TO: LINDA REICH, CITY MANAGER
FROM: JACKIE MELENDEZ, ASSISTANT CITY MANAGER
SUBJECT
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Amendment No. 1 to Animal Shelter and Animal Control Services Agreement No. 2022-37 Between the City of Chino and Inland Valley Humane Society & S.P.C.A.
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RECOMMENDATION
1) Approve changes to the Animal Shelter and Animal Control Services Agreement with the Inland Valley Humane Society & S.P.C.A. (IVHS) to remove guaranteed revenue and modify revenue credits upon termination, and 2) authorize the City Manager to execute all documents related to this agreement.
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FISCAL IMPACT
Will require an additional appropriation to be determined based on revenue collected by IVHS during the current fiscal year. This appropriation will be brought to the City Council for approval during the mid-year budget report. The average deficit over the past three years was $62,224.
CITY OF CHINO MISSION / VISION / VALUES / STRATEGIC ISSUES
The recommendation detailed above further the City’s values and strategic issues that serve as key pillars on which identified priorities, goals, and action plans are built, by fostering:
• Financial Stability
• Responsible Long-Range Planning
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Revenue: Click or tap here to enter text. |
Expenditure: |
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Transfer In: Click or tap here to enter text. |
Transfer Out: Click or tap here to enter text. |
BACKGROUND
The City of Chino has long partnered with the Inland Valley Humane Society (IVHS) to provide essential animal services, including sheltering, licensing, and low-cost clinics. Since the inception of this agreement, the City has benefited from Guaranteed Revenue Credits. This allocation, amounting to $320,000, has historically been subtracted from the City’s annual fee obligation to IVHS.
Guaranteed credits were generated from IVHS’s collection of payments for animal licensing, late fees, impound fees, kennel care fees, and court fines. However, since the latter part of 2020, IVHS has modified its canvassing model, leading to decreased collection of these fees. This action prompted the discontinuation of the guaranteed revenue credits, and therefore a higher financial burden for the City. As a result, the City of Chino will face a financial adjustment in the annual budget for animal services.
ISSUES/ANALYSIS
Changes to Revenue Credits
Currently, IVHS collects and retains payments from various fees related to the City’s animal control program, such as dog and cat licenses, late fees, impound fees, kennel care fees, and court fines. The City is guaranteed an annual revenue of $320,000 from these collections. If IVHS fails to collect this amount in any given year, it commits to crediting the City the full $320,000 on the final (June) invoice. Any revenue collected in excess of the guaranteed amount is shared equally between the City and IVHS. IVHS's portion of this excess is placed in an escrow account dedicated to providing medical services, such as spaying, neutering, and microchipping, for City residents who cannot afford them.
Amendment No. 1 removes the Guaranteed Revenue Clause. It specifies that IVHS will collect and retain the same types of payments related to the City’s animal control program, referred to as "Service Fees." These collected fees are then credited against the Annual Fee owed by the City, as outlined in specific paragraphs of the agreement. However, this version does not guarantee a minimum annual revenue for the City, and it does not include provisions for sharing excess revenue or allocating funds to an escrow account for community medical services. In this arrangement, the City receives credit for exactly the revenue collected during the service period in Chino.
Changes to Revenue Credits Upon Termination
Currently, section 13 of the agreement allows either party to terminate the agreement without cause by providing at least 180 days written notice, specifying the termination date. In the event of termination, IVHS will be compensated for all work performed up to the termination date. However, if the agreement ends before the term or renewal period concludes, the City is only entitled to credits for the actual revenue collected from July 1 until the termination date, rather than the full Guaranteed Revenue amount. The City retains the right to claim the full Guaranteed Revenue in case of termination due to a breach by IVHS. If the City terminates the agreement, IVHS must assist in transferring animal shelter and control services to a new provider. This includes identifying and relocating animals, transferring records, and other related expenses. If there is no breach of contract by IVHS, the City will be credited based on actual revenue receipts without any additional guaranteed revenue.
The new termination revision clause still requires 180 days written notice from either party to terminate the agreement without cause. The termination notice must specify a date at least 180 days in the future. Upon termination, IVHS is paid for all work completed up to the termination date, minus any Service Fee credits. IVHS must also cooperate with the City to transfer animals and services to a new provider, covering the costs of identifying, relocating animals, and transferring records. Revenue will be credited to the City based on actual receipts for the service period if termination is initiated. If Amendment No. 1 is approved, there will be no prorated guaranteed revenue.
Attachment - Amendment No. 1 - IVHS