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Agenda Item
ASR
Control 16-000486 |
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MEETING DATE: |
05/24/16 |
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legal entity taking action: |
Board of Supervisors |
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board of supervisors
district(s): |
All Districts |
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SUBMITTING
Agency/Department: |
Treasurer-Tax Collector (Approved) |
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Department contact
person(s): |
Shari L. Freidenrich (714) 834-7625 |
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Paul Gorman (714) 834-2288 |
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Subject: Renew Agreement with
Official Payments for Electronic Payment Processing
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ceo CONCUR |
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Clerk of the Board |
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Concur |
Approved Agreement to Form |
Discussion |
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3 Votes Board Majority |
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Budgeted: N/A |
Current Year Cost:
N/A |
Annual Cost:
FY 2016-17 $73,333 |
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Staffing Impact: |
No |
# of Positions:
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Sole Source:
Yes |
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Current Fiscal Year Revenue: N/A
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Prior Board Action: 06/23/2015
#9, 07/22/2014 #9, 07/24/2012 #39, 07/17/2012 #33 |
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RECOMMENDED ACTION(S):
Authorize the County Purchasing Agent or authorized Deputy to renew and amend Agreement with Official Payments Corporation for electronic payment processing services in an amount not to exceed $80,000 commencing on August 1, 2016, through July 31, 2017, for a revised cumulative agreement amount not to exceed $530,000.
SUMMARY:
Authorization to renew and amend Agreement with Official Payments Corporation will allow the Treasurer-Tax Collector to be able to continue to accept credit card, debit card and eCheck payments online, by phone and in person for property tax bills and other County invoices and significantly reduce the cost of processing eChecks.
BACKGROUND INFORMATION:
The Treasurer-Tax Collector (Treasurer) provides credit card, debit card and eCheck payment options for property taxes and probation fees on the County’s website, the property tax interactive voice response (IVR) telephone system and at the public counter. Official Payments Corporation (OPC) collects a fee from the County for eCheck payments and a fee from the taxpayer for processing credit and debit cards.
In FY 2014-15, OPC processed almost 350,000 credit card, debit card and eCheck property tax payments totaling $1.27 billion, up from FY 2013-14 when OPC processed almost 310,000 property tax payments totaling $1.13 billion. Total payments to OPC from taxpayers to process property tax fees in FY 2014-15 for credit card and debit card transactions were approximately $3.6 million. Current property tax fees for taxpayers are 2.3% for credit and debit cards with a minimum charge of $3.95 or a $3.95 charge for VISA Signature debit cards. Total payments from the County to OPC for eChecks in FY 2016-17 are estimated at $80,000 reflecting a negotiated reduction in the eCheck charge from $.45 to $.20 per transaction, or a 56% reduction in County costs. Currently the eCheck option represents 19% of all property tax payments and is the most cost-effective way for the County to process payments. Providing this payment option at no cost encourages higher adoption rates and taxpayers’ use of eChecks has increased 100% since FY 2011-12. Usage of eCheck is expected to continue to increase, as it is the only on-line payment method that has no service fee. Because the eCheck option of $0.20 per payment approximates the cost to process a check and maintain appropriate records in the cashiering and accounting systems, this cost is absorbed by the County.
The Treasurer plans to issue a Request for Proposal (RFP) for these services prior to the expiration of this third and last renewal period of this Agreement.
Property Tax Payments History:
In 1994, the Board of Supervisors (the Board) approved the use of credit and debit cards for the payment of property taxes, approved a transaction fee schedule and authorized the fees to be paid by the card user as a convenience fee. In 1996, the Board approved a variable credit and debit card transaction fee schedule versus the flat fee previously authorized. In 2002, the Board approved a new agreement with Wells Fargo Bank that authorized a convenience fee of 2.50% of the transaction amount and the ability to process eChecks. In 2009, the Probation Department began online payments processing through this agreement. In 2012, the Treasurer negotiated lower credit and debit card convenience fees with Wells Fargo Bank who had partnered with OPC to provide the actual payment services and later that year the Board approved a new two-year agreement with OPC reducing the convenience fee to 2.30% with a $3.95 minimum and a $3.95 fee to process VISA Signature debit cards.
County audits in last three years
The County Internal Audit Department and the Auditor-Controller Internal Audit Division (these two Internal Audit groups were combined effective August 21, 2015) regularly audit compliance with the IPS as required by Government Code 27134 and a Treasury Oversight Committee directive. They performed the Annual Audit of Treasurer’s Investment Compliance for the calendar years 2013 and 2014 with no significant findings. They performed quarterly Continuous Compliance Auditing of the Treasury Investment Portfolio from March 31, 2013 through December 31, 2015 with no significant findings.
Prior Board Action
On June 23, 2015, the Board approved Amendment No. 2 to renew and amend the Agreement with OPC for electronic payment processing services for a one-year term effective August 1, 2015 through July 31, 2016 and compensation to be paid under this additional term shall not exceed $169,000. On July 22, 2014, the Board approved Amendment No. 1 to the Agreement with OPC for the first of the three successive one-year renewals effective August 1, 2014 through July 31, 2015. On July 24, 2012, the Board approved to renew and amend the Agreement as a sole source agreement with OPC that had a total five-year term, consisting of an initial two-year term and three one-year renewal options. On July17, 2012, the Board held a public hearing as to the proposed OPC fees for credit and debit card fees for the payment of taxes.
Sole Source Agreement
The sole source agreement with OPC provides for online credit and debit cards and eCheck processing services. The proposed Price Agreement is a sole source agreement, and a completed Sole Source/Proprietary Request Form is attached to this Agenda Staff Report. Continued service to taxpayers and users of County payment software using these payment types is necessary, while the Treasurer prepares an RFP that will be issued in FY 2016-17 prior to this last extension under the existing agreement. The County is exercising the final term of the contract and is satisfied with the performance of the vendor.
The Agreement is a standard agreement provided by Official Payments for these services. In order to receive these services from Official Payments services, the County was required to accept the terms and conditions in the proposed Agreement. The County negotiated several amendments, including allowing the County to terminate the Agreement should the Board not appropriate funds without penalty and changing the term of the Agreement. The terms and conditions deviate from the County’s standard terms and conditions including, but not limited to indemnification and the limitation of liability. Risk Management reviewed the agreement and amendment and determined that the risks of the proposed Agreement were minimal, and we believe that it is in the County’s best interest to approve the Amendment. This contract does not include subcontractors or pass through to other providers. See Attachment F for Contract Summary Form.
FINANCIAL IMPACT:
The General Fund cost associated with this contract (100%) represents the Treasurer's Net County Cost (Budget Control 100-074-1100-1913); the Countywide General Fund cost of this contract will be less than 100% when we consider approximately 31% offsetting revenue from the Property Tax Administration Costs (Budget Control 100-001-100-7310), which will be received in County General Purpose Revenue. (These are not 100% reimbursed as the School Districts and Community Colleges are not charged for their share of the billings related to the property tax bills.) The Agreement has a 30-day termination clause for convenience. Appropriations for this Agreement are included in the FY 2016-17 Recommended Budget and will be included in the budgeting process for future years.
STAFFING IMPACT:
N/A
ATTACHMENT(S):
Attachment A - Amendment No. 3 to Agreement No.
MA-074-12012200
Attachment B - Amendment No. 2 to Agreement No. MA-074-12012200
Attachment C - Amendment No. 1 to Agreement No. MA-074-12012200
Attachment D - Master Agreement No. MA-074-12012200
Attachment E - Sole Source/Proprietary Request Form & BidSync Approval
Attachment F - Contract Summary Form
Attachment G - Risk Assessment of Insurance Form