Resolution 2021-035 authorizing the City Administrator to execute Amendment No. 3 to the agreement with Peninsula Messenger Service for mail delivery for a not to exceed increase of $122,000 for the term of July 1, 2021 to December 31, 2022

Adopt Resolution 2021-035 authorizing the City Administrator to execute Amendment No. 3 to the agreement with Peninsula Messenger Service for mail delivery for a not to exceed increase of $122,000 for the term of July 1, 2021 to December 31, 2022

The City of Carmel-by-the-Sea does not have house numbers. Nor does the community support the use of group or clustered mailboxes. Therefore, the use of post office boxes is an alternative to the United States Postal Service delivering mail directly to residential homes. The City contracts with a courier service, Peninsula Messenger Service, and pays for residential home mail delivery services for residents upon request. 

On March 3, 2020, Council directed staff to modify the mail service program to incorporate the use of eligibility criteria.  Specifically, residents whom are able to document that they are physically unable to obtain their mail directly from the post office are eligible to participate in the mail delivery program at no cost to the resident.  However, as the program changes coincided with the emergence of the Coronavirus and shelter in place protocols issued by the County of Monterey and the State of California, Council provided direction to defer the implementation of the new program until 60 days after the lifting of the shelter in place restrictions. (On June 1, 2021, Council adopted Resolution 2021-027 and confirmed August 15, 2021 as the effective date for the modified program.)

On January 5, 2021, Council authorized the City Administrator to execute Amendment No. 2 to the agreement with Peninsula Messenger Service to extend the term of the contract through June 30, 2021.  The purpose of this agenda item is to (1) extend the term of the agreement through December 31, 2021 and (2) increase the not to exceed amount of the agreement by $120,000. In addition, the second amendment also establishes a sliding fee scale for service based upon the number of post office boxes enrolled within the program.

Currently Peninsula Messenger Service charges $41 a month for each post office box holder. As the vendor has set fixed costs of operating, such as employees, vans, insurance, and post office box fees, a certain volume of accounts is required to provide this service. The number of post office box accounts from the period from January 2020 to May 2021 ranged from a low of 146 to a high of 187 with an average of 167 accounts.  However, it is unknown how many of these accounts will be deemed eligible to receive the service at the City’s expense and/or how many accounts will pay to receive continued service.  Peninsula Messenger Service has proposed a minimum of 25 accounts and the following fees as shown in Table 1, Proposed Fee Schedule.

Table 1: Proposed Fee Schedule

The not to exceed contract authorization for the agreement and the subsequent two amendments totals $200,200 and covers the term of January 1, 2019 to June 30, 2021.  The City has spent $189,054 from January 2019 to June 2021. The third amendment is for the term of July 1, 2021 to December 31, 2022 for a not to exceed amount of $122,000. The not to exceed amount includes up to $81,000 for July 1, 2021 to June 30, 2022 and up to $41,000 for July 1, 2022 to December 31, 2022. Upon approval of the third amendment, the total amount of the agreement is $324,200 for the term of January 1, 2019 to December 31, 2022.

The Fiscal Year 2021-2022 Adopted Budget includes $81,000 for this service. The budget assumed 150 accounts per month, based on the historical average number of total enrolled post office box accounts, with a potential fee increase to $45 month per account. This equates to $6,750 a month. The percentage of accounts that will be determined to be eligible based on the program criteria is unknown at this time.

Depending on the number of mail service requests that the City approves and pays for, it is possible that the City will pay significantly more per account. However, if the overall volume decreases, it is possible to achieve savings, even with the higher monthly fee, as illustrated in the attached Table 2, Fee Scenarios. Staff will monitor service levels and rates and return to Council with an update, including seeking direction as needed regarding any additional program modifications.

1. On January 8, 2019, the City Council adopted Resolution 2019-003 to approve an agreement with Peninsula Messenger Service for mail delivery for the term of January 1, 2019 to December 31, 2019 for a not to exceed amount of $70,200 on (“Agreement”).

2. On January 7, 2020, the City Council adopted Resolution 2020-005 pertaining to the first amendment to the Agreement to (1) extend the term through December 31, 2021, (2) approve a rate increase from $39 to $41 per post office box and (3) increase the not to exceed amount by $72,000.

3.  On January 5, 2021, the City Council authorized the second amendment to the Agreement by adopting Resolution 2021-003, which extended the term through June 30, 2021 and increased the contract amount by an additional $58,000.