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1 MEETING DATE: September 20, 2017 PREPARED BY: Marta D. Lundgren, Finance Manager DEPT. DIRECTOR: Tim Nash DEPARTMENT: Finance CITY MANAGER: Karen P. Brust SUBJECT: City of Encinitas Merchant Processing Agreement RECOMMENDATION: Council approve an agreement with Automated Merchant Services, Inc. for payment gateway and merchant services for an initial term of three years, followed by two additional one-year options to extend the agreement by mutual acceptance of both parties. STRATEGIC PLAN: This item agenda item falls within the Organizational Efficiency and Effectiveness focus area of the Strategic Plan by maintaining the City s financial health. FISCAL CONSIDERATIONS: Funding for these services is included in the adopted Fiscal Year Finance Department operating budget in account which has a total budget of $186,822. Funding for the remainder of the agreement will continue to be provided in the Finance Department s operating budget on an annual basis. Based on historical volume, it is estimated that the annual cost of the agreement will be for an amount of $54,000 or a potential cost of $270,000 if this agreement is extended to its maximum duration. BACKGROUND: The City of Encinitas (City) currently accepts credit and debit card payments for over the counter payments (e.g planning and engineering fees, business registration and other misc. types of payments). Customers like the flexibility and record keeping advantages of paying with a credit card and have expressed interest doing more City business online. ANALYSIS: The City is in the process of implementing Citizen Self Service (CSS), Code Enforcement and Storm Water Inspections as part of the EnerGov Enterprise Workflow software project. In order to complete this implementation, it is necessary for the City to upgrade its payment gateway and merchant services to ensure proper integration with Tyler MUNIS system and to ensure Payment Card Industry (PCI) compliance. PCI is a set of security standards designed to ensure that credit card information is maintained in a secure environment. This standard applies to any organization that accepts, transmits, or stores cardholder data Item 08E 1 of 14

2 The City and the San Dieguito Water District (District) issued a joint Request for Proposals (RFP) for payment gateway and merchant services with a response deadline of June 8, Responses to the RFP were received from five vendors, as follows: - Automated Merchant Systems - US Bank - Commercial Bank - Wells Fargo - Elavon After evaluating the responsiveness of the proposals for cost, integration, and compliance criteria, it was determined that Automated Merchant Systems, Inc. was the vendor that best met the needs of the City and the District. Automated Merchant Systems is a PCI-compliant vendor that is also a preferred partner of Tyler MUNIS. Due to the fact that the City and District have separate Federal Tax ID numbers, the vendor is requiring that separate agreements be approved with the City and the District. This item is to award an agreement between the City and Automated Merchant Services, Inc. The initial term of this agreement is a period of three (3) years with two additional one (1) year extensions by mutual agreement of both parties. The District will bring its companion agreement before the District Board of Directors at a District Board meeting. Due to the nature of these services, the City will be billed based upon a combination of set-up fees, monthly fees and per-transaction costs. Per-transaction charges for customer payments make up the majority of the costs for this agreement with the number of transactions being variable depending upon customer volume. ENVIRONMENTAL CONSIDERATIONS: The action being considered by the City Council is exempt from the California Environmental Quality Act (CEQA) because it is not a project under Section 15378(b)(5) of CEQA Guidelines. The action involves an organizational or administrative activity of government that will not result in the direct or indirect physical change in the environment. ATTACHMENTS: Attachment 1: Merchant Processing Agreement between the City of Encinitas and Automated Services, Inc. for payment gateway and merchant services Item 08E 2 of 14

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