05-03-2021 Council Work Session Packet

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WS – Item 5 WORK SESSION STAFF REPORT Work Session Item No. 5 Date: May 3, 2021 To: City Council From: Hannah Lynch, Finance Director Re: Utility Billing Statement Processing Background The City’s folder/sorter/stuffer machine is at the end of its life and is no longer operational for monthly utility billing statement processing. The city received a quote for a new machine as well as three quotes from companies who could outsource the function. Only one quote was received for the machine since it would be purchased through the state contract. The City purchased the current machine in July of 2016 for $8,959. The maintenance agreement on the machine was an additional $1,120 annually. The anticipated life was 10 years, but it only operated for 4.5 years. The City currently purchases envelopes and utility bill statements from Curtis 1000. The City also has a contract with the post office to receive the best rates for postage. City Staff evaluated the quotes received over a 5-year period. Assumptions in the analysis include:  Processing 2,000 utility bills per month (24,000 bills annually)  No inflation is included for the product/service quotes received  Infrequent use of the folder/sorter/stuffer function by other departments was not estimated when considering the outsourced functions  Postage was not included since it will be the same across all scenarios City Staff recommends purchasing a Relay 3500 Machine from Pitney Bowes ($32,875 approx. 5-year cost) or outsourcing the function to Image Printing while continuing to purchase envelopes from Curtis 1000 ($28,997 approx. 5-year cost). Outsourcing the function is estimated to save $3,878 over 5 years, although nominal charges would be incurred if more than 24,000 utility billing statements need to be processed in a given year or if another department needs a small mailing processed. Requested Council Direction Consider purchasing a folders/sorter/stuffer machine or outsourcing the function.