SR-03-19-2013-3ECity Council Meeting: March 19, 2013
Agenda Item: 3 -�
To: Mayor and City Council
From: Gigi Decavalles- Hughes, Director of Finance
Subject: Modification to Agreements with IPS Group, Inc. and TransFirst Health
and Government Services, Inc. for Annual Operating and Maintenance
Costs for Single -Space Parking Meters
Recommended Action
Staff recommends that the City Council authorize the City Manager to negotiate and
execute the following contract amendments to provide credit card processing services
for single space parking meters:
1) an amendment to contract no. 9496 (CCS) with IPS Group, Inc., a California -
based company, in an annual estimated amount of $600,000 for a new contract
annual operating amount of approximately $1.2 million;
2) an amendment in the amount of $3 million to contract no. 9082 (CCS) with
TransFirst Health and Government Services, Inc. a Kansas -based company.
This will result in a 5 year amended agreement with a new total estimated
amount of $6,350,000 with future year funding contingent on Council budget
approval; and
3) Appropriate the budget increases as outlined in the Financial Impacts and
Budget Actions section of this report.
Executive Summary
Since 2011, the City has converted all 5,967 on- street parking meters to IPS Group, Inc.
credit card enabled meters. The single -space parking meters also include sensors that
provide real -time parking information via a mobile application and the City's website.
The City processes an average of 1 million transactions per month from the single -
space parking meters. Credit card usage has increased from 30% since the trial
program in Fiscal Year 2010 -11 to approximately 60% of all transactions today. The
increased usage of credit cards has increased the City's operating cost by an estimated
amount of $1.4 million per year, necessitating amendments to contracts with IPS Group,
Inc. and TransFirst Health and Government Services, Inc. Additionally, staff
recommends consolidating all IPS Group, Inc. costs into the original contract, including
an annual amount of $150,000 for batteries and other routine maintenance.
Background
On October 25, 2011, Council awarded contract no. 9496 to IPS Group, Inc., in the
amount of $4,500,000 plus an annual estimated operating cost of $612,000, which
includes communication and software costs. The communication charges are based on
the number of credit card transactions. Pursuant to a contract awarded by Council on
January 19, 2012, the City also pays a per transaction fee for credit card processing to
TransFirst Health and Government Services, Inc. (TransFirst). The original budget
estimate, that was included as part of the citywide $3,350,000 TransFirst contract, was
based on an estimated 35% of transactions utilizing credit cards. This was based on
the then - current credit card usage rate of 30% in comparable cities and experience with
the City's trial project. Credit card usage at the City's parking meters has increased to
approximately 60% of all transactions, significantly increasing the City's processing
cost. Staff anticipates that credit card usage will continue to increase as the last few
beach parking locations that do not accept credit cards are able to accept credit card
payments.
Discussion
Since the October 1, 2012 parking meter rate adjustment, an average of 60% of all
single space meter transactions, about 600,000 transactions per month, are paid for
with credit cards. This has significantly increased the City's communication charges
and credit card processing fees, necessitating a $450,000 per year increase in the IPS
Group, Inc., agreement and an estimated $1 million per year increase in processing
fees for TransFirst Health and Government Services, Inc.
Additionally, the original IPS contract did not incorporate routine annual maintenance
that was to be included into future budget requests. In order to more transparently
reflect all costs of the parking meter program, staff recommends adding this cost to the
IPS Group, Inc. (IPS) contract. The estimated annual amount of $150,000 includes
$100,000 for a meter battery replenishment program plus $50,000 for miscellaneous
parts, for a new annual operating and maintenance amount of $1.2 million. The battery
replenishment program is necessary to ensure fully charged and functional batteries at
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all times since the solar recharging function built into the meters is insufficient to
maintain a full charge with all the functionality of the meters the City utilizes, such as the
real -time parking application.
In February 2012, in an effort to conserve battery life as much as possible and respond
to the fact that only 0.6% of transactions, or about 6,000 monthly, utilized the pay -by-
phone service, the City terminated its agreement with Parkmobile for this service.
Without termination of that agreement, the battery replenishment cost would have been
an estimated $250,000 annually.
Contractor /Consultant Selection
IPS Group, Inc.
In January 2011, the City initiated a trial program to test new single -space on- street
parking meters with electronic payment options. All companies that produce credit -card
enabled single or multi -space parking meters were invited to participate, and one took
part in the trial. Based on customer feedback and functionality, staff recommended a
single -space meter solution. IPS Group, Inc. was the only company that could deliver a
functional single -space product. IPS Group, Inc. single -space meters have been widely
deployed in Los Angeles, Beverly Hills, and West Hollywood and are widely accepted
and known by on- street parkers in the Los Angeles area. IPS Group, Inc. is a San
Diego based company.
TransFirst Health and Government Services, Inc.
A request for proposals for merchant account processor services was issued on June
10, 2009, to which responses were received from TransFirst Health and Government
Services, Chase Paymentech, Wells Fargo Merchant Services, Bank of America,
Govolution LLC, Union Bank/Elavon Merchant Services, Citi Merchant Services /First
Data, and Electronic Merchant Services. The responses were evaluated by an
interdepartmental committee composed of representatives of the Finance and
Information Services departments. TransFirst was selected on the basis of pricing,
complete response to the RFP requirements, and quality and scope of services.
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Financial Impacts & Budget Actions
The contract modification to be awarded to IPS Group, Inc. is for an estimated annual
amount of $600,000. Funds are available in the FY 2012 -13 Finance Department
Budget; the contract will be charged to account 01225.555010.
The contract modification to be awarded to TransFirst Health and Government Services,
Inc. is for an amount of $3 million. Award of the contract modification requires an
additional appropriation of $550,000 to account 01224.522230 in FY 2012 -13.
Budget authority for subsequent budget years will be requested in each budget for
Council approval. Future funding is contingent upon Council approval and budget
adoption.
Prepared by: Donald Patterson, Assistant Director — Finance
Approved:
rd
Forwarded to Council:
Rod Gould
City Manager