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COUNCIL AGENDA REPORT
APRIL 8, 2015
MAYOR AND TOWN COUNC]
LES WHITE, INTERIM TOWN
MEETING DATE: 04/21/15
ITEM NO: 5
SUBJECT: AUTHORIZE THE TOWN TO NEGOTIATE CHANGES TO THE 1995 MONTE
SERENO POLICE SERVICES CONTRACT WITH THE CITY MANAGER OF
MONTE SERENO TO ADJUST THE ANNUAL INCREASE CAP AND TO
CONSIDER OTHER COST SHARING ADJUSTMENTS
RECOMMENDATION:
Authorize the Town to negotiate changes to the 1995 Monte Sereno police services contract with the
City Manager of Monte Sereno to adjust the annual increase cap and consider other cost sharing
adjustments, and recommend to the Council adjustments in those rates.
EXECUTIVE SUMMARY:
Staff has previously provided Council with a detailed analysis regarding the police services contract
between the Town of Los Gatos and City of Monte Sereno in preparation for Council's discussion on
February 17t1 (see Attachment 1 which includes previously distributed reports). The purposes of this
report are to summarize the previous report and to provide some new information as Council considers
the authorization of negotiations.
Based on the February analysis, staff has concluded that the police services contract is a mutually
beneficial arrangement; however, the current contract should be updated to be more fiscally equitable.
The 1995 Monte Serene police services contract authorizes a re- evaluation of the annual limit on cost
increases (cap) every five years, effective June 1, 2000. Re- evaluation of the cap is scheduled to occur
in June 2015. Given this existing contract language, it is timely for staff to re- evaluate cap limits and
discuss other cost recovery aspects of the current contract. Therefore, staff recommends Council
authorize the Town to open negotiations to re- evaluate the annual cap as well as amending the contract
as described in this report.
PREPARED BY: LES WHI MATT FRISBY r
Interim Chief of Police
Manager a ��
Reviewed by: Assistant Town Manager own Attorney 4i?/ Finance
NAMGR\AdminWorkFiles\2015 Comcil Reports\Aprll 2RContmct rmsionFINAL.doc
PAGE
MAYOR AND TOWN COUNCIL
SUBJECT: AUTHORIZE THE TOWN TO NEGOTIATE CHANGES TO THE 1995 MONTE
SERENO POLICE SERVICES CONTRACT WITH THE CITY MANAGER OF
MONTE SERENO TO ADJUST THE ANNUAL INCREASE CAP AND TO
CONSIDER OTHER COST SHARING ADJUSTMENTS
APRIL 8, 2015
BACKGROUND:
The Los Gatos Monte Sereno police services contract allows for more efficient patrol and other police
services due to the close proximity of the two communities. The contract requires Los Gatos to provide
police protection services, including patrol, investigation, communications (i.e., dispatch), records, and
other services. Since FY2007/08, the revenue to cover these services averages $580,000 annually. Over
time, Los Gatos has integrated service delivery to most efficiently provide the services to both
communities.
DISCUSSION:
Contract Cost Evaluations
The Town of Los Gatos provides full police services to the City of Monte Sereno which includes
traditional core responsibilities such as patrol, traffic, investigations, dispatch, and records as well as
many other specialized services. Since the inception of the contract with Monte Sereno, the special
services in Section 3 entitled Special Provisions have changed largely in terms of augmentations. These
have become part of the service level to Monte Sereno. (see Attachment 2 entitled Police Department
Programs for a recent delineation of those services). Despite the provision of service augmentations and
other core services, the only services directly billed are patrol and traffic services. All other services are
provided at "no cost" to the City of Monte Sereno.
Benchmarking
Staff has examined similar current police service agreements found within Santa Clara County for
benchmarking purposes (Saratoga, Los Altos Hills, and Cupertino). These agreements specify that core
services are provided at an hourly cost based upon the number of hours negotiated for each service
provided, such as patrol, traffic, and investigation. It would appear that should Monte Sereno pursue
contracting police services at a similar service level with another agency, the cost to Monte Sereno could
be approximately $800,000 (which is calculated based on the direct costs of patrol, traffic, and
investigation services).
In comparison, the Town's agreement only charges the direct costs for patrol and traffic services. If the
direct cost of the Town providing investigation services to Monte Sereno was billed in 2014, the amount
would be approximately $150,000.
Staff also examined dispatch and administrative costs. From the evaluation of other agreements, it
appears that dispatch costs are absorbed along with and considered a basic part of administrative costs
with a minimal overhead being charged on direct services. If direct dispatch costs are included in the
contract between the Town and City of Monte Sereno, that would add another $150,000 per year. This
PAGE
MAYOR AND TOWN COUNCIL
SUBJECT: AUTHORIZE THE TOWN TO NEGOTIATE CHANGES TO THE 1995 MONTE
SERENO POLICE SERVICES CONTRACT WITH THE CITY MANAGER OF
MONTE SERENO TO ADJUST THE ANNUAL INCREASE CAP AND TO
CONSIDER OTHER COST SHARING ADJUSTMENTS
APRIL 8, 2015
gap could be closed by authorizing staff to renegotiate certain contract terms, including caps, that would
be fiscally reasonable while still providing quality service levels for the City of Monte Sereno.
In summary, while other agreements clearly delineate investigation services as a service that is billed,
investigative services are not covered in the current Los Gatos /Monte Sereno contract. The other public
safety agreements also appear to include overhead or other adjustments to cover administration and
other costs. In a discussion between the Town Manager and City Manager of Monte Sereno, it was
agreed that the cap adjustment and other cost recovery considerations could be discussed.
Cap
In accordance with Paragraph 6 C iii,(f) of the 1995 Agreement, the Chief shall present to the Town
Manager and City Manager of Monte Sereno, "costs adjustments that will occur as of July 1, because of
contractual changes in employee salary and/or benefits, inflation, or other cost changes and the
consumer price index..." The Finance Department determined that the average cost increase since 1995
has been 6 %. Since the inception of the contract the annual cap rate has been adjusted in a range of
2.4% to 8% per year. Initially, this adjustment was approved by the Council and then it occurred
administratively. Over the term of the contract the cap has been negotiated twice, initially increased to
8% in 2001 and then later reduced during the recession to 5.5% in 2008. Once again, the two parties to
the contract are scheduled to negotiate a new cap rate.
Geographical Relationships:
The Town of Los Gatos provision of police services to the City of Monte Sereno is not only mutually
beneficial, but also logical and relatively seamless given the geographical proximity of the two
jurisdictions. The two main thoroughfares used by the residents of Monte Sereno are the same roadways
officers and citizens' use to access large portions of the Town. For this reason when the contract
agreement was finalized in 1995 it was determined to maintain existing deployment models and simply
incorporate the jurisdiction of Monte Sereno into two police beats. This proximity affords a flexible
deployment model that has benefitted both communities particularly in high risk crime situations and
other emergencies. Attachment 3 shows the police beats and boundaries of the two local government
jurisdictions.
CONCLUSION:
The police services contract with Monte Sereno is mutually beneficial to both jurisdictions. However,
some fiscal disparity does exist under the current contract language and staff recommends re- evaluation
and amendment of the contract language to be more fiscally equitable. Specifically, staff recommends
Council authorize the Town to enter discussions with Monte Sereno to re- evaluate the cap limit as well
as negotiate additional contract language to include reimbursement for other direct services.
PAGE 4
MAYOR AND TOWN COUNCIL
SUBJECT: AUTHORIZE THE TOWN TO NEGOTIATE CHANGES TO THE 1995 MONTE
SERENO POLICE SERVICES CONTRACT WITH THE CITY MANAGER OF
MONTE SERENO TO ADJUST THE ANNUAL INCREASE CAP AND TO
CONSIDER OTHER COST SHARING ADJUSTMENTS
APRIL 8, 2015
ALTERNATIVES
The Council has two alternatives to consider for this matter:
• Do not negotiate any changes to the Monte Sereno contract
• Commence the contract termination process
For each alternative, the advantages and disadvantages are provided as well as an explanation as to why
the alternative is not recommended.
Alternative A: Do not negotiate any changes to the Monte Sereno contract
The advantage of not negotiating any changes is that the contract would not be vulnerable to
other modifications that Monte Sereno may wish to introduce beyond the scope of the items
discussed in this report.
The disadvantage of not negotiating is that the Town does not attempt to modernize the
arrangement and recover the financial costs for the direct police services being provided.
This alternative is not recommended because the Monte Sereno City Council has authorized its
City Manager to negotiate with the Town Manager, which provides an opportunity to improve
the financial arrangement. In addition, there is low risk for Monte Sereno to introduce other
changes to the contract which could be considered by the Council.
Alternative B: Commence the contract termination process
There are no advantages to this alternative at this time.
The disadvantages are that the Town would need to begin to determine service modifications and
possible service reductions, staff reductions, and a phasing plan for implementation. Specific
service modifications include reconfiguring the interwoven geographic beats and the staffing
shifts; pulling apart the current joint emergency preparedness with appropriate reassignments;
and determining other service changes to Los Gatos given reduced resources. Given the
economies of scale and efficiencies that have developed over time, without the contract, the
Town would either need a budget augmentation to supplement the lost revenue to maintain
current service levels or reduce current service levels and operating expenses.
The disadvantages for Monte Sereno include, but are not limited to, the residents would lose the
officers experienced with local concerns, lose the prevention and community policing programs,
and lose the efficiency of joint emergency preparedness.
PAGES
MAYOR AND TOWN COUNCIL
SUBJECT: AUTHORIZE THE TOWN TO NEGOTIATE CHANGES TO THE 1995 MONTE
SERENO POLICE SERVICES CONTRACT WITH THE CITY MANAGER OF
MONTE SERENO TO ADJUST THE ANNUAL INCREASE CAP AND TO
CONSIDER OTHER COST SHARING ADJUSTMENTS
APRIL 8, 2015
This alternative is not recommended because the negative impacts to both communities outweigh
the maintenance of the existing contract.
COORDINATION:
The contents of this staff report was drafted in collaboration with the Departments of Police, Finance,
and Town Manager's Office and reviewed by the Town Attorney. This topic has also been discussed, in
general, with the City Manager of Monte Sereno.
ENVIRONMENTAL ASSESSMENT:
This report and the recommended actions are not a project under CEQA and no environmental clearance
is required.
FISCAL IMPACT:
Re- evaluation of cap limits and language as well as amending the contract language to include
reimbursement for additional core services would provide the potential for an undetermined amount of
additional revenue to the Town that would be available to supplement the Town's current police service
levels.
Attachments:
I . Report previously received on February 12, 2015 for the February 17, 2015 Town Council Meeting
Exhibit A: Desk Item on February 17, 2015)
2. Los Gatos /Monte Sereno Beat Map
3. Memo from Chief Frisby to Interim Town Manager Les White dated March 31, 2015 regarding
Police Department Programs