SR 02-23-2018 3B
City Council
Report
City Council Meeting: February 13, 2018
Agenda Item: 3.B
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To: Mayor and City Council
From: Gigi Decavalles-Hughes, Director, Finance Department, Revenue
Subject: Award of Property Tax Information and Audit Services
Recommended Action
Staff recommends that the City Council:
1. Award RFP #148 to HdL Coren & Cone, a California-based company, to provide
property tax information consulting and audit services.
2. Authorize the City Manager to negotiate and execute a professional services
agreement with HdL Coren & Cone for an estimated amount of $141,000 over a
five-year period with future year funding contingent on Council budget approval.
Executive Summary
Since 1997, HdL Coren & Cone (HDLCC) has provided the City with property tax
information consulting and audit services needed to ensure that the City receives all
property tax revenues due for economic planning and analyses, property tax revenue
trend reports to forecast City property tax revenues, bond disclosure report updates,
and other consulting services as needed. In November 2017, the City solicited bids for
property tax information and audit services. Based on evaluation responses to the
Request for Proposals (RFP), staff recommends that the City negotiate a new five-year
contract with HDLCC. The annual amount for information and consulting services is
$25,000. The annual amount for auditing services is approximately $3,200 based on
average actual costs over a five-year period. Based on these figures, the estimated
total value of the contract over the next five-year period will be approximately $141,000.
Background
Since 1992, the City has contracted for property tax information consulting and auditing
services. Services provided also included fiscal consulting services associated with tax
allocation bonds issued by the former Redevelopment Agency (Agency). The City’s
current contract with HDLCC (Contract #9686 CCS) was authorized by Council on
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January 22, 2013 (Attachment A). The contract provided a five-year term and expires
on February 20, 2018.
Discussion
Local taxes represent approximately two-thirds of the projected fiscal year 2017-18
General Fund revenues, with property taxes projected to account for 16% (14%
property tax and 2% real property transfer tax) or $64.4 million. Property tax revenues
result from a 1% levy on the assessed value of all real property in the City. The base
property tax levy of 1% of property assessed valuation is collected by the Los Angeles
County Tax Collector and is distributed to various public agencies located in the County
including cities, school districts, and special districts. The City’s share of the 1% levy is
approximately 14-17% depending on the area of the City where the property is located.
The City’s real property transfer tax is assessed on the sale of real property in the City
at a rate of $3.00 per $1,000 of transfer value. Property tax information and audit
services are specialized in nature and require in-depth knowledge of local and state
government operations and legislation.
HDLCC would work with the Finance and Housing and Economic Development
Departments to prepare annual tax reports and property tax audits; reconcile the Annual
Auditor Controller Assessed Valuation reports; and prepare assessment appeal
information. As part of its property tax service, HDLCC would prepare preliminary and
final property tax reports for all City tax districts and former Redevelopment project
areas and present the data to the City and Agency. Consultant staff would assist the
City in forecasting property tax revenues and the City’s share of residual payments,
calculating statutory pass-through payments to taxing entities, preparing fiscal
consultant reports, and updating bond disclosure schedules and reports. Property tax
auditing services would assist in identifying misallocated property tax revenues and
enhance the revenue recovery process. Audits conducted on secured and unsecured
property tax rolls would ensure that each parcel is coded to the appropriate tax entity.
Consultant Selection
On November 13, 2017, the City published a Request for Proposals (RFP #148) for
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property tax information and audit services. The RFP was posted on the City’s online
bidding website and notices were advertised in the Santa Monica Daily Press in
accordance with the City Charter and Municipal Code provisions. A total of 579 vendors
were notified and 20 vendors downloaded the RFP. Proposals were received from the
following two firms:
HdL Coren & Cone
MuniServices, LLC
An evaluation panel composed of representatives from the Finance and the Housing
and Economic Development departments reviewed and ranked the proposals using the
criteria set out in the RFP. Based on the selection criteria in SMMC 2.24.073, HDLCC
was recommended as the best qualified firm to provide property tax information and
audit services. HDLCC was selected based on the firm’s long standing and
documented success in audit recoveries, ability to meet project work plan goals in a
timely manner, experienced and qualified staff, methodology that would be used to
maximize City revenues, financial stability, pricing, available resources, and compliance
with City scope of work. Staff thoroughly reviewed and analyzed each proposal’s
methodologies for improving process efficiencies to ensure that the City maximizes the
collection of revenues and takes advantage of new and existing technologies. HDLCC’s
estimated annual cost to provide property tax information consulting services is $25,000
plus a one-time 25% fee for property tax audit recoveries.
Financial Impacts and Budget Actions
The contract to be awarded to HDLCC is for an estimated annual amount of $25,000 for
property tax information consulting services plus $3,200 for audit recovery services
(based on historical averages), resulting in an estimated five-year total of approximately
$141,000. Funds are available in the FY 2017-19 biennial budget in the Finance
Department. The contract will be charged to account number 012241.555060 and
future year funding is contingent on Council budget approval.
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Prepared By: David Carr, Assistant City Treasurer
Approved
Forwarded to Council
Attachments:
A. January 22, 2013 Staff Report (Weblink)
B. Oaks Initiative Form
REFERENCE:
Agreement No. 10619
(CCS)