TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: Justin Clifton, City Manager
PREPARED BY: Isaac Bravo, Management Analyst
SUBJECT:
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Approve a Professional Services Agreement with RSG, Inc. for an Annexation Feasibility Study
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ABSTRACT
Approval of a proposed Professional Services Agreement with RSG, Inc. for preparation of an annexation feasibility study to evaluate the fiscal, operational, and service delivery implications of potential annexation scenarios within the City's Sphere of Influence. The study will provide the City Council with the information necessary to determine whether to proceed with a formal annexation application to the Riverside Local Agency Formation Commission (LAFCO).
RECOMMENDATION
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Authorize a transfer of $91,010 from the General Fund Reserve Balance to the City Manager’s Consultant Contracted Services Account (60320) to fund the Professional Services Agreement;
Approve a Professional Services Agreement with RSG, Inc, in the amount of $91,010 for preparation of an annexation feasibility study in a form approved by the City Attorney; and
Authorize the City Manager to execute the Professional Services Agreement.
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PRIOR ACTION/VOTE
On February 26, 2026, the City Council adopted tiered priorities for citywide projects and initiatives, identifying Fire Station No.6 as a Tier 1 Priority.
STRATEGIC ALIGNMENT
This item aligns with the City Council goal to maintain a high performing organization that values fiscal sustainability, transparency, accountability and organizational efficiency relating to a Tier 1 priority. The feasibility study will provide the City Council with the information necessary to evaluate the fiscal, operational, and service delivery implications of potential annexation scenarios before determining whether to proceed with a formal annexation application.
DISCUSSION
Construction of Fire Station No. 6 is identified as a Tier 1 City Council Priority. The station is planned on a City-owned parcel located near the City's northeastern Sphere of Influence. While the station would improve emergency response capabilities for both existing City residents and nearby unincorporated communities, residents outside the City do not contribute certain municipal revenues that fund ongoing operations and maintenance of City services. In addition to the estimated $15-20 million cost to construct a new fire station, the estimated annual operating cost for a new station is approximately $5 million per year, which is not currently financially feasible for the City to absorb as an ongoing annual expense. Annexation could result in new revenues to help cover this annual cost, but would also create additional operational responsibilities for the City to provide other municipal services in the annexed area. The purpose of this feasibility study is to conduct an in-depth analysis to understand the long-term cost-benefit of a potential annexation.
To better understand the long-term fiscal and operational implications of serving these areas, the City developed a Request for Proposals (RFP) seeking professional consulting services to evaluate the feasibility of annexing portions of the City's northeastern Sphere of Influence. The feasibility study would evaluate three (3) potential annexation scenarios: the existing LAFCO-proposed annexation area, a modified City-requested annexation area, and full annexation of the City's Sphere of Influence.
The study is intended to provide the City Council with sufficient information to determine whether annexation is fiscally and operationally feasible before initiating a formal application with the Riverside Local Agency Formation Commission (LAFCO). If the Council determines annexation is not in the City's best interest, the project may conclude following completion of the feasibility study.
The City released an RFP in May 2026 and received two (2) proposals from qualified firms in July 2026. An evaluation committee reviewed the written proposals, conducted interviews, and completed reference checks. Based on the evaluation process, RSG, Inc. was determined to provide the best overall value to the City based on its project understanding, experience with annexation feasibility studies, familiarity with Riverside LAFCO, and proposed project approach.
The proposed agreement also includes optional services that may be authorized in the future, including preparation of a LAFCO application, Proposition 218 engineering reports, assessment district modifications, and community outreach. These services are included to streamline future implementation should the City decide to proceed with annexation. Authorization of the agreement does not obligate the City to utilize these optional services. Any decision to proceed beyond the feasibility study will return to the City Council for consideration.
The estimated timeframe for completion of the first phase of the exploratory study is February 2027. Before any optional implementation services are authorized or the City proceeds with a formal annexation application, the City Council will be presented with the results of the feasibility study to determine whether moving forward is in the City's best fiscal and operational interest.
PUBLIC NOTICING
The agenda item has been noticed according to the Brown Act (72 hours in advance of the meeting at which the City Council considers the item).
CEQA AND REGULATORY OVERVIEW
This action is exempt from the California Environmental Quality Act (CEQA) pursuant to Sections 15060(c)(2) and 15060(c)(3) of the CEQA Guidelines because this action will not result in a physical change to the environment, directly or indirectly.
FISCAL IMPACT
The current budget does not included funds appropriated for this work. Approval of this item includes authorization to transfer $91,010 from the General Fund Reserve Balance to the City Manager's Consultant Contracted Services Account (60320) to fund the Professional Services Agreement. The cost for the first phase of work is $61,595. If the City opts to proceed with the LAFCO annexation process, the additional cost would be $29,415, for a grand total of $91,010.
The agreement establishes a not-to-exceed amount, and actual expenditures may be less than the authorized amount depending on the level of services ultimately required.
ATTACHMENTS
ATT 1 - Professional Services Agreement with RSG
ATT 2 - Map of Proposed Annexation Areas