SR 09-13-2016 3A
Ci ty Council
Report
Ci ty Council Meeting : September 27, 2016
Agenda Item: 3.A
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To: Mayor and City Council
From: Susan Cline, Director , Public Works, Airport
Subject: Authorization to Execute a Contractual Services Agreement with Yardi
Systems, Inc.
Recommended Action
Staff recommends that the City Council a uthorize the City Manage r to negotiate and
execute an agreement with Yardi Systems, Inc., a California -based company, for real
property and asset management software licensing and maintenance. This
recommended award is made as an exception to the competitive bidding process
pursu ant to Municipal Code Section 2.24.080 (d) and is for an amount not to exceed
$14,933 for one year, with four additional one -year renewal option(s) subject to annual
cost of living increases not to exceed 3%, plus a 10% contingency, for a total amount
not to exceed $87,212 over a five -year period, with future year funding contingent on
Council budget approval.
Executive Summary
The City manages 590 leases and license agreements for City -owned assets and
properties such as offices, hangars, and land leases . These leases are managed by
the Santa Monica Airport and Housing and Economic Development’s Economic
Development Division. Since 2007, t he City has use d Yardi Systems, Inc.’s (Yardi),
Yardi’s Voyager®, a proprietary and web -based comprehensive real esta te property and
asset management software, to manage commercial real estate operations, execute
leasing, run analytics, and provide accounting process services . The City competitively
bid the software in 2007 and has successfully used it since that time. Although the City
Council voted to close the Airport by June 2018, there is a need to maint ain the
software in the interim , therefore s taff recommends a one -year agreement with Yardi to
receive critical software updates and support, with four one -year opt ions to renew at the
City’s sole discretion , each of which are subject to a cost of living increase not to
exceed 3% per year . This allows staff flexibility to rebid the software , if needed, when
the long -term needs of the Airport are better understood wh ile ensuring continuity of
service in the short -term.
Background
Yardi Systems, Inc. (Yardi) has provided real estate property and asset management
software services to the Economic Development Division (EDD) and the Airport Division
since November 21, 20 07. Staff use s Yardi to execute leasing, run analytics, and
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provide accounting process services , performing multiple property management tasks
including but not limited to : generate courtesy notices to tenants on a monthly basis;
record payments, late fees and security deposits collected on a monthly basis; prepar e
month -end reports on lease / license agreement monies charged and monies received
for submission to Finance; track tenant insurance documentation; track lease/license
expiration dates; maintain tenant contact information; and assess Consumer Price Index
increases on an annual basis .
The City entered into a greement No. 1573 for licensing and software maintenance for
an amount not to exceed $35,900 in year one, for software license and hosting fe es for
up to six (6) ledger users and one (1) read only user at $15,500 per year, subject to
annual cost of living increases, automatically renewing after each maturity period. The
contract also authorized additional payments for ongoing staff training. T he EDD and
the Airport Divisions pro -rate the total expense based on the number of users per
department .
To date, the City has spent $159,106 with Yardi. This amount includes the $35,900 in
FY 2007 -2008, for year one, and subsequent payments totaling $1 23,206 for annual
software license and hosting fees for up to six (6) ledger users and one (1) read only
user, subject to annual cost of living increases, and expenses related to additional
ongoing staff training. It should be noted that in 2012 the City r educed the number of
ledger users to five (5), lowering the annual licensing fee to $14,139 beginning in FY
2012 -13, subject to annual cost of living increases. EDD has two (2) ledger users, and
the Airport has three (3) ledger user licenses and one (1) read -only license.
Discussion
Yardi’s Voyager® software is a web -based, fully integrated platform to manage
commercial real estate operations, execute leasing, run analytics, and provide
accounting process services. Yardi’s Voyager® software database and accounting
processing are key features of Yardi that support the management of City owned real
estate property assets. Yardi’s software license and hosting fees include critical
software updates as well as technical support via Yardi’s toll free phone line .
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Continuing payments to this vendor will exceed the authority of the City Manager by
December 1, 2016 ; therefore, staff requests approval to enter into a new licensing and
services agreement in an amount not to exceed $14,933 for one year, with four
add itional one -year renewal option(s) subject to annual cost of living increases not to
exceed 3% on the same terms and conditions, plus a 10% contingency , for a total
amount not to exceed $87,212 over a five -year period. The EDD and Airport Division
recommen d a one year agreement with Yardi to receive critical software updates and
support .
Currently, EDD manages 150 leases and license agreements in Yardi, and the Airport
manages 440 leases and license agreements in Yardi , including offices, hangars, and
lan d leases . Due to the current phasing out of master tenants at the Airport, staff
anticipates additional leases to be tracked on Yardi in the coming year. In FY 2015 -16
EDD staff used Yardi to track a total of $10,859,577 in revenues and fees, and the
Airpo rt tracked a total of $5,734,915.
Staff requests to continue using Yardi’s Voyager® software as the City’s leasing data
and records are currently incorporated into this system. It would be prohibitively
expensive to replace the software with another prope rty management system, transfer
the data accurately and retrain staff on a new system.
Vendor/Consultant Selection
In 2007, staff requested proposals for a web -based, fully integrated platform to manage
commercial real estate operations, execute leasing, run analytics, and provide
accounting process services for the EDD and Airport Divisions. Based on proposals
submitted, Yardi Systems, Inc. was recommended as the best bidder, and an
agreement was authorized by the City Manager’s office.
Yardi Systems, Inc. is the only vendor that can provide maintenance and support for its
propriet ar y Voyager software system and is therefore the exclusive vendor pursuant to
Section 2.24.080(d) of the Municipal Code. Staff recommends Yardi Systems, Inc. to
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furnish and d eliver/provide software updates and support for its propriety Voyager
software system as an exception to the competitive proces s . This purchase meets the
City’s exception to competitive bidding criteria. Competition does not exist because
Yardi Systems, In c. is the only vendor that possesses the unique capability to meet the
particular requirements of critical software updates and support, as its Voyager software
system is proprietary, copyrighted and updates and support are only available from
Yardi Syste ms, Inc.
Financial Impacts and Budget Actions
The contract to be awarded to Yardi Systems, Inc. is for a total amount not to exceed
$87 ,212 . Funds of $14,933 are available in the FY 2016 -17 budget in the Public Works
and Housing & Economic Development De partments. The contract will be charged to
the following accounts:
Account Number Department & Division Amount
33431.588500 Public Works - Airport $9,189
012681.555060 Housing & Economic Development –
EDD
$5,74 4
TOTAL $14,93 3
Future year funding is co ntingent on Council budget approval.
Prepared By: Kate Schlesinger, Administrative Analyst
Approved
Forwarded to Council
Reference:
Agreement No. 10362
(CCS)