O: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: David Chantarangsu, AICP, Development Services Director
PREPARED BY: Chris Tracy, Senior Planner, Advanced Planning
SUBJECT:
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Approve a Third Amendment to the Agreement for Short-Term Vacation Rental Administration Services with Granicus LLC
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RECOMMENDATION
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Approve a three year extension of the agreement between the City of Murrieta and Granicus LLC for short-term vacation rental administration services, extending the agreement until November 3, 2028;
Authorize the exemption from bidding requirement; and
Authorize the City Manager to execute the agreement.
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PRIOR ACTION/VOTE
On October 20, 2020, the City Council approved a one-year Agreement with Host Compliance, LLC for short-term vacation rental administrative services (Vote: 5-0).
On October 14, 2021, the City and Host Compliance LLC entered into a First Amendment to the Agreement, which extended the term through November 3, 2022, and decreased the Scope of Work and Compensation.
On October 18, 2022, the City and Granicus LLC, as the successor in interest and assignee of Host Compliance, entered into a Second Amendment to the Agreement for an additional three-year term, whereby the term was extended through November 3, 2025.
CITY COUNCIL GOAL
Maintain a high performing organization that values fiscal sustainability, transparency, accountability and organizational efficiency.
BACKGROUND
Following several public workshops on the topic in 2020, the City of Murrieta (City) adopted an ordinance to regulate Short-Term Vacation Rentals (STVR) within its boundaries. This was in response to growing concerns in the community regarding unregulated STVR, which were operating throughout the City, and how to support a balanced framework to provide for limited STVR operations for homeowners while ensuring that a registration and enforcement structure would be in place to address any issues that might arise with the implementation of the ordinance.
In 2020, staff identified approximately 150 properties offering STVR accommodations. The City Council capped the number of STVR properties to 300 when the ordinance was adopted. Based on current estimates, there are 130 STVR properties being monitored, which include 22 properties under review for potential STVR activity. For the past three fiscal years, STVR revenue has averaged approximately $130,000 to the City. These figures are unaudited. Staff notes that Transient Occupancy Tax (TOT) revenue is collected to offset the cost of wear and tear on City facilities, as well as to provide City services resulting from tourism activity.
Following the adoption of the ordinance, the City went through a Request for Proposal process from qualified companies that had the capacity and expertise to complete a comprehensive STVR inventory for the City and to assist the City in the development and implementation of an efficient system for permitting, administration, monitoring, and enforcement of STVR regulations. Through this process, the City selected Host Compliance LLC for online monitoring and the permitting of STVR properties in the City. The service allows staff to use technology to conduct what would otherwise require hundreds of hours of staff time to search for and document properties, run the permit process, perform accounting, and monitor properties for STVR ordinance violations. The service includes various support functions as described below.
Platform Abilities
Host Compliance augments staff’s ability to implement the City’s STVR program. It allows the City to account for STVR operating within the City and provides permitting, enforcement, tax processing, and compliance monitoring. This also includes STVR database management, which includes identifying STVR properties, including listing details, host information, occupancy, rental activity, tax/license status, and application tracking.
Granicus LLC also provides STVR registration with processing applications through the City’s website, verifying compliance with all applicable regulations, maintaining an up-to-date registry, coordinating billing, and sharing financial data with the City’s Finance Department. Such related services ensure that the data supports GIS/CSV/Excel file exports and the City’s outreach/enforcement needs; monitoring of listings; providing outreach and education; notifying hosts of registration, taxes, and compliance requirements; conducting community outreach on the STVR program and complaint procedures; and developing and submitting outreach materials for City approval.
Granicus LLC provides City TOT and fee management through the collection and remittance of taxes/fees electronically. It also assists the Finance Department with pursuing delinquent payments, auditing (as needed), providing monthly financial reports, and reconciling accounts. It also operates a 24/7 complaint hotline and online platform, which enables the public to submit violation evidence (e.g., photos/videos) while also providing enforcement support, monitoring of listings for STVR violations, assisting with the identification and notification of non-permitted operators, and providing data and reports weekly for non-compliant units.The original proposal was chosen over five (5) other proposals.
The selection committee evaluated all proposals, and the highest graded proposer was identified as Host Compliance LLC, by Granicus, and was selected and awarded the contract. Given the robust services Granicus provides, staff recommends extending the contract for STVR administrative services. Section 3.08.280 of the Murrieta Municipal Code outlines competitive bidding procedures, and requirements may be dispensed in circumstances when the City Council finds that adherence to these procedures would be inefficient, impractical, and unnecessary. Without the contract extension, the services described above would either be performed manually by staff, increasing the City’s costs to monitor STVR properties, or a new software platform would be needed before the current agreement expires.
FISCAL IMPACT
The total fiscal impact for the third amendment for a three (3) year extension is $42,633.17, which is approximately $14,000 annually. The annual software management fees are based on a set amount per year. As described below and within the two tables on the subsequent page, from November 4, 2025, to November 3, 2026, the pricing is proposed at $12,880.11, and from November 4, 2026, to November 3, 2027, the pricing is proposed at $14,168.13. Lastly, from November 4, 2027, to November 3, 2028, the pricing is proposed at $15,584.93. To view the pricing summary for the years 2025–2028, please refer to Exhibit A of the Third Amendment (Attachment 1).
From a cost perspective, the pricing remains competitive for the services rendered. It should be noted that the original cost was $18,632.50 for the first year. Staff was able to successfully negotiate this lower amount in 2021 to $16,623.48 for the First Amendment subscription period, as the number of listings was not as large as initially modeled by Granicus LLC. Staff was able to leverage this same approach and subsequent savings again for the Second Amendment period, covering $11,709.32 per year for 2022 through 2025.
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SUMMARY OF GRANICUS LLC SOFTWARE COSTS TO THE CITY |
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Initial 1st Year (2020-2021) |
$18,632.50 |
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Amendment 1 (2021-2022) |
$16,623.48 |
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Amendment 2 – Year 1 (2022-2023) |
$11,709.32 |
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Amendment 2 – Year 2 (2023-2024) |
$11,709.32 |
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Amendment 2 – Year 3 |
$11,709.32 |
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RUNNING TOTAL (PRESENT YEAR) = |
$70,383.94 |
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Amendment 3 – Year 1 (Proposed – 2025-2026) |
$12,880.11 |
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Amendment 3 – Year 2 (Proposed – 2026-2027) |
$14,168.13 |
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Amendment 3 – Year 3 (Proposed – 2027-2028) |
$15,584.93 |
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PROPOSED TOTAL COST OF AMENDMENT 3 = |
$42,633.17 |
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OVERALL TOTAL = |
$113,017.11 |
ATTACHMENTS
1.Third Amendment to Agreement for Short-Term Vacation Rental Administration Services