Title
Recommendation to Authorize the City Manager to Execute a Five-Year Agreement with MuniServices, LLC in an Amount Not to Exceed a Total Five-Year Expenditure of $375,000 for Utility Users Tax Ordinance Implementation and Audit of Utility Users Tax Revenue. (Finance 2410)
Body
To: Honorable Mayor and Members of the City Council
From: Jill Keimach, City Manager
Re: Recommendation to Authorize the City Manager to Execute a Five-Year Agreement with MuniServices, LLC in an Amount Not to Exceed a Total Five-Year Expenditure of $375,000 for Utility Users Tax Ordinance Implementation and Audit of Utility Users Tax Revenue
BACKGROUND
The Utility Users Tax (UUT) is a general tax that was originally adopted in 1972 and applies to the consumption of electricity, gas, cable and telephone services. The rate is set at 7.5% and represents approximately 10 percent of the City’s annual General Fund revenue. In 2016, the UUT Ordinance was revised and placed by the City Council on the November 2016 ballot and was successfully passed by the City of Alameda voters.
DISCUSSION
The Utility Users Tax is the City’s third largest source of General Fund revenue. Utility Users Tax accounts for $9.5 million or 10% of General Fund revenue. The tax is imposed on the consumption of the utility services such as electricity, gas, cable television and telephone (including cell phones and prepaid phones).
MuniServices provides UUT audit services for over 70 municipal clients in California, representing approximately 70% of all UUT revenues collected in the state. With over 27 years’ experience, MuniServices UUT services focus on all utility providers, and identifies and corrects errors and omissions that cause revenue deficiencies.
MuniServices also offers a dedicated Government Relations team to provide policy, regulatory and legislative consulting support and will provide revenue forecasts and management reports on an annual basis that outline the year’s activities in review, comparison charts and revenue generated from compliance activities. Reports will also contain an analysis of UUT revenue and a five-year revenue forecast on each of the utility business segments (electric, gas, cable and telecommunication).
In addition to the services described above, MuniServices will specifically help the Finance Department ensure that all telecommunication providers are abiding by the new ordinance passed by the voters in 2016 and are properly applying the tax. They will also assist the City with developing administrative procedures that may be necessary to interpret the updated ordinance. A copy of the consultant agreement is attached in Exhibit 1.
FINANCIAL IMPACT
The Utility Users Tax is a vital source of revenue to the General Fund. The cost of services provided by MuniServices, LLC is six-tenths of one percent (0.6%) of the total UUT revenues received from the most recent fiscal year and a maximum cap of $75,000 per calendar year. Additional revenue resulting from the audit process will add to the General Fund and will offset the cost of the contract in whole or in part. The adopted Fiscal Years 2017-19 Budget includes funding for the first two years of the contract. Staff will include contract fee in subsequent budgets presented to the Council for approval. The total five-year contract cost is not to exceed $375,000.
MUNICIPAL CODE/POLICY DOCUMENT CROSS REFERENCE
This action is consistent with the Municipal Code.
ENVIRONMENTAL REVIEW
The California Environmental Quality Act (CEQA) applies only to projects, which have the potential for causing a significant effect on the environment. This project is exempt pursuant to CEQA Guidelines section 15061(b)(3).
RECOMMENDATION
Recommendation to authorize the City Manager to execute a five-year agreement with MuniServices, LLC in an amount not to exceed a total five-year expenditure of $375,000 for Utility Users Tax Ordinance implementation and audit of Utility Users Tax revenue.
Respectfully submitted,
Elena Adair, Finance Director
Financial Impact section reviewed
Elena Adair, Finance Director
Exhibit:
1. MuniServices, LLC Agreement