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HomeMy WebLinkAbout10/22/2002 - Study SessionI CITY OF NEWPORT BEACH City Council Minutes Study Session October 22, 2002 - 5:30 p.m. ROLL CALL Present: Heffernan, O'Neil, Bromberg, Glover, Adams, Proctor, Mayor Ridgeway Absent: None CURRENT BUSINESS 1. CLARIFICATION OF ITEMS ON THE CONSENT CALENDAR. In response to Council Member Glover's questions regarding Item No. 4 (Beaches of Southern California Coalition Agreement #001), City Manager Bludau stated that the City is not increasing the agreement in any way. He added that the City also has not entered into any agreements that are looser with regard to advertising private vendors. He confirmed that this is a continuation of the previous agreement. Regarding Item No. 14 (Corona del Mar Crosswalk Update), Council Member Heffernan asked about the status of the relinquishment of Coast Highway to the City. Further, if Coast Highway were relinquished tomorrow, he asked what the City intends to do about the crosswalks. Regarding Item No. 15 (City Communication Summary), Council Member Heffernan requested a comparison of what other cities are doing, especially since the City is updating the cable franchise agreement. He noted that the City may be asking for money and effort from the cable companies for these efforts. Mayor Ridgeway indicated that he will be pulling this item to receive a report. City Manager Bludau introduced Marie Knight, the new Recreation and Senior Services Director. He stated that yesterday was her first day with the City. 2. ORAL REPORT REGARDING IMPROVEMENTS TO BILLING AND RELATED SYSTEMS. Administrative Services Director Danner stated that they are proposing significant changes in the way the City does business. He noted that they introduced this to the Finance Committee about a month ago and was encouraged to proceed with what they will be recommending tonight. He stated that the goal of the proposed changes is to consolidate as many municipal billings into one municipal services statement and to print and mail the billings as efficiently and cost - effectively as possible. He indicated that, by achieving this goal, the City will accomplish other service enhancements, including electronic presentment and improvements in other printing and mailing services. He reported that, over the past ten years, the City's billing function has been consolidated from various City departments to the Revenue Division of the Administrative Services Department. He stated that the City currently prepares over 325,000 bills annually, with water bills making up about half the count. He added that the billings are also used to communicate with the Volume 55 - Page 436 110910.4 Billing (40) City of Newport Beach Study Session Minutes October 22, 2002 INDEX residents, reporting that sometimes a flyer or informational brochure is included in the water billing or municipal service statement. Mr. Danner highlighted the bills that should be consolidated. He reported that. the City currently sends out separate bills for each of the billings and noted. that, in postage alone, it would be advantageous if the billings were consolidated. He indicated that, if consolidation occurs, the billing for water would be done on a monthly basis rather than bi- monthly and there will be a greater volume. He noted that the current printing equipment is old, already broken down, and expensive to replace; and additional staff would be needed to continue the service. He reported that, in order to continue to print municipal, service statements in- house, it would require the replacement of two high speed, laser printers, one high volume printer which costs $125,000, and a lesser volume printer which costs $25,000. Mr. Danner stated that they have studied this problem for over a year and believe that the most cost - effective solution is to outsource selected aspects of the billing function, primarily the printing and mailing of municipal service statements. He indicated that the advantages include significant cost savings, additional capability to combine /consolidate bills, flexibility, reaching the customers on a monthly basis, electronic presentment of all information, direct; links to online bill paying and other City and related services, consolidated printing and mailing of flyers, notices, and other communications with residents, and the speed in which this can be done. He indicated that smart; inserting means targeting selected properties for insertion of additional materials with the bills. He stated that this can be done with the enhanced service. Further, electronic presentment means that everything that is mailed can be viewed online. He confirmed that e -bills can only be available if the customer knows their account number. Mr. Danner showed the current equipment that is used to print the bills and the vendor's equipment which can print 135,000 pages /minute. He indicated that they looked at three vendors who are located in the San Diego, Santa Barbara, and Phoenix areas. He reported that the City would transmit a file to the vendor who would send the bills to the Riverside post office. He added that the City would not need to upgrade its computer systems to do this. He stated that the vendors are not a general mail house. He also showed photos of both the City's and vendor's envelope stuffing equipment. Mr. Danner reported that they have analyzed outsourcing versus in -house printing and mailing, interviewed vendors, thoroughly analyzed the costs, and tentatively selected a vendor. He discussed the ten year analysis of the printing outsourcing costs. He noted that, over the ten year period, the present value of outsourcing is about $1.9 million and the in -house value is about $2.9 million, which makes the savings a little over $1 million. He emphasized that the cost includes the cost for paper, printing, postage, etc. He stated that the vendor can do this cheaper than the City because this is all they do. He explained that they can achieve cost savings because of volume and can mail pieces 3¢ cheaper than the City. Further, additional postage costs can be avoided for special mailings since six inserts will be allowed in the billings instead of two, the City will not need to purchase the expensive printer, and additional staff is not needed. Mr. Danner indicated that, to make this successful, the City will need to read the meters and prepare water billings on a monthly basis. He stated that this can be accomplished by continuing to read meters bi- monthly and estimate the Volume 55 - Page 437 City of Newport Beach Study Session Minutes October 22, 2002 INDEX usage for the months when the meters are not read, automate the meter reading function, or keep reading meters as currently done and hire more staff. He reported that the automated meter would produce a radio signal that goes to a car, so a person would still need to drive the City to pick up the reading. Mayor Ridgeway noted that there are systems that read the meters by satellite. Mr. Danner indicated that the type of system is dependent on cost. He explained that they are recommending monthly billings because, out of all the bills that are sent out, the only one that is sent out bi- monthly is the water bill. He indicated that, if the water bills are not done monthly, the bills cannot be consolidated. He added that most cities currently bill on a monthly basis. Mr. Danner stated that an automated system would provide staff with a detailed daily -use history. Further, they are compatible with a variety of meters, the field units will always be ready to transmit, there is a 10 -year warranty on the battery life, no FCC license is required, they are waterproof, they are competitively priced with strong features, they are easy to program and install, and they have tamper detection alerts. He showed how the existing meter is read and reported that there are 123 different meter routes in the City. He indicated that the Utilities Department has four people assigned to meter reading, but they do not do that all the time. He stated that they also repair and replace meters. He showed a sample of the device that would be placed on the meter to make it automated and the system that reads the meter. He indicated that they are proposing to have half (13,000) of the automated readers installed by the vendor and then have in -house staff install the other half over the next couple of years. Mr. Danner stated that the ten year cost to estimate the water bills is about $500,000, the automated meter reading process costs about $1.4 million, and hiring more staff to read the meters costs about $1.2 million. He emphasized that the costs for estimating and reading the meters with additional staff will go on forever; however, starting in year ten, the automated meter reading process shows a cash savings of over $200,000. He stated that, in the long run, the automated system is the cheapest way to go. Further, the City could borrow the money to buy the automated equipment since the interest rate on a 10 -year loan will be about 3 %. Mr. Danner showed a chart of the combined cash flow comparison for the outsourced printing /mailing and the estimated interim amounts ($483,000); and the outsourced printing /mailing and the automated meter reading (- $420,000). He stated that the City could either do nothing; approve the billing change to outsource the printing /mailing and automate the water meters, subject to finalization of costs and other information; or approve the billing change with no change in the water reading schedule and using estimates for the interim bills. He indicated that staff is recommending that Council approve outsourcing printing and mailing, and automate the meter reading function. He stated that this is initially more expensive than estimating but is recommended because estimating is inherently difficult. He indicated that automated reading is more cost effective in the long run, interest rates will probably never be more favorable, there is relatively inexpensive technology available now, and it provides much more detailed usage information. He noted that they would like to come back to Council at the November 12 Council meeting with a staff report and would like to implement this by the start of next year. Council Member Heffernan suggested that the Finance Committee also look at this in detail, but still keep within the recommended timetable. Council Member O'Neil stated that this seems like the right thing to do and would probably support staffs recommendation. Mayor Pro Tom Bromberg, Council Volume 55 - Page 438 City of Newport Beach Study Session Minutes October 22, 2002 INDEX Member Glover, and Council Member Proctor concurred with Council Member Heffernan's suggestion. Mayor Ridgeway indicated that the City has talked about outsourcing a number of functions for a long time and stated that this is a step in the right direction. He also concurred about this going to the Finance Committee and suggested providing 15 and 20 year estimates in order to see the savings. Dolores Otting stated that this item has been brought up before. She requested a breakdown of the 350,000 bills, i.e. how many are for water bills, rental properties, piers, etc., and asked how many contracts the vendors have. She requested information about how the posting will be done if the vendor does the billings. She also asked how much it would cost for a satellite system. She indicated that she is not in favor of monthly billings and believed that most of the constituents are not in favor of it either. She believed that this is a matter of cash flow and getting more cash flow into the City, adding that she does not believe the City needs any more right now since there are not enough people who look at where the money goes. She asked why the vendor can mail bills 30 cheaper and stated that, if it is such a good deal, maybe the City should go into the business of doing a bunch of people's bills to make money. She took issue with the presentation since no one could ready anything. She believed that more information is needed. City Manager Bludau stated that no additional money will be coming to the City. Further, the bills will be less since they will occur monthly. PUBLIC COMMENTS — None. ADJOURNMENT — 6:05 p.m. *xxert *t * *x *�x�xx�xx�xx *max *�xx The agenda for the Study Session was posted on October 16, 2002, at 3:15 p.m. on the City Hall Bulletin Board located outside of the City of Newport Beach Administration Building. City Clerk O�A .�. Recording Secretary Mayor Volume 55 - Page 439