sr-011910-1gC7®
c;tror City Council Report
Santa Monica
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City Council Meeting: January ~, 2010
Agenda Item: I -~
To: Mayor and City Council
From: Carol Swindell, Director of Finance
Subject: Lockbox Services for Utility Payments
Recommended Action
Staff recommends that the City Council authorize the City Manager to negotiate and
execute athree-year contract, with two one-year options to extend for a total amount
not to exceed $132,300, with RT Lawrence Corporation to provide lockbox payment
processing services for utility payments.
Executive Summary
The City requires lockbox services at an estimated annual cost of $25,000, including
contingency to receive, process. and deposit to the City's bank account mailed in
payments for utility services plus initial cost of $7,300 authorized via a purchase order.
The City issues 104,000 invoices annually, of which 40% are paid electronically and
payment for the remainder are mailed in. The City's current lockbox service provider,
Bank of America, has informed the City that they will no longer offer this service thus
requiring selection of an alternate provider.
Discussion
The City requires lockbox services to receive, process and deposit to the City's bank
account payments for utility services billed through the City's software system. The City
mails 2,000 invoices each week, a total of 104,000 invoices mailed. annually.
Approximately 60% of payments are mailed in and the remainder are paid electronically
by telephone, on-line or via over-the-counter payment methodology. Lockbox services
were previously provided by Regulus as part of the City's contract with Bank of America.
These services ended December 31, -2009. In order to ensure continuity of lockbox
services, a Purchase Order in the amount of $7,300 was issued to RT Lawrence
Corporation on November 18, 2009, to cover the initial set up costs of the new provider.
The proposed contractor will provide a lockbox facility to which utility account holders
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will mail payments. Contractor's staff will open the envelopes, inspect the contents,
reconcile the payment to the remittance statements, prepare deposits and forward
payments to the City's bank for deposit to the City's account. The contractor will
produce daily data files that will be transmitted electronically to the City in a specified
format for uploading to the City's billing system for posting of payments.
Contractor/Consultant Selection
A request for proposals for lockbox services was issued on August 7, 2009. Responses
were received from RT Lawrence, Retail Lockbox, Bank of the West, J.P. Morgan, FMS
Infoserv, US Bank, and Wells Fargo Bank. The responses were evaluated by an
interdepartmental committee composed of representatives of the Finance and
Information Services departments. RT Lawrence currently provides lockbox services for
utility payment processing for cities and water districts/authorities in California, as well
as Santa Monica Community College. RT Lawrence was selected on the basis of
pricing, complete responsive to the RFP requirements, and quality and scope of
services.
Financial Impacts & Budget Actions
For FY 2009-10, funds are available in Account 01224.556010 Utility Billing Supplies.
Funds for future years will be included as part of each year's proposed budget.
Prepared by: Pamela McGarvey, Revenue Collection Administrator
Approved: Forwarded to Council:
;Carol Swindell
Director of Finance
Manager
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