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City Council Report


City Council Meeting: March 19, 2013

Agenda Item:  3-E  

To:               Mayor and City Council 

From:           Gigi Decavalles-Hughes, Director of Finance

Subject:        Modification to Agreements with IPS Group, Inc. and TransFirst Health and Government Services, Inc. for Annual Operating and Maintenance Costs for Single-Space Parking Meters



Recommended Action

Staff recommends that the City Council authorize the City Manager to negotiate and execute the following contract amendments to provide credit card processing services for single space parking meters:

1)    an amendment to contract no. 9496 (CCS) with IPS Group, Inc., a California-based company, in an annual estimated amount of $600,000 for a new contract annual operating amount of approximately $1.2 million;

2)    an amendment in the amount of $3 million to contract no. 9082 (CCS) with TransFirst Health and Government Services, Inc. a Kansas-based company.  This will result in a 5 year amended agreement with a new total estimated amount of $6,350,000 with future year funding contingent on Council budget approval; and

3)    Appropriate the budget increases as outlined in the Financial Impacts and Budget Actions section of this report.


Executive Summary

Since 2011, the City has converted all 5,967 on-street parking meters to IPS Group, Inc. credit card enabled meters.  The single-space parking meters also include sensors that provide real-time parking information via a mobile application and the City’s website.  The City processes an average of 1 million transactions per month from the single-space parking meters.  Credit card usage has increased from 30% since the trial program in Fiscal Year 2010-11 to approximately 60% of all transactions today.  The increased usage of credit cards has increased the City’s operating cost by an estimated amount of $1.4 million per year, necessitating amendments to contracts with IPS Group, Inc. and TransFirst Health and Government Services, Inc.  Additionally, staff recommends consolidating all IPS Group, Inc. costs into the original contract, including an annual amount of $150,000 for batteries and other routine maintenance.  




On October 25, 2011, Council awarded contract no. 9496 to IPS Group, Inc., in the amount of $4,500,000 plus an annual estimated operating cost of $612,000, which includes communication and software costs.  The communication charges are based on the number of credit card transactions.  Pursuant to a contract awarded by Council on January 19, 2012, the City also pays a per transaction fee for credit card processing to TransFirst Health and Government Services, Inc. (TransFirst).  The original budget estimate, that was included as part of the citywide $3,350,000 TransFirst contract, was based on an estimated 35% of transactions utilizing credit cards.  This was based on the then-current credit card usage rate of 30% in comparable cities and experience with the City’s trial project.  Credit card usage at the City’s parking meters has increased to approximately 60% of all transactions, significantly increasing the City’s processing cost.  Staff anticipates that credit card usage will continue to increase as the last few beach parking locations that do not accept credit cards are able to accept credit card payments. 




Since the October 1, 2012 parking meter rate adjustment, an average of 60% of all single space meter transactions, about 600,000 transactions per month, are paid for with credit cards.  This has significantly increased the City’s communication charges and credit card processing fees, necessitating a $450,000 per year increase in the IPS Group, Inc., agreement and an estimated $1 million per year increase in processing fees for TransFirst Health and Government Services, Inc.


Additionally, the original IPS contract did not incorporate routine annual maintenance that was to be included into future budget requests.  In order to more transparently reflect all costs of the parking meter program, staff recommends adding this cost to the IPS Group, Inc. (IPS) contract.  The estimated annual amount of $150,000 includes $100,000 for a meter battery replenishment program plus $50,000 for miscellaneous parts, for a new annual operating and maintenance amount of $1.2 million.  The battery replenishment program is necessary to ensure fully charged and functional batteries at all times since the solar recharging function built into the meters is insufficient to maintain a full charge with all the functionality of the meters the City utilizes, such as the real-time parking application.


In February 2012, in an effort to conserve battery life as much as possible and respond to the fact that only 0.6% of transactions, or about 6,000 monthly, utilized the pay-by-phone service, the City terminated its agreement with Parkmobile for this service.  Without termination of that agreement, the battery replenishment cost would have been an estimated $250,000 annually.


Contractor/Consultant Selection


IPS Group, Inc.

In January 2011, the City initiated a trial program to test new single-space on-street parking meters with electronic payment options.  All companies that produce credit-card enabled single or multi-space parking meters were invited to participate, and one took part in the trial.  Based on customer feedback and functionality, staff recommended a single-space meter solution.  IPS Group, Inc. was the only company that could deliver a functional single-space product.  IPS Group, Inc. single-space meters have been widely deployed in Los Angeles, Beverly Hills, and West Hollywood and are widely accepted and known by on-street parkers in the Los Angeles area.  IPS Group, Inc. is a San Diego based company.


TransFirst Health and Government Services, Inc.

A request for proposals for merchant account processor services was issued on June 10, 2009, to which responses were received from TransFirst Health and Government Services, Chase Paymentech, Wells Fargo Merchant Services, Bank of America, Govolution LLC, Union Bank/Elavon Merchant Services, Citi Merchant Services/First Data, and Electronic Merchant Services.  The responses were evaluated by an interdepartmental committee composed of representatives of the Finance and Information Services departments.  TransFirst was selected on the basis of pricing, complete response to the RFP requirements, and quality and scope of services.  

Financial Impacts & Budget Actions

The contract modification to be awarded to IPS Group, Inc. is for an estimated annual amount of $600,000.  Funds are available in the FY 2012-13 Finance Department Budget; the contract will be charged to account 01225.555010.


The contract modification to be awarded to TransFirst Health and Government Services, Inc. is for an amount of $3 million.  Award of the contract modification requires an additional appropriation of $550,000 to account 01224.522230 in FY 2012-13.


Budget authority for subsequent budget years will be requested in each budget for Council approval.  Future funding is contingent upon Council approval and budget adoption.


Prepared by: Donald Patterson, Assistant Director – Finance





Forwarded to Council:








Gigi Decavalles-Hughes

Director of Finance


Rod Gould

City Manager