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TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: DIRECTOR OF FINANCE AND INFORMATION TECHNOLOGY
DATE: MAY 6, 2003
SUBJECT: COST-BASED FEE STUDY – CONSULTANT SELECTION AND CONTRACT APPROVAL
Staff Coordinator: Gary Gyves, Senior Administrative Analyst
Approve the attached Consultant Services Agreement (hereafter the "Proposed Agreement") with MAXIMUS for the preparation of a Cost-Based Fee Study (hereafter the "Study").
City Council Approval Of Request For Proposal For A Cost Based Fee Study, February 18, 2003
The City Council took the following action at its February 18, 2003 meeting:
Legal Authority To Charge Fees For Services
Cities have the general authority to impose fees, sometimes called charges or rates, under the Constitution of the State of California. Fees are distinguished from taxes in two principal ways: (1) the amount of the fee may not exceed the estimated reasonable cost of providing the particular service or facility for which the fee is charged, while the amount of a tax is not subject to any such restriction; and (2) the service or facility for which the fee is charged bears a relationship to the person or entity paying the fee.
Cost-Based Fee Study
The Study will calculate the full (100%) cost of providing certain City services as well as a proposed fee to recover such costs. However, the City Council may always choose to subsidize a service by establishing a fee less than its cost. Upon completion of the Study, the selected consultant will present a report of its findings, including a comparison of the City’s current fees, proposed fees, estimated revenue impact, as well as similar fees charged by other comparable California cities, including neighboring cities.
The Request For Proposal Process
Finance staff distributed the RFP to four consultants specializing in Cost-Based Fee Studies. Three consultants submitted a proposal. Two consultants were selected to participate in the interviewing stage of the selection process. The fee quotation of the third consultant was approximately $10,000 greater than the two consultants selected for interviews.
As detailed in the attached RFP, the following criteria was used to select the consultant:
Based on the aforementioned consultant selection criteria, the results of the interview process and reference calls, MAXIMUS was selected for the following reasons:
MAXIMUS is the largest firm in the United States specializing in federal, state and local government consulting. MAXIMUS was founded in 1975 and has more than 5,000 employees located in more than 170 offices across the United States. MAXIMUS is viewed as one of the foremost firms for preparing Cost-Based Fee Studies, as well as providing other fiscal and management consulting services. MAXIMUS estimates the Study completion date to be three to four months from the time the contract is signed.
Services To Be Performed By The Selected Consultant
As detailed in the attached Proposed Agreement, the following services would be performed by MAXIMUS:
The RFP, MAXIMUS’ proposal and Proposed Agreement are attached for review by the City Council.
The "not to exceed" fixed fee proposed by MAXIMUS to perform the scope of services detailed in the attached Proposed Agreement is $23,750. The FY 2002-2003 budget includes an appropriation of $25,000 for the Study. Also, assuming that costs have increased at the rate of one (1%) percent annually, the Study may provide fee increases of $100,000 annually, based upon $1.0 Million of annual fee revenue X ten (10) years X one (1%) percent rate of increase.