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C~TY OF SAN BER~ARDINof'.EQUEST ~OR COUNCIL ACTION
From: FRED A. WILSCI!iI, Assistant to the
City Adninistrator
Dept: City Adninistrator
Subject: APPROVAL CF AMBNI:mNr TO AGREEMENT Wl'l'B
0C1!iALD B. MAYRE FCR AlJDIT SERVICES
RELATIVE TO GAS AND ELBC'l'RIC fRANCHISE
AGRlmlmTS.
Date: 6/19/90
Synopsis of Previous Council action:
10/16/89 - Resolution No. 89-405 adopted which approved an agreem.".t with
Donald B. Maynor for audit services relative to gas and electric
franchise agJ:"eelbt:I"lts.
Recommended motion:
Adopt Resolution.
1iJJL
Signature
Contact person: FRED A. WILSCI!iI
Phone:
5122
Supporting data attached:
YES
Ward:
N/A
FUNDING REQUIREMENTS:
Amount:
Source: (Acct. No.!
(Acct. DescriPtion)
Finance:
Council Notes:
75.0262
Agenda Item No ~O
. CITY OF SAN BER,QRDINO - REQUEST 2R COUNCIL ACTION
STAFF REPORT
On October 16, 1989, the Mayor and Common Council adopted
Resolution No. 89-405 which authorized the execution of an
agreement with Donald H. Maynor relative to the performance
of an audit on the City's gas and electric franchise
agreements.
The purpose of the audit was to discover franchise collection
errors which could result in either the undercollection or
noncollection of gas and electric franchise revenues as well
as the associated utility users tax revenues which are
collected by these franchises. Examples of the utility
errors which were to be addressed by this audit included:
1. Large utility customers incorrectly coded as being
located outside the City.
2.
utility customer billed
schedule resulting in
franchise fees and utility
under the wrong rate
the undercollection of
users tax.
3. Delays in including an annexation in the gas or
electric franchise fee calculation.
4. Utility making a computational error in calculating
the city's franchise fee.
A Request for Information (RFI) package was mailed to both
utilities after the Mayor and Common Council approved the
agreement asking for very detailed information relating to
the audit. Due to the detail requested in the RFI, both
utilities requested additional time to compile the
information. Southern California Edison also indicated that
they had initiated a self audit to ensure that all city
accounts were correctly coded for the City's franchise fee
calculation. Edison's self audit which was completed in
April resulted in an additional $14,000 in franchise fees to
the City. These two items delayed the completion of the RFI.
The Consultant's approach on the study from this point will
be to request a completed RFI from each utility and to
conduct an audit of the largest 250 franchise rate payers in
the City to verify that these utility customers are being
billed under the correct rate schedules to ensure that an
undercollection of franchise fees and utility users tax is
not occurring.
The proposed amendment to the agreement will permit the ./
Consultant to initiate negotiations for payment to the City
of any amounts which are identified in the audit as
undercollection or noncollection of franchise fees and/or
utility users tax. The amendment will also allow the
Consultant to conduct any necessary litigation, with the
consent and approval of the city Attorney, to recover any
75-0264
. 0
d1sputed amounts. The
year is also included in
o
extension of the agreement for
the agreement.
one
It is important to note that Mr. Maynor will only be
compensated on a contingency basis. If the initial review
does not reveal the potential for new revenues, the audit
will be discontinued and the City will not incur any costs.
If a more extensive audit is conducted, Mr. Maynor will be
compensated based on the percentage of new revenues
identified in the original agreement. '
D A. WILSON,
ssistant to the
City Administrator
FAW/sh
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o
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1 RESOLUTION NO.
2 RESOLUTION OF THE CITY OF SAN BERNARDINO AUTHORIZING AN
AMENDMENT TO THE AGREEMENT WITH DONALD H. MAYNOR RELATIVE TO THE
3 PERFORMANCE OF AN AUDIT ON THE GAS AND ELECTRIC FRANCHISE
AGREEMENTS.
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NOW, THEREFORE, BE IT RESOLVED BY THE MAYOR AND COMMON
COUNCIL OF THE CITY OF SAN BERNARDINO AS FOLLOWS:
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SECTION 1. The Mayor is hereby authorized and directed to
execute on behalf of said City an amendment to the Agreement with
Donald H. Maynor relative to the performance of an audit on the
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gas and electric franchise agreements.
SECTION 2.
The authorization to execute the above
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referenced agreement is rescinded if the parties to the agreement
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fail to execute it within sixty (60) days of the passage of this
resolution.
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DAB/ses/E1ectric.res 1
June 18, 1990
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o
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1 RESOLUTION OF THE CITY OF SAN BERNARDINO AUTHORIZING AN
AMENDMENT TO THE AGREEMENT WITH DONALD H. MAYNOR RELATIVE TO THE
2 PERFORMANCE OF AN AUDIT ON THE GAS AND ELECTRIC FRANCHISE
AGREEMENTS.
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I HEREBY CERTIFY that the foregoing resolution was duly
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adopted by the Mayor and Common Council of the City of San
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Bernardino at a
meeting thereof, held on the
day of
, 1990, by the following vote, to wit:
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Council Members:
AYES
NAYS
ABSTAIN
ESTRADA
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REILLY
FLORES
MAUDSLEY
MINOR
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POPE-LUDLAM
MILLER
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City Clerk
The foregoing resolution is hereby approved this
day
of
, 1990.
W. R. Holcomb, Mayor
City of San Bernardino
Approved as to
form and legal content:
JAMES F. PENMAN,
Ci ty a;. ttorney d.
By: -1-,? ~
o
DAB/ses/Electric.res 2
June 18, 1990
"
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FIRST AMENDMENT TO AGREEMENT
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THIS AMENDMENT TO AGREEMENT is made and entered into this
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day of
, 1990, by and between the CITY OF
4 SAN BERNARDINO, hereinafter call~d "City", and DONALD H. MAYNOR,
5 hereinafter called "Consultant",
6 WITNESSETH:
7 WHEREAS, the parties entered into that certain Agreement
8 for Consultant's services dated October 17, 1989, and
10 NOW, THEREFORE THE PARTIES HERETO AGREE AS FOLLOWS:
9 WHEREAS, the parties desire now to amend said Agreement,
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1.
Section 2.E. of said Agreement is. hereby amended to
12 read as follows:
13 "Upon a determination of an undercollection or
14 noncollection of franchise fees and/or utility users'
15 taxes under subsections above, Consultant shall advise
16 the City Administrator in writing of the nature and
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17 amount of such revenues and taxes, and the likelihood
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of successfully collecting these amounts.
Consultant
shall commence negotiations for payment to the City
of the disputed amounts.
If such negotiations are
unsuccessful, Consultant, may conduct any necessary
litigation on behalf of the City to collect such
monies, with the prior consent and approval of the
City Attorney, which consent shall not be unreasonably
withheld.
All complaints filed by Consultant shall
receive the prior review and approval of the City
Page 1 of 3
DAB/ses/Electric.res
June 20, 1990
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2.
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7 as follows:
Attorney, which approval shall not be unreasonably
withheld. Consultant shall have no authority to
settle any claim without the consent of the Mayor and
Common Council of City, which consent shall not be
unreasonably withheld."
Section 4 of said Agreement is hereby amended to read
8 "The term of this agreement shall be for the
9 1990-91, 1991-92, 1992-93, 1993-94, and 1994-95 fiscal
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3.
years. The scope of the audit shall also include, at
the Consultant's option, up to four years prior to
1990."
14 as follows:
Section 9 of said Agreement is hereby amended to read
15 "City shall not be responsible to pay to
16 Consultant any amounts as noted in Paragraph 3 except
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17 on funds actually received or savings received under
Section 2. D.
Furthermore, City shall owe Consultant
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no fee hereunder with respect to Edison's $14,000 past
payment to City in 1990 as a result of Edison's self-
audit, provided, however, if Consultant's auditing
activities reveals that Edison's $14,000 payment is
inaccurate or inadequate, for any reason whatsoever,
Consultant shall be entitled to receive a fee based on
any recovery of "additional revenues" in excess of
said $14,000, in accordance with the provisions of
Page 2 of 3
DAB/ses/Electric.res
June 20, 1990
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1 AGREEMENT BY AND BETWEEN THE CITY OF SAN BERNARDINO, AND
DONALD H. MAYNOR.
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this Agreement."
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Except as amended herein, said Agreement shall remain
in full force and effect.
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IN WITNESS WHEREOF the parties hereto have executed this
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Amendment to Agreement on the day and date first above shown.
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By:
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W.R. Holcomb, Mayor
City of San Bernardino
ATTEST:
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City Clerk
CONSULTANT
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17 APPROVED AS TO FORM
AND LEGAL CONTENT:
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JAMES F. PENMAN,
City Attorney
i1 1 d
By: ~~ . ~
C .
Page 3 of 3
DAB/ses/E1ectric.res
June 21, 1990