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ADOPT A RESOLUTION TO AUTHORIZE CONTRACT AMENDMENT NO. 1 WITH PRE-SORT CENTER OF STOCKTON, INC TO PROVIDE CUSTOMER NOTICE PROCESSING SERVICES
recommended action
RECOMMENDATION
It is recommended that the City Council adopt a resolution to authorize contract Amendment No. 1 (Exhibit 1 to the Resolution) in the amount of $500,000 with Pre-Sort Center of Stockton, Inc to provide customer notice processing services.
It is also recommended that the City Manager be authorized to take appropriate and necessary actions to carry out the purpose and intent of this resolution.
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Summary
The Municipal Utilities Department (MUD) encompasses the Water, Wastewater, and Stormwater Utilities, which are supported by user fees and regulated for the protection of public health and the environment.
The MUD is required to regularly mail notices to record owners of property and/or customers of record that receive water, wastewater, and/or stormwater services in the respective City of Stockton service areas. Customer Notice Processing Services are necessary to provide the City of Stockton the most efficient and cost-effective printing and mailing services including processing customer lists to merge addresses, print a large volume of notices, fold, seal, add the United States Postal Service (USPS) Permit Imprint, and deliver to the USPS.
If approved by the City Council, Contract Amendment No. 1 will add $500,000 to the original contract, increasing the total contract amount to $925,000 with a contract term through June 30, 2026.
DISCUSSION
Background
The City is required to regularly mail notices to record owners of property and/or customers of record that receive water, wastewater, and/or stormwater services in the respective City of Stockton service areas. Customer notices may include invitations to community meetings to discuss topics related to water, wastewater and/or stormwater. Additional required notices include legal notices of public hearings to consider proposed rate adjustments to water, wastewater or stormwater, as well as annual notices informing customers of approved rate adjustments.
On May 25, 2021, by Motion 2021-05-25-1210, the City Council authorized a five-year contract with Pre-Sort Center of Stockton, Inc (Pre-Sort) in the amount of $425,000 to provide customer notice processing services. The approved amount includes the cost to print and mail the notices to customers, and postage funds to mail notices using United States Postal Service (USPS) First Class Mail.
Present Situation
In the last few years, USPS postage costs have increased by approximately 33 percent. Likewise, the cost of paper, printing, and mailing services have increased by about 50 percent.
In addition, in response to the Governor's Drought Emergency Declaration, the City of Stockton Council adopted Resolution 2022-07-12-1503 declaring a Stage 2 Water Shortage Emergency (Water Emergency) on July 12, 2022. The MUD mailed notices to customers in the City’s water service area to inform them about Water Emergency and the subsequent water use restrictions effectively immediately.
The significant cost increases and additional Water Emergency notification mailer caused the need to advance funding from future years to the 2022-2023 and 2023-2024 fiscal years reducing the available funds to pay for the most recent notices of rate study. As a result, the available balance through the end of the term of the contract is approximately $150,000.
|
Original Contract Amount |
$425,000.00 |
|
Remaining Balance |
$150,000.00 |
In addition, the stormwater cost of service rate study underway in FY 2024-25 requires a two-step process for adjusting stormwater rates. The process must follow guidelines California Constitution Article XIII D, Section 6, commonly referred to as “Proposition 218.” The two-step process requires additional public notification in comparison with the water and wastewater rate setting procedure. Contract Amendment No. 1 changes are summarized below:
|
Additional Funds Requested |
|
|
Water Utility |
$130,000.00 |
|
Wastewater Utility |
$210,000.00 |
|
Stormwater Utility |
$310,000.00 |
|
Additional Funds Needed |
$650,000.00 |
|
Remaining Balance |
$150,000.00 |
|
Total Additional Funds Requested |
$500,000.00 |
If approved by the City Council, Contract Amendment No. 1 will add $500,000 to the contract to fund the increased cost of postage and related printing and mailing services and revise the total contract amount to $925,000 for the remaining term. Amendment No. 1 does not impact the term of the contract through June 30, 2026.
FINANCIAL SUMMARY
Amendment No. 1 increases the total contract amount to $925,000. There are sufficient funds to cover the current year’s expenses. The proposed contract amendment will add funds to the contract for services in FY 2024-2025 and FY 2025-26. Budgeting for future purchases will be from the same accounts in subsequent fiscal years and presented to the City Council for approval through the annual budget approval process.
This action has no impact on the General Fund or any other unrestricted funds.