SR 05-24-2016 3N
City Council
Report
City Council Meeting: May 24, 2016
Agenda Item: 3.N
To: Mayor and City Council
From: David Martin, Director, Planning and Community Development, Planning &
Community Development
Subject: Contract Modifications for Ongoing Meter Operations and Maintenance
Recommended Action
Staff recommends that the City Council authorize the City Manager to negotiate and
execute a third modification to agreement #9496 (CCS) in the amount of $7,247,219
with IPS Group, Inc., a California-based company and extend the term of the agreement
for an additional five years for the ongoing maintenance for parking meters and sensors,
battery replenishment, miscellaneous parts, credit card processing communication
services, and a web-based management system. This will result in a 10 year amended
agreement with a new total amount not to exceed $17,544,169, with future year funding
contingent on Council budget approval.
Executive Summary
On October 25, 2011, Council awarded Contract No. 9496 to IPS Group, Inc. for the
purchase and installation of credit card enabled on-street single space parking meters
with in-ground sensors, ongoing maintenance for meters and sensors, battery
replenishment and miscellaneous parts, credit card processing communication services,
and a web-based management system. The contract was amended pursuant to the
First Modification dated April 22, 2013 and Second Modification dated May 28, 2014.
This Third Modification would extend the term of the contract for five additional years
from December 9, 2016 to December 8, 2021 with no additional options to extend and
increase the estimated annual not to exceed amount to $18,738,410 for the additional
five years of maintenance and to account for increased credit card transactions. The
modification would also add a warranty on all sensors at no cost to the City through
December 31, 2018, provide the City with the option to terminate services related to the
meter sensors on December 31, 2018, provide a new, lower IPS credit card
communication pricing option, and would provide the City with the option to test new
meter sensor technology on 100 meters for a period of 6 months at no cost to the City.
Background
On October 25, 2011 (Attachment A), Council awarded contract no. 9496 to IPS Group,
Inc. (IPS), in the amount of $4,500,000 to purchase meters and in-ground sensors, plus
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an annual estimated ongoing operating cost of $612,000 for a total not to exceed
amount of $7,560,000, which included communication and software costs for a five year
term with one five year option to extend.
On March 19, 2013 (Attachment B), Council authorized the City Manager to negotiate
and execute the first modification which included a Battery Replenishment Program to
be performed by IPS; the purchase of miscellaneous parking meter parts; and an
increase to the contract maximum annual payment to pay for the Battery Replenishment
Program and increased credit card transactions processing for total not to exceed
amount of $9,694,345 with no change to the five year term.
On April 22, 2014 (Attachment C), Council authorized the City Manager to negotiate and
execute the second modification for a one-time purchase of 350 additional parking
meters with in-ground sensors for a total not to exceed amount to $10,296,950 for the
parking meter and in-ground sensor ongoing operating costs with no change to the five
year term.
The City currently operates 5,950 single space meters with varying enforcement hours
and rates. All meters are credit card enabled and are predominantly used to enforce
curbside on-street parking to assist with managing demand and to ensure turnover. A
small number of single space meters are used in downtown parking structures. The
Police Department enforces meter time limits and payment and issues citations for
parking violations; the Finance Department collects payment on parking citations and
collects and processes revenue from parking meters; and the Public Works department
is responsible for meter maintenance and repairs. The Parking Operations Division of
Planning and Community Development is the contract manager for IPS equipment and
services and other parking enforcement, permitting, and parking citation appeal hearing
examiner services.
Discussion
Meter revenue in FY2013-14 was $13,147,837 and $14,781,223 in FY2014-15, an
increase of $1,633,386 or 12.4%. Revenues in FY2015-16 are currently estimated to
reach $15,257,000. Revenue from credit card payments accounted for 64% of all meter
revenue. This is up from 40% in April 2014, when Council approved the last contract
modification.
1
IPS Credit Card Transaction fees are variable fees paid by the City to IPS on a per
credit card transaction basis when a parker pays with a credit card at a meter instead of
1 This credit card transaction fee is an IPS fee and not associated to the merchant fees paid to the bank
for the privilege of accepting credit cards.
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with cash. Due to the continued increase in credit cards used at meters as well as the
addition of 134 meters since the last contract modification approved by Council in April
2014, credit card payment transactions have increased. In FY2014-15 there were 4.9
million credit card transactions with a projected 5.2 million transactions for FY2015-16,
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or a 6.1% increase. This volume of credit card transactions necessitates an increase in
the estimated annual not to exceed amounts for the remaining term of the contract to
cover these additional expenditures. The amended contract would also provide for a
lower cost option for IPS credit card communication fee, reducing the fee from $0.13 per
transaction to $0.06 per transaction, providing an estimated monthly reduction in fees
by approximately $360,000 annually over existing pricing and transaction volume.
The amended agreement would also provide a warranty on all sensors, at no cost to the
City, through December 2018 and provide the City with the option to terminate the in-
ground sensor related services after December 2018 when the free warranty expires. In
conjunction with this provision, IPS will provide the City with the option to test new meter
technology, including new sensor technology that is mounted to the meter instead of
being placed in the ground. IPS would install, at no cost to the City, up to 100 meters to
test in locations chosen by the City. This will allow staff to evaluate technology and
establish a long term strategy for implementing parking payment, enforcement, and data
management technologies that are best suited to meet the needs of the City and its
mobility goals.
Additionally, due to the need to increase the not to exceed amount on the agreement at
this time, staff recommends exercising the one-time, five year option on the existing
contract which expires December 8, 2016 to ensure continued and smooth operations
of all meters after December 8th.
Contractor/Consultant Selection
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 was the only company that could deliver a functional
single-space product at that time. IPS single-space meters have been widely deployed
in Los Angeles, Beverly Hills, and West Hollywood and are commonly accepted and
known by on-street parkers in the Los Angeles area. IPS is a San Diego-based
company. Staff will initiate a competitive process for parking meter equipment and
payment services prior to the end of the next five year term to ensure a transparent and
competitive process for parking meter services that best serve the public good at the
most competitive price.
2
There have been 3.9 million credit card transaction year-to-date through March for FY2015-16
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Financial Impacts & Budget Actions
The contract modification to be awarded to IPS is $7,247,219, for an amended contract
total not to exceed $17,544,169. Funds are available in the FY 2015-16 budget in the
Planning and Community Development Department. The contract will be charged to
account 01417.555010. Future year funding is contingent on Council budget approval.
Prepared By:
Salvador Valles, Assistant Director of PCD
Approved Forwarded to Council
Attachments:
A. October 25, 2011 Council Meeting
B. March 19, 2013 Council Meeting
C. April 22, 2014 Council Meeting
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Reference:
Modified
Agreement
No.
9496
(CCS)