SR-04-28-2015-3GCity or
Santa Monica
City Council Regular Meeting: April 28, 2015
Agenda Item: 3 -G
To: Mayor and City Council
From: Gigi Decavalles- Hughes, Director
Subject: Modification to Agreement with MuniServices, LLC for Parking Facilities Tax
and Business License Tax Audit Services
Recommended Action
Staff recommends that the City Council authorize the City Manager to negotiate and
execute a first modification to Contract No. 9736 (CCS) with MuniServices, LLC a
California -based company, to extend the contract term through June 30, 2016 for
Parking Facilities Tax and Business License Tax audit services. This will result in a
three -year amended agreement with no change to the contract value not -to- exceed
$221,262.
Executive Summary
The City of Santa Monica contracted with MuniServices, LLC to provide tax audit
services to ensure accurate reporting and payment of Parking Facilities Tax and
Business License Tax. The current contract expires on June 30, 2015. Due to staffing
changes in the Finance Department, the audit program for Parking Facility Taxes was
put on hold. Staff recently has moved forward with the second phase of the program,
but the audits and associated final reports will not be complete by June 30. Extension
of the contract for one year will allow time for completion of the audits now under way
and an evaluation of the program going forward. Staff recommends modifying the
original contract term for an additional one year term with no change to the contract
value of $221,262.
Background
On May 14, 2013, (Attachment A) Council approved a two -year contract with
MuniServices, LLC (MuniServices) to provide Parking Facilities Tax and Business
License Tax audit services. The contract provided for the audit of private parking
facilities and of specific companies that were identified as potentially underreporting
gross receipts used to calculate business license tax. The initial contract term was for
two years for an amount not -to- exceed $221,262.
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Discussion
The purpose of the Parking Facilities Tax audits is to monitor compliance of parking
facilities with the City's tax ordinance and to ensure the City is receiving the appropriate
amount of taxes due. To date, 24 parking facilities have been audited at a cost of
$35,000. The audits discovered payment shortfalls in three of the 24 facilities. Unpaid
taxes and penalties recovered from the audits to date are approximately $50,000 with
approximately $10,000 more in the collection process. Audits of 12 more facilities were
recently authorized. Due to staffing changes in the Finance Department, the audit
program for Parking Facility Taxes was put on hold. Staff recently has moved forward
with the second phase of the program, but the audits and associated final reports will
not be complete by June 30. Extension of the contract for one year will allow time for
the consultant to complete of the audits now under way. Upon completion of the
recently authorized audits, staff will evaluate the program to determine if the return on
investment from the audits warrants continuation of the Parking Facilities Tax audit
program.
The contract also provides for MuniServices to conduct Business License Tax audits on
certain complex businesses specifically identified by staff as potentially underreporting
gross receipts and therefore underpaying taxes. To date, MuniServices has conducted
one audit that recovered nearly $1 million in unpaid taxes. Staff has currently identified
one additional potential audit that MuniServices could be used to perform. It is unlikely
that this audit would be completed by the current June 30, 2015 contract termination
date. Staff therefore recommends that Council authorize a contract modification to
extend the term through June 30, 2016. Staff anticipates the additional audit to be
completed in that time frame. During the extended contract period, staff will evaluate
the need for such services going forward, and will return to Council as appropriate.
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Financial Impacts and Budget Actions
There is no immediate financial impact or budget action necessary as a result of the
recommended action. Funds are available in the FY 2014 -15 budget in account
01224.555060 to pay for ongoing audits. Future year funding is contingent upon
Council budget approval.
Prepared By: Yolanda Nunez, Senior Administrative Analyst
Approved
-'gi eecavalles -Hdgl es, irector4 /14/2015 Elaine M Polachek, Interim City M }&WO&5
Attachments:
A. May 14, 2013 Staff Report
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Reference:
Modified Contract
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(CCS)