DATE:
December 19, 2023
TO:
Paul Buddenhagen, City Manager
FROM:
Lawrence Chiu, Finance Director
SUBJECT:
Resolution Of The City Council Of The City Of Emeryville Authorizing The City Manager To Execute A Third Amendment To The Contract With MuniServices LLC To Add A Termination Date Of December 31, 2024, Increase The Annual Fixed Fee With A Total Not To Exceed Amount Of $2,625 For Sales And Use Tax Report Services, And Add A Total Not To Exceed Amount Of $20,000 For Sales And Use Tax Audit Services Recommendation
Staff recommends that the City Council adopt the above-entitled resolution authorizing the City Manager to execute a Third Amendment to the City’s existing contract with MuniServices LLC for Sales and Use Tax report and audit services. Additionally, staff will issue a Request for Proposals (RFP) for Sales Tax reporting and audit services in mid-2024.
Background
On January 12, 1990, the City of Emeryville entered into a contract with MuniServices LLC to perform Sales and Use Tax report and audit services. Under that contract, the annual fixed fee for the Sales Tax Analysis and Reporting System (STARS) is $2,500 and there is no total not to exceed amount for the Sales and Use Tax audit services. The City and Contractor have been operating under the original contract since that date. The contract has no termination or expiration date.
On January 22, 1996, the City entered into a First Amendment with Municipal Resource Consultants which has enacted business under the name of MuniServices. The contract amendment added business license, revenue enhancement audit, and geo based revenue information services.
On April 16, 2020, the City entered into a Second Amendment with MuniServices and added revenue from a one-quarter-cent sales tax increase from Measure F to the contract. Measure F became effective on July 1, 2020,
DISCUSSION
The sales tax rate for the City of Emeryville is 10.5%. The City anticipates generating approximately $8.5 million of sales tax revenue in the General Fund for Fiscal Year (FY) 2024.
MuniServices has provided Sales and Use Tax report and audit services to the City since 1990 and currently provides these services for over 1,000 government entities nationwide. However, since the Sales and Use Tax report and audit services has been in effect since 1990, staff have determined that a competitive procurement should be undertaken and, with the contractor’s agreement, the proposed contract amendment adds a termination date of December 31, 2024. With the addition of a termination of the contract on December 31, 2024, and recognition that the fee structure has not changed since 1990, staff supports an increase in the Contractor’s compensation until December 2024, pending Council approval.
Sales and Use Tax Report Services
The annual fixed fee paid to the Contractor is currently $2,500. The payment structure has not changed since 1990 despite increased contractor costs to provide the service to the City. MuniServices proposed an increase in the annual fixed fee by 5% from the current fee of $2,500 to a new fee of $2,625, which staff supports given the increased costs between the time this fee was set thirty-three years ago and today.
Sales and Use Tax Audit Services
The contract with MuniServices did not provide a total not to exceed amount or a termination date. The compensation to the Contractor is based on 25% of new sales tax revenue realized by the City as a result of MuniServices identifying and correcting related point-of-sale distribution errors. Staff recommend that the City Council adopt the attached resolution authorizing the City Manager to execute a Third Amendment to the Contract with MuniServices to add a termination date of December 31, 2024, and add a total not to exceed amount of $20,000 for Sales and Use Tax audit services.
FISCAL IMPACT
Because compensation to the Contractor is based on 25% of new sales tax revenue realized by the City as a result of MuniServices identifying and correcting related point-of-sale distribution errors there is no additional cost beyond what is currently budgeted. The total cost is anticipated to be $20,000, which would be offset by increased Sales and Use Tax revenues and is identified as the contract limit.
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 a Third Amendment to the contract with MuniServices to add a termination date of December 31, 2024, increase the Annual Fixed Fee with a total not to exceed amount of $2,625 for Sales and Use Tax report services, and add a total not to exceed amount of $20,000 for Sales and Use Tax audit 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 Sales and Use Tax Contract 1990
Municipal Resource Consultants, First Amendment 1996
MuniServices Sales and Use Tax, Second Amendment 2020
Draft Resolution
Exhibit A – Sales and Use Tax, Third Amendment
MuniServices Sales and Use Tax Contract Amendment
City Council Meeting | December 19, 2023
City of Emeryville
CALIFORNIA
MEMORANDUM