M-Group Contract: 2022-23 Cost/Benefit Analysis
Planning Department Staffing Model
Since 2008, the City of Petaluma has used a hybrid service model with the support of M-Group, a firm that provides staffing and expertise to public agencies. M-Group’s contract was most recently approved by City Council in 2018. This hybrid service model is used throughout the City including in Information Technology, Parks and Recreation, Transit, Facilities, and Public Works and not only allows the City to scale up/down depending on needs and activity levels, but ultimately saves taxpayer funds for other priorities.
For planning, the model has provided high-quality service while contributing to a balanced city budget with an annual cost savings of over $450,000. Most importantly, the breadth and depth of work completed by the City of Petaluma has changed significantly in response to community priorities, changes in state laws, and City Council direction. This partnership has been integral to Petaluma’s landmark legislation over the years in response to climate change and the housing crisis, including adoption of an all-electric code, visitability and universal design regulations, fossil fuel gas station ban, emergency shelter declaration, reduction in applicable development impact fees for affordable housing, and most recently, adoption and certification of the City’s 6th cycle Housing Element.
2022-23 Cost Benefit Analysis
The City routinely performs a cost/benefit analysis is with City contracts and recently completed this study for the M-Group contract as part of the FY 23/24 budget preparation process. This analysis incudes a thorough review of M Group’s monthly and annual costs, including hours worked and services provided, based on the needs of a full-time City Planning Department. The analysis below compares three models – M-Group only, City in-house planning department, and our current hybrid model.
First, we looked at M-Group’s monthly costs, which change depending on demand, and calculated an annual average cost. Next, we reviewed our Planning Department's service requests to assess the community’s needs and understand which positions provide these crucial services. The first columns assess the cost of staffing the Planning Department only with M-Group contractors.
Next, we considered the costs of an in-house planning department model. We looked at the type and number of City positions that it would take to continue operations at our current service level (i.e., staffing the Building counter, etc.). These positions include both salaries and benefits, based on comparable local agencies, plus the overhead incurred with bringing on new internal staff, like admin, technology, and human resources costs.
When all costs are considered, transitioning to an in-house planning department model is estimated to cost approximately 24% more than the M-Group only model. This is in part because a consultant like M-Group can move staff to other projects when the City's demand is low, while the City would have to bring on full-time employees in an in-house model, regardless of whether there is a consistent need.
Finally, we looked at the hybrid model we have in place today. This includes an in-house, full-time Community Development Director (CDD) to bring Planning, Building and Housing services under one roof and provide oversight. The CDD then utilizes M-Group for other services, which provides more flexibility for day-to-day operations and the ability to pivot quickly when necessary. The cost to operate this model is approximately 6% more costly than the M Group only model, a minimal increase that still provides significant savings and community benefits.
