well as comparable cities outside of the County. ■ Recommending appropriate fees and charges based on this analysis in order to achieve adopted cost recovery levels. ■ Forming an opinion of the reasonableness of proposed City fees in light of City costs, service levels, policies, and practices of other agencies in California. ■ Developing and presenting findings in a manner that ensures understanding, confidence and credibility by operating staff, interested community members, and policy-makers in the overall work product. ■ Reporting on other matters that come to their attention in the course of their evaluation that in their professional opinion should be considered by the City. Evaluation and Selection Process A pre-proposal conference to review the workscope and answer any questions that prospective. bidders may have is scheduled for September 14; the proposal closing date is scheduled for September 29. After a "desk top" review of the proposals based on the evaluation criteria set forth in the RFP, finalists will be invited for a follow-up presentation/interview before a review committee composed of representatives from Administration, Finance, and the operating departments. Based on the results of their written proposal, oral presentation, and reference checks, the review committee will make its recommended selection to the CAO. It is anticipated that contract award will be made by November 1, and that work will be completed and presented to the Council by mid-January of 1995. Because we believe that the results of this analysis will play an important role in preparing the 1995-97 Financial Plan, it is important that they be considered early in the process. city of San suis OBISp0 COUNCIL AGENDA REPORT Prospective Bidders In addition to publishing a formal notice requesting proposals, the RFP will be mailed to a limited number of firms specializing in this type of review who have indicated their interest in performing this work. A list of prospective bidders is attached. FISCAL IMPACT The projected cost for this work is $45,000. Funding has already been appropriated by the Council for this study (1993-95 Financial Plan, page D-123). ALTERNATIVES Alternatives identified when the budget request for this study was presented for Council review as part of the 1993-95 Financial Plan process include: ■ Do Nothing. We can continue using the existing 1988 Vertex cost analysis as the basis for our current fees as modified by changes in the consumer price index. Based on our current policy that a comprehensive review be performed at least every five years, and the fact that it has been six years since the last benchmark analysis was performed, this alternative is not recommended. ■ Use In House Staff Resources. Although we possess the staff capabilities to perform this type of analysis in-house, this would be a major staff project consuming considerable resources. Basic day-to-day core services would suffer, and the report would not be prepared as timely. Further, there are advantages from a "credibility" perspective in having this type of analysis prepared by an independent, third party. An option would be to prepare an analysis with in-house staff that would not be as detailed or comprehensive as one prepared by a cost accounting firm, but would provide a reasonable, updated basis for setting fees. This would also require a significant investment in staff resources, but at a lower level than trying to match the caliber of the 1988 report. Either approach will require evaluating and reprioritizing existing activities, internal control procedures, and objectives in order to take on this project. Based on existing staff resources and commitments, and the need for confidence in the findings of this study by operating staff, community groups, and policy makers, preparation of this study by an independent firm specializing in this type of analysis is recommended. ATTACHMENT ■ Bidders list ON FILE IN THE COUNCIL OFFICE ■ Request for proposals for preparation of a comprehensive cost of services study C'-a2 t3 BIDDERS LIST COST OF SERVICES STUDY - SPECIFICATION NO. 95-18 Arthur Anderson KPMG Peat Marwick Atter Jim Warren Attn: Tom Snow 1 Market Plaza 725 Figueroa St. San Francisco, CA 94105 Los Angeles, CA 90017 (415) 546-8701 Municipal Resource Consultants Coopers & Lybrand Attn: Jeffrey L. Mikles Attn: Lynn Edelson 3550 Watt Ave., Ste. 140 350 S. Grand Ave. Sacramento, CA 95821 Los Angeles, CA 90071-3405 (916) 971-4732 David M. Griffith & Assoc., Ltd. Price Waterhouse 5715 Marconi Ave., Ste. A Attn: J. Michael Patterson Carmichael, CA 95608 150 Almaden Blvd. #1200 (916) 485-8102 San Jose, CA 95113 (408) 282-1200 Deloitte & Touche Attn: Don Amezcha Vertex Cost Systems 60 S. Market St. 500 Denton Tap, Ste. 125 San Jose, CA 95113-2303 Coppell, TX 75019 (408) 998-4000 (214) 462-7333 Ernst & Young Westhoff-Martin Financial Services Attn: Ed Kaempf 3675 Mt. Diablo Blvd., Ste. 350 555 Capitol Mall, Ste. 650 Lafayette, CA 94549 Sacramento, CA 95814 (510) 284-3804 (916) 449-3523