HomeMy WebLinkAboutCC Resolution 8802 (Expanded Audit Services)RESOLUTION NO. 8802
A RESOLUTION AUTHORIZING THE SIGNING OF A
CONTRACT, LEASE OR AGREEMENT
THE CITY COUNCIL OF THE CITY OF SAN RAFAEL RESOLVES as follows:
The MAYOR and CITY CLERK are authorized to execute, on behalf of
the City of San Rafael, a contract, lease or agreement with
Municipal Resource Consultants (for expanded audit services)
a copy of which is hereby attached and by this reference made a part
hereof.
I, JEANNE M. LEONCINI, Clerk of the City of San Rafael, hereby
certify that the foregoing resolution was duly and regularly intro-
duced and adopted at a regular meeting of the City Council of said
City held on Mondav the 21st day of December
1992 , by the following vote, to wit:
AYES: COUNCILMEDBERS: Breiner, Cohen, Thayer & Mayor Boro
NOES: COUNCILT'IED'BERS : None
ABSENT: COUNCILMEMBERS: Shippey
hr. '
JEAIE M. LEONCIN , City Clerk
aRiciNAt
.1�,.
URC�p
M MUNICIPAL RESOURCE CONSULTANTS
R
A partnership of John T. Austin, Inc. & Allen W. Charkow, Inc.
Tustin Madera
(714)258-3000 (209)432-6039
November 30, 1992
Mr. Ransom Coleman
Finance Director/Treasurer
City of San Rafael
1400 Fifth Avenue
P.O. Box 60
San Rafael, CA 94915-0060
San Ramon San Rafael
(510)838-1115 (415)485-2926
Re: Ext)anded Revenue Enhancement & Information Services
Dear Mr. Coleman:
32107 W. Lindero Canyon Road
Suite 233
Westlake Village, CA 91361
(818)991-5220
Fax: (818) 991-5365
Municipal Resource Consultants (MRC) hereby proposes to expand the scope of
revenue enhancement and information services currently being provided to the
City of San Rafael (City) to include Revenue Enhancement Audits and a Property
Tax Information Service. The objectives, scope of service, timing, staffing, and
compensation are summarized as follows:
1. BACKGROUND
It is not uncommon for California cities and RDAs to be deprived of revenue
to which they are entitled. This is largely due to administrative errors and
omissions by both the revenue -generating (taxpaying) entities and third -
party intermediaries (state, counties, utility companies) responsible for
collecting and distributing taxes.
Administrative errors and omissions are virtually assured given the non-
standard, complex nature of state and local taxes with regard to
applicability, rates, exceptions, exemptions, quirks and inconsistencies.
Human fallibility, fragmented responsibilities, and employee turnover
further compound the problem.
Because there are time limitations on the City's and RDA's ability to recover
revenue either has been deprived of, it behooves the City and the RDA to
detect tax deficiencies as quickly as possible, before they become non-
recoverable.
1
2. OBTEC IVES
A. REVENUE ENHANCEMENT AUDITS
The objective of MRC's revenue enhancement audits is to assist the
City and its Redevelopment Agency (RDA) in realizing all of the
revenue to which each is entitled from sources that include business
license tax, documentary transfer tax, franchise fees, property tax,
transient occupancy tax, use tax and utility users tax for the City and
tax increment for the RDA.
MRC's revenue enhancement audits result in the detection and
documentation of errors and omissions causing deficiencies and
thereby recover revenue that would not otherwise have been realized
by the City/RDA.
B. PROPERTY TAX INFORMATION SERVICE
MRC's geobased information services for sales tax, property tax and
other revenue sources enable cities and RDAs to monitor and analyze
where their tax revenues are coming from and what they are based
on.
Although property tax is a key source of City revenues, many cities
have limited knowledge as to the composition of their property tax
base and the changes that are occurring within it. MRC's property tax
management reports offer a complete review of the City's/RDA's
property tax on both a detailed (parcel by parcel) and summary level,
and provide the City/RDA with a thorough and accurate
understanding of its property tax revenue base.
MRC's sales tax information service is provided to the City in the
form of the quarterly updated STARS (Sales Tax Analysis and
Reporting System) reports and Sales Tax Inquiry System. By adding
the property tax information service the City will have databases for
two of its most important tax revenue sources in place.
MRC's geobased information services are designed to provide the
City/RDA with an informed basis for developing strategies that
recognize and capitalize on the interrelatedness of the City's/RDA's
unique economic base and its locally -generated tax revenue sources to
achieve and maintain fiscal self-reliance.
2
3. SCOPE OF SERVICE
The expanded scope includes, but is not limited to, MRC providing the
services summarized as follows:
A. REVENUE ENHANCEMENT AUDITS
General --All Revenue Sources
o Meet with designated City/RDA official(s) to review service
objectives and scope, procedures, public relations and logistical
matters; we will also establish an appropriate liaison with the
City/RDA staff coordinator and logical checkpoints for
measuring progress;
Note: With the exception of this initial meeting, MRC's
expanded service requires no time or effort on the part of
City/RDA staff
o Review applicable provisions of the City's municipal code and
ordinances adopted by the City;
o Represent the City/RDA for the purpose of examining records
pertaining to business license tax, documentary transfer tax,
franchise fees, property tax, tax increment, transient occupancy
tax, use tax and utility users tax to identify and confirm
errors/omissions that are resulting in non-payment and/or
deficient payment of these revenues;
o For each error/omission identified and confirmed, prepare
documentation to substantiate and facilitate recovery of
revenue due from prior periods (plus applicable interest and
penalties) and prevent recurring deficiencies in current and
future years;
o Prepare and forward to the appropriate parties "date of
knowledge" requests for corrective action and revenue
recovery;
o Meet with designated City/RDA staff to review and discuss
our findings and recommendations; and
3
o Provide additional assistance as necessary to support
City/RDA in recovering and preventing future revenue
deficiencies.
Svecificallv--Documentary Transfer Tax. Property Tax and RDA
Tax Increment
o Establish a comprehensive, valid inventory of every parcel
located within the City and each project within the
Redevelopment Agency Project Areas and, for each, the
database elements needed to facilitate a comparison analysis
with Los Angeles County (County) secured and unsecured
taxable values and the California State Board of Equalization
taxable assessed values;
o Review County assessment practices, systems and procedures
for the determination of property tax value and the calculation
and allocation of property tax revenue to the City and its
Redevelopment Agency under AB8 and the Community
Redevelopment Law (CRL) Section 33670;
o Conduct a review and analysis of the RDA local secured and
unsecured valuations, tax rate area (TRA) and parcel
misplacements/ omissions, incorrect tax rate levies, late
assessments, tax roll adjustments and supplemental roll
placements;
o Procure from the County a detailed listing indicating for the
period 1985 to present the documentary transfer tax
distribution payments to the City including for each property
transferred, identification (street address and APN),
description, transfer date and actual or allocated transaction
value; and
o Research private and public record sources (beyond the
County) to compile data on City properties involved in change -
of -ownership transactions since 1985, including real estate
sales/purchases and business mergers/acquisitions.
4
Svecificallv--Franchise Fees and Utility Users Tax
o Review City's franchise agreements with utility and cable
television companies to determine bases for calculating
payments;
❑ Review City's franchise fee/utility users tax payment receipt
records;
o Inventory and analyze utility service providers/users subject
to the City's code/ ordinances;
❑ Validate on a test basis that the rate calculation components
have been accurately computed; and
o Review the City's payments for utility/telecommunications
services to determine whether City is being billed under the
most cost effective tariff applications available to meet the
City's needs.
Specifically - Use Tax
o Review purchase transactions, including purchases scheduled
for payment, in order to identify and correct actual and/or
scheduled misallocation of use tax stemming from improper
reporting and/or tax remittance procedures, for businesses,
institution, and government agencies conducting business
activities within the City, including the City itself.
o Identify businesses doing business activities within the City
that are properly reporting sales/use tax but have the potential
for modifying their marketing and/or purchasing operation to
generate additional revenue to the City. MRC will pursue
these opportunities and implement the appropriate changes to
enhance City's revenue.
P,
B. PROPERTY TAX INFORMATION SERVICE
A distinctive feature of MRC's property tax reports is the focus on the
City's/RDA's share of property tax revenues from the secured and
unsecured tax rolls. This focus offers significant advantages over
property tax reports based on total tax paid, which fail to account for
rate changes in different TRA's, RDA Projects, and other significant
adjustments that impact the actual revenue received by the
City/RDA.
MRC's reports include all parcels in the analysis, but concentrate on
significant taxpayers in the City and relate vital information by TRA
and land use. The Analysis Reports highlight significant property tax
generators, multi -property owners, contribution by TRA and land
use, and prior year comparative analysis. The Reference section
features complete listings of significant properties by property owner,
address, and assessor parcel number.
Finally, the RDA Increments Reports give a full accounting of tax
increment and General Fund revenues for all the Redevelopment
Agency's project areas within the City.
Enclosed under separate cover is a bound sample of the standard
reports produced from the property tax information service database.
The standard property tax reports include:
o Top 100 Property Tax Generators
o Top 100 Property Tax Values
o Properties with Significant Exemptions
o Pending Assessment Appeals Report (in Filing Date Order)
o Change of Ownership Report
o Significant Property Owners (By Total Net Assessed Value)
o RDA Increment By TRA
o Significant Property Tax Producers by TRA
o Significant Property Tax Changes (From Prior Year)
o Property Tax By Land Use
o Cross-reference Reports by Owner, Address and APN
Z
Many counties do not provide prior year property tax data on
magnetic media. In the absence of prior year information, reports
during the first year of service include only the current property tax
year data. Where available, and commencing the second year of the
service where not available, analysis data comparing changes
between each year will be included with the regular property tax
reports.
4. TIMING
MRC is prepared to commence the expanded service within 10 days
following authorization. MRC understands that San Rafael may be currently
involved in auditing several of these revenue sources. Accordingly, MRC
will not begin revenue enhancement audits for any source without specific
written authorization from the City. Each quarter, MRC shall provide the
City/RDA with a report summarizing audit progress to date and, as
applicable, the actual and projected amounts of revenue recovery for the
City/RDA by revenue source. MRC shall deliver the initial set of the
property tax reports, within 90 to 120 working days following authorization.
The City/RDA and MRC will mutually agree on the frequency and type of
periodically updated property tax reports to be provided thereafter.
5. PROTECT TEAM
MRC's project team for the multi -revenue enhancement audits consists of 18
personnel listed in the organizational chart on the following page according
to project role (see Exhibit A for individual qualifications).
7
7
N
7
'o
A
m
N
U
m
0
CD
•pl
CO
N
m
c
c
N
ID
CL
E
c6
N
c
m
x C
A
=
A
a
T�
U
� m
G
t- v�
m 3i
C O
Q
� r
W
L
C mcc
E
D
m C
c
Q
N v
C ��{ppp6
toC: ro
U
O �—
W
2a
Q' G
'm E o
W
V
C
o
C
it
m C
E
a
o a
co
g g
Z
o
G O
:01
LU
o
o
W
�-CE
m
N C
O
Z
W
O
L�
W
~ c~ m
CD C
CD
C V m
Z w
�G
t�l!11
rn iW A O
� Z
J
G T m O
.5
Ivi intnm
SS Q _ G
U :7 ; 9
of O
Y
(}
f
O
C7
7
N
7
'o
A
m
N
U
m
0
CD
•pl
CO
N
m
c
c
N
ID
CL
E
c6
N
5. COMPENSATION
In order to make the property tax reports and expanded revenue
enhancement audit service self -funding for the City, MRC's compensation is
entirely predicated and contingent upon our audits producing additional
revenue for the City as a result of MRC detecting and documenting
errors/omissions causing the deficiencies.
MRC's compensation for providing the expanded revenue enhancment audit
service is 25% of the retroactive adjustments for deficiency recoveries from
eligible prior periods (plus associated charges for penalties and interest).
Should MRC's audit service result in the detection and documentation of
errors/omissions that the City/RDA and MRC mutually agree will produce
ongoing (rather than one-time) benefits to the City/RDA, MMC's
compensation shall be 25% of the additional revenue realized by the
City/RDA during the first 12 consecutive quarters following correction.
MRC's compensation for providing the initial set of property tax reports is
$7,000, including expenses. Compensation for subsequent reports will be
mutually agreed upon between City/MDA and MRC depending on the type
and frequency of reports to be provided.
MRC's compensation for providing the property tax reports is also self -
funding in that payment is contingent upon the City/RDA receiving
sufficient funds from the City's/RDA's share of new revenue produced from
MRC's sales tax and/or expanded audit service, providing such revenue is
received by the City/RDA after MRC has delivered the property tax reports.
Under this arrangement, the City/RDA agrees to notify MRC within 10 days
following receipt by the City/RDA of payments resulting from MRC's audit
service. Upon being notified of receipt of payments, MRC will then invoice
the City/RDA for 25% of the amounts received. Earned compensation is
due and payable upon receipt of billings.
The same compensation provisions would apply if MRC's tariff rate analysis
and recommendations enable the City to realize refunds and/or future cost
savings on its utility/telecommunications services.
0
7. AUTHORIZATION
To expand the scope of revenue enhancement and information services
currently being provided to the City, to include the audit and information
services described above, please return an executed copy of this letter to my
attention. The original is for your records. Thank you.
ACCEPTED FOR THE MUNICIl'AL RESOURCE CONSULTANTS
CITY OF SAN RAFAEL PARTNER: JOHN T. AUSTIN, INC.
By:By: C�
(�Auth - ed Signa e) /
Name: Albert J. Boro Name: Tohn T. Austin
(Please Print or Type)
Title: Mayor
Title: President
Date: December 21. 1993 Date:
ATTEST:
JeaDn M. Leoncini, City Clerk
G:\data\docs\letter\sr\multprop.doc
Gj
November 30.1992
ADDENDUM TO PROPOSAL TO EXPAND THE SCOPE OF AUDIT SERVICES
PROVIDED TO THE CITY OF SAN RAFAEL
BY MUNICIPAL RESOURCE CONSULTANTS
As a part of the scope of service described in Section 3 of the
proposed scope expansion, MRC will provide advisory services as
requested by the City of San Rafael.
Compensation for these advisory services will not exceed $10,000
and will be payable solely from the City or Redevelopment Agency's
share of increased revenue generated by MRC's audit efforts.