CITY OF SIMI VALLEY MEMORANDUM

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Arlene Lane
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1 CITY OF SIMI VALLEY MEMORANDUM AGENDA ITEM NO. Consent (2) November 14, 2016 TO: FROM: City Council Board of Directors, Ventura County Waterworks District No. 8 Board of Trustees, Simi Valley Public Library Department of Administrative Services SUBJECT: APPROVAL OF THIRD AMENDMENT TO THE AGREEMENT WITH PAYMENTUS CORPORATION FOR ELECTRONIC BILL PAYING SERVICES STAFF RECOMMENDATION Staff recommends that the City Council/Boards of Directors/Trustees authorize the City Manager to amend the agreement with Paymentus Corporation (Attachment A, page 4), which includes a revised fee structure (Schedule A, page 6), for an additional three-year term through October 2019, with an automatic renewal period for another three years past that date. CITY MANAGER S RECOMMENDATION The City Manager concurs with staff s recommendation of approval. BACKGROUND AND OVERVIEW On June 21, 2012, the Department of Administrative Services entered into a Master Services Agreement (MSA) with Paymentus Corporation to provide electronic bill paying services. These services were initially solicited to facilitate receipt of utility billing payments made to the City by Visa, MasterCard, Discover and E-check via a secure internet interface or Interactive Telephone Voice Response (IVR). The MSA was amended on July 16, 2012, to include online Business Tax payments, and a second amendment to the MSA was signed by the City Manager s office on July 18, 2013 to accommodate online payments for Permits. The MSA committed the City to a three-year term, and the MSA and amendments are on file with the City Clerk s office. The cost of services provided by Paymentus is variable, dependent upon the volume of credit card transactions presented for payment. The greater the number of transactions, the higher the fees incurred. At the time the MSA with Paymentus was signed, the estimated value of the yearly utility bills/invoices to be processed was $198,000. Based on this volume, the cost of Paymentus services was estimated to be under the expenditure level limit of $125,000 requiring contract approval by Council.

2 2 A recent review of fees for Paymentus services shows that credit card activity and corresponding processing costs have increased exponentially over the contract term, now bringing it to a threshold requiring Council approval. As of the fiscal years ending June 30, 2015 and 2016, the average monthly processing fees were in excess of $9,000, resulting in annual costs that exceeded $223,000 for the two-year term. Accepting credit card and other electronic payment methods provides a higher level of customer service to City customers. In addition, the electronic format provides for more efficient payment processing and recordation for the City. To confirm the City has received optimal benefit utilizing electronic payment services provided by Paymentus, Administrative Services staff analyzed historical transaction volume and fees charged to-date. In addition, cities of similar size were surveyed to compare their fees for similar services. The Government Finance Officers Association recently provided a webinar on this topic, which provided more insight on credit card fee structures. Further, staff consulted with vendors to better understand how costs are assessed by the banks holding the credit cards used for payments to the City. Staff concluded that given hard costs in the industry coupled with the transaction volume currently experienced, the fees assessed for services have been within industry standards. After multiple conversations and negotiation sessions with Paymentus executives to discuss how the City can contain these costs, agreement was made to modify the current service fee schedule. In accordance with Simi Valley Municipal Code Section (j), banking services are excluded from the competitive bid process. In consideration of the pricing proposal submitted by Paymentus, staff recommends amending the agreement for another threeyear period. Fees for electronic bill paying services are variable in nature, depending upon the number of transactions presented and the type of credit card presented for payment. Given the variable nature, it is not practical to set a not-to-exceed value on the contract. However, based on recent activity, it is anticipated that total fees during a three-year extension period will be less than $325,000. FINDINGS AND ALTERNATIVES The following alternatives are available to the City Council/Boards of Directors/ Trustees: 1. Amend the agreement with Paymentus Corporation, which includes a revised fee structure, for an additional three-year period with a subsequent automatic threeyear extension period. 2. Do not amend the attached agreement, and provide staff with further direction. Staff recommends Alternative No. 1. SUGGESTED CITY COUNCIL/BOARDS MOTION I move to amend the agreement for the provision of electronic bill paying services with Paymentus Corporation for an additional three-year period with a subsequent automatic three-year extension period.

3 3 SUMMARY In June, 2012, the City signed an MSA for electronic bill paying services with Paymentus Corporation. The MSA was amended twice, in 2012 and 2013 to include additional services for a three-year period. Based on the quality of service provided in the past and a revised, more favorable fee schedule, it is recommended that the City Council/Boards of Directors/Trustees approve a contract amendment for an additional three-year term through October, 2019, with an automatic renewal period for another three years past that date. Jody Kershberg, Director Department of Administrative Services Prepared by: Jody Kershberg, Director of Administrative Services INDEX Page Attachment A Agreement... 4 Schedule A Paymentus Service Fee Schedule... 6

4 4 ATTACHMENT A Paymentus ATTACHMENT A AMENDING AGREEMENT Customer: City of Simi Valley (CA) Customer Address: 2929 Tapo Canyon, Simi Valley, CA Contact for Notices to Customer: Jody Kershberg, Director of Administrative Services This Amending Agreement is entered into as of the effective date below, by and between the City of Simi Valley ("Customer'') identified above and Paymentus Corporation, a Delaware Corporation ("Paymentus"). WHEREAS: A - The parties entered into a Master Services Agreement dated June 21, 2012 B - The Parties now wish to amend Schedule A of the Master Services Agreement to accommodate a pricing modification. C - The Parties now wish to amend Section 9.1 ("Term") of the Master Services Agreement to extend the term for an additional period of three (3) years. At the end of the three (3) year period, the Agreement shall automatically renew for an additional three (3) year period unless the Customer or Paymentus provides the other party with not less than six (6) months prior written notice before such automatic renewal date that such party elects not to automatically renew the term of this Agreement. NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth, the receipt and sufficiency of which are hereby acknowledged, the parties, intending to be legally bound, hereby covenant and agree as follows: Except Schedule A, and Section 9.1, as provided in this Amending Agreement, all provisions of the Agreement remain in full force and effect. un-amended. IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their duly authorized representatives Customer: By: Name: //7.// Paymentu:/,, ~ By: b,&~~ Name: Dyshyant Sharma Title: Title: President and CEO Date: Date: October

5 5 Paymentus Customer: By: Name: :~J~ Name: David Shapiro Title: Title: Senior Vice President Date: Date: Qctober

6 6 Schedule A- Paymentus Service Fee Schedule Paymentus ATTACHMENT B Paymentus Service Fee charged to the City of Simi Valley will be based upon the following table: Paymentus Service Fee (Absorbed Fee Model) Utility Payments Paymentus Service Fee per qualified utility rate transaction shall be: Residential Credit/Debit Card Commercial Credit/Debit Card ACH/e-Check Non-qualified Excess Fee $1.80 per transaction (Utility Rate Program) 2.65% of the payment amount $0.80 per transaction $2.65% of the payment amount* *Paymentus will assume the cost of the Non-qualified Excess Fee on behalf of the City up to the initial 15% Miscellaneous Government Services (Non-Utility) Credit/Debit Card ACH/e-Check 2.65% of the payment amount $0.80 per transaction The Paymentus Service Fee will be collected in addition to the end-user bill payment total. Paymentus may apply different limits per transactions for user adoption or to mitigate risks. The Maximum Payment Amount shall now be $10,000. Paymentus shall continue to apply the Paymentus Service Fee to the City in increments of $300.

CITY OF SIMI VALLEY MEMORANDUM

CITY OF SIMI VALLEY MEMORANDUM AGENDA ITEM NO. Consent (6) June 4, 2018 TO: FROM: SUBJECT: City Council Department of Administrative Services ADOPTION OF A RESOLUTION AUTHORIZING THE LEVY OF A SPECIAL