Agenda Item AGENDA STAFF REPORT ASR Control 13-000176
MEETING DATE:	02/26/13
legal entity taking action:	Board of Supervisors
board of supervisors district(s):	1
SUBMITTING Agency/Department:	Treasurer-Tax Collector (Approved)
Department contact person(s):	Shari Freidenrich (714)834-7625
	Jennifer Burkhart (714)834-6143

Subject: Approve Agreement with City of Westminster for water billing & payment services

ceo Concur	County Counsel Review		Clerk of the Board
Concur	Approved Agreement to Form		Consent Calendar
			3 Votes Board Majority
Budgeted: N/A		Current Year Cost: N/A		Annual Cost: N/A
Staffing Impact: No		# of Positions:		Sole Source: No
Current Fiscal Year Revenue: $5,520
Funding Source: City of Westminster Contract Revenue 100%
Prior Board Action: No

RECOMMENDED ACTION(S):

1. Approve Agreement with the City of Westminster to provide water billing and payment processing services for the period March 1, 2013 to February 28, 2018.

2. Authorize the Treasurer-Tax Collector to execute, on behalf of the County of Orange, the submitted Agreement with the City of Westminster.

SUMMARY:

The Treasurer-Tax Collector (“TTC”) requests that the Board of Supervisors approve the submitted Agreement with the City of Westminster (“City”) to generate the monthly water bills and process mailed payments through the TTC’s remittance processing unit on behalf of the City.

BACKGROUND INFORMATION:

Under Government Code Section 23008, the County is authorized to contract with any city or municipal corporation within the County to provide services or perform work whenever it is economical and satisfactory to do so. In addition, under section 51350, a County which provides services through its departments to any city shall charge the city costs incurred in providing such services.

The City contacted the TTC in June 2012 to discuss contracting with the County to issue their initial monthly water bills and associated payment processing. The City requested that TTC generate the monthly water bills in addition to depositing and processing mailed payments associated with these bills due to staff reductions at the City. The City currently generates approximately 120,000 water bills annually.

Currently, the TTC processes various invoices and delinquent invoices on behalf of County agencies. Over the past year, the TTC has been developing a standardized process for generating bills and processing payments to lower overall processing costs and timely deposit revenues. The TTC sets up each County agency with an identification code, uses standardized invoice formats, and depending on the volume, will set up separate Post Office boxes for mail delivery. The standardized invoices allow for some customization of invoices by the agencies, but maintain the cost-effectiveness of efficiently mailing invoices and processing payments. The TTC staff image all invoices and payments, and electronic files are sent to the agency for uploading into their systems.

Because the TTC has established a standardized process for processing billings and payments, we are able to handle this request from an outside agency in a manner that is cost-effective for the City. Under this proposed contract, the TTC will set up a separate Post Office box to receive the City’s mailed payments. The TTC will utilize existing contracts to have invoices printed and mailed for the City. The TTC staff will sort and open the mail, process the payments through the TTC’s remittance processing equipment and send a deposit file electronically to the City’s designated bank account. The TTC will also provide a data file and associated reports containing the payment information to the City along with images of the payment coupons and checks. The TTC will invoice the City monthly based on the contract charges. In addition, the TTC will invoice the City for the development and programming costs associated with all initial client set-up costs which the City has also agreed to pay.

The TTC estimates that the first year total costs for the City, including one-time set-up charges, will be $80,490 ($.785 per water bill), based on the estimated volume of 120,000 bills mailed and 72,000 processed payments. The TTC estimates ongoing annual costs in year two and subsequent years of $64,480 per year ($.652 per water bill). The City costs are further broken down into two parts. First, the TTC’s current costs of the payment processing services will be charged at a rate of $.115 per document (with a check and a payment coupon considered two separate documents). The TTC expects to process approximately 72,000 mailed payments annually (144,000 documents) for an estimated total of $16,560. The TTC costs include salaries, wages, benefits, services, supplies, as well as department and County (CWCAP) overhead. The TTC contracted costs for printing and mailing, excluding postage, are estimated at $18,400 based on 120,000 annual bills ($.153 per bill) with no additional County mark-up. If TTC’s contracted rates for printing and mailing change, the actual costs will be provided to the City and charged effective the new contract date. In addition, the TTC will charge the City monthly, the actual postage costs, with current first class bulk postage rates at $.384 (two ounces). Finally, the TTC will bill the City for the contracted fixed costs and actual postage rates based on actual service usage monthly. If payment is not made within 30 days of the invoice date, the TTC will charge late payment penalties in accordance with County Billing Policy.

A copy of the Agreement is on file with the Clerk of the Board

FINANCIAL IMPACT:

The City is 100% responsible for all costs related to this agreement. The TTC expects to receive revenue of approximately $17,000 per year based on the assumption of 72,000 mailed payments processed to offset County staffing costs.

STAFFING IMPACT:

None – The TTC, through economies of scale, can add some additional processing without having to add additional staff at this time due to the monthly nature of this billing.

REVIEWING AGENCIES:

County Counsel

EXHIBIT(S):

Exhibit A - Agreement with City of Westminster

ATTACHMENT(S):

Government Code Section 23008 and 51350