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Home My WebLink AboutShopping Cart Retrieval:. �i. ►� e ",.� ti• � i�i : ...,�.: � •. - - ,. . r �.� �y,= ; � _ ,,:�;_ .,,_,_ REQUEST: SUBMITTED BY: DATE: CONTENTS: CITY OF PALM DESERT DEVELOPMENT SERVICES STAFF REPORT Informational Item Concerning Shopping Cart Retrieval in the City of Palm Desert Gary Rosenblum, Risk Manager September 18, 2007 Shopping Cart Retrieval Graphs (2) Executive Summary: The City contracts with California Shopping Cart Retrieval Corporation (CART) to collect and return shopping carts abandoned within the City. The service invoices the City on a $4.50 per-cart-retrieved basis. This past fiscal year, the number of carts retrieved has increased to about 300 per month. The City has spent an average of $1,350 per month for shopping cart retrieval in FY 2006/07, and expects to pay up to $17,000.00 forthis service for the 2007/08 fiscal year. In June 2007, the City Council approved a contract extension with California Shopping Cart Retrieval Corporation (CART) for the 2007/08 fiscal year, and requested a report investigating if there were any means to recover the cost that would meet the requirements of California State Law Business and Professions Code Section 22435.7. Cost recovery can occur through the business license renewal process. If retailers with carts were required to post a"Shopping Cart Deposit" at the time of business license renewal, some and perhaps most of the annual cost could be recovered. Discussion: Cost Recovery Plan This report identifies a method to create a simple cost recovery system through the business license renewal process. The City would add to the annual license renewal fee a "shopping cart deposit" for any retailer who uses shopping carts. The amount of the deposit would be based on the exact number of carts the particular retailer caused to be retrieved by the City contractor in the previous fiscal year. The deposit could be 100% refundable at the following year's license renewal. The deposit is returned in proportion to the effort the retailer takes to reduce or eliminate carts being taken in the following fiscal year, at the next business license renewal. If the retailer eliminates returned carts, the deposit is 100% returned. If the retailer does nothing to reduce the number of their carts abandoned, the deposit is not returned, and a new Informational Item - Shopping Cart Retrieval Page 2 of 4 September 27, 2007 deposit is required, again based on the exact number of carts the City returned over the course of the year. While this process is not 100% cost recovery for the City, what is not recovered (i.e. refunded deposits) can be considered an incentive to responsible retailers who prevent carts from being taken and abandoned, and even to collect the abandoned carts themselves. Because retailers that were successful in reducing or eliminating abandoned carts would have most or all of their deposit returned, the annual cost (deposits the City returns) would replace the annual cost for cart retrieval, and go to local retailers who take responsibility for their own carts. For example, one retailer had 342 carts returned by the City service last year. Under the proposed pian, this retailer would be required to post a shopping cart deposit of $1,539 at the time of business license renewal. One year later, if the retailer changed their cart policy and had no carts returned by the City contractor, it would get a full 100% refund on the deposit, and have no further deposit required. If the retailer only had only 10 carts returned due to their own efforts to reduce the carts being taken, they would have their full deposit returned less $45 (10 carts @$4.50 each). If the retailer did nothing over the course of the year to reduce carts being taken, and the City service returned, say, another 342 carts over the following year, the original $1,539 deposit would be retained by the City for cost recovery, and a new deposit of $1,539 would be assessed for the following year. The State law does not proscribe this system because the City is not impounding the carts; it is not even taking possession of them. It is using a service that many retailers already use themselves. The City is not levying a"fine" because the money is a"deposit" held for a year and it is potentiaify 100% returned based on future performance. The deposit is not a general "fee" based on an average number of carts paid for by the City that might be unfair to a retailer with very few carts returned. Each deposit is based on an exact number of carts specific to each retailer, and it is a pass through for which the City adds no administrative overhead. The cart tracking system is performed by the retrieval service and the City receives the data monthly so that a 12- month total is simple to maintain for every retailer who does not control their carts (see attached). Retailers that already take responsibility for their carts incur no deposit costs to the City. For example, local supermarkets Vons and Albertsons already contract with a cart retrieval service and while they have carts taken and abandoned throughout the City, they pay for their own retrieval service. Therefore, none of their carts ever appear within the City system and as a result, Vons and Albertsons deposits would be zero. With this program, the City does not require anything of any retailer other than a fully refundable deposit, and only if necessary. The City does not micro-manage the methods and procedures retailers may want to use to reduce cart theft, and to collect their carts off lnformational Item - Shopping Cart Retrieval Page 3 of 4 September 27, 2007 the City streets. The City does not have to add Code Enforcement ordinances for things like shopping cart signage, fencing, Smart-carts, or retrieval. In FY 2006/07, there were 36 different retailers who had carts returned by the City, with only 20 that had totals higher than 50 carts. There were five retailers who had over 1000 carts returned. See attachments A and B for detailed statistics on the exact number of carts retrieved and which retailers are involved. As retailers take responsibility for their carts, the number of carts in the City system would be reduced, and the cost to the City would be proportionally reduced. In a perfect world, the number would eventually drop to zero. Alternative Plans Without Cost Recovery There are alternatives, but these incur costs to the City without cost recovery. The City Council may, within the specifications mandated by California State law (Business and Professions code 22435) enact an ordinance to regulate shopping cart management in the City. The law makes it unlawful for a person to take a cart off the owner's property, and classifies the violation as a misdemeanor. However, Code 22435 also severely limits the manner and amount that a City can recover its costs for "impounding" abandoned carts. State law codifies a cost recovery process that is complex and administratively cumbersome and is not worth the resources that would be needed to implement it. The State law allows Cities to "impound" shopping carts, which means pick them up and store them to a City location. The City must then provide notice to the cart's owner within 24 hours. If the owner fails to retrieve the cart in 72 hours, the City then provides another notice that pick up of the cart is overdue. After 30 days, if the cart is not picked up, the City may dispose of it. The City cannot fine a cart owner for failure to pick up their cart after 72 hours unless it is the third such violation in 30 days. The maximum fine is $50. There are obviously many drawbacks to this approach. It requires the City to have a cart pickup, storage, notice tracking and cart tracking bureaucracy and it creates an adversarial relationship between Cities and their businesses. Several Cities in Southern California try a more preventative approach. They enact an ordinance that requires retailers to provide to the City a written program describing how they will reduce the number of abandoned carts. However, enacting such an ordinance again requires an ongoing allocation of City resources to collect, file, read, analyze and approve each retailer's plan, and then contact and meet with retailers whose plans are not sufficient and try to get them into compliance. Enacting such an ordinance will not necessarily prevent shopping carts from being taken and abandoned, and require the City to continue some form of retrieval service. It is likely the combined cost for City resources and continuing contractor services would be higher than just contractor services alone. Enacting an ordinance to require retailers to have a written program reduce abandoned shopping carts is, therefore, not recommended. Some Cities have taken a more aggressive approach by enacting an ordinance that requires retailers have active systems to prevent carts from being taken off the property. Informational Item - Shopping Cart Retrieval Page 4 of 4 September 27, 2007 An active system is fencing that does not allow carts to pass through, or use of "Smart- carts" that have electronic devices that lock the wheels if the cart passes over a wire embedded in the perimeter of the store parking lot. This system was recently used very effectively by the 99-Cent Store on Highway 111, but it is no longer in use. Because these carts are far more expensive to buy and maintain, a Citywide requirement for use of these Smart-carts would likely be unpopular with local businesses. Submitted By: G� f. �� Gary Rosenblum Risk Manager Approval: /��`� Carlos L. 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Al3�I�iIra: . .. . . . ^ i ... ... .... i�'ERIFIED EY• ; .. ,.,� ..��; � .. ,, .,,. , . .�., �ric�inal on F�l� �a� Cit�y C1erk's Offi�c Department Head: CITY OF PALM DESERT DEVELOPMENT SERVICES OFFICE OF THE RISK MANAGER Carts Retrieved Per Month by Store For Fiscal Year 2006-2007Fiscal YearFiscal Year Average Carts Retrieved Store NameJul-06Aug-06Sep-06Oct-06Nov-06Dec-06Jan-07Feb-07Mar-07Apr-07May-07Jun-07 TotalCost Per StorePer MonthPer Grand Total Target433$ 1,948.50 36.0812.12% 344347383430381936383838 Walgreens347$ 1,561.50 28.929.71% 232821212723393537334020 Jensen's342$ 1,539.00 28.509.57% 202430313426333338183520 Sears310$ 1,395.00 25.838.67% 173421152128352535202534 99 Cents293$ 1,318.50 24.428.20% 5456816511836522 Dollar Tree176$ 792.00 14.674.92% 10131516171525158141018 Ross153$ 688.50 12.754.28% 15159913911714131424 Staples153$ 688.50 12.754.28% 11131071513121114181613 World Market142$ 639.00 11.833.97% 7111212312192520615 Michael's136$ 612.00 11.333.81% 1477910161171113724 Best Buy131$ 589.50 10.923.67% 1497781091213161016 Toys R Us117$ 526.50 9.753.27% 98111197971014139 Rite Aid112$ 504.00 9.333.13% 57867121318781110 Home Goods99$ 445.50 8.252.77% 114121010111057613 Bed Bath & Beyond74$ 333.00 6.172.07% 767466758576 TJ Maxx74$ 333.00 6.172.07% 89110257111245 Petco70$ 315.00 5.831.96% 4345461264886 Marshall's63$ 283.50 5.251.76% 3662742711528 Circuit City58$ 261.00 4.831.62% 3252105466735 The Alley56$ 252.00 4.671.57% 2143711012610 Cost Plus48$ 216.00 4.001.34% 55581645 Office Depot44$ 198.00 3.671.23% 231133258106 JoAnn32$ 144.00 2.670.90% 322544132222 Office Max26$ 117.00 2.170.73% 113354333 Sav-On19$ 85.50 1.580.53% 412142212 Home Depot17$ 76.50 1.420.48% 611 Ace Hardware14$ 63.00 1.170.39% 113 Sportmart10$ 45.00 0.830.28% 1 1215 Walmart8$ 36.00 0.670.22% 1133 Other6$ 27.00 0.500.17% 213 Coachella Ranch3$ 13.50 0.250.08% 12 Payless3$ 13.50 0.250.08% 21 Super Saver2$ 9.00 0.170.06% 2 Costco1$ 4.50 0.080.03% 1 Pier 11$ 4.50 0.080.03% 1 Sam's Club1$ 4.50 0.080.03% 1 3574 Total Carts Per Month275317321294287274307270329308285307$ 16,083.00100% Prepared by: Angelica Chavez 8/31/20211 of 1 -2007-Shopping Cart Retrieval Program FY 2006 StorePercentage Sam's ClubPier 1CostcoSuper SaverPaylessCoachella RanchOtherWalmartSportmartAce HardwareHome DepotSav-OnOffice MaxJoAnnOffice DepotCost PlusThe AlleyCircuit CityMarshall'sPetcoTJ MaxxBed Bath & BeyondHome GoodsRite AidToys R UsBest BuyMichael'sWorld MarketStaplesDollar Tree99 CentsSearsJensen'sWalgreensTarget 40.00 35.00 30.00 25.00 20.00 15.00 10.00 5.00 CITY OF PALM DESERT DEVELOPMENT SERVICES OFFICE OF THE RISK MANAGER 8/31/20211 of 1 Prepared by: Angelica Chavez