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MEETING NOTICE/AGENDA
FINANCE COMMITTEE
CANYON'S CONFERENCE ROOM
41000 MAIN STREET
TEMECULA, CALIFORNIA
TUESDAY, AUGUST 27, 2013
3:00 PM
CALL TO ORDER:
ROLL CALL: Mayor Mike Naggar, Council Member Chuck Washington
PUBLIC COMMENTS
A total of 15 minutes is provided so members of the public may address the Committee on items
that are not listed on the agenda. Speakers are limited to three (3) minutes each. If you desire
to speak to the Committee on an item not listed on the agenda, a"Request to Speak" form
should be filled out and filed with the staff liaison.
When you are called to speak, please come forward and state your name for the record. For all
Public Hearing/Committee Business matters on the agenda, a"Request to Speak" form must
be filed with the staff liaison prior to the Committee addressing that item. There is a five-minute
(5) time limit for individual speakers.
COMMITTEE BUSINESS
1. Local Vendor Preference Program
ADJOURNMENT
� jz� J � �.� �� -
Date Susan . Jones, MMC
City Cler
' NOTICE TO THE PUBLIC
The Agenda will be available for viewing, prior to the meeting, at the Main Reception at City Hall — 41000 Main Street,
Temecula, 8:00 — 5:00 PM as well as on the City's website — www.cityoftemecula.orq. Any staff report/written
material pertaining to this meeting will be available, prior to the meeting, for public review at the Main Reception and
at the respective meeting. Any Supplemental Material distributed to a majority of the Committee Members
regarding any item on the Agenda, after the posting of the Agenda, will be available for public review at the Main
Reception. In addition, such material will be made available for review at the respective meeting.
If you have any questions regarding any item of business on the Agenda for this meeting, please contact City Hall —
951-694-6444.
CITY OF TEMECULA
FINANCE DEPARTMENT
MEMORANDUM
TO: Mike Naggar, Finance Committee Member
Chuck Washington, Finance Committee Member
FROM: Jennifer Hennessy, Director of Finance
Roberto Cardenas, Fiscal Services Manager
David Bilby, Senior Debt Analyst
DATE: August 27, 2013
SUBJECT: Local Vendor Preference Program
REPORT SUMMARY:
At its meeting August 13, 2012, Staff presented the results of an analysis conducted by Keyser
Marston Associates (KMA) which quantifies the economic benefit derived by purchasing from
local vendors within the City of Temecula. The discussion was cut short due to time constraints,
and the Committee requested the continuation of this agenda item at a subsequent Finance
Committee meeting.
RECOMMENDATION:
In an effort to increase the economic benefit realized by increased local spending, as referenced
in KMA's analysis, Staff recommends that Iocal vendors with bids greater than the current 5%
margin be given the opportunity to match the lowest bid amount in the purchase of Materials,
Supplies, and Equipment.
DISCUSSION:
At the request of the Finance Committee, the City entered into an agreement in August 2012
with Keyser Marston Associates (KMA) to conduct an analysis of the potential economic
benefits of the City's Local Vendor Preference Program in terms of employment, income, local
spending, and tax revenue.
To evaluate the economic benefit, KMA reviewed the City's expenditures during Fiscal Years
2011 and 2012 for the purchase of Maintenance Services, Materials, Supplies, Equipment,
Professional Services, and Public Works Projects up to $45,000. The table below summarizes
KMA's key findings:
�. Ke. KMA Findin s;� . . �: .. . �.,; ;,;:: : ; � �
Annual City Spending on Purchase Categories $9,813,181 ($9.8 million)
Estimated Expenditures to Local Vendors $1,244,000 ($1.2 million or 13% of $9.8 million)
Economic Output $1,753,000
Labor Income $860,000
Employment 22.2 Jobs Created
City's Current Economic Output $3.7 Billion from private sector industries
General Fund Revenue from Economic Out ut $1.19 for Ever $100
R:IFinance Committee Meetingsl9 - August 27, 20131Local Vendor Preference ProgramlFinance Committee Memo - Local Vendor
Preference_JH.docx
According to KMA's analysis, the City receives a$0.017 (1.7%) increase in revenue per $100
spent on local vendor purchases. In an effort to shift City expenditures toward local vendors
and increase the economic benefits caused by increased local spending the Finance Committee
may consider amending the Municipal Code to implement a 1.7% credit to local vendors
(competing against a non-local vendor) as illustrated below:
Bid on Materials, Supplies, Equipment, and Public Projects (Public Works) up to $45,000
Non-Local Vendor Bid $100.00
Local Vendor Bid $110.00
Credit of 1.7% (of lowest bid amount) to the Local Vendor $1.70
Revised Bid of Local Vendor (if Local Vendor chooses to accept) $101.70
BACKGROUND:
The City Council approved the Local Vendor Preference program in May 2012, and the program
became effective on July 12, 2012. Under the Local Vendor Preference Program, a local
vendor that submits a bid for materials, supplies, equipment, and public projects within five
percent (5%) of the lowest bid (non-Iocal vendor) is awarded the bid if they are willing to reduce
their price to the lowest amount.
For solicitations that are based on criteria other than lowest price (e.g. Professional Services —
where experience, quality, schedule, service delivery, etc. may be additional factors), a five
percent (5%) preference is added to the final evaluated local vendor score, as determined
through the request for proposal (RFP) process. In some cases, if the evaluated scores are
close to one another, this 5% preference could move the local company to the top of the list.
However, if there is more than a 5% disparity in the evaluated scores, the Local Vendor
Preference will not outweigh the other criteria evaluated, such as levels of expertise, quality,
service, etc., ensuring Staff evaluates the RFPs objectively and recommends the best qualified
respondent to do business with the City.
R:IFinance Committee Meetingsl9 - August 27, 20131Local Vendor Preference ProgramlFinance Committee Memo - Local Vendor
Preference_JH.docx