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CC:SA - CONSENT ITEM: (1) Waiver of Competitive Bidding Procedures Pursuant to Culver City Municipal Code Section 3.07.075.F.3; and (2) Approval of a Five-Year Professional Services Agreement with HdL Coren & Cone for Property Tax Management Services, Property Tax Information and Audit Services, Measure RE Real Estate Property Transfer Tax Audit Services, and On-Call Consultation Services.
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Meeting Date: July 10, 2023
Contact Person/Dept: Lisa Soghor/Finance Department
Phone Number: (310) 253-5865
Fiscal Impact: Yes [X] No [] General Fund: Yes [X] No []
Attachments: Yes [ ] No [X]
Public Notification: (E-Mail) Meetings and Agendas - City Council (07/06/2023)
Department Approval: Lisa Soghor, Chief Financial Officer (07/06/2023)
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RECOMMENDATION
Staff recommends the City Council and Successor Agency (1) waive competitive bidding procedures pursuant to Culver City Municipal Code Section (CCMC) 3.07.075.F.3; and (2) approve a five-year professional services agreement with HdL Coren & Coen LLC (HCC) for property tax management services, property tax information and audit services, Measure RE real estate property transfer tax audit services, and on-call consultation services.
BACKGROUND
The City and the Successor Agency receive their portion of property tax revenue generated from parcels within the City limits from the Los Angeles County Assessor’s Office. The City and the Successor Agency have historically contracted with HCC to perform various property tax management and property tax information and audit services. As part of this work HCC provides regular reports on property values, taxes, construction activity and transfers, analyzes trends and develops revenue projections.
In November 2020, Culver City residents voted to approve Measure RE establishing a marginal tax rate for the City's real estate transfer tax with four brackets, based on sales price or value. The City amended its agreement with HCC to include Measure RE property transfer tax management and audit services once the measure became effective on April 1, 2021. The City’s agreement with HCC expired June 30, 2023.
DISCUSSION
Pursuant to CCMC Section 3.07.045, in the event the same vendor has been utilized for a period of five consecutive years, competitive bidding procedures shall apply. CCMC Section 3.07.075.F.3, provides the Council may waive, by a majority vote, bidding requirements if it is deemed to be in the City’s best interest and authorize a negotiated contract. Staff is satisfied with the quality of the services HCC provides, and HCC has developed a successful process for auditing the monthly property transfer tax statements. Changing consultants at this time would lead to a disruption of City services. Staff recommends that the City enter into a new 5-year agreement with HCC for property tax management services, property tax information and audit services, Measure RE real estate property transfer tax audit services, and on-call consultation services.
Staff has reviewed HCC’s proposal for these services and determined that it satisfies the City’s property tax management needs at a reasonable price. HCC has quoted the City a fixed annual fee for property tax management services in an amount of $17,460 and fixed annual fee for property transfer tax in an amount of $10,800 for Fiscal Year 2023-2024. These fixed annual fees shall be increased annually based on the California Consumer Price Index. In addition to these services, HCC reviews property tax remittance information and conducts audits. Fees for the identification and correction of property tax related errors are paid on a contingent basis. HCC receives 25 percent of the property tax and property transfer tax revenues received by the City as a result of audit or analysis performed by HCC. In addition, HCC will provide on-call consulting services, if requested by the City, based on certain established hourly rates.
FISCAL ANALYSIS
There are sufficient funds available in the Adopted Budget for Fiscal Year 2023-2024 for property tax and property transfer tax management in Account No. 10114400.610100 (Treasury - Audit Services). Funding for subsequent years of the agreement will be included in future fiscal year budgets.
The costs related to auditing of tax errors are difficult to estimate in advance as they are dependent on property tax remittances every year. The City Manager may approve budget increases throughout the year to address these types of expenditures. Per City Council Policy Statement 5001 (Budget Development and Administration), the City Manager has the authority to approve budget appropriations in excess of $30,000 to cover costs incurred for tax audits that are performed on a contingency fee basis.
ATTACHMENTS
None.
MOTIONS
That the City Council:
1. Waive competitive bidding procedures pursuant to Culver City Municipal Code Section 3.07.075.F.3; and
2. Approve a five-year professional services agreement with HdL Coren & Coen for property tax management services, property tax information and audit services, Measure RE real estate property transfer tax audit services, and on-call consultation services; and
3. Authorize the City Attorney to review/prepare the necessary documents; and
4. Authorize the City Manager to execute such documents on behalf of the City.