DATE:
December 19, 2023
TO:
Paul Buddenhagen, City Manager
FROM:
Lawrence Chiu, Finance Director
SU
BJECT:
Resolution Of The City Council Of The City Of Emeryville Authorizing The City Manager To Execute (i) A Second Amendment To The Contract With Avenu Insights & Analytics To Add A Termination Date Of December 31, 2024 And Increase The Total Annual Fixed Fee By $28,000 For A Total Not To Exceed Amount Of $78,000 For Utility User Tax (UUT) Franchise Compliance Services; And (ii) A First Amendment To The Contract With Avenu Insights & Analytics To Add A Termination Date Of December 31, 2024 And Increase The Total Compensation Amount From The Current Rate Of $2.95 Per Transaction To $3.10 Per Transaction With A Total Not To Exceed Amount Of $9,500 For UUT Administration Services Recommendation
Staff recommend that the City Council adopt the above-entitled resolution authorizing the City Manager to execute two amendments with Avenu Insights & Analytics (Avenu) for UUT franchise compliance Services, and UUT administration services. Additionally, staff will issue a Request for Proposals (RFP) for UUT franchise compliance services and administration services in mid-2024.
Background
UUT Franchise Compliance Services Contract
On October 24, 2001, the City of Emeryville entered into a contract with MuniServices, LLC (currently known as Avenu) to perform UUT franchise compliance services. The Total Annual Fixed Fee was set at either $10,000 or 0.5% of the total UUT revenues received from the prior fiscal year, whichever is greater (the “Compliance Services Contract”). Compensation under this agreement had a not to exceed amount of $50,000 for a 5-year term. This contract, however, has no termination or expiration date.
On January 1, 2015, AB 1717, the Prepaid Mobile Services Telephony Services Surcharge Collection Act was enacted, establishing a statewide method of collecting the UUT on prepaid wireless services and imposing certain restrictions on third party consultants who are designated and authorized by the City to examine certain Board of Equalization (BOE) documents relating to the collection of the City’s UUT on prepaid wireless services.
On October 20, 2015, the City entered into a First Amendment to the Compliance Services Contract, and added additional authorizations to the Contractor to examine certain BOE documents relating to the collection of the City’s UUT on prepaid wireless services. The City and Contractor have been operating under the original contract and amendment since that date.
UUT Administration Services Contract
On April 3, 2013, the City entered into a contract with MuniServices for UUT administration services to manage UUT filings, payments, and collection activities (the “Administration Services Contract”). The monthly administration fee was based on $2.95 per UUT filing transaction. The contract does not provide a total not to exceed amount or termination date. The City and Contractor have been operating under the original contract since that date.
DISCUSSION
The City imposes a Utility User Tax for a variety of utility services within the City. Utilities subject to the UUT include electricity, gas, and telecommunication. Individuals and entities using the utility services pay a City’s UUT tax rate of 5.5%. The City anticipates generating approximately $4 million in UUT revenues for Fiscal Year (FY) 2023.
Avenu has provided UUT revenue analysis, auditing, collection, recovery, and reporting services to the City since 2001 and currently provides these services for over 1,000 government entities nationwide. However, since the UUT Compliance Service Contract has been in effect since 2001 and the UUT Administration Service Contract has been in effect since 2013, staff have determined that a competitive procurement should be undertaken and, with the contractor’s agreement, the proposed contract amendments add a termination date of December 31, 2024. With the addition of the December 31, 2024 contract termination date and recognition that the fee structure has not changed since the effective date of the UUT Compliance Services Contract and UUT Administration Contract in 2001 and 2013 respectively, staff support an increase the Contractor’s compensation until December 2024.
Compliance Services Contract
The current Total Annual Fixed Fee is based on the greater of $10,000 or 0.5% of the total UUT revenues received from the prior fiscal year. Total compensation paid to the Contractor cannot exceed $50,000 for a 5-year term. This amount was based on UUT revenue projections of $2 million annually between FYs 2001 and 2005. Although the annual UUT revenues have gradually increased over the past 23 years from $2 million in FY 2001 to $4 million in FY 2023, the fee structure has not changed.
Staff recommends that the City Council adopt the attached resolution authorizing the City Manager to execute a Second Amendment to the Contract with Avenu to add a termination date of December 31, 2024, and increase the contract amount by $28,000 to an amount not to exceed $78,000 for UUT franchise compliance services. The additional cost of the contract would be offset by increased UUT revenues.
Administration Services Contract
The original contract with Avenu did not provide a total not to exceed amount or a termination date. The monthly administration fee paid to the Contractor is based on a transaction fee of $2.95 per UUT filing. The payment structure has not changed since 2013 to reflect the Contractor’s increased costs in providing services to the City. Avenu proposed an increase in the transaction fee by 5% for a new rate of $3.10 per transaction, which staff supports given the increased costs between the time this fee was set ten years ago and today.
Staff recommends the City Council adopt the attached resolution authorizing the City Manager to execute a First Amendment to the Contract with Avenu to add a termination date of December 31, 2024, increase the transaction fee to $3.10 per UTT filing, and add a total not to exceed contract amount of $9,500.
There is adequate funding in the FY 2024 budget to cover the projected cost increase.
FISCAL IMPACT
The total fiscal impact to the FY 2024 budget for both contract amendments is anticipated to be $30,500, which would be offset by increased UUT revenues.
ADVISORY BODY REVIEW
There has been no communication with the budget committees.
COnclusion
Staff recommends that the City Council adopt the resolution authorizing the City Manager to execute (i) a Second Amendment to the contract With Avenu Insights & Analytics to add a termination date of December 31, 2024 and increase the total Annual Fixed Fee by $28,000 for a total not to exceed amount of $78,000 for Utility User Tax (UUT) Franchise Compliance Services; and (ii) a First Amendment to the contract With Avenu Insights & Analytics to add a termination date of December 31, 2024 and increase the total compensation amount from the current rate of $2.95 per transaction to $3.10 per transaction with a total not to exceed amount of $9,500 for UUT Administration Services.
PREPARED BY: Lawrence Chiu, Finance Director
Approved and Forwarded to the
City Council of the City of Emeryville:
Paul Buddenhagen, City Manager
Attachments
MuniServices UUT Compliance Contract 2001
MuniServices UUT Compliance First Amendment 2015
MuniServices UUT Administration Contract 2013
Draft Resolution
Exhibit A - UUT Compliance, Second Amendment
Exhibit B - UUT Administration, First Amendment
Avenu Insights & Analytics UUT Contract Amendments
City Council Meeting | December 19, 2023
City of Emeryville
CALIFORNIA
MEMORANDUM