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�X REQUEST FOR COUNCIL ACTION CITY COUNCIL MEETING DATE: June 19, 2000 TITLE: AGREEMENT TO PROVIDE UTILITY USER TAX COMPLIANCE SERVICES A-= VA'a tion lsr CLERK OF COUNCIL USE ONLY: APPROVED As Recommended As Amended Ordinance on 1s' Reading Ordinance on 2nd Reading Implementing Resolution Set Public Hearing For_ ONTINUED TO ILE NUMBER A-2000-10 2 RECOMMENDED ACTION 1. Direct the City Attorney to prepare and authorize the Mayor and Clerk of the Council to execute an agreement between the City and MMC/Municipal Resource Consultants. 2. Direct the City Attorney to prepare and authorize the Mayor and Clerk of the Council to execute an agreement between the City and Donald H. Maynor, a Professional Law Corporation. DISCUSSION The City of Santa Ana has contracted with MMC/Municipal Resource Consultants since 1992 for audit, legal, and protective services relating to the utility users tax (UUT). During FY 98-99, UUT revenue represented approximately 13.9 percent of the City's total general fund revenue. MMC/MRC's audit services and Donald H. Maynor's legal services have combined to protect the City's UUT revenue. For example, two years ago, Mr. Maynor and MMC/MRC worked at the state and national levels to ensure that the Internet Tax Freedom Act did not preclude the City from continuing to tax voice telecommunications that traveled over the Internet. The MMC/MRC Program recently alerted us to the potential threat of losing our entire telecom UUT by way of federal preemption, and is spearheading a fight to preserve it. Due to the complexity of utility tax issues, city staff cannot provide such needed expertise (i.e., lawyers, auditors, and accountants specializing in utility taxation). In the past, compensation for MMC/MRC's work has been based on a contingency fee of 25 percent of the total "additional new" revenue received by the City for a period of three years following the correction made by MMC/MRC, along with 25 percent of the total retroactive recovery (if applicable). MMC/MRC now proposes, and City staff recommends, to fund the program via an annual fixed fee equal to one-half of one percent (0.5%) of the total UUT revenue less certain adjustments. The fixed fee program would have two separate contracts - one with MMC/MRC for the auditing work representing 75 percent of the total, and one with the law Page 125 25.0.