Chino Hills council members were not happy to learn that its yearly contract with the Inland Valley Humane Society (IVHS) could potentially increase by approximately $300,000 per year.
The council on Tuesday voted 3-2 to extend the contract by one month to allow negotiations taking place between city staff and the IVHS since January to continue.
Councilpersons Ray Marquez and Cynthia Moran wanted a two-month extension for a better understanding of the sizeable increase but were voted down by Mayor Johsz and Councilmen Peter Rogers and Art Bennett.
The IVHS provides animal control services to the city. The contract amount for fiscal year 2020-21 was $200,563.
(The gross contract is $502,564 with guaranteed revenue that makes the net cost $200,563.)
Nikole Bresciani, IVHS President and CEO, explained that the Humane Society is no longer sharing revenues with the cities it serves because revenue has been declining as more animals are spayed and neutered.
“The unintended consequences of spaying and neutering means reduced licensing fees,” Ms. Bresciani said. “Cities have been warned about plateauing revenue for the past few years.”
She was referring to the member cities that have contracts with the IVHS, including Chino, Ontario, Pomona, Diamond Bar, and others.
In the dark
Councilman Marquez said his main concern is that the city does not know how much revenue the city is bringing into the IVHS.
He said he isn’t happy with the cost model where the city pays for the contract and IVHS keeps the revenues.
Mr. Marquez said the IVHS does not want to give the city an accounting of how much money Chino Hills is generating in revenues. “They’re not willing to show us the information and that’s not right,” he said.
Mr. Marquez said he was not aware that city staff and the IVHS have been negotiating since January. “This should have been placed on the agenda earlier. I wish we could have had more data and more information for us to move forward,” he said.
Councilman Art Bennett said Thursday he is having difficulty accepting that the city has no control over the fixed fee that is jumping up $300,000 a year. “I’m perplexed that we can’t seem to find any alternatives to a huge increase like this,” he said.
Mr. Marquez asked, “Who else is out there for our city? We have an obligation to provide the service at the least possible cost.”
IVHS is offering two options to all its member cities for contract costs: a gross cost model and a net cost model.
Under the gross cost model, Chino Hills would be invoiced for the monthly gross cost, minus all the licensing revenues received on behalf of the city.
The gross cost would be $680,000 but the city would not be guaranteed a predetermined revenue amount, so the cost to the general fund could be greater in this model, according to the city’s assistant city manager Rod Hill.
Under the net cost model, the city would be invoiced for the net cost of the contract with a “guaranteed” revenue amount.
IVHS has “guaranteed” a revenue of $175,000 for the city, bringing the net cost to $505,000. Any revenue collected on behalf of the city in excess of $175,000 would be split 50-50 with the IVHS.
The IVHS’ portion of the excess would be placed in an escrow account to be used for spaying, neutering or microchipping of dogs and cats for those residents who cannot afford the services.
Ms. Bresciani said the city is due for a canvass in July, where the IVHS goes door-to-door to enforce licensing.
She said in a canvass year, the combined revenue with licensing and impound generates $425,000 in Chino Hills.
The gross contract amount of $680,000 would become a net cost of $250,000 during the canvass year, she said.
Ms. Bresciani said when revenue plateaus as it has been doing for several years, the IVHS cannot provide services. “In all these years, this has never been addressed,” she said.
Councilwoman Cynthia Moran said the IVHS does a great job, but the money doesn’t stay in Chino Hills. “We’re paying for the whole business model and subsidizing other cities,” she said.
City of Chino
The IVHS began presenting the cost model changes to Chino in February, said spokesperson Vivian Castro.
The city approved the gross cost model agreement at the June 15 council meeting through its annual contract amendment/renewals report.
The model takes the gross cost of $880,000 to service Chino and applies a guaranteed revenue of $320,000, leaving Chino with a net total of $560,000, she said.
If IVHS does not obtain $320,000 in revenue, the agency will make up that difference, Ms. Castro said.
If revenues exceed $320,000, the revenues are split 50-50 with the amount going into an escrow account for animal medical procedures for low income families.
“Additionally, the city will now have a dedicated Humane Society Officer that will serve Chino from 7:30 a.m. to 9 p.m.,” Ms. Castro said.
Ms. Bresciani said the officer is an enhanced benefit for the size of the City of Chino. The contract is still based on shared expenses, she added.