SR 10-23-2018 3G
City Council
Report
City Council Meeting: October 23, 2018
Agenda Item: 3.G
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To: Mayor and City Council
From: Gigi Decavalles-Hughes, Director, Finance Department, Revenue
Subject: Utility Users Tax and Franchise Fee Audit and Revenue Enhancement
Services
Recommended Action
Staff recommends that the City Council:
1. Award Bid #162 to MuniServices, LLC, a California-based company for Utility
Users Tax and Franchise Fee Audit and Revenue Enhancement Services for the
Finance Department;
2. Authorize the City Manager to negotiate and execute a five -year agreement with
MuniServices, LLC, in an estimated amount of $320,000 with future year funding
contingent on Council budget approval.
Summary
The City levies a 10% Utility Users Tax (UUT) on electricity, natural gas, telephone
(both hardwire and wireless), cable and water/wastewater services. The City also
collects revenue through franchise agreements with the providers of electricity, natural
gas, and cable television services. The City’s FY 2018-19 anticipated revenue from
UUT and franchise fees is approximately $30.6 million or 8% of total General Fund
revenues. Continuing legislative actions and technology challenges make it prudent
that the City take precautions to safeguard and preserve these revenues. Providing
Utility Users Tax and Franchise Fee audit and revenue enhancement services to the
City since 1998, MuniServices, LLC (MuniServices) would continue to provide ongoing
legislative monitoring, technology updates, ordinance updates, tax geo-coding
information, and statewide tax application compliance and business detection under a
new contract. Staff recommends that the City award an agreement to MuniServices in
an estimated amount of $320,000 over a five-year period.
Discussion
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MuniServices would be instrumental in ensuring that the City receives the amount of
UUT revenues to which it is legally entitled as well as providing policy, regulatory and
legislative consulting support.
With over 28 years of experience, MuniServices has developed extensive data
management resources to facilitate the identification of new revenue sources for clients
as well as offer a dedicated government relations team to provide policy, regulatory and
legislative consulting support. MuniServices currently provides UUT and/or franchise
audit services for over 70 public agencies in California.
The City contracted with MuniServices for Utility Users Tax (UUT) and Franchise Fee
audit and revenue enhancement services from 1998 until the contract expired in April
2018. City UUT collections continue to require continual monitoring to protect the City’s
existing UUT revenues from decrease or elimination due to new legislation,
technologies, outdated ordinance language, non-collecting companies, and inaccurate
information. The nearly $4 million annually that the City collects from wireless
telecommunication providers is a direct result of MuniServices’ efforts to work with the
industry to achieve compliance with local UUT ordinances.
Under the new contract, MuniServices would continue to perform compliance reviews of
major utility providers to ensure that the UUT is properly applied to taxable service
charges and include periodic compliance discovery reviews.
Vendor Selection:
RFP Data
Bid Posting
Date
Bid Posted
On
RFP Advertised
in (City Charter &
Municipal Code)
# of
Vendors
Downloaded
# of
Submittals
Received
Date RFP
Opened
03/08/2018 City's Online
Bidding Site
Santa Monica
Daily Press 21 1 03/29/2018
Submittals Received Selection Criteria
MuniServices,
LLC
$212,500* fixed
amount plus an
estimated $95,000 for
Municipal Code SMMC 2.24.072
Evaluation
Criteria
Experience/Technical
Competency, Ability to Meet
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revenues recovered
through audits
*excludes CPI increases
Work Plan/Timeliness, Cost of
Services/Cost Control, and
Responses to RFP.
Justification to Award
Utility Users Tax and Franchise Fee audit and revenue enhancement services are a
complex area of tax law which require specialized services that is offered by a limited
amount of firms. MuniServices was the only firm to submit a proposal and provide a full
range of revenue recovery, audit and administration services. Based on analysis
conducted, staff was able to negotiate and reduce the consultant’s fixed annual cost by
approximately 54%.
Financial Impacts and Budget Actions
Staff seeks authority to award a professional services agreement with MuniServices for
Utility Users Tax and Franchise Fee audit and revenue services.
Professional Services Agreement
FY 2018-19 Request
Estimated Amount
FY 2018-19 Budget Finance
Department/Account#
Total Estimated Contract
Amount
$61,500 01300005.552010 $320,000
The fee includes an annual fixed component starting at $42,500 which would be revised
annually by the change in the Consumer Price Index (estimated at 2.5% annual
increase). Additionally, the fee for revenues recovered through specific audits of the
UUT and Franchise Tax payments would be 20% of new revenues recovered. Based
on recent history, this fee is expected to be approximately $19,000 annually. Therefore,
it is anticipated that most, if not all, of the fixed fee would be covered by additional
revenues. Funds in the amount of $61,500 are available in the FY 2018 -19 budget in
the Finance Department. 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. Oaks Initiative Form
CITY OF SANTA MONICA
OAKS INITIATIVE NOTICE
NOTICE TO APPLICANTS, BIDDERS, PROPOSERS
AND OTHERS SEEKING DISCRETIONARY PERMITS, CONTRACTS,
OR OTHER BENEFITS FROM THE CITY OF SANTA MONICA
Santa Monica’s voters adopted a City Charter amendment commonly known as
the Oaks Initiative. The Oaks Initiative requires the City to provide this notice and
information about the Initiative’s requirements. You may obtain a full copy of the Initiative’s
text from the City Clerk.
This information is required by City Charter Article XXII—Taxpayer Protection. It
prohibits a public official from receiving, and a person or entity from conferring, specified
personal benefits or campaign advantages from a person or entity after the official votes,
or otherwise takes official action, to award a “public benefit” to that person or entity. The
prohibition applies within and outside of the geographical boundaries of Santa Monica.
All persons or entities applying or receiving public benefits from the City of Santa
Monica shall provide the names of trustees, directors, partners, and officers, and names
of persons with more than a 10% equity, participation or revenue interest. An exception
exists for persons serving in those capacities as volunteers, without compensation, for
organizations exempt from income taxes under Section 501(c)(3), (4), or (6), of the
Internal Revenue Code. However, this exception does not apply if the organization is a
political committee or controls political committees. Examples of a “public benefit” include
public contracts to provide goods or services worth more than $25,000 or a land use
approval worth more than $25,000 over a 12-month period.
In order to facilitate compliance with the requirements of the Oaks Initiative, the City
compiles and maintains certain information. That information includes the name of any
person or persons who is seeking a “public benefit.” If the “public benefit” is sought by an
entity, rather than an individual person, the information includes the name of every person
who is: (a) trustee, (b) director, (c) partner, (d) officer, or has (e) more than a ten percent
interest in the entity. Therefore, if you are seeking a “public benefit” covered by the Oaks
Initiative, you must supply that information on the Oaks Initiative Disclosure Form. This
information must be updated and supplied every 12 months.
CITY OF SANTA MONICA
OAKS INITIATIVE DISCLOSURE FORM
In order to facilitate compliance with the requirements of the Oaks Initiative, the City
compiles and maintains certain information. That information includes the name of any
person or persons who is seeking a “public benefit.” If the “public benefit” is sought by
an entity, rather than an individual person, the information includes the name of every
person who is: (a) trustee, (b) director, (c) partner, (d) officer, or has (e) more than a ten
percent interest in the entity.
Public benefits include:
1. Personal services contracts in excess of $25,000 over any 12-month period;
2. Sale of material, equipment or supplies to the City in excess of $25,000 over a 12-
month period;
3. Purchase, sale or lease of real property to or from the City in excess of $25,000
over a 12- month period;
4. Non-competitive franchise awards with gross revenue of $50,000 or more in any
12-month period;
5. Land use variance, special use permit, or other exception to an established land
use plan, where the decision has a value in excess of $25,000;
6. Tax “abatement, exception, or benefit” of a value in excess of $5,000 in any 12-
month period; or
7. Payment of “cash or specie” of a net value to the recipient of $10,000 in any 12-
month period.
Name(s) of persons or entities receiving public benefit:
Name(s) of trustees, directors, partners, and officers:
Name(s) of persons with more than a 10% equity, participation, or revenue interest:
Prepared by: ____________________________Title: __________________________
Signature: ______________________________________ Date: ________________
Email: ____________________________________ Phone: ____________________
FOR CITY USE ONLY:
Bid/PO/Contract # ____________________________ Permit # ___________________________
y: __________
____________________________________________________________________________________________________________________________________________________________________________________________
Doug Jensen Senior Vice President
August 20, 2018
Doug.Jensen@muniservices.com 559-288-8943
MuniServices, LLC
Doug Jensen, Senior Vice President
None.
REFERENCE:
Agreement No. 10774
(CCS)