TO: Honorable Mayor and Members of the City Council
THRU: Tom Kisela, City Manager
FROM: Trang Nguyen, Finance Director
1. Subject
title
Agreement with Matrix Consulting Group, LTD for the preparation of a citywide Cost Allocation Plan and User Fee Study.
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2. Summary
At the June 25, 2024, City Council meeting, staff was directed to prepare and issue a Request for Proposal to develop a Cost Allocation Plan and User Fee Study. The City received two responses. Matrix Consulting Group, LTD was the top ranked consultant based on the evaluation of the proposals.
3. Recommended Action
recommendation
Approve the agreement with Matrix Consulting Group, LTD in the amount of $58,500 for the preparation of a citywide Cost Allocation Plan and User Fee Study; and authorize the Mayor and City Clerk to execute on behalf of the City.
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4. Fiscal Impact
The expense for this amendment is $58,500 and will be funded through the General Fund (100).
100.1231.51670.00000 Other Professional & Consulting Services
5. Strategic Plan Goals
Goal 2: Be a fiscally healthy community
b: Analyze future fiscal needs and potential revenue opportunities.
d: Effectively manage and develop City assets.
6. Discussion and Background
At the June 24, 2024, City Council meeting, staff was directed to prepare and issue a Request for Proposal (RFP) to develop a Cost Allocation Plan and User Fee Study. The purpose of a cost allocation plan is to identify and distribute central service and other administrative support costs to the users of those services. These kinds of costs include finance, facility maintenance, personnel, and certain departmental administrative functions. Cost allocation plans help a city determine the full costs by identifying the indirect/overhead allocations to be added to a program’s direct costs. Once developed, the full program costs can help set internal city charges and be used as a basis to establish user fees, permits and applications, billing rates, hourly rates, and costs of special services. Furthermore, a cost allocation plan can be used to charge indirect overhead to federal and state grants and charge external agencies and funds their fair share of support costs.
A user fee study determines the full cost of services offered by a government agency for which user fees are currently charged or could be charged. According to State law, city fees for services cannot exceed the cost of providing the service. The purpose of this updated study is to identify the full cost of providing these services, therefore identifying any subsidy of General Fund tax dollars for said services. This study will examine and determine if the actual costs associated with city services are achieving full cost recovery. The last comprehensive citywide user fee study was completed in 2018. It is recommended by industry professionals in the cost recovery sector that local governments update their cost-based fee studies every three to five years.
Staff contacted and solicited proposals from reputable firms. All firms were presented with the scope of work, project schedule, plans and product specifications. The proposals were received as follows:
1. Matrix Consulting Group, LTD Irvine $58,500
2. Baker Tilly US, LLP, Irvine $74,600
Proposals received were evaluated based on background and experience in organizational analysis evaluation, staff expertise and overall experience of personnel assigned to the work, time required to accomplish the requested services, public sector experience in municipal setting conducting similar studies, references, and overall cost. Matrix Consulting Group, LTD was ranked as the top consultant. Therefore, staff recommends Matrix Consulting Group, LTD be awarded the agreement in the amount of $58,500.
The scope of service includes examining the total costs associated with providing city services and providing recommendations for changes in fees that will achieve full cost recovery. Matrix’s costing model is built based on the City’s operations, budget details and intended use for the results. The method used is a customized approach specific to the City.
Upon conclusion of the fee study, Matrix will produce and present a detailed report summarizing the results that will include:
• A concise executive summary discussing the study, methodology, results and narrative describing the services included in the study.
• A section on proposed modifications to the current fee schedule, including removal or addition of new fees for service.
• A section on per unit and annual results for each fee in the analysis, as well as where workload data is available.
• A comparative survey section outlining key fees, their comparison to other local jurisdictions, and contextual information regarding budget and staffing.
• A methodology for annual updates including CPI adjustments and a calculation to determine cost recovery for any new fees.
7. ATTACHMENTS
• Professional Services Agreement with Matrix Consulting Group, Ltd.