Fremont City Council Meeting: 07/11/23 07:00 PM
3300 Capitol Avenue Div/Dept: Finance Department
Fremont, CA 94538 Category: Agreements and Contracts
SCHEDULED
Sponsors:
COUNCIL STAFF REPORT (ID # 4935) DOC ID: 4935
Updated: 7/5/2023 10:29 AM by Susan Gauthier Page 1
PROPERTY TAX CONSULTING SERVICES – Authorization to Execute Agreement for Property Tax Consulting Services with HdL Coren & Cone in an Amount Not to Exceed $350,000 for a Five-Year Term
Contact Persons:
Name: David Persselin
Title: Finance Director
Div/Dept: Finance Department
Phone: 510-494-4631
E-Mail: [email protected]
Executive Summary: The City engages a property tax consultant to provide reports, data, and analysis that assist staff in understanding and forecasting property tax revenue. The property tax consultant also prepares the annual special tax and special assessment levies for the City’s Paramedic Special Tax and Clean Water Protection Fee.
Staff recently conducted a request for proposals (RFP) process to solicit proposals fr om qualified firms. Having reviewed and evaluated the proposals based on criteria outlined in the RFP, staff recommends that the City Council authorize the City Manager or her designee to execute a property tax consulting services agreement with HdL Coren & Cone (HdLCC) for a five-year term and a total not-to-exceed amount of $350,000.
BACKGROUND: Property taxes are the City’s single largest revenue source; comprising approximately 48% of total FY 2023/24 projected General Fund revenues, or $135.7 million.
In addition to this ad valorem property tax specified under Article XIIIA of the State Constitution, the City also levies a voter-approved “over-ride” property tax to pay for the City’s Fire Safety General Obligation Bonds, a voter-approved special tax to pay for paramedic services, and a clean water protection fee.
Given the importance of these revenues and the large number of parcels included on the annual property tax roll, over 64,000 citywide, the City retains a firm of specialized consultants to develop and maintain a property tax database and associated analytic software. The database and software are available to City Finance, Economic Development, and Community Development staff and are used for a variety of revenue forecasting, economic development, and land use planning purposes.
The property tax consultant also provides the City with an annual compilation of property tax reports drawn from the database as well as quarterly updates on property tax appeals and residential property sales. The consultant uses the database to audit the secured and unsecured property tax rolls to ensure that each parcel is coded to the appropriate taxing entity.
Along with these general property tax services, the consultant also provides special tax and special assessment services that include: calculating the Paramedic Special Tax and Clean Water Protection Fee amounts for each parcel in the City; based on the calculated special tax and fee amounts, providing revenue estimates for the Paramedic Special Tax and the Council Staff Report (ID # 4935) Meeting of July 11, 2023 Updated: 7/5/2023 10:29 AM by Susan Gauthier Page 2
Clean Water Protection Fee; providing a report identifying new parcels subject to the Paramedic Special Tax and Clean Water Protection Fee and the associated classification data, parcels no longer subject to the special tax or fee, and parcels for which the special tax or fee amount have changed from the prior year; and uploading the data necessary to levy the Paramedic Special Tax and Clean Water Protection Fee on the Alameda County Special Assessments web portal in accordance with County requirements.
In addition to providing reports, analysis, and data, as well as annual special tax and special assessment preparation, the property tax consultant’s staff is available throughout the year, as needed, to provide training and consultation.
HdLCC has provided these property tax consulting services to the City since 1997.
DISCUSSION/ANALYSIS: The current property tax consulting agreement with HdLCC ended on June 30, 2023, so staff issued an RFP for Property Tax Consulting Services in May 2023 and received responses from four firms.
Staff reviewed the proposals based on criteria outlined in the RFP and has determined that continuing with HdLCC as the City’s property tax consultant best meets the City’s needs.
Accordingly, staff recommends that the City Council authorize the City Manager or her designee to execute an agreement with HdLCC to provide property tax consulting services for a five-year term beginning in fiscal year 2023/24 and ending on June 30, 2028.
HdLCC has proposed a base fee of $22,500 and per-parcel fees of $0.30 for each of the Paramedic Special Tax and the Clean Water Protection Fee for the first year, increasing annually by the lesser of the California Consumer Price Index (CCPI) or 5%. Using the current year parcel counts for the special tax and fee, the first-year cost would be $62,869.
Assuming the maximum annual increase of 5% in each of the following four years, the total amount for those services would be $347,392. The recommended not-to-exceed amount of $350,000 includes $2,608 for any on-call consultation or training services that would be charged on a time and materials basis.
HdLCC will also receive a contingent fee of 25% of any net tax revenues recovered through the audits it performs. For purposes of the contingent fee calculation, the net tax revenues include the year in which the audit is performed as well as the three prior years. Because these contingent fees are paid from recovered revenues, they are not bound by the annual not-to-exceed amount specified in the agreement.
FISCAL IMPACT: Appropriations for property tax consultant services were included in the FY 2023/24 Adopted Operating Budget.
ENVIRONMENTAL REVIEW: Action on this item represents a fiscal, organizational, and/or administrative governmental activity that will not result in physical changes in the environment. Therefore, it is not a project subject to review under the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines Section 15378.
ATTACHMENTS: None.
Council Staff Report (ID # 4935) Meeting of July 11, 2023 Updated: 7/5/2023 10:29 AM by Susan Gauthier Page 3
RECOMMENDATIONS:
1. Award the property tax consulting services agreement to HdL Coren & Cone.
2. Authorize the City Manager or her designee to execute an agreement with HdL Coren & Cone to provide property tax consulting services through June 30, 2028, at a total amount not to exceed $350,000 for the five-year term.