That the City Council authorize the City Manager to execute Amendment No. 2 with West Coast Arborists, Anaheim, California, to provide a three and one-half percent (3.5%) increase in annual contract costs for citywide tree maintenance services.

The City's tree maintenance program and services are currently provided by West Coast Arborists (WCA). Under the terms of an agreement, WCA provides routine maintenance of City owned street and park trees. The current agreement had an initial five-year (5) term that ended June 30, 2019, along with five (5) additional one-year extensions.  The City and WCA are currently in the fourth extension year and, in the event the agreement is extended for the fifth and final extension, the agreement would expire June 30, 2024.

In Spring 2022, WCA notified the City that unexpected, rapidly rising costs caused by high inflation were significantly impacting their labor, materials, parts, fuel and other overhead costs, hampering WCA's ability to sustain reliable service to the City on a going forward basis. As a result of these unique inflationary factors, WCA requested that the City consider a 7.4% Consumer Price Index (CPI) rate adjustment to their contract. City staff reviewed WCA's request, as well as the CPI data for the Southern California market, along with information regarding WCA's operating costs. After further discussions with staff, WCA agreed to revise their request, and decreased the requested contract adjustment to 3.5%. WCA's revised amount better reflects the longer term change in annual average CPI and appears to be justified and supported given the economic conditions over the past year. It should be noted that the City has utilized WCA as a reliable and qualified tree maintenance contractor for more than 20 years, and that over this period of time, staff cannot recall another instance when WCA has requested a mid-contract consideration for a CPI adjustment, reflecting the magnitude of the unprecedented rise in inflation over the past year.

If approved by City Council, the contract will be modified as follows:

A 3.5% contract amendment will increase costs for the current fiscal year by $11,265.87. WCA continues to demonstrate that they are a reliable service contractor and City staff have an effective working relationship with WCA staff. Staff recommends accepting the modified terms to the agreement for this fiscal year.

The City Council approved and adopted the Fiscal Year 2022-2023 Budget includes funding for the Parks Division for Professional Services, which includes the WCA annual contract amount of $321,882. If the requested 3.5 percent adjustment to the contract is approved, the annual contract cost will increase by $11,265.87. There are sufficient budgeted funds in the current fiscal year budget to fund this increased cost without the need to request an additional budget appropriation.