CITY OF CARMEL-BY-THE-SEA

CITY COUNCIL
Staff Report

May 1, 2018
ORDERS OF BUSINESS

TO: Honorable Mayor and City Council Members

SUBMITTED BY: Sharon Friedrichsen, Director of Budget and Contracts

APPROVED BY: Chip Rerig, City Administrator

Consider Continuing, Modifying, or Eliminating Home Mail Delivery Service Provided by

the City.
SUBJECT:

RECOMMENDATION:
Provide staff with policy direction on options for the home mail delivery service furnished at the expense of the
City.

BACKGROUND/SUMMARY:
The United States Postal Service (USPS) operates under a Universal Service Obligation (USO) which calls for
everyone in America to be able to receive at least a minimum level of mail service at a reasonable and uniform
price. The USO includes a requirement that the USPS provide delivery to all persons, regardless of where in
the country they live. The USPS typically delivers residential mail to homes in areas in which house numbers
have been assigned. House numbers are assigned through the adoption of local laws. In areas in which no
house numbers have been assigned, the USPS will deliver residential mail to a centralized location (such as the
local post office).

Founded as an exceptional creative arts colony nestled within a beautiful urban forest, Carmel-by-the-Sea has a
history of devotion to unique traditions, including the rejection of house numbering. Because no house numbers
exist, the USPS provides mail delivery service to residents of Carmel-by-the-Sea through post office boxes at
the post office located on 5th Avenue between San Carlos Street and Dolores Street. Community residents
must travel to the post office to retrieve their mail, unless they arrange for pick-up and delivery by a courier
service either through the City (as described below) or by private contract. The cost of delivery by courier from
the post office to the home is in addition to the cost of renting the post office box itself.

During FY 2000-2001, the Council decided to contract with a courier service to provide home mail delivery to
residents “who are physically unable or who for some other reason cannot obtain their mail on a regular basis
from the post office located in Carmel-by-the-Sea”. Persons wishing to receive this service contact City Hall to
provide their physical address and post office box number, which are then furnished to the City’s contract
courier.
During the FY 2003-2004 budget process, the Council reduced home mail delivery service to three days per
week as a cost savings measure. In July 2003, this service was reinstated to its original six days of delivery per
week at the request of those receiving the service. No further modifications have been made to the scope of
service for home mail delivery since 2003.

In 2015, as part of the ongoing review of contracts and service needs, the City issued a Request for Proposals
for this service in order to determine whether the City was obtaining "the lowest possible cost commensurate
with quality needed" per Municipal Code §3.12.010 and identified Peninsula Messenger Service as the most
qualified to meet the City’s needs. Peninsula Messenger Service had served as the City’s residential mail
delivery courier for preceding 12 years.

Peninsula Messenger Service's contract, entered into in September 2015, provided for charges to the City
based on a rate of $33.00 per home delivery address per month during the initial year (FY 2015-2016). The rate
applicable to years two and three of the contract (FY 2016-2017 and FY 2017-2018) increased to $35.00 per
home delivery address per month. For a number of years preceding the contract, the participation rate had
remained fairly stable at approximately 125 residents. Thus for the nine months of service rendered in FY 2015-
2016, the total cost was projected at $37,125 per year and was assumed to be $52,500 per year for the two full
subsequent fiscal years (for a total contract amount of $142,125). Since mid-2016, the number of participants
has increased by nearly 13% to 141 residents as of April 2018.

FY 2018-2019 POLICY DIRECTION

As the FY 2018-2019 budget continues to be refined, policy direction regarding options for home mail delivery
service is needed from the Council. There are several options that the Council may wish to consider regarding
the provision of home mail delivery service: (1) continue to fund the service with no changes; (2) continue to
provide the service to participants who meet certain eligibility criteria; (3) reduce the number of home mail
delivery days per week; or (4) discontinue funding for home mail delivery service.

Option 1: Continue to fund the service with no changes.

The Council could direct staff to keep the home mail delivery service status quo and budget accordingly for the
upcoming fiscal year. The City has never instituted a cap on the number of recipients of home mail delivery,
applied any formally defined eligibility criteria that participants must meet, or assessed any fees for the provision
of the service. A self-certification process (i.e., one in which an applicant merely states that he or she is unable
to go to the post office and that does not require supporting proof such as a report from a doctor) perhaps with
annual recertification would be simple to administer, inexpensive for the participant, and would minimize intrusion
into medical or other privacy concerns. However, taking applicants at their word leaves open some possibility for
abuse by those who may not truly be impeded by their physical condition from getting to the post office.

Option 2: Continue to provide the service to participants who meet certain eligibility criteria.
The Council could direct staff to explore implementing a process for applying standards, terms and conditions
for home mail delivery that would limit the service to those “who are physically unable” to obtain their mail on a
regular basis from the post office. Applicants could be required to show not only that they are unable to retrieve
their mail from the post office but also that there is no other member of the same household who could go to the
post office. After appropriate criteria were established, staff time would be required to administer the system
and verify applicants’ eligibility. If the criteria require proof of disability, there could be additional expense to
applicants (such as obtaining certifications from doctors). Consideration would need to be given to how medical
and other privacy concerns could best be met. City residents who did not meet the criteria would not receive
City-paid home mail delivery service, but would not be precluded from working directly with Peninsula
Messenger Service or another courier service to receive their mail at their homes at their expense. Staff prefers
this option.
Option 3: Reduce the number of home mail delivery days per week.
Similar to efforts undertaken in Fiscal Year 2003-2004, staff has again explored reducing the number of delivery
days to reduce the cost of service. Because of the increase in parcel delivery, which has expanded significantly
since Amazon began working with the USPS, a reduction in number of delivery days will no longer result in cost-
savings. According to the City’s contracted service provider, a reduction in the frequency of deliveries will
actually double the number of staff and vehicles needed to make deliveries due to the same volume of mail and
packages to be delivered within a shorter time frame. Also, because of the increase in parcel delivery, which has
expanded significantly since Amazon began working with the USPS, a reduction in number of delivery days is
likely to meet with great resistance on the part of the delivery service users (particularly because it would to a
degree defeat the rapid delivery advantage that is one of the prime motivators for ordering through services
such as Amazon). If the City’s objective remains to allow those of its residents who are unable to go to the post
office to receive their mail each day on which U.S. Mail is delivered, cost reduction or containment strategies will
need to be focused elsewhere.

Option 4: Discontinue funding for home mail delivery service.

The City is not legally required to provide home mail delivery service. The Council could direct staff to eliminate
funding for this service. In that instance residents could work directly with Peninsula Messenger Service or
another courier service to continue to receive home mail delivery (at the residents’ own expense). Elimination of
City-provided home mail delivery service would result in a cost savings to the City of approximately $59,000 per
year based on current rates and participation levels.

FISCAL IMPACT:
The City has expended approximately $750,000 on mail service over the past 17 years. If the increased
participation in the service as seen over the past three years is indicative of a new trend, costs to the City to
provide the service will continue to increase unless changes are made.

PRIOR CITY COUNCIL ACTION:

The Council implemented the home mail delivery service in 2001 in response to public demand for mail delivery
for those were physically unable to retrieve mail at the Carmel-by-the-Sea post office. During the FY 2003/2004
budget process, Council reduced the number of days that Peninsula Messenger Service delivered mail to three
days per week, as a cost savings measure. In July 2003, this service was reinstated to its original six days of
delivery per week. No further modifications have been made to the scope of service for home mail delivery
since 2003. Council authorized an agreement with Peninsula Messenger Service for the term of September 1,
2015 to June 30, 2018 for an amount not to exceed $154,500 on September 1, 2015.

ATTACHMENTS: