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1993-155-Execute Amendment No.1 To Contract With Municipal Response Consultants To Add Property Tax Audit ServicesRESOLUTION 1993 -155 RESOLUTION OF THE TOWN OF LOS GATOS AUTHORIZING TOWN MANAGER TO EXECUTE AMENDMENT NO.1 TO CONTRACT WITH MUNICIPAL RESOURCE CONSULTANTS TO ADD PROPERTY TAX AUDIT SERVICES RESOLVED, by the Town Council of the Town of Los Gatos, County of Santa Clara, State of California, that the Town of Los Gatos amend contract (attached) with Municipal Resource Consultant Contract by adding property tax review services, and that the Town Manager is authorized, and is hereby directed, to execute said Amendment No. 1 to the Contract in the name and on behalf of the Town of Los Gatos. PASSED AND ADOPTED at a regular meeting of the Town Council of the Town of Los Gatos, California, held on the 1st day of November, 1993 by the following vote: COUNCIL MEMBERS: AYES: Randy Attaway, Steven Blanton, Linda Lubeck, Patrick O'Laughlin Mayor Joanne Benjamin NAYES: None ABSENT: None ABSTAIN: None SIGNED: OR OFT T N OF LOS GATOS S GATOS, CALIF NIA ATTEST: trc /C.z cl�, CLERK OF THE TOWN O OS GATOS LOS GATOS, CALIFORNIA `t✓wN cl.�RiA vdgi iHH: - RL�`C+ �1LJ: AMENDMENT NO. 1 TO CONSULTANT SERVICES AGREEMENT BETWEEN THE TOWN OF LOS GATOS AND MUNICIPAL RESOURCE CONSULTANTS This Amendment No. 1 to the Consultant Services Agreement between the Town of Los Gatos and Municipal Resource Consultants dated December 4, 1989 (hereinafter 1989 Agreement), is made and entered into this day of , 1993, as follows: 1. Addition of Property Tax Services. In addition to the services provided under the 1989 Agreement, Consultant shall provide to Town the services described in Exhibit C to this Amendment No. 1. Consultant shall provide these services at the time, place, and in the manner specified in Exhibit C to this Amendment No. 1. Consultant shall not be compensated for any services outside the scope of Exhibit A to the 1989 Agreement or of Exhibit C to this Amendment No. 1. Consultant further acknowledges that the services to be provided under this Amendment No. 1 are to benefit both the Town and the Town of Los Gatos Redevelopment Agency [hereinafter Agency], and that by executing this Amendment No. 1, Consultant is obligating itself to provide the same standard of care and service regarding property tax issues affecting the Agency as it does for the Town. 2. Payment. Town shall pay Consultant for services rendered under Exhibit C to this Amendment No. 1 at the times and in the manner set forth in Exhibit C to this Amendment No. 1. The payments specified in Exhibit C to this Amendment No. 1 shall be the only payments to be made to Consultant for services rendered pursuant to Exhibit A to this Amendment No. 1, unless the Town gives prior written approval for additional compensation for additional service. Consultant shall submit all billings for services rendered pursuant to Exhibit A to this Amendment No. 1 in the manner specified in that Exhibit. 3. Effect of 1989 Agreement. Except as explicitly amended in this Amendment No. 1, all other terms, conditions, and exhibits of the 1989 Agreement shall remain unamended and in full force and effect. 4. Exhibits. All Exhibits referred to herein are attached hereto and are by this reference incorporated herein. TOWN OF LOS GATOS Title: MUNICIPAL RESOURCE CONSULTANTS PARTIED. JOHN T. AUSTW, INC. By: John T. Austin Im Date: September 23, 1993 EXHIBIT C EXPANDED REVENUE ENHANCEMENT AUDIT SERVICE Municipal Resource Consultants (MRC) hereby agrees to expand the revenue enhancement and information services currently being provided to the Town of Los Gatos (Town). The purpose, scope, procedures, timing, reports and compensation are set forth as follows: 1. BACKGROUND Many California cities are not realizing all of the revenue to which thev are entitled due to administrative errors and omissions by revenue - generating businesses and third -party intermediaries (such as the state, counties and utility companies) responsible for collecting and remitting the revenue to the cities. Administrative errors and omissions are inevitable given the non- standard, complex nature of state and local taxes with regard to applicability, rates, exceptions, exemptions, quirks and inconsistencies. Human fallibilitv, fragmented responsibilities and employee turnover further compound the problem. Because there are time limitations on the Town's ability to recover revenue it has been deprived of, it behooves the Town to have revenue enhancement audits conducted as thoroughly and rapidly as possible. 2. PURPOSE & SCOPE The purpose of MRC's revenue enhancement audits is to assist the Town in recovering all of the revenue to which it is entitled from Property Tax and RDA Tax Increment. MRC's revenue enhancement audit service results in the detection, documentation and correction of errors and omissions causing deficiencies and thereby produces new revenue that would not otherwise have been captured by the Town /Agency. 3. PROCEDURES In general, MRC shall: ❑ Meet with Town's designated staff to review service objectives, scope, workplan schedule, public relations and logistical matters. MRC will also establish an appropriate liaison with the Town's coordinator and logical checkpoints for reviewing progress ❑ Review applicable provisions of the Town's municipal code and ordinances ❑ Physically canvass the revenue generating elements of the Town's economic base, such as the land parcels, major buildings, commercial, industrial, institutional and governmental users ❑ Represent the Town for purposes of examining records pertaining to property tax and RDA tax increment to identify and confirm any errors/ omissions that are resulting in deficient payment to the Town ❑ For each error /omission identified and confirmed, prepare documentation to substantiate and facilitate recovery of revenue due from prior periods (plus applicable interest and penalties) ❑ Prepare and forward to the appropriate parties "date of knowledge" requests for corrective action and revenue recovery ❑ Meet with designated Town official(s) as necessary to review our findings and recommendations ❑ Provide additional assistance as necessary to support the Town in recovering and preventing tax deficiencies Specifically, MRC shall ❑ Establish a comprehensive inventory of every parcel located within the Town and each project within the Redevelopment Agency project areas, including the database elements needed to facilitate a comparison analysis with County secured and unsecured taxable values and the California State Board of Equalization taxable assessed values ❑ Review County assessment practices, systems and procedures for determining property tax value, calculating and allocating property tax revenue to the Town and its Redevelopment Agency under AB8 and Community Redevelopment Law Section 33670 ❑ Conduct a review and analysis of the RDA local secured and unsecured valuations, tax rate area and parcel misplacements /omissions, incorrect tax rate levies, late assessments, tax roll adjustments and supplemental roll placements ❑ Notify MRC within 10 days following receipt by the Town /Agency of payments resulting from MRC's audit service. Upon being notified of receipt of payment(s), MRC will then invoice the Town /Agency. Earned compensation is due and payable upon receipt of invoice. All expenses incurred by MRC in providing the revenue enhancement audit service will be absorbed by MRC. These expenses include such items as employee salaries and benefits, insurance airfare, auto rentals, meals lodging, computer processing, clerical, communications (e.g., personal meetings, telephone, mail, etc.), photocopying, overhead and miscellaneous out -of- pocket expenses for consumable supplies and research materials such as maps, directories, etc. 4. TIMING & REPORTING MRC shall commence the revenue enhancement audits within 10 working days of authorization (unless instructed otherwise by the Town) with the objective of delivering the initial audit reports within 90 to 120 working days. Thereafter, MRC shall provide the Town with audit progress reports to include, but not be limited to, the following: ❑ Status of work in progress, including copies of reports addressing errors/ omissions with assessor's identification or parcel number, individuals contacted, date(s) of contact, reason(s) for error/ omission and recommended corrective procedure ❑ Actual revenue produced for the Town by MRC's service on a quarterly and cumulative basis ❑ Projected revenue forthcoming to the Town as a result of MRC's audit service, specified according to source, timing and on -time versus ongoing ❑ Alphabetical listing of all errors /omissions detected for the Town by MRC including, for each, the account number, correction status, payments amount received by the Town, period to which payment is related and payment type (e.g. reallocation, deficiency assessment, etc.) 5. COMPENSATION & EXPENSES To make the service self - funding for the Town/ Redevelopment Agencv, MRC's compensation for providing the revenue enhancement audit service shall be entirely predicated and contingent upon the audit(s) producing new revenue that would not otherwise have been realized by the Town /Agency. Under this arrangement, the Town /Agency agrees to pay MRC an amount equal to 25% of the deficiency recoveries from eligible prior periods (plus associated charges for penalties and interest). When MRC audits result in the detection and correction of errors/ omissions that the Town /Agency and MRC mutually agree will produce ongoing (rather than one -time) benefits to the Town /Agencv, MRC's compensation shall be 25% of the incremental revenue realized by the Town /Agency during the first twelve consecutive quarters following correction. In this regard, the Town Agency agrees to: ❑ Notify the County (on Two or MRC letterhead) for tax deficiencies (plus associated charges for penalties and interest) identified and confirmed by MRC within 30 days following receipt of MRC's report; and ❑ Notify MRC within 10 days following receipt by the Town of payments resulting from MRC's audit service. Upon being notified of receipt of payment (s), MRC will then invoice the Town. Earned compensation is due and payable upon receipt of invoice. All expenses incurred by MRC in providing the revenue enhancement audit service are absorbed by MRC. These expenses include items such as employee salaries and benefits, insurance, airfare, auto rentals, meals, lodging, keypunching, computer processing, clerical, communications (e.g. personal meetings, telephone, mail, etc.) photocopying, overhead and miscellaneous out - of- pockets for consumable supplies and research materials such as maps, directories, etc. 6. QUALIFICATIONS Since its inception in 1978, Municipal Resource Consultants (MRC) has specialized in providing innovative revenue enhancement audit services to California cities. MRC is the only firm in the United States offering these proprietary revenue enhancement audit services that encompass all sources of municipal tax revenue. MRC's revenue enhancement audit services are complemented by geobased management information programs and consulting in areas such as strategic planning, economic development and redevelopment. MRC pioneered the concept of revenue enhancement consulting with its sales tax services for California cities in 1978. Since then, MRC has established a track record of consistently impressive results by providing ongoing revenue enhancement services to more than 125 California cities. MRC's audits have recovered more than $100 million for its client cities. MRC's revenue enhancement services are designed to provide cities with an ongoing, readily measurable economic return that is many times greater than the amount invested in the service. On behalf of the cities served, MRC's revenue enhancement audit findings and recommendations have been validated and accepted by third party intermediaries (including the State Board of Equalization, county assessors and major utility companies) throughout California, in addition to thousands of corporate tax departments throughout the United States. MRC has a staff of 60 consultants serving California cities from six in -state office locations. 6. PROJECT MANAGEMENT TEAM MRC's project management team for the revenue enhancement audit services consists of the following personnel: John Austin & Allen Charkow - Project Co- Directors As founders of MRC and project co- directors, John and Allen are responsible for the overall quality control and timeliness of the project. They are also responsible for making MRC's resources available to the project and assisting in the technical direction, management and liaison activities. John is responsible for the overall design and provision of MRC's revenue enhancement services and client relations. In this capacity, he interfaces with third -party intermediaries (such as the state, counties and public utility companies) and corporate taxpayers on behalf of client cities. John has been an economic development and tax consultant to California municipalities for more than 20 years, principally focused on the enhancement of sales, use and property tax revenue. He received a BS Degree in Business Economics and Marketing from the University of Southern California. Allen has overall responsibility for the design and provision of the firm's data processing and geobased information systems for auditing, monitoring and analyzing revenue sources. Allen pioneered computerized information systems for revenue auditing and analysis on behalf of California cities. Allen was in municipal finance for more than "17 years, "14 of which were in the capacity of Director and one year as Assistant Town Manager. He received a BA in Business Management from Fresno State and an MBA from the University of Santa Clara. Jeff Mikles - Administrative Liaison Jeff is responsible for managing client relations with MRC's Northern California clients. He has over 22 years of management and consulting experience in public and private sector auditing, finance, administration, and operations analysis. Before joining MRC, he was principal of an innovative cost reduction firm that specialized in reducing utility and energy costs. Jeff has also served as Assistant Town Auditor for a major California Town, Senior Management Auditor for the California Auditor General's Office, and Senior Consultant for an international accounting firm. Moreover, Jeff has been an international and domestic Personnel Administration and Data Manager for a Fortune 100 firm. Jeff has a BS degree from Michigan State University and an MA degree from Arizona State University. Gary Tones - Property Tax and RDA Tax Increment Gary has overall responsibility for MRC's property tax consulting practice. In this capacity, Gary and his staff conduct deficiency audits for cities and their redevelopment agencies to detect, document and recover previously unrealized property taxes and tax increments. Prior to joining MRC, Gary was a Principal with the firm of Katz Hollis in charge of fiscal and administrative management consulting services to redevelopment and other public agencies throughout California and other western states. Gary has been analyzing property tax assessments and tax allocations for public agencies throughout California for more than 20 years. Gary received his BA degree from CSU, Fresno and completed graduate courses at UCLA. Joe Vinatieri - Legal Analvsis Joe is a partner in the Whittier law firm of Bewley, Lassleben & Miller where he specializes in matters of California state and local taxation, including sales and use tax, franchise/ income tax and property tax. He is former deputy to the Honorable Ernest J. Dronenburg, Jr., and a member of the California State Board of Equalization. Joe received his BA degree from Westminster College and his JD degree from the University of San Diego. He is Chairman of the State and Local Subcommittee of the Tax Section of the Los Angeles County Bar Association and member of the Tax Section of the California State Bar. He is also a member of the Institute of Property Tax for which he has spoken nationally.