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REQUEST FOR <br />COUNCIL ACTION <br />CITY COUNCIL MEETING DATE: <br />SEPTEMBER 20, 2016 <br />TITLE: <br />RECOMMENDED ACTION <br />CLERK OF COUNCIL USE ONLY: <br />..IT9 <br />❑ <br />As Recommended <br />❑ <br />As Amended <br />❑ <br />Ordinance on tai Reading <br />❑ <br />Ordinance on 2 "tl Reading <br />❑ <br />Implementing Resolution <br />❑ <br />Set Public Wearing For <br />CONTINUED TO <br />FILE NUMBER <br />Authorize the City Manager and Clerk of the Council to execute an agreement with Macias Gini & <br />O'Connell, LLP for Medical Marijuana Business License Tax Revenue Auditing services for an initial <br />two -year term beginning January 1, 2017 through December 31, 2018, for an amount not to exceed <br />$250,000 over the life of the initial agreement with a provision for one one -year extension <br />exercisable by the City Manager and the City Attorney, in an amount not to exceed $125,000 <br />subject to non - substantive changes approved by the City Manager and the City Attorney. <br />DISCUSSION <br />On November 4, 2014, Santa Ana residents passed a voter ballot measure (Measure BB) to <br />regulate the operations of permitted medical marijuana collectives /cooperatives (hereafter, <br />"collectives ") within the City. Subsequent to the passage of Measure BB, the City ratified Ordinance <br />No. NS -2864 ( "Ordinance ") delineating the various regulations and operating standards including <br />Section 21 -127, which outlines the business license tax imposed on permitted collectives. As part <br />of the regulation, the City Council requested staff to create an enforcement plan that would more <br />effectively provide for the closure of illegal medical marijuana collectives, as well as allow for the <br />monitoring of any collectives that may be allowed to operate legally. The enforcement plan required <br />additional staffing, which is currently being offset by revenues collected through a gross receipts <br />business license tax on legal collectives. The adopted maximum tax rate is 10% of gross receipts, <br />but the Ordinance initially imposes this tax at a 5% effective rate. <br />In order to ensure the permitted collectives are complying with the tax requirements set forth in the <br />Ordinance, on February 11, 2016 a Request for Proposals (RFP No. 16 -022) for Revenue Auditing, <br />Recovery, Reporting, Analysis, and Legislative /State Agency Liaison and Implementation <br />Monitoring services for Medical Marijuana Business License Tax was released and posted on the <br />City's online bid management and publication system. Three proposals were received. They were <br />subsequently reviewed by a three - member committee comprised of staff from Finance & <br />Management Services Agency and the Community Development Agency. As a result, each of the <br />responding consultants were interviewed and evaluated based on the following criteria: <br />251 -1 <br />