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HomeMy WebLinkAbout25-City Administrator CITY OF SAN BERNARDINO - REQUEST FOR COUNCIL ACTION Date: February 12, 2003 Subject: Report by City Administrator concerning the City's agreement for Utility User's Tax compliance services with MMC (Don Maynor, et al) relative to Settlement Agreement with In Touch Communications, Inc. From: Fred Wilson, City Administrator Dept: City Administrator's Office Synopsis of Previous Council Action: January 2003 - Mayor and Council adopt a resolution approving a settlement agreement and general release with In Touch Communications, Inc., concerning Utility User's Tax. Recommended motion: Receive and file. /" :1i1'C,l f. L/fr:, G (117 ) , ./ Signature Contact person: Lori Sassoon Phone: 384-5122 Supporting data attached: Staff report Ward: All FUNDING REQUIREMENTS: Amount: None Source: (Accl. No.) (Accl. Description) Finance: Council Notes: Agenda Item NO.lJ..S o1/l~/D3 STAFF REPORT Subiect: Report by City Administrator concerning the City's agreement for Utility User's Tax compliance services with MMC (Don Maynor, et al) relative to Settlement Agreement with In Touch Communications, Inc. Backl!round: At the January 21 Council meeting, further information was requested concerning the City's UUT auditing services as it related to a utility user's tax settlement agreement with In Touch Communications, Inc. Since 1987, the City has had an agreement with Municipal Resource Consultants (MRC) for the audit of sales and use taxes. In 1996, the Agreement was amended to add revenue enhancement services which are self-funded by the new revenues realized. Specifically, under this amended agreement MRC and attorney Don Maynor currently provide audit, legal, and protective services related to sales/use tax, utility users tax (UUT), franchise fees, and other taxes. Several years ago, MRC was acquired by MBIA MuniServices; the firm is now called MMC (which stands for MBIA MuniServices Company). In April of200l, the Mayor and Council approved Resolution 2001-79 authorizing the Mayor to execute a new agreement with MMC for services related to UUT and franchise fee revenues. The new agreement adjusted the manner in which MMC and Don Maynor are compensated with regard to UUT and cable franchise fee activities. In the past, MMC was paid 25% of the total additional, new revenue received by the City for a period of three years following the correction made by MMC, along with 25% of the total retroactive recovery, if applicable. The new agreement is funded by an annual fixed fee that covers UUT and franchise fee-related services; services related to sales tax, transient occupancy taxes, and other taxes continue to be paid on a contingency basis. City-specific UUT audits and franchise fee audits also remain on a contingency basis. By moving to the fixed fee arrangement, the City also began participation in a new UUT/Franchise Compliance and Revenue Protection Program that consolidates various activities and coordinates them among cities throughout California. This program includes many of the services provided previously, but at a reduced cost to the City. In addition to the cornerstone audit services, the Program identifies utility businesses doing business in the City that are not collecting the UUT; provides utilities with accurate geocoding boundaries of the City, which satisfies requirements under federal law related to wireless service; assists the City with updating its UUT ordinance to reflect changes in technology and regulation; places the City's UUT ordinance on MMC's website for access by tax-collecting utilities; and assists City staff in addressing complex tax application and exemption issues that arise from time to time as new products and technologies are introduced. Attached is a summary of the compliance program activities. Under the fixed fee agreement, the City's total annual fee to MMC and Don Maynor will equal one-half of one percent (0.5%) of the City's total UUT revenue for the prior fiscal year, less certain adjustments, or a minimum of$lO,OOO. Of the total percentage fee, 0.375% is paid to MMC, and 0.125% is paid to Don Maynor. In the past calendar year, payments based on this formula totaled $80,800. Since MMC's work with In Touch Communications was not City-specific, it falls within the scope ofthe fixed fee agreement. Therefore, no further compensation will be due to MMC for this work. 1 Discussion was raised concerning alternatives to using a specialty firm such as MMC for UUT auditing work. Given the complexity of the utility industry, the large numbers of companies remitting UUT to the City (see attached), and the specialized nature of this work, cities generally use firms such as MMC or its major competitor, HdL Companies, to perform UUT audit services. Financial Impact: None Recommendation: It is recommended that the Mayor and Council receive and file this report. 2 MMCIMAYNOR UUT/FRANCHISE COMPLIANCE PROGRAM Compliance Services . Discovery Services o Provider Detection (every 6 months) - MMC will identify non- complying providers by using proprietary database that compares providers paying UUT in neighboring jurisdictions with providers currently collecting UUT in your City. o Telecom Compliance Activities (annually - ongoing) - MMC will monitor the activities of over six hundred CPUC-licensed companies, and when non complaints are detected, clearly spell out their tax collection responsibilities and provide essential UUT collection information that will assist them. o Technoloqv Chanqes (ongoing) - MMC continually researches information to identify taxable services delivered by new technologies that are not in compliance with the City's UUT ordinance, such as VolP (voice over internet protocol) and DSL and special access. . Collection Pavment Information Review o UUT Payment Analvsis (quarterly) - MMC will analyze the City's payment information and identify missing payments and other payment anomalies. MMC will provide City with compliance assistance and follow up letters. o UUT Revenue Manaqement Reports & Forecastinq (on request) MMC will provide an analysis of the City's UUT revenues by utility business segment (electric, gas, CA TV, wired telecom, wireless telecom, etc.) and provide forecasts of the City's UUT revenues by each utility segment. . Geocode Review of Top UUT Collectors o Audit Tool - MMC uses its proprietary database to analyze a provider's electronic customer database and report which customers are incorrectly included and excluded from the provider's reporting to the City. o Assistance To Tax Collectors - On request, MMC will assist utility providers in your City with electronic boundary descriptions to accurately geocode their customers in the City. MMCIMAYNOR UUT/FRANCHISE COMPLIANCE PROGRAM . 58-278 Non-Core Gas and Electric Direct Access Review MMC has worked in both the gas and electric industries during and after deregulation to insure that competitive marketers adhere to various ordinance stipulations. We analyze the available information provided by the gas and electric distribution companies to identify situations where the City is not receiving UUT from customers purchasing these commodities directly from third-party providers. We perform audits to verify usage and commodity charges to calculate tax deficiencies and assist in future compliance. . Tax Application Reviews (customer bill analvsis) MMC will assist the City in responding to questions of citizens (residential and business) regarding their utility bills and the computation of the UUT. We also assist the City in verifying refund requests for validity and accuracy. We also assist in bankruptcy filings and provide revenue estimates for submission. ********************** Protective Services Utility law specialists, Don Maynor, Esq. and Doug Wiese, Esq. (Law Firm), provide the protective services included in the MMC/Maynor Program. . Update of UUT Ordinance LA W FIRM will provide a comprehensive review and update of your existing UUT ordinance upon request. Thereafter, upon request, LA W FIRM will provide periodic reviews and updates to address or anticipate new utility issues arising out of new technologies, services or marketing methods; or due to changes in case law, statutes, or regulations. . Tax Initiative Help In response to aggressive anti-tax efforts, LA W FIRM will assist City in developing effective strategies to meet these difficult challenges. Such strategies may include new ordinance provisions allowing for temporary suspensions or reductions of specific UUT rates. . Monitor Leaislation and Reaulatorv Proceedinas LAW FIRM will monitor proposed state and federal legislation, and major regulatory agencies (e.g., California Public Utilities MMCIMAYNOR UUT/FRANCHISE COMPLIANCE PROGRAM Commission, Federal Commerce Commission, Federal Energy Regulatory Commission) to identify issues affecting the city's UUT or utility franchise revenues, and make appropriate recommendations to the City, the League of California Cities, and other City lobbyists. . UUT Newsletters. Workshops, and Access to Client-On Iv Webpaae LA W FIRM and MMC will provide the city's staff (with UUT responsibilities) access to the client-only features of the maynorwiese.com webpage and periodic newsletters, including legislative tracking, legal memos, breaking news, special utility issue features (e.g., new technologies), and practice hints. MMC and LA W FIRM will also provide educational UUT workshops on emerging issues. . Other Important Leaal and Protective Services o LA W FIRM will provide legal and technical assistance to staff and City Attorney's office in response to tax application inquiries from taxpayers or tax-collecting entities. o LAW FIRM will assist staff and MMC in gaining access to audit- related information, and analyze legal issues that arise in the course of a review or enforcement of the UUT ordinance. o LA W FIRM will provide electronic publication of tax ordinance and administrative rulings on the UUT TTF website, www.uutinfo.ora. Mr. Maynor developed and maintains this website and includes special information (e.g. remittance and exemption forms) for MMC clients. CITY OF SAN BERNARDINO CITY ADMINISTRATOR'S OFFICE INTEROFFICE MEMORANDUM TO: Mayor and Common Council FROM: Lori Sassoon, Assistant to the City Administrato(Ql ~rr,----/ SUBJECT: Replacement Pages for February 18 Council Meeting - Item #25 DATE: February 18, 2003 COPIES: City Clerk; City Attorney As an attachment to the Agenda Item #25, a list was provided of all utilities that are currently remitting Utility User's Tax. This attachment inadvertently contained the amount of UUT collected from each utility. That data is confidential and should not have been distributed. Please substitute the attached list, and destroy the fonner pages. I apologize for this error and please contact me if you have any questions. 1 1(oJj .~ / I ,<{hs YEAR TO DATE TOTALS ACCESS ONE ACC NATIONAL LONG DISTANCE CORP. ACCESSLlNE COMMUNICATIONS CORP ACN-COMMUNICATIONS SERVICES INC. ACN ENERGY ADELPHIA (Comcost Cable) ADELPHIA (ACC Telecommunications, LLC) ADELPHIA COMMUNICATIONS (CENTURY TCI) ADELPHIA TELECOMMUNICATIONS INC. AFFINITY CORP AIRNEX COMMUNICATIONS ALLEGIANCE TELECOM OF CA, INC. ALLSTAR TELECOM AMERICAN FIBER NETWORK INC. AMERVISION COMMUNICATIONS APS ENERGY SERVICES COMPANY ARRIVAL COMMUNICATIONS ASSOCIATION ADMINISTRATORS INC. AT&T AT&T WIRELESS AT&T WIRELESS SERVICES (FLORIDA) AT&T WIRELESS SERVICES INC (West Palm B) BBG COMMUNICATIONS INC. BELL ATLANTIC COMMUNICATIONS BIG PLANET INC. BILLING CONCEPTS INC. BROADWING TELECOMMUNICATIONS BUSINESS DISCOUNT PLAN BUSINESS TELECOM, INC. CABLE & WIRELESS COMM. CALL AMERICA, INC. CELLCO PARTNERSHIP CELLULAR SERVICE CHARTER COMMUNICATIONSIMarks Cable) CLARICOM NETWORKS. INC. CHOCTAW'S CIERA NETWORK SYSTEMS, INC. CLEARWORLD COMMUNICATIONS. CORP COlUMBIA CELLULAR INC. ICONEXONE COMM) COM DATA TELECOM. SERVICES INC. COMM SOUTH COMPANIES, INC. COMMON WEALTH ENERGY CORP. COMMUNICATIONS EXPRESS, INC. COMMTECH 21 LLC CORECOMM-ATX,INC. DANCRIS TELECOM, LLC DIVERSIFIED SOlUTIONS INC. DPI TELECONNECT EASTON TELECOM SERVICES, INC. . J 2~ / I ,f /Zi){0_. ,_ i ly'lt,U/11J f'vI-' (~IJi_S - ::tJ::--~.) YEAR TO DATE TOTALS ELECTRIC LIGHTWAVE, INC. EMPIRE ONE TELECOMMUNICATIONS ENHANCED COMMUNICATIONS NETWORK, INC. EN RON ENERGY MARKETING CORP.(PG&E) ENRON ENERGY SERVICES, INC. EUREKA BROADBAND CORPORATION EVERCOM SYSTEM I NC. EXCELL TELECOMMUNICATIONS EXPRESS TEL FARM DALE CREAMERY INC. FEDERAL TRANSTEL, INC. FIBERLlNK COMMUNICATIONS FOCAL COMMUNICATIONS CORP. OF CA FRESNO MSA LIMITED PARTNERSHIP FRONTIER COMMUNICATIONS OF AMERICA GE CAPITAL COMMUNICATIONS, INC. GENESIS COMMUNICATIONS INTL. GLOBALCOM,INC. GLOBAL CROSSING TELECOMMUNICATIONS GLOBAL CROSSING TELEMANAGEMENT INC. GLYPHICS COMMUNICATIONS, INC. GREEN MOUNTAIN ENERGY RESOURCES GROUP LONG DISTANCE GTC TELECOM GTE MOBILENET OF CALIFORNIA HERTZ TECHNOLOGIES, INC. HOLD BILLING SERVICES IBM GLOBAL SVCS ICG COMMUNICATIONS INC. IDT CORPORATION IN TOUCH COMMUNICATIONS, INC. INCOMNET COMMUNICATIONS CORP. INTEGRETAL INCORPORATED INTELLlCALL OPERATOR SERVICES INTERMEDIA COMMUNICATIONS INC. INTER-TEL NETSOLUTlONS, INC. ITC DELTACOM COMMUNICATIONS LA QUINTA INN LCIINTERNATIONAL LD EXCHANGE.COM, INC. L1GHTYEAR COMMUNICATIONS, INC. LONG DISTANCE OF MICHIGAN MATRIX TELECOM TAX ESCROW MCI WORLDCOM NETWORK SERVICES, INC. MCI WORLDCOM (Cross Country Wireless I McLEODUSA TELECOMMUNICATIONS SERV INC MOUNTAIN SHADOWS MOVING BYTES, INC. NATIONAL ACCOUNTS, INC. NEW ENERGY CALIFORNIA, LLC YEAR TO DATE TOTALS N EXTEL NOS COMMUNICATIONS, INC. NOSVA LIMITED PARTNERSHIP NXLD COMPANY OAN SERVICES INC. OCCIDENTAL ENERGY MARKETING, INC. OMNIPLEX COMMUNICATIONS GROUP OMNIPOINT COMMUNICATIONS, INC. ONE CALL ONE STAR LONG DISTANCE, INC. ONSTAR CORPORATION OPENTEL COMMUNICATIONS, INC. OPEX COMMUNICATIONS INC. PAC-WESTTELECOMM,INC. PAETEC COMMUNICATIONS, INC. PNG TELECOMMUNICATIONS INC. PHOENIX NETWORK INC. PHONE DEBIT SYSTEMS PREMIERE COMMUNICATIONS PRIME MATRIX PRIMUS TELECOMMUNICATIONS INC. QUANTUM SHIFT COMMUNICATIONS QWEST COMM CORPORATION RSL COM PRIMECALL, INC. RSL COM USA. INC. SAVECOM INTERNATIONAL USA, INC. SBC COMMUNICATIONS INC. (Pacific Bell) SEMPRA ENERGY SOLUTIONS SINGLE BILLING SERVICE, INC. SONIX4U TELECOM, INC. SOUTHWESTERN BELL MOBILE SYSTEMS LLC SOUTHERN CALIFORNIA EDISON SOUTHERN CALIFORNIA GAS SPRINT SPECTRUM LP. SPRINT TELEPHONY PCS, LP (formerly Cox Comm) STARTEC GLOBAL OPERATING CO T-NETIX TELECOM. SERVICES, INC. TALK. COM HOLDING CORPORATION TCAST COMMUNICATIONS INC. TCG LOS ANGELES TCOM MARKETING CORP TELCO DEVELOPMENT GROUP TELECENTS COMMUNICATIONS, INC. TELECOM NEW ZEALAND TELEPACIFIC COMMUNICATIONS TELSCAPE COMMUNICATIONS TIME WARNER TELECOM TMC COMMUNICATIONS TOPP TELECOM, INC. TOTAL CALL INTERNATIONAL INC. YEAR TO DATE TOTALS TOUCH I COMMUNICATIONS TRANS NATIONAL COMMUNICATION INTERN. TRAG-WIRELESS TXU ENERGY SERVICES UNICOM ENERGY OHIO UNITED STATES ADVANCED NETWORK UNITED SYSTEMS ACCESS TELECOM. INC. UNIVANCE TELECOMMUNICATIONS US LONG DISTANCE US SPRINT COMMUNICATION US WATS INC. US VOICE V ARTEC TELECOM VERIZON CALIFORNIA INC. VERllON SELECT SERVICES INC. VERllON WIRELESS (Airtouch Cellular) VIRGIN MOBILE USA VOICECOM TELECOMMUNICATIONS. INC. WORKING ASSETS WORLD NETWORK COMMUNICATIONS WORLDNET COMMUNICATIONS SERVICES WORLDXCHANGE CORP. WORLDXCHANGE COMMUNICATIONS INC. XO CALIFORNIA, IN C. lONE TELECOM INC. l-TEL. INC.