Agenda Report
Fullerton City Council
MEETING DATE: october 18, 2022
TO: CITY COUNCIL / SUCCESSOR AGENCY
SUBMITTED BY: Ellis chang, director of administrative services PREPARED BY: STEVEN AVALOS, BUDGET AND PURCHASING MANAGER SUBJECT: professional services agreement WITH HDL COREN & CONE for property tax management AND ANALYSIS
SUMMARY
Consideration of Professional Services Agreement (Agreement) with HdL Coren & Cone (HdL) to perform property tax management and analysis, audit and information services for the City of Fullerton (City).
RECOMMENDATION
1. Approve Professional Services Agreement with HdL Coren & Cone for a seven-year term, with three one-year extension options
2. Authorize City Manager, or designee, to execute and administer the agreement, including extension options, in a form approved by the City Attorney.
CITY MANAGER REMARKS
None.
PRIORITY POLICY STATEMENT
This item matches the following Priority Policy Statement:
Fiscal and Organizational Stability.
FISCAL IMPACT
This item generates no fiscal impact to the FY 2022-23 budget as the adopted budget includes property tax management and consulting services. Staff will incorporate property tax consulting services for the agreement term in the FY 2023-24 budget and all budgets in subsequent years through the annual budget process.
Year 1 through Year 3 costs will total a $19,025 annual fixed fee based on 34,706 City parcels. Years 4 through 7 annual costs will be subject to annual fee increases capped at an annual 5% maximum increase and based on California Consumer Price Index (CCPI) as determined by the CA-All Urban Consumers Index, February over February period. Optional one-year extensions will be subject to same CCPI annual adjustments.
The City will pay HdL 25% of net property tax or property tax increment recovered from any misallocation to another entity and reallocated to the City, for property tax audit services. This provides a revenue generating service with revenues anticipated to fully support and pay for HdL’s cost of audit services.
DISCUSSION
The City seeks to enter into a professional services agreement with HdL Coren & Cone for property tax management and analysis, audit and information consulting services. HdL is the leading industry business standard in California in performing property tax management and information services and provides specialized consulting services to over 260 California public agencies. Founded in 1992, HdL has over 30 years of experience working with public agencies and was the first firm to develop a property tax software system in California for tracking property tax revenues for counties, cities and special districts. The company was also the first in the State to go beyond using parcel data for allocation audits by developing specialized reports and models to assist government agencies by using the data for parcel administration, focused economic development strategies and revenue projections.
The City has a long-standing business relationship with HdL dating back to 1992. The former Fullerton Redevelopment Agency engaged HdL to perform property tax services on behalf of the agency. The City restructured its property tax services agreement in 2010 to perform property tax and audit services. The City terminated its agreement with HdL in 2017 as part of its budget reduction measures to address fiscal issues and contend with declining revenues.
The City determined the need and benefit to reinstate specialized property tax management and consulting services during the FY 2022-23 budget process, City Council approved the cost for these services in the adopted budget. Staff solicited informal cost proposals from HdL and the one other firm that provides these specialized services to California public agencies Staff determined HdL as the industry leader in this field to provide such services for the City, due to HdL’s specialized nature and breadth of property tax services provided, proprietary property tax management software and historical City property tax data up to 25 years.
Utilizing professional property tax consulting services will greatly assist staff in forecasting Citywide property tax revenues at the property parcel detail level and assessed valuations for all residential and commercial properties within the City. Access to this level of property tax detail will allow Finance and Community and Economic Development staff to better monitor and assess all residential property areas, commercial and industrial project areas, former RDA and residual property tax pass-throughs and Successor Agency RPTTF revenues, as well as support property-based decisions in City zoning and planning. HdL’s audit recovery services will assist in restoring critical misallocated property tax revenues back to the City and provide increased revenue to the General Fund. Both improved property tax revenue forecasting and revenue recovery will greatly assist in the City’s fiscal sustainability and long-term financial planning efforts.
Attachments:
Attachment 1 – Professional Services Agreement with HdL Coren & Cone Attachment 2 – HdL Coren & Cone Cost Proposal
cc: City Manager Eric J. Levitt
PSA with HdL Coren & Cone
October 18, 2022 - Page 2