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Home My WebLink About0608.000Deceaber 13, 1990 HONORABLE CITY COUNCIL Palo Alto, calif~rnia Xembers at the Council: hR9.rt; iJl. Bri.f 8 As staff ~eported to council in CMR:515:0 on September 20, 1990, the vendor who vas processing utility bill payments discontinued service as of October 31, 1990. An evaluation of available alternatives ihdicated that In-housa processing of utilities pByaents was tha best option to ensure qualitY' service to the customers, with uninterrupted and accurate depositing of payments. The Finance Deparbaent beqan processinq utility bill remittances on November 1, 1990. Staft now requests that the council approve the attached Budget Amendment Ordinance to ccver the initial start-up expenses and the operations for September .1990 throuqh June 30, 1991. laal!:qroDDI! Since 1975, the city baa contracted with outside aqencies to provlc!e utility remittance processinq services i lockbox) .. Processinq of utility payments is an essential service to the City, and utilizing' outside i!IIgencie.s has previously provided a cost effective method. of rapid processinq and deposit of payments. The 10Ckb0~ service included the pickup of payments mailed to a post office box, processing and photocopying of those payments, endoralnq and depositing the checks into a City bank account, and transaittinq a coaputer t~pe of payment information to credit the appropriate individual customer utility accounts. CMR:608:0 •• o Dat.llft, the City's lockbox: contractor, notified the city on September 4, 1990, that they would permanently clos~ their facility on october 31, 1~90. Staft an~lyzed the alternatives and recom aended in-house processing: to allow tha SInooth continuation of utility bill processing. In CKR:519:0 (october 4, 1990}, staff esti-ated annual costs of approximately $100,000 to $125,000 and one-time costs of $10,000 to $20,000. Staff established a Palo Alto post office box in September 1990 and hired three teJIporary employees in October to process the payments. After receivlnq traininq, the new staff began processlnq utility payments on November 1, 1990. All payments have been deposited in the bank on the day received. At this time, the customer account is being credited for the utility payment on the day of the bank deposit or the follcr..,inq day~ This is much faster than the previous vendor's processing. As of November 21.. 1990, staff has incurred one-tiJlle costs of $9,500, pri.arily for the installation ot thR communication lines between the new locatiQn on Brjant Street and the computer in civic center, and the purchase of chairs, calculators and an electric letter opener. Staff anticipates additienal one-time expenses of approximately $2,500 for additIonal eq-.. iipme.nt during 199\)-91. Thus, the total one-time equipment expense for 1990-50.1 vill be $12.0ilO. As ot November 21, 1990, the operational costs have been primarily the cost ot the three temporary employees. Between October 15, 1990 and November 21, 1990, these employees have worked 544 hours at a cost to the city of approximately $7,400. For the 31 weeks from November 26 .. 1590 throuqh June 30, 1991, it is anticipated the temporary ~ployees will work 3,10~ hours for a cost to the city of $51,000. Thus, the total operational costs for the three temporary employees for 1990-91 are estimated to be $58,400. In addition to the temporary employees, there are operational costs for 9upplies, janitorial services, post office box expensas, facility utilities, transport services and other miscallaneous expenses. Staff estl.ates these expenses at ~2,OOO per month, or $16 .. 000 for the period November 1990 through June 1991. In sum, total operational costs for-1990-91 are estimated at $74.4ilO. Tbe total one-time equipment expenses for 1990-91 will be $12,000 and the total operational costs for 1990-91 vill be $74,400, resultlnq in I!l required funding of $86,400. The funds remaining in the account to pay the prior vendor, Oatalift, viII be used first, and the remaining funds viIl be taken from the Enterprise re6erves~ CHR: 608: 0 2 · . \ o "rwap.D~ Op.ra\loA Peraanent ltatt vill be requested as part ot the 1991-92 interim bu4qet. If the operation continues in its current (0%111., staff anticipates requeetinq three peraanent employees to replace the three te8porary amployees currently pertonDinq the function.. This request for employees miqht be reduced if automated equipment or out.ide services can more effectively perform some ot the func tions. Stat! believes the utility r~mittar.ce processinq p~ocedure can be improved with the purchase of automated equipment. The equipment would more quickly and accurately read the utility :bills and provide trans~ction records.. If staff recommends the purchase of lIutcmated equipment~ the request will be included in a future CApital IlIlprove.ent Project. Staff is also investigating the possibility of hiring an outsIde aqency to perform the basic data entry. staff intends to issue a request for proposal in early 1991 to investiqate possible enhancements to the system. Re o ouell4at.iOD Statf recommends that CotIncil approve the attachecS Budget A1llendlDent Ordinance in the amount ot $86., 400 to fund the current utility payment processing operations throu9h June 30., 1991~ Respectfully submitted, /~~,$~ GORDUN B. FORD ~~ Director of Finance lfILLJ:lIM: ZANER City Manager Attachment: Budget Amendment ordinance Related staff Reports: CMR:515 0 processing of utility Bill ~aymer.ts CKR:519 0 In-House PrQ9QB$ing of Utility Bill Remittances CMR:579 0 In-Rouse Utility Bill Processing CIIR:608:0 3 ORDIr/ANCR NO. ORDINANCE OF THE COUNCIL OF THE CITY OF PALO ALTO AlIEIIDING THE BUDGET FOR THE FISCAL YEAR 1990-91 TO PROVIDE AN ADDIrIONAL APPROPRIATION TO THE TREASURY DIVISION OF THE FINANCE DEPARTMENT FOR IN-HOUSE PROCESSIN~ OF UTILITY BILL REMITTANCES WHEREAS, pursuant to the provisions of Section 12 of Article III of the Charter of the City of Palo Alto, the Council on June 18, 1990 did adopt a budget tor fiscal year 1990-91; and W'REREAS. processinq of utility payments is an essential service to the City; and WHEREAS, the City's utility bill processing vendor, Datalift, discontinued service as of october 31, 1990; and WHEREAS, the Finance Oep,e.rtment, to ensure the continuation of quality custo.er s-erviee, beg-an processing utility bill remittances on November 1. 1990; and WHEREAS, start-up costs have been incurred, and ad4itional operational costs for staffinq and supplies will continue; and WHEREAS, there is appropriated money availabl~ in utilities Administration due to the unexpended Datalitt contract, and as the balance of the utility bill processing expenditures will be funded by the Entarprise Funds; NOW, THEREFORE, the Council of the city of Palo Alto does ORDAIN as follows~ SECTION 1. The sua of Seventy-five Thousand Five Hundred Dollars ($75,500) is hereby appropriated to the Treasury Division of the Finance oepart~ent and utilities Administration's Contract Services is reduced in the amount of Fifty Thousand Dollars ($;0,000). The Tventy-five Thousand Five HUndred Dollar ($25,500) ~lance is hereby f~~ed from the Enterprise Fund reserves in the follOWing &mounts: o $2,555 from the Water Fund System Improvement Reserve. e $1,960 froa the Gas Fund Transfer Stabilization Reserve. o $10,585 from the Wastewater-Fund System Improvement Reserve. o $9,670 rrom the Refuse Fund System Improvement Reserve. o $5,680 from the stora Drainage System Improvement Reserve. o The Electric FUnd Transfer Stabilization Reserve will increase by $4,950. • , . SECTION 2. This transactiQn will change the reserve balances a8 of July 1, 1990, as tollows: o The Water Syate. I.provement Reserve will be reduced from $122,242 to $119,697. o The GaB FUnd 'rransfer stabilization ~eserve will :be reduced from $1,852,194 to $1,850,234. o The Wa.t&water Fund System Iaprov~t Reserve ~ill be reduced ~ro. $2,741,480 to $2,730~895. C The .aetQse Fund system I Ilprovement Reserve wi 11 be reduced tram $4,950,532 to $4,940,862. o The stor. Drainaqe Fund System Improvement ~eserve will be reduced from $542,957 to $537,287. o The Electric Fund Transfer Stabiliz~tion Reserve will be incrsased from $11,856 t 164 to $11,861,114. $iCTIQH 3. The Council of the city of Palo Alto hereby finds that the enactment of this ordinance ie not a project under the California Environmental Quality Act and, therefore, no environmen tal i.pact assessment is necessary. ~IL!. Municipal Code, adoption. As provided in section 2.04.375 of the Palo Alto this or4inance shall become effective upon IIITRO!>UCED AND PASSED: AYES: HOES: ABSTENTIONS, ABSENT, ATl'l!ST, APPROVED, city Clerk Mayor APPROVED AS TO FORM: CUy Attorney APPROVI!D: city Manager Director of FInance DIrector of utIlitIes 90-1. 20