That the City Council authorize the City Manager to execute a five-year agreement for animal sheltering services with the Inland Valley Humane Society.

The Inland Valley Humane Society (IVHS) has provided reliable and quality animal sheltering services to the City of La Habra since 2008. The most recent agreement extension with IVHS was approved by the City Council in 2015 and provided for a three-year term, commencing on July 1, 2015 and expiring on June 30, 2018. Since the end of that three year term, the City's contract with IVHS has been automatically renewed for successive one-year terms and will continue to renew annually until the contract is either terminated or renegotiated by either party.  The annual fee when the agreement extension was negotiated in 2015 was $65,000. Since then, the annual fee has been increased each year based on the Consumer Price Index (CPI - Los Angeles, Riverside and Orange County regions), capped at no more than five percent per year.  For Fiscal Year (FY) 2022-2023, the annual fee for IVHS sheltering services was approximately $75,000.

Animal Control is a division within the La Habra Police Department (LHPD). Over the past several months, staff from the LHPD have worked with IVHS to negotiate a new long-term contract for animal sheltering services for the La Habra community. During these discussions, IVHS staff indicated that the shelter has realized significant increases to its operating costs, particularly for insurance premiums and coverage for animal bites and injuries, higher staffing and labor costs, and higher costs for equipment replacement and food for housed animals. IVHS staff further indicated that they would no longer be able to provide sheltering services to the City at the previous annual fee levels due to escalating sheltering and operations costs. They proposed that, if the City wanted to continue sheltering services with IVHS, that there would need to be substantial cost increases in the first two to three years of a new agreement. City staff discussed terms and conditions for a potential contract extension and were able to negotiate lower annual cost increases over a longer term contract. This provides the City with a more predictable annual sheltering cost over time and secures a longer five-year contract term, with enhanced services such as a semi-annual IVHS pet adoption event to be held in the City. 
 
If approved by the City Council, the annual fee to IVHS for FY 23/24 will be $110,987, an increase of $35,000 from FY 22/23.  For each additional fiscal year thereafter through the end of the proposed five-year term, the annual fee will increase at a fixed rate of $35,000, plus a 3% annual fee inflationary adjustment, as reflected below:
 

FY	Base Fee	Negotiated Annual Fixed Fee Increase	Subtotal	3% Annual Fee Adjustment	Final Annual Fee
23/24	$75,987	$35,000	$110,987	$0.00	$110,987
24/25	$110,987	$35,000	$145,987	$4,380	$150,367
25/26	$150,367	$35,000	$185,367	$5,561	$190,928
26/27	$190,928	$35,000	$225,928	$6,778	$232,705
27/28	$232,705	$35,000	$267,705	$8,031	$275,737

If approved, this agreement will be for five years, commencing on July 1, 2023, and expiring on June 30, 2028.  After the initial five-year contract term ends, unless terminated by either party or mutually renegotiated, the contract will automatically renew for successive one-year terms. The City's partnership with IVHS over the years has proven to be very satisfactory and LHPD Animal Control staff have been impressed with IVHS's willingness to serve the La Habra community. Working alongside with City Animal Control Officers, there has been a consistent practice of trying to reunite pets with their families, both before and after sheltering.  IVHS maintains a reputation of humane treatment of animals and of providing quality animal care.

Based on the high quality animal care provided by IVHS, along with negotiated sheltering costs and access to a convenient facility location for both residents and staff, it is recommended that the City Council authorize the City Manager to execute a five-year agreement with IVHS for animal sheltering services.  The City Attorney's office has reviewed the proposed agreement.

Animal Control costs are budgeted in the Police Department budget and are a General Fund expense. Sufficient funding has been included in the proposed FY 23/24 budget to fund the estimated increase for animal sheltering contract costs.