"outsourcing Petaluma Planning Department''

F2 Page 9

The amount of money flowing from the City to M-Group has increased over the life ofthe contracts due to the increase in development activity and M-Group's rate increases. The City has failed to provide a cost-benefit analysis justifring the continuing issuance of contracts. Comment: The City Council wholly disagrees with the finding. The City has repeatedly conducted cost-benefit analyses of the services M-Group perl'orms for the City, which continue to show that the City's contract with M-Group yields significant savings for the City. The City of Petaluma adopted a cost recovery system in 2008 to recover time and materials costs associated with development applications. The City keeps the development application fees (or cost recovery charges) it imposes to recover development related services costs. The City uses some ofthese funds to reimburse M-Group and other consultants for project review services. Some are used to cover other City stafftime devoted to development-related services. In either case, the cost recovery charges for development-related services avoid subsidies from City General Fund moneys needed for core services like public safety, parks and roads. In response to new state laws. community needs and City Council priorities. M-Group's scope of work has changed significantly. While some increases in M-Group charges reflect M-Group periodic rate adjustments, others result from that expanded scope. The City's M-Group contract limits the reimbursable services to those the contract specifies. The contract does not permit adjustments to hourly base level service rates over the life ofthe contract, and permits limited annual increases to hourly cost recovery rates based on changes in the Consumer Price Index.

Related Recommendations (1)

R2

Page 11

By no later than March 1,2024,the City opens an RFP for planning services and considers a combination ofcity employees and private contractors to staffthe planning department. (Fl, F3) 9 Docusign Envelope ID: 2D9F4186-6164-4203A68A-C9AD0DD0AD59 Comment: The recommendation has not yet been implemented, but will be implemented in the future. Before the conclusion of the current contract with M-Group in July 2026, the City will release a Request for Proposals (RFP) for planning services to solicit proposals from multiple private firms prior for a new contract for planning services. The City will continue to consider the best combination of City employees and contractors to provide the best, most cost-effective service delivery for the Petaluma community. The City has determined that a employee-only model would be more expensive and provide no higher level of service.

F4 Page 10

The Cit_v of Petaluma recently hired a director of communi{v development, demonstrating an interest in increasing oversight, however, the City has failed to consider hiring FTE employees in base level services positions. Comment: The City Council partially disagrees with the finding. The City has hired a community development director and has considered hiring employees to perform base level services, Following the public engagement that was part ofthe Fiscal and Organization Sustainability study completed by the City in 2020, Petaluma voters successfully passed Measure U, a l-cent sales tax measure, to support the community's desire for more investment in City roads and infrastructure and continuity ofessential services, and public safety response times. The City continues to monitor its resources closely and with every budget cycle, adjusts where changes are needed. At the end of 2023, the City hired its first Community Development Director to oversee a new department that combines the City's Planning, Building, Housing, and Code Enforcement programs. One ofthe Director's primary responsibilities is building and retaining a diverse workforce that is responsive to both short- and long-term community needs and City Council priorities. At this time. the model includes in-house and contracted services across all Community Development Department divisions to provide high quality, cost-effective service to the community. Please refer to the City's response to Finding 3 and the attached Appendix A regarding the City's planning service cost analysis.

No recommendations for this finding

F5 Page 10

The City has failed to require M-Group employees working in the planning department to wear identifuing badges or logos that would inform the public that they are interacting with contractors and not City employees. Docusign Envelope lD: 2DgF418G6164-4203A6BA{9AD0DD0AD59 Comment: The City Council wholly disagrees with the finding. All M-Group employees working in Petaluma are required to wear identi$ing badges. Each staff member doing work in City facilities for the City has an identification badge that distinguishes each as such. For example. the badge ofeach M-Group employee clearly states that the employee is an M-Group contractor representing the City of Petaluma. Additionally, each M- Group employee working in Petaluma has an M-Group issued business card that is prominently displayed at the public counter and is easily distinguished from City-issued business cards. As the City continues to develop a diverse, inclusive and highly-productive workplace that attracts top talent, the City will continue to explore ways to better integrate its workforce as one cohesive and effi cient organization.

No recommendations for this finding

F6 Page 11

The City has failed to require M-Group employees working in the planning department to include M-Group logo or company name in their email signatures. Comment: The City Council agrees with the finding and has implemented it. All city staff, regardless ofemployee status, use a standard email signature that identifies name, department and contact information. As noted in the City's response to the Grand Jury's

Related Recommendations (1)

R6

Page 12

By December 31,2023, the City conducts a formal survey ofthe citizens of Petaluma to better understand their awareness and understanding ofthe outsourcing of the planning department and their experiences interacting with M-Group employees, (Fs, F6, r.7) 10 DocuSign Envelope lD: 2DgF41 86-61 64-4203-A6BA-CSAD0DD0AD59 Comment: The recommendation has not yet been implemented, and will not be implemented, because it is not reasonable. The City of Petaluma has a rich history, unique natural assets, historic resources and public amenities, a robust business community, a strong focus on sustainability and climate action, and a diverse housing program. The City Council and other local leaders are attuned to the community's values and all of its needs. To that end, the City will continue to find diverse ways to remain engaged with its constituents and to ensure that all City services are delivered to the public in the best and most cost-effective ways possible. This applies to all City services, notjust to one type of City service, such as planning services. Therefore, by December 31, 2024, the Cily will conduct a formal survey to increase awareness ofthe full range ofexisting city services and solicit feedback on the effectiveness ofthose services and the communiry's needs. IV. Conclusion The City Council appreciates this opportunity to respond to the findings and recommendations in the 2022-2023 Civil Grand Jury report entitled "Outsourcing Petaluma Planning Services." We hope we have provided information that will help the Grand Jury and the public more fully understand the City's planning service delivery approach, in the context ofthe City's entire contracting program for augmenting the services the City is able to deliver to the Petaluma community. We have also provided additional information regarding the mechanics of planning services cost recovery that is common in most cities. We have also provided information on the ethics laws and regulations that govem not only municipal contract service providers, but also city elected and appointed officials and employees. The City ofPetaluma takes its ethical obligations very seriously, and all elected and appointed officials, employees and contractors are expected to fully comply with their ethical duties. We have provided the thorough cost benefit analysis that City staff have periodically performed that continues to support the significant cost benefits to the City, its developers and taxpayers from the City's planning service delivery model. We have also listed some of the especially noteworthy City planning accomplishments that are a direct result ofthe City's unique approach to planning services. We are proud to note that those accomplishments are in direct response to City Council policy priorities, which are in tum responsive to community needs the Council members have perceived. The City of Petaluma has been and will continue to be a leader in the region, the state, and the nation. in responding to our current climate and housing crises. Our expectation as the City Council is that our City staff, as a whole, including all employees and contract service providers, will continue to effectively implement the City Council's policy direction, and that the City's staff team carrying out its important public service duties will continue to evolve as needed, as determined by the City executive team under the Council's supervision, to preserve and enlance the wonderful Petaluma communit5u we all love. As a City Council, we judge our staff according to the results of their work. We invite all our community members to do the same, and hope the information provided in our response will assist them in doing so. l1 t:^--o. l stdsi;o'il id!jd;virr s :r- :l ! :l il, El!6 Et; :! 3lt gl E:frP: I !i-.-a. tE-'--'-^ '^- s '!E:! 9.a ! ! Ea$ia; ie if idi 6E' e E !-6----------- a ! ! EiE:9a9*9P9Pl:Pa ?t II El !n--o6do r a 6 a I a s i ,E6 Lt r : !+ EfE := ! :+ !! ! i0, 2 r t !rE.-:E-.gEi=-; i= 4 r! riiE!EEi;5,r!:: !E JE 9 i!ii!i:':--ala:tti ; in ::s6i!E!::'E;iE ESF ,P

F7 Page 11

The City has failed to identi$ persons listed on the Planning Directory located on the City's website as M-Group employees. Comment: The City Council agrees with the finding and has implemented it. Formerly, all City staff regardless of employee status were listed in a standard staff directory that identifies name, department and contact information. Now, the City staffdirectory identifies M-Group staff as "M-Group Consulting PIanners." III. Recommendations Rl. By December 31,2023, the City completes a cost-benefit analysis of using a private firm versus employees to staffthe planning department. (F1, F2, F3, F4) Comment: The recommendation has been implemented. The City routinely performs a cost/benefit analysis with City contracts and recently completed this study for M-Group's contract as part ofthe FY 23124 budget preparation. This analysis includes a thorough review of M-Group's monthly and annual costs, including hours worked and services provided, based on the needs ofa full-time City Planning Department. Refer to response to findings F1, F2, F3, and F4 and Appendix A.

No recommendations for this finding

Findings and Recommendations 5 findings