March 21, 2023
Finance Department
DATE: March 21, 2023
TO: Mayor Martinez and Members of the City Council
FROM:
Nickie Mastay, Deputy City Manager Internal Services
Delmy Cuellar, Director of Finance
Mubeen Qader, Deputy Finance Director
Antonio Banuelos, Accounting Manager
Subject:
Contract to Provide a Ten-Year Revenue Forecast.
FINANCIAL IMPACT: The proposed expenditure will not exceed $20,000 per year. The contract is included within the approved fiscal year 2022-2023 Finance Department budget (01177015-
400201).
PREVIOUS COUNCIL
ACTION:
N/A
STATEMENT OF THE
ISSUE:
City staff requests approval of a contract with Beacon
Economics to provide a ten (10) year revenue forecast
for Property Tax, Sales Tax, Utility User Tax,
Documentary Transfer Tax, and Business Tax.
RECOMMENDED ACTION:
APPROVE a contract with Beacon Economics to provide
a ten-year revenue forecast for Property Tax, Sales Tax, Utility User Tax, Documentary Transfer Tax, and
Business Tax, in an amount not to exceed $60,000, with
a term beginning March 22, 2023 and ending June 30,
2026, with a two-year option to renew at $20,000 per
year – Finance Department (Nickie Mastay/Antonio
Banuelos 510-620-6741).
AGENDA
REPORT
March 21, 2023
DISCUSSION:
The Finance Department, in close consultation with other departments, is preparing a new General Fund forecast for revenues and expenses. This renewed effort stems in part from recommendations included in the State of California’s Audit of the City of Richmond’s financial records and report published in November 2022, and the Corrective Action Plan. Specifically, the Auditor’s recommendation stated:
“Richmond should include multiple scenarios in its financial projections, including scenarios with potential additional risks, such as economic downturns or recessions, and how the city would continue to fund its operations under those circumstances.”
Beacon Economics will help address this recommendation, in collaboration with Finance staff, by providing short-and long-term revenue projections for the top five (5) revenue streams that constituted approximately 90 percent of the General Fund revenue (Property Tax, Sales Tax, Utility User Tax, Documentary Transfer Tax, and Business Tax). The data from Beacon Economics will serve as an additional tool in providing the most accurate forecast possible. A separate contract with GovInvest, Inc. will also support this effort.
The forecasts will be based on revenue collection trend data and prevailing economic conditions at the time of the forecast. The proposed three (3) year contract will include both annual and mid-year updates. The revenue forecast takes into consideration several economic factors including changes in economic growth, assessed valuation, growth in income levels, consumer consumption, and the Consumer Price Index (CPI), among other factors. Anticipated changes in State and local tax policy are also considered to the extent that such actions drive specific revenue streams.
On January 12, 2023, the Finance Department issued a Request for Proposals (RFP) for Revenue Forecasting Services. The RFP was posted on the City’s BidsOnline system where 196 vendors were notified, and 10 vendors downloaded copies of the RFP. On January 27, 2022, two electronic proposals were received. The proposals were reviewed by City staff members and each vendor was found to be compliant.
City staff is requesting to approve a three-year contract with Beacon Economics to provide a ten-year revenue forecast for the top five (5) revenue sources, in an amount not-to exceed $60,000, with a term beginning March 22, 2023 and ending June 30, 2026, with a two-year option to renew at $20,000 per year.
DOCUMENTS ATTACHED:
Attachment 1 – Contract
Attachment 2 – Project Report
Attachment 3 – Rating Matrix
Attachment 4 – State Audit Report – November 2022