TO:
Honorable Mayor and Members of the City Council
THROUGH:
Talyn Mirzakhanian, City Manager
FROM:
Libby Bretthauer, Finance Director
Emy-Rose Hanna, Financial Services Manager
John Albi, Management Analyst
SUBJECT:Title
Consideration of a Resolution Approving Amendment No. 1 to the Agreement with ParkMobile, LLC for Credit Card Merchant Processing Services Related to Parking Pay Stations and the Mobile Parking Payment System, in the Amount of $1,100,000 for the Remaining 27 Months in the Agreement, for an Updated Not-to-Exceed Amount of $3,528,310. (Budgeted) (Finance Director Bretthauer).
ADOPT RESOLUTION NO. 26-0106
Body
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RECOMMENDATION:
Staff recommends that the City Council Adopt Resolution No. 26-0106, approving Amendment No. 1 with ParkMobile, LLC for merchant processing services required for handling credit and debit card transactions associated with the City’s Parking Pay Stations and Mobile Parking Payment System.
FISCAL IMPLICATIONS:
Sufficient funds are included in the FY 2027 Budget for merchant processing fees within the Parking Fund, County Lots Fund and State Pier and Parking Fund. Merchant processing fees have grown significantly in the past few years as more customers have shifted their preference to pay by card or through online payment platforms. Historically, the City has absorbed processing fees as a cost of operations. Staff is currently evaluating all credit card processing fees that could be passed through to the end user as a convenience fee to recover costs and will return to the City Council with this discussion at a future date.
BACKGROUND:
At the February 17, 2026, City Council Meeting, a three-year agreement with ParkMobile, LLC was awarded for the purchase, installation, and operation of parking pay stations and mobile parking payment system services with a not-to-exceed amount of $2,428,310.
Through the implementation process, City staff were tasked with identifying viable options for merchant processing services and explored whether the City should serve as the Merchant of Record or if ParkMobile, LLC should assume the role. The Merchant of Record is responsible for processing and managing credit and debit card transactions for both the parking pay stations and the mobile payment application. The Merchant of Record also manages the overall payment system, including daily batch settlement, chargebacks/disputes, variance resolution, and remittance of payments to the City for approximately 1.8 million individual parking transactions annually.
The merchant services included in Amendment No. 1 are outside the original scope of the agreement from February 17, 2026, and were not originally included, as the City expected to continue using the existing payment processor at the time. However, through the implementation process, it was determined that having ParkMobile, LLC as the Merchant of Record brings efficiencies to managing high-volume transactions associated with parking programs. Additionally, ParkMobile, LLC was able to offer more favorable pricing.
DISCUSSION:
Staff conducted an extensive review of available merchant processing options, evaluating both City-managed merchant accounts and contractor-managed merchant accounts. The following options were considered:
City-managed merchant accounts (City would serve as Merchant of Record)
• Utilize the City’s existing merchant processor, Open Edge/Global Payments, or alternative merchant processors, including Elavon or AMG.
• City manages new merchant agreement with either Open Edge, Elavon or AMG, and oversees daily batch settlement, payment chargebacks/disputes, variance resolution, and payment remittance to the City.
Contractor-managed merchant accounts (ParkMobile would serve as Merchant of Record)
• Use ParkMobile’s contracted merchant processor through Flowbird to manage parking transactions.
• Contractor manages merchant agreement with Flowbird, and oversees daily batch settlement, payment chargebacks/disputes, variance resolution, and payment remittance to the City.
• Note: The City currently has a Contractor-managed merchant account in place with the existing parking system vendor, however, that merchant account will terminate once the City transitions to the new Parking Pay Stations and Mobile Parking Payment System.
Following a thorough review of all options, staff determined that designating ParkMobile, LLC as the Merchant of Record offered the highest operational benefit of managing parking transactions while also offering favorable pricing. ParkMobile, LLC specializes in parking payment systems and understands the unique nature of parking programs, where there is a high volume of low-dollar amount transactions. The City averages approximately 1.8 million individual parking meter transactions per year. Given this structure, the agreed-upon pricing of $0.12 per transaction and a 2.5% transaction fee is favorable compared to alternatives evaluated. When comparing ParkMobile, LLC to the City’s existing Contractor-managed merchant account, the City is estimating an annual savings of approximately $34,000 in merchant processing fees for parking payments.
Amendment No. 1 to the ParkMobile, LLC agreement maintains the same term through February 17, 2029, modifies the scope and fees to include merchant processing services, and updates the max compensation from $2,428,310 to $3,528,310, which adds $1,100,000 to the agreement. This additional compensation is based on 27 months of merchant services (December 2026 through February 2029), multiplied by the estimated monthly merchant fees of $40,417.
Staff recommends that the City Council adopt Resolution No. 26-0106 approving Amendment No. 1 to the ParkMobile, LLC agreement, establishing ParkMobile, LLC (Arrive) as the Merchant of Record for credit and debit card transactions associated with the City’s Parking Pay Stations and Mobile Parking Payment System.
PUBLIC OUTREACH:
After analysis, staff determined that public outreach was not required for this issue.
ENVIRONMENTAL REVIEW:
The City has reviewed the proposed activity for compliance with the California Environmental Quality Act (CEQA) and has determined that the activity is not a “Project” as defined under Section 15378 of the State CEQA Guidelines; therefore, pursuant to Section 15060(c)(3) of the State CEQA Guidelines, the activity is not subject to CEQA. Thus, no environmental review is necessary.
LEGAL REVIEW:
The City Attorney has approved the agreement as to form.
ATTACHMENTS:
1. Resolution No. 26-0106
2. Amendment No. 1 - ParkMobile, LLC
3. Agreement - ParkMobile, LLC