Report Prepared by: Kuljit Singh, Deputy Finance Officer
Title
SUBJECT: Approval of an Order Form for Lease and Subscription Based Technology Arrangement (SBITA) Management Software with Fifth Asset, Inc. DBA DebtBook in the Amount of $49,500 Over Three Years with an Option to Extend for Two Additional One-Year Terms
REPORT IN BRIEF
Considers approving an Order Form for lease and SBITA management software with Fifth Asset, Inc. DBA DebtBook, in the amount of $16,500 annually for an additional three years totaling $49,500 with an option to extend for two additional one-year terms through waiving a competitive bidding requirement pursuant to the City’s Municipal Code.
RECOMMENDATION
City Council - Adopt a motion:
A. Waiving a competitive bidding requirement as stated in Section 3.04.210 of the Merced Municipal Code due to established use and operation efficiency; and,
B. Approving an Order Form for lease and SBITA management software with Fifth Asset, Inc. DBA DebtBook, in the amount of $16,500 annually for three years totaling $49,500; and,
C. Authorizing the City Manager to execute the necessary documents.
Body
ALTERNATIVES
1. Approve as recommended; or,
2. Refer back to staff for further study; or,
3. Deny.
AUTHORITY
Charter of the City of Merced, Section 200 et seq.
Professional Contractual services with an estimated value greater than $38,000, are made by written contract in accordance with Merced Municipal Code, Title 3 - Revenue and Finance, Chapter 3.04.
CITY COUNCIL PRIORITIES
As provided for in the Fiscal Year 2025/2026 Adopted Budget.
DISCUSSION
To improve transparency and provide a more accurate picture of long-term financial obligations and resource usage related to leases, the Governmental Accounting Standards Board (GASB) issued Statement No. 87, which standardizes lease accounting for governmental entities. Effective for reporting periods beginning after June 15, 2021, this standard requires all leases to be reported as a right-to-use asset and a corresponding lease liability based on the present value of lease payments.
Building on the lease accounting framework of GASB 87, GASB Statement No. 96-which governs Subscription-Based Information Technology Arrangements (SBITAs)-was issued and became effective for reporting periods beginning after June 15, 2022. GASB 96 mirrors the GASB 87 model but applies specifically to cloud-based IT subscriptions and services.
Both GASB 87 and GASB 96 required significant preparation across all City departments, including compiling a comprehensive inventory of leases and subscriptions, and thoroughly reviewing related contracts to determine applicability under the standards. This process has been highly technical and time-consuming, requiring staff training and expertise. Given the concurrent ERP implementation and limited internal capacity, staff explored external solutions. After evaluating various software platforms, DebtBook stood out for its automation, time-saving features, audit support, and overall reduction of manual work.
In June 2023, the City entered into a one-year contract with DebtBook (06/30/2023-06/30/2024) for $17,500. The software supported both leases and subscriptions management and significantly eased the audit process. To further assess its long-term fit, the City renewed the contract for an additional year (07/15/2024-06/30/2025) at a cost of $15,750. DebtBook has continued to reduce staff workload, assist with data management, provide technical expertise, and support audit compliance.
DebtBook has been in use for several years and was originally recommended by our auditors as it was one of the leading solutions in the market at the time. It remains a widely recognized platform, and our team is well-integrated with its features and reporting functions. Transitioning to another system would result in additional costs, retraining, and potential compliance disruptions. Given the prior justification, established use, and operational efficiency gained through this platform, we request to continue with DebtBook and ask that the competitive bidding process be waived for this engagement.
Staff is proposing to execute a three-year contract from 07/01/2025 to 06/30/2028 for $16,500 annually, a total contracted cost of $49,500. In addition, City also has an option to extend the contract term for year 4 and year 5 with an annual cost of $16,500. Staff will return to Council to request the approval for the optional renewal years beginning in year four.
IMPACT ON CITY RESOURCES
No additional appropriation is needed. Funding is available within Finance’s Department FY2025-26 adopted budget cover the first-year cost of $16,500. All future year amounts will be included in the budget process.
ATTACHMENTS
1. Order Form