Recommendation to adopt Specifications No. RFP FM16-153 and award a contract to Kubra America West, Inc., of Tempe, AZ, for payment processing for City services, in an annual amount not to exceed $820,330, authorize a 20 percent contingency in the amount of $164,066, for a total annual contract amount not to exceed $984,396, for a period of three years, with the option to renew for two additional one-year periods; and authorize City Manager, or designee, to execute all documents necessary to enter into the contract, including any necessary amendments; and Authorize City Manager to eliminate the utility bill convenience fee for credit/debit cards and electronic checks as soon as implementation to Kubra America West, Inc. is complete. (Citywide)
Motion carries. 27. Report from Financial Management Recommendation to award a contract to COBRA American West for payment processing. For City Services. For a total annual contract amount. Not to exceed 984,396. And authorize the city manager to eliminate the utility bill convenience fee for credit, debit cards and electronic checks citywide. We have a staff report on this. Yes, we are. So. Our finest moment. Jon GROSS is with us tonight. And this is something that he's been working on at some time. I know it's been something that the city council has been trying to achieve for quite some time, and I think we're close to being there. So, John, thank you. Honorable mayor and council members. I don't often get to do anything as exciting as this is on the surface. We're recommending a contract for award to Cooper America West for payment processing. And payment processing is a a kind of a boring operation where they process credit cards and debit cards and check payments for city bills. But this is exciting because we're also making a staff recommendation to eliminate the convenience fee paid by utility customers to use use credit and debit cards and E checks. And the use of credit and debit cards to our customers will then be free for utility customers when they make payments. Right now, these utility customers pay $3.75 if they pay by credit or debit card and $0.95 that they pay by. E check. This will now be no charge and those completely free services will encourage more use of our fast and easy internet and telephone payment services. And we will now be able to offer mobile payment options on your phones at no additional cost. The overall cost of this contract, in addition to all that, is lower than the previous contract. When we look at the combined cost to the both the customer and of the city, however, by the city absorbing the convenience fees, the city utilities, not the general fund, but the city utilities that is refused gas and water will have an increased cost estimated at about $720,000 a year. Those extra costs will be absorbed into the normal cost of doing business. And I want to point out that that's very similar, if not identical, to the way the city already handles the cost of processing cash payments and the check payments that we receive for utilities. Those extra and those credit card costs, those are projections that could be higher if uses are higher. Overall, we believe that Cooper will be an excellent service provider, and we are very pleased to make the recommendation to eliminate utility convenience fees. That's the end of my report. I stand ready for any questions. Thank you very much, Mr. GROSS. And just to clarify, I think there's a couple of council questions as well. This is the elimination of that additional fee that we charge when someone tries to pay their utilities online, which is a constant complaint from the public. Is that correct? That is correct, except I would I would clarify that we don't actually charge we don't receive any money from those fees. It is a third party service provider. Okay. Thank you very much, Councilman Mongo. So I am 100% behind getting rid of the convenience fee. That is important. I also am curious as to. I am under the understanding that several years ago we had the opportunity to have our bank provider such as, say, Union Bank. Do this in house where we would be able to as a city, not have the 5%, where we would take 2%, they would take 2%. And that this $900,000 cost would not be burdened. I'm wondering why we don't bring some of these types of things in-house. We have quite a bankroll at Union Bank, and I'm interested in knowing what have we done in terms of exploring getting rid of the service charges that come from agencies like this? Councilmember We did a we did and a bid processing request for this. And and these were the cheapest services in terms of we do have some Citibank or some bank processing. But in terms of this particular service, we did we did do an open bid request. And we did analyze every proposal that came. And I don't believe there was one from Union Bank. Well, I think that part of it and again, I think that we need a little bit more time on this to discuss it more thoroughly is that we were asking for something very specific. So people who have those types of services responded to what we asked, and I wonder if we should be asking a different question. And so my thought would be to move forward on the elimination of the utility bill, convenience fee for credit, debit cards and electronic checks. What was the timeline on signing this contract? It is our intent to move as quickly as possible to sign this contract as the other one is expiring. We would we would need to explore. We would need to continue the next the old contract for a period of time. We think we can do that. But we would like to move on the new contract quickly so that we can begin the implementation of elimination of the convenience fees without the new contract. We're not in a position to do that. However, if there was more of a cooperative agreement with the banking system, we would be in a better position because there's actually is increasing costs to our city departments where at least according to your staff report. I can't I can't say that I can think of a relationship with the bank in a way that would reduce our costs below what we have. I may be mistaken on that, but I'm not aware of a mechanism that that would reduce our costs. I'd like to listen to either public comment and or my colleagues before I might have a few additional questions. Thank you. Councilman Austin, do you have any comments? Yes, I seconded the motion to support the item, but I do have a couple of quick questions. So the the elimination of the the service fee. Who does that benefit? Who does the elimination of the convenience fee benefit? It benefits directly the utility customers. It does not have any benefit to the city. It is intended to benefit and make life easier on our customers. So this is this is a benefit, direct benefit to our our constituents, our senior citizens, to the ratepayers in the city. It is a direct benefit to the people who pay utility bills, our residents and our citizens. Yes. And I didn't read it in the staff report, but is there a mechanism or will there be a report back to determine whether or not this is performing the way we want, that this contract is performing, the way we want it to perform after one year, after 18 months? I know there's a three year contract. Do we just reevaluate it then? Yes, we would reevaluate it then. If there was a problem with the service provider and with our reference checks, we honestly do not believe there will be. But this is a very important contract with something goes wrong with these services. I can't even begin to tell you how unhappy people are because they get sensitive about their money and they get sensitive about it very quickly. So we are we we believe this will be an excellent provider. If there is a service problem that is that continues, you will hear about it very quickly from us. Okay. Well, you have my full confidence. I support giving a break to our taxpayers and ratepayers to the city of Long Beach or in the city of Long Beach. And so I will be voting in support. Thank you. Thank you. Base me, Richardson. Thank you, Mr. Mayor. I just have a couple questions. So this makes a lot of sense to take steps toward removing that fee. I think it's a hassle. It's annoying. You know, I used to do that. Then I just switched over to online Bill Pay and just sent a sound check directly from my account just to avoid that fee. The question for me is about the process. So we hired this consultant and it says, and correct me if I'm wrong, it says not to exceed $984,000. Now, will that will that consultant actually remove the fee or is there some additional funding required or necessary in order to implement whatever changes the consultant recommends? Thank you for that question. I'll I'll try to clarify. The 984,000 is is not a consultant. It is a it is a service a service to process the payments that come in to the city, either by way of credit card, by way of debit card and to process e checks. And they provide an intermediate service between us and the banks. The banks typically do not get involved in this, so that is the service of processing an individual transaction. In addition, in terms of answering fully answering your question, there is an implementation process so that 984,000 back to the 984 is really a charge per transaction. We estimate based on the number of transactions that the cost will be 984,000. But if we had two transactions, the cost would be $6, something like that. We do have a cost that we estimate for implementation. There are 14 interfaces and and lots of all those interfaces have to be designed and. Programed. In addition, their computer changes and programing changes that need to be made. Those costs, we estimate, at $600,000 as a one time costs. Almost all of the costs, both the 984,000 and the 600,000 will be paid by utilities, not the general fund. So about 600,000. That's for the consultant. That is for about 200,000. Of that is for the consultant. The rest is for programing and other needs associated with implementing that. The final expense in order to achieve what we want to achieve. Will there be additional expenses beyond that? It is an estimate. It's the best estimate we can do. We do not change these services very often. We have spent a lot of time on those services. We have done some discussions with consultants. We think that 200,000 for the consultant is is on target. The rest in terms of programing, we have to get into it to see what's going on. But it is our best estimate, I will assure you. And we have utilities watching us. If we spend less, that's what we will do. If it turns out, we will need to spend more and we hope we don't. We would let the utilities know and they would be paying those costs. But our best guess is that 600,000 will do it. Thank you. And I feel a little bit more comfortable understanding that 200,000 of that is for consultant. The rub that I have here is that we pay a consultant to eliminate a fee before we've we opened up a RFP to go look for that service before we just checked around, who's already managing our money to say, hey , what would it take to expand your role to take on this service and we eliminate this fee? It seems like that would be a step that we should take. But I like the way this conversation is going, and thanks for a thank for your responses. Vice Mayor If I can clarify on that, because I think you raised some very good points. Yes. The consultant we're using or we would be using has not been selected. And yes and no consultant was used to date. So the whatever consultant we hire will not have had a role in what we've done so far. Thank you, Councilman Mongo. So is when we did the original RFP, did we consider purchasing our own merchant line so that we would run our own credit cards and be the processor in-house and save that money? No, we did. We did not. I'm not aware of of governments doing that. I actually can't comment too much on that. I can't think of a single government that has done that. I'm not saying they haven't. I don't know of any. And I would be concerned if we could as to why we would get into that. I can't tell you it's good or bad, but it would certainly be a major, major change in the way we operate and the expertize we would require in-house. So. I know that this has come up before. There are groups that have talked about this in the past and that it could be a significant savings to taxpayers. That's why we would explore it and that it would be through an addendum on potentially our banking contract or other contracts. So I'm going to I made the motion tonight. I'm going to be supportive of it. But I think that we also need to be creative about the future of how money is collected, the future of how people interact with money and the ways in which things are paid. Because as we move more and more online, these fees are being incurred at larger quantities of the tax bill. And the reason the convenience fee was initially added. It was not a Long Beach choice. It was the determination that we could not pay. That we could not collect different amounts from different types of people. If you pay online, you have to pay the exact same amount to the government as the people who build in a check. And that's where the convenience fee originated from. And there were several regional committees supported, both through GAG and other agencies talking about this challenge through the years. And so I know that people have come up with solutions. And I'd like for us, as we move forward, to look at those best practices, because at the end of this three years, I think that we're going to be looking at a very different banking system in terms of how how millennials interact with government, how our our taxpayers are interacting with government. So thank you for the information. And I look forward to the potential that at the end of this contract that we have a more creative solution in Councilwoman. One thing as you move forward and we move forward with that. One of the things we would be look at and that that I and I think the the 82 Tidd chief of department had have tried to avoid is getting involved in credit card processing that involves the type of security with credit cards. We have worked very diligently to this point to avoid having to maintain credit card numbers and maintain those things and do that kind of data processing security. So that's been an important I. Think that is a very wise choice. I also think that the the the menu of services available to us in the future is changing. And we need to instead of taking out the old RFP from years past and just regenerating over and over again, what we've always done be creative about the future to make sure that, I mean, $1,000,000 of processing is a lot of money and that's that's streets that sidewalks, that's a lot of trees. And so we need to talk through what are these creative solutions for the future? Thank you. Thank you, Councilman Price. Thank you and thank you to my colleagues for their thoughtful comments and, of course, staff. I think when our in-house financial expert starts off his staff report by talking about how excited. He is. About this item, it makes you think he needs a more exciting life. But also he rarely, you know, express his usually very, you know, objective and analytical on these items. So the fact that he's recommending this item makes me more drawn to it. At the same time, I think Councilwoman Mango has, as she always does, raised some very valid points regarding financial consequences and future considerations for us to have. So and it's really not my area of expertize, so I do defer to a lot of her comments in that regard because this is just not my area of expertize. But I think as she stated it well, you know, I support this item tonight, but of course, as we move forward, hopefully we start early with looking at things that even if other cities are aren't doing them, things that we might be able to do to reduce these costs associated with these in the future and see really to what level we can maybe even start a pilot in another context so that we can see what we can do in terms of our own application in this regard. So thank you very much for the staff report and for the conversation. Thank you. Vice Mayor Richardson, just a quick question. When does the banking RFP come up again? Do we know? Can I get back to you? Can I send you a note on that? I actually don't know. Okay. Sounds good. Thanks. Customer. Pearce I just wanted to say I really appreciated the comments of my colleagues, but definitely if you start off saying how excited you are, I think anytime we can look at reducing costs for the city and pass those on to residents, those costs add up. Whenever we have small fees like this. It's a small things that that hit us in our pocketbooks sometimes. So I appreciate the effort and the conversation and definitely we'll be supporting this. Thank you. And let me just add, just lastly, I want to thank everyone. I think those are some really good comments. And I particularly like the conversation around the future of banking because that is going to have a big impact on our services. But let me just say that this and believe me when I say this, this council will do a lot of things in our time together. There will be very few things that will be more popular than the one you're voting on tonight. The second it's implemented. And I guarantee you that the amount of correspondence that I get on this one issue is almost at the top of the list of things that come to my office and eliminating this burdensome additional fee for the taxpayer. This is an opportunity that we really have to essentially give something back to our constituents. And they're going to appreciate this so much and are going to be so happy that they don't have to pay that additional fee. That's a complex fee. And obviously there's reasons why we've had it in the past. But I just want to thank staff. You guys have worked been working on this incredibly hard. We've been talking about it for a long time. And we've come up with a solution that is a little burden to the city, but a huge benefit to all of our residents across the community. And so I just want to thank you for for doing that. Any public comment on this? Great. Let's vote.