Title
Recommendation to Authorize the City Manager to Execute an Alameda Animal Shelter Services Agreement and a Lease Agreement with the Friends of the Alameda Animal Shelter (FAAS) for an Amount Not to Exceed $804,300 in FY18/19 with an escalator for the second year, plus $45,000 for Capital Improvements in Fiscal Year 2017-18. (City Manager 2110)
Body
To: Honorable Mayor and Members of the City Council
From: Jill Keimach, City Manager
Re: Recommendation to Authorize the City Manager to Execute an Alameda Animal Shelter Services Agreement with the Friends of the Alameda Animal Shelter (FAAS) for an Amount Not to Exceed $804,300 with an escalator for the second year plus $45,000 for Capital Improvements in Fiscal Year 2017-18.
BACKGROUND
Animal control shelters are regulated under the California Food and Agriculture Code and the California Civil and Penal codes. It mandates that city and county animal control shelters and/or its agencies provide care to animals housed in an animal control shelter to prevent spread of disease, to protect the animals and protect the public good. Historically, animal care and control in the City of Alameda has been provided by the Police Department.
In June 2011, during the height of the recession, the Alameda City Council approved its annual budget, which included steep spending cuts in all Departments in order to close a $7.5 million budget deficit. The Police Department's $1.3 million budget reduction, or five percent of its total budget (at that time), included outsourcing the Alameda Animal Shelter to another community or non-profit organization and eliminating four police officer positions (two in investigations and two in traffic). The alternative to outsourcing the Animal Shelter was the elimination of an additional five police officer positions, for a total of nine police officers. These positions have not been added back into the Police Department since 2011, with the exception of adding another .5 FTE Animal Control Officer (the previous two half time positions were increased to one full-time and one half-time.)
At that time, the Friends of the Alameda Animal Shelter (FAAS) and the Humane Society of Alameda (HSA) expressed a strong interest in taking over the Shelter, rather than contracting with another community. After several months of negotiations, the City and FAAS entered into a 15 year contract which included the option of two additional five year extensions, starting in January 2012 (Exhibit 1). Elements of the existing, enforceable agreement include:
• FAAS pays the City $1 annually as rent;
• Starting in January 2012, the City provided FAAS with a base of $300,000 plus an escalator tied to the Bay Area Consumer Price Index (CPI) annually to run the shelter. For Fiscal Year (FY) 2016-17 the City contributed a total of $355,823 (plus an additional $75,000 discussed below);
• The City maintains responsibility for the building's roof, foundation, heating/ventilation/air conditioning systems, and electrical systems;
• FAAS is responsible for general maintenance of the building as well as janitorial services and all utilities;
• FAAS provides all of the general shelter services such as licensing of companion animals (for which it is entitled to keep the licensing revenues), holding of strays and owner-surrendered animals, finding homes for animals within their care, and ensuring the provision of after-hours drop boxes;
• The Police Department retains the responsibility for animal control, which includes two part time animal control officers responding to stray animal calls, transporting animals to the facility, and field enforcement of animal control laws. Because the part-time positions were difficult to fill, the City recently approved the creation of one full time position in addition to retaining one of the part-time positions;
• FAAS is required to accept all companion animals and make a “reasonable effort” to find a new owner. They also have to use a “best effort” to avoid euthanasia; and
• FAAS has no requirement to accept live wild animals; however, they must accept dead animals to ensure the proper disposal of remains.
For the past four years, FAAS has been operating the shelter and reporting to the City Council annually on its audited financials, per the contract. According to their last financial report, FAAS’ FY 2015-16 total expenditures were $1,033,150, which were funded by both the City’s and FAAS’ contributions. The cost of animal control officers is not included in the total expenditures as the City has been and continues to separately fund and provide this service. In addition, in the current Fiscal Year, the City will have spent approximately $170,000 on facility improvements including roof and skylight improvements, replacement of the cooling and heating system, and replacement of kitchen cabinets.
In early 2016, four years into the contract, the (then) newly appointed Executive Director of FAAS approached the City indicating they were having financial difficulties and asked if the City could provide additional funding.
Staff met several times with FAAS in early 2016, but discussions began in earnest in late spring with the arrival of the new City Manager. Initial discussions centered on FAAS’ projected budget and potential solutions, including services that could be scaled back to reduce expenditures, a reduction in staffing levels, ways to increase revenues, and services the City could provide in lieu of funding. With the exception of the City providing services in lieu of funding, FAAS did not feel any of these ideas were viable ways to address their financial challenges.
In August of 2016, FAAS provided the City with a revised contract proposal. In that proposal, FAAS requested the City provide $1,375,528 annually to operate the shelter or $1,263,728 if the City provides services such as IT, HR and payroll support and pays for shelter utilities and repairs. In addition to the City contribution, FAAS would continue to fundraise, collect fees, and solicit in-kind donations, bringing their total annual operating budget to $1,827,150. Although FAAS proposed a $1.8 million budget for FY 2016-17 budget their adopted budget for FY 2016-17 was $1.2 million. FAAS has indicated that the 50 percent increase from their adopted to proposed budget represented a sustainable budget.
DISCUSSION
The following chart reflects the historical and proposed cost to operate the Alameda Shelter. These numbers exclude the cost of providing animal control officers since the City has provided this service and, therefore, has never been included in FAAS’ audited financial statements. The cost to the City of providing animal control officers has ranged from $110,000 in FY 10/11 to $115,000 in FY 18/19.
Table 1
Historical and Proposed Animal Shelter Expenditures
(without Animal Control Officers)
|
Fiscal Year (FY) |
Operator |
City Contribution |
FAAS Contribution |
Total Expenditures |
Percent Increase/ Decrease |
|
FY 10/11 |
City |
$819,168 |
N/A |
$819,168 |
N/A |
|
FY 12/13 (audited) |
FAAS |
$300,000 |
$459,758 |
$759,758 |
-7% |
|
FY 13/14 (audited) |
FAAS |
$305,412 |
$448,665 |
$754,077 |
-1% |
|
FY 14/15 (audited) |
FAAS |
$318,644 |
$632,920 |
$951,564 |
26% |
|
FY 15/16 (audited) |
FAAS |
$328,055 |
$705,095 |
$1,033,150 |
9% |
|
FY 16/17 (projected) |
FAAS |
$414,053 |
$802,273 |
$1,216,326 |
18% |
|
FY 17/18 (proposed) |
FAAS |
$804,300 |
$534,400 |
$1,338,700 |
10% |
NOTE: Operations for FY 2011/12 were split between the City and FAAS
Based on staff’s analysis shown above, and Council direction, staff engaged the services of Willdan Financial Services Inc. to look at FAAS’ financial situation and better understand their budget. As part of the analysis, (Exhibit 2) Wildan collaborated with an industry expert from the Peninsula Humane Society to help evaluate FAAS’ positions, job descriptions, and budget.
The following outlines Wildan’s significant findings:
• From FY 2012-13 to FY 2015-16 FAAS’ budget increased approximately 35 percent, which was attributed to salaries and benefits and general costs to operate the shelter. During this time, collection of fees declined.
• In FY 2012-13, FAAS had an operating surplus. In FY 2015-16, they broke even.
• FAAS current (FY 2016-17) Board-approved budget is 13 percent more than last year’s actual expenditures while at the same time they had an increase in payroll, shelter, and consulting expenses, a drop of in-kind donations, and an expectation that the use of cash reserves of $350,000 would be necessary to balance their budget.
Today FAAS can claim a very impressive 94 percent live release rate up from a high of 82 percent when the Police Department ran the shelter. The live release rate refers to the percentage of animals leaving the shelter alive, regardless of health or behavior status. This could be through adoption, return to owner or transfer to another shelter or rescue agency. In addition, FAAS subscribes to best practices, which have become industry standards. Though not explicitly outlined in the original contract, FAAS requires all animals be fully vaccinated and microchipped before leaving the shelter, provides a behaviorist to evaluate each animal’s temperament to ensure a better fit with adopting individual(s), provides extensive veterinarian services and medical treatment, and in some cases, the gift of lifetime medical treatment for animals that are difficult to adopt out.
With this information as a backdrop, staff worked collaboratively with FAAS to understand how to continue this high level of service and performance. Consequently, after months of discussions, staff is pleased to present to Council a proposed contract with FAAS that meets both the City’s and FAAS’ objectives. The following outlines the basic points of the agreement:
Table 2
Terms of FAAS Services Agreement
|
Rent |
$1 |
|
Compensation |
Not to exceed $804,300 disbursed on a reimbursement basis City to license all pets and keep fees (approx. $110,000) |
|
Capital Costs |
$45,000 (one-time) reimbursement for capital costs |
|
|
|
|
Staffing |
7 - Fulltime Employees - Compensation Paid by City o (1) Executive Director o (1) Shelter Operations/Facilities Manager o (1) Animal Care Supervisor o (2) Customer Care Associates o (1) Vet Tech - Certified o (1) Community Outreach/Volunteer Coordinator 5 - Part-time Employees - Compensation Paid by City o (1)Senior Animal Care Attendant (34 hours/week) o (4) Animal Care Attendants (20-30 hours/week) 2 - Full-time Employees - Compensation Paid by FAAS o (1) Animal Behavior Coordinator o (1) Marketing, Communications and Development Coordinator |
|
Animal Control |
1- Full-time City Funded Position (Police Department) 1- Part-time City Funded Position (Police Department) |
|
|
|
|
Operational Assessment |
City and FAAS jointly participate in operational assessment by the American Humane Association (AHA). FAAS must report on progress toward AHA assessment recommendations. |
|
Oversight |
• FAAS must follow Brown Act, Sunshine Ordinance, and State Conflict of Interest code relevant to non-profit organizations. • Quarterly Board meetings must be open to the public. |
|
Reporting |
• Quarterly and Annual reporting of Administration and Staffing, Animal Care, Fundraising, and Outreach. • Annual Financial Audit |
|
|
|
|
Term |
July 2017 - June 2019 with a two year extension subject to City Council approval. |
In return for additional funding from the City, FAAS has agreed to use good faith efforts to hire up to two residents from the Alameda Point Collaborative at Alameda Point, apply for grants to help support their operations, and explore moving toward a more cost-recovery model for things like spay and neuter. Each of these efforts will be included in their annual report to the City.
In addition to reporting on the priorities outlined above, FAAS will be required to report on a quarterly and annual basis the following:
• # of animals received from Animal Control Officer and those accepted/surrendered from residents
• # of animals returned to owners
• # of animals returned to FAAS after adoption
• # of animals transferred to welfare agencies
• # of animals adopted out
• Amount of adoption fees collected
• # of animals DOA, or died while in care of FAAS including those euthanized and why
• Total live release rate
• Staffing levels and # of volunteer hours
• Schedule of fees/charges and amount collected
• Summary of donations received
• Grants applied for and number/amount received
Finally, it is understood that just like other contracts for services, funding for FAAS will be dependent on the City’s budget and ability to support the program, balancing other responsibilities throughout the City.
FINANCIAL IMPACT
The first year operating annual cost of this contract is an amount not to exceed $804,300 paid on a reimbursement basis, $25,000 of which will only be disbursed if FAAS secures grant funding of an equal amount. In addition to the $804,300, the City will reimburse FAAS for $45,000 worth of FAAS-completed capital improvements in FY 2017-18 only. The City has also identified a total of $50,000 in the two-year Capital Improvement Program (CIP) for Fiscal Years 2017-18 and 2018-19, to install a stainless steel bathtub, a kitchen sink and countertop, and replace fans and ceiling tiles.
Funds for the existing FAAS contract have been budgeted in Fiscal Year 2016-17 at $340,000. As part of the negotiations, the City provided an additional one-time $75,000 to assist FAAS until the end of the current Fiscal Year. Staff will budget total expenditures of $804,300 in the upcoming Fiscal Year 2017-18 and FY 2018-19 budget since the contract runs through June 30, 2019. Revenues are estimated to be net $110,000 per year in licensing fees, which will help offset these costs. In addition, the City is proposing an annual escalator for the second year, based on the Bay Area Consumer Price Index (CPI).
MUNICIPAL CODE/POLICY DOCUMENT CROSS REFERENCE
This action is in conformance with the Alameda Municipal Code and all policy documents.
ENVIRONMENTAL REVIEW
This action is not subject to environmental review as the activity is not a "project" for purposes of the California Environmental Quality Act (CEQA) because it is an organizational or administrative activity of the City that will not result in direct or indirect physical changes in the environment. CEQA guidelines, section 15378(b)(5).
RECOMMENDATION
Authorize the City Manager to execute an Alameda Animal Shelter Services Agreement and a Lease Agreement with the Friends of the Alameda Animal Shelter (FAAS) for an amount not to exceed $804,300 with an escalator for the second year plus $45,000 for capital improvements in Fiscal Year 2017-18.
Respectfully submitted,
Jill Keimach, City Manager
Financial Impact section reviewed,
Elena Adair, Finance Director
Exhibits:
1. Original Lease Agreement with Friends of the Alameda Animal Shelter (FAAS) January 1, 2012
2. Willdan Financial Services Inc, Assessment of Friends of the Alameda Animal Shelter, February 5, 2017
3. Proposed Shelter Services Agreement
4. Proposed Lease Agreement