TO:
Honorable Mayor and Members of the City Council
THROUGH:
Talyn Mirzakhanian, City Manager
FROM:
Lisa Jenkins, Human Resources Director
Briza Morales, Risk Manager
SUBJECT:Title
Consideration of a Resolution Approving Monthly Fees Incurred in Connection with an Employee Fitness Membership Program with American Specialty Health Fitness, Inc. (ASH) (Budgeted) (Human Resources Director Jenkins).
ADOPT RESOLUTION NO. 26-0034
Body
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RECOMMENDATION:
Staff recommends that the City Council adopt Resolution No. 26-0034.
FISCAL IMPLICATIONS:
The Council authorized funds for this employee benefit in the FY 2025 Budget and subsequent fiscal years. There are sufficient funds in the Human Resources Fiscal Year (FY) 2025-2026 and FY 2026-2027 budgets to support the program through December 30, 2026. To date, the City has paid American Specialty Health Fitness Inc. (ASH) $64,050.30, which is within the City Manager’s authority. Due to an increase in City enrollment, staff estimates that fees will exceed $75,000 by the end of 2026. Accordingly, staff seeks City Council approval of $11,640 for fees incurred by December 31, 2026.
BACKGROUND:
On June 4, 2024, City Council held a public hearing and adopted the FY 2025 Budget, which included budgeted funds for enhanced employee wellness benefits, including gym membership benefits for City employees. On January 1, 2025, the City entered into a master service agreement with ASH to participate in its Active&Fit Enterprise® program (Active & Fit).
DISCUSSION:
Following the proper approval via the budget adoption process, the City implemented the Active & Fit program as part of its broader employee wellness initiatives to support employee health and well-being. Active & Fit offers a broad network of fitness options, including access to over 12,700 fitness centers within its “standard network” and “premium” locations for an additional cost. The initial agreement was structured at a cost of $8.75 per eligible employee per month, with a monthly minimum of $3,500 ($42,000 per year). All full-time employees were eligible to participate, and part-time employees had the option to opt in to the program. The program provided employees with unlimited access to fitness centers in the standard network, two premium locations (Afterburn-Manhattan Beach and Club Pilates-Redondo Beach), and other wellness resources. There was no out-of-pocket cost to employees, unless they elected to enroll in additional premium locations. Program utilization in 2025 demonstrated meaningful employee engagement, with 177 out of approximately 400 eligible employees utilizing the program and visiting a fitness center.
Given the high rate of City of Manhattan Beach employees participating in the program, Active & Fit renegotiated its terms following the initial one-year agreement and offered the City a one-year amendment with a revised rate structure. Amendment No. 1 updated the program’s cost structure, employee contribution requirements, and term under a revised “Statement of Work”. As part of the amendment, one of premium locations changed from Club Pilates-Redondo to Club Pilates-Manhattan Beach. The amended agreement reflects a cost of $9.30 per eligible employee, per month. The estimated annual cost for calendar year 2026 is $44,640, based on approximately 400 eligible employees. Under the amended agreement, employees who enroll in the program pay an out-of-pocket cost of $20 per month directly to ASH to participate in the program. Eligibility remains unchanged in that all full-time employees are eligible to enroll, and part-time employees can opt in.
The Active & Fit program remains a valuable component of the City’s wellness initiatives and supports employee health, morale, and retention. The City’s continued participation in the Active & Fit program supports employee health and wellness, encourages preventative health practices and stress reduction, enhances recruitment and retention by offering a valuable benefit, and demonstrates the City’s ongoing commitment to employee well-being.
Manhattan Beach Municipal Code (MBMC) Section 2.36.130 authorizes the City Manager to approve contracts up to $75,000. The service agreement with ASH is unique in that it is essentially a subscription service for an employee wellness benefit, and the agreement (and amendment) includes a “per employee” cost structure rather than a total contract “not-to-exceed” amount. While the amounts paid have not yet exceeded the $75,000 threshold, the total monthly fees to be incurred will exceed that amount. Based upon increased employee membership, staff has estimated that the fees will exceed $75,000. Accordingly, per the Municipal Code, and to be transparent, staff has prepared the attached resolution for Council consideration to authorize payment of fees that exceed the City Manager’s authority. Currently, staff recommends that the Council adopt Resolution No. 26-0034, granting approval for expenditures exceeding $75,000 up to $86,640 for the two-year agreement ending December 31, 2026.
PUBLIC OUTREACH:
After analysis, staff determined that public outreach was not required for this issue.
LEGAL REVIEW:
The City Attorney has approved the agreement as to form.
ATTACHMENTS:
1. Resolution No. 26-0034
2. Amendment No. 1 - American Specialty Health Fitness, Inc.
3. Agreement - American Specialty Health Fitness, Inc.
4. Statement of Work No. 1 - American Specialty Health Fitness, Inc.