HomeMy WebLinkAboutAGENDA REPORT 1993 0602 CC REG ITEM 08E e
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CITY OF MOORPARK
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By -- IrAr .L
TO: Honorable City Council
FROM: Steven Kueny, City Manager g4-
DATE: May 28, 1993 (CC Meeting of June 2, 1993)
SUBJECT: Consider Resolution No. 93- Authorizing Receipt
and Review of Sales and Use Tax Information from
the State Board of Equalization and Approve an
Agreement with Hinderliter, de Llamas and
Associates (HDL) for a Sales Tax Management
Program
The firm of Hinderliter, de Llamas and Associates (HDL)
provides revenue management for local government. As part of
their services, they perform audits of sales tax receipts and
property tax for cities and redevelopment agencies. After
conclusion of their initial work, they provide management
reports and perform reviews of the City's property tax and
sales tax. At the present time, we are proposing only to
contract for sales tax management services.
The Budget and Finance Committee (Lawrason and Montgomery)
has reviewed the services agreement and met with a
representative of HDL. It is the recommendation of the
committee and staff that this firm be contracted to perform
specialized consulting work required for the sales tax audit
and reporting work. Now that the Redevelopment Agency is
operational, we believe now is the time to begin this work.
The sales tax reporting work will be beneficial for both
economic development and financial forecasting purposes, as
well as ensuring that we receive all of the sales tax income
due the city. City staff is planning to evaluate the
property tax audit services and will have a future report on
this matter.
The two primary components of the HDL sales tax program are
as follows:
1. Economic Analysis: Reports on the City's major sales
tax producers for the most current and previous four
quarters and the sales tax receipts for each business
Honorable City Council
Resolution & Agreement with HDL
Page 2
May 28, 1993
category used by the Board of Equalization. Information
can also be provided by geographic areas. The cost for
this service is $300. 00 per month. This data would be
useful for economic development and financial
forecasting purposes. This is an efficient way to
retrieve this information.
20 Allocation Audit and Recovery: The purpose is to
identify and correct "point-of-sale" distribution errors
potentially resulting in sales tax income not previously
paid to the City. The cost for this work is payment of
15% of all new sales tax revenue received by the City as
a result of the audit and recovery work performed by the
contractor for back quarter reallocations and monies
received in the first eight consecutive reporting
quarters following completion of the audit and
confirmation of corrections by the State. This is a no-
risk proposal. If no reallocations are found, no fee is
paid. There is the possibility, as was the case with
Fillmore, where sales tax payments made to the City
should have been paid to another agency. In such case,
the money will have to be refunded or withheld from
subsequent allocations received from the State. It is
better to discover any such errors as soon as possible
to minimize the financial impact of repayment and to
have an accurate understanding of the City's sales tax
base.
The Cities of Agoura Hills and Fillmore were contacted
regarding the services provided to them by HDL. Both cities
were pleased with HDL's performance.
With the continuing uncertainty of the State's attitude and
actions toward traditional city revenue sources, the
importance of sales tax to all cities is even greater. The
sales tax analysis activities will also provide timely and
useful information.
The attached agreement has been reviewed by the City
Attorney. The work*will begin immediately upon the execution
of the agreement by HDL. No appropriation is necessary for
1992/93 in that the monthly report costs for the partial
month of June, 1993, can be covered by existing budgeted
accounts. The $3,600 annual cost for the reporting work will
be included in the 1993/94 budget. At a later date, the City
Council may desire to have the Redevelopment Agency fund all
or part of the reporting work.
Honorable City Council
Resolution & Agreement with HDL
Page 3
May 28, 1993
RECOMMENDATION:
The Budget and Finance Committee and staff recommend
authorizing approval of the attached agreement for execution
by the Mayor, on behalf of the City, and approval of
Resolution No. 93- authorizing receipt and review of Sales
and Use Tax information from the State Board of Equalization.
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Attachments: Agreement w/Exhibit A
Resolution
c:\wp51\ccagenda\salestax.pro