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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.