To: MAYOR AND CITY COUNCIL
From: JOE HOFFMAN, CHIEF OF POLICE
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APPROVE A SECOND AMENDMENT TO THE AGREEMENT WITH PAYBYPHONE TECHNOLOGIES, INC. FOR THEIR MOBILE PARKING PAYMENT APPLICATION SERVICE TO INCREASE THE PER TRANSACTION CONVENIENCE FEE TO THE FOLLOWING AMOUNTS: $0.30 EFFECTIVE APRIL 16, 2024, $0.32 EFFECTIVE APRIL 16, 2025, AND $0.45 EFFECTIVE APRIL 16, 2026, AND TO ESTABLISH A SMS TRANSACTION FEE OF $0.20 PER TEXT MESSAGE EFFECTIVE APRIL 16, 2024 FOR USE OF THE OPT-IN TEXT MESSAGE REMINDER FEATURE, WITH NO CHANGE TO THE EXISTING AGREEMENT TERM WHICH ENDS OCTOBER 18, 2026
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EXECUTIVE SUMMARY
In 2020, the City Council directed staff to explore the possibility of improving and expanding mobile parking payment application (app) options across the City. A request for proposals (RFP) was issued, and, in 2021, agreements were approved with ParkMobile, LLC and PayByPhone Technologies.
The mobile parking payment application companies charge a convenience fee for each transaction, which is added to the customer’s cost of parking, and incorporated into the parking fee revenue collected by the City. The company then sends monthly invoices to the City to remit the convenience fee portion of the revenue. The second amendment would set convenience fees (which are currently $0.25) through 2026, to $0.30 effective April 16, 2024, $0.32 effective April 16, 2025, and $0.45 effective April 16, 2026.
Additionally, the second amendment incorporates a new SMS transaction fee of $0.20 per text message, should the customer opt-in to text messages for payment confirmation and expiring parking meter reminders. Similar to the convenience fee, the SMS transaction fee would be incorporated into the overall parking meter fee collected by the City, and then remitted to PayByPhone. The SMS transaction fee is optional for the customer, and only those opting-in to the SMS text message service would be charged this fee.
BACKGROUND
Redondo Beach has approximately 1,300 metered parking spots in the City, with roughly 1,100 smart-meters spaces in operation. There are an additional 1,300 pay by space parking spots in the pier/harbor area that allow for mobile parking apps. The City Council approved an agreement with ParkMobile, LLC on May 5, 2021 and staff worked with ParkMobile, Bank of America, DataTicket, IPS, and MacKay to plan, map equipment, implement, test, and launch the service on all parking meters in the City, including the Waterfront area. A soft launch of the ParkMobile, LLC. for on-street parking service began on October 1, 2021 and was supported with advertisement and educational information about the service.
To expand the number of mobile payment apps, the City Council directed staff to solicit services from one additional company, PayByPhone, and a contract was approved on October 19, 2021.
Each mobile payment application company charges a per transaction convenience fee to cover the cost of providing its service. The fee is added to the customer’s total cost of parking. The original fee charged by PayByPhone was $0.18 per transaction. A first amendment to the agreement was approved by City Council on May 16, 2023, which increased the fee to $0.25. The second amendment increases the cost to $0.30 per transaction, and includes two additional annual increases through 2026. The vendor requests the increase to keep pace with current market rates for mobile app convenience fees. As per the original Agreement, the fee may be increased by mutual agreement of both parties.
Additionally, PayByPhone has implemented an SMS text message feature. If a customer chooses to opt-in, they can receive text messages confirming payment and reminders for an expiring parking meter. In the instance of an expiring meter, the customer may pay to add time using the app which would make them subject to an additional transaction fee.
Staff believes this can potentially enhance revenue by providing customers with a mobile option to add time to an expiring meter, or by encouraging quicker turnover by reminding customers of an upcoming expiration of paid parking time. The SMS feature is optional, and customers opting-in would be charged $0.20 per text message, which is added to the total cost of the parking meter fees collected by the City and then remitted to PayByPhone. Any future increase to this fee would require approval of the City Council.
COORDINATION
The proposed contract amendment has been prepared by the City Attorney’s Office.
FISCAL IMPACT
The amendment is cost neutral to the City. The transaction fees are added to the total parking meter payment collected by the City, and then are remitted to PayByPhone through monthly invoicing.
APPROVED BY:
Mike Witzansky, City Manager
ATTACHMENTS
• Agmt - Second Amendment to Agreement with PayByPhone Technologies, Inc.
• Agmt - First Amendment to Agreement with PayByPhone Technologies, Inc., May 16, 2023
• Agmt - Original Agreement with PayByPhone Technologies, Inc., October 19, 2021
• City Council - Administrative Report, October 19, 2021
• Insurance - PayByPhone Technologies, Inc.