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Agreements with MuniServices For Sales And Use Tax & Utility Users' Tax Compliance, Auditing And Consulting October 4, 2016 Page 2 BACKGROUND Staff has developed a phased approach in selecting and presenting for City Council' consideration the auditing services for the City's top General Fund revenue sources. On September 20, 2016, the City Council approved Macias Gini & O'Connell, LLP (MGO's) agreement for Medical Marijuana Auditing Services. Staff is presenting today for Council consideration the awarding of auditing services in connection with the Sales and Use Tax along with the Utility Users' Tax (UUT), which has been a service the City has maintained. The final consideration is for a new service, which will enhance the City's ability to forecast and ensure compliance with Property Tax and Hotel Visitors' Tax regulations. Staff will present for Council consideration the awarding of auditing services for the Secured and Unsecured Property Tax and the Hotel Visitors' Tax on October 18, 2016. DISCUSSION The Sales and Use Tax and UUT represent approximately 32% of the City's total General Fund revenue. Sales Tax is levied upon the retailers who sell tangible property in the State of California. The Tax is measured by gross receipts from retail sales at an 8% rate. The distribution of the statewide tax is as follows: 7% to other governmental agencies including the State, County and others and 1 % is allocated to the City of Santa Ana. A Use Tax complements the Sales Tax and is imposed on the storage, use, or other consumption of tangible personal property purchased from any out -of -state retailer. The Use tax is measured by the sales price of the property and the rate is the same for both, the Sales Tax and the Use Tax. The UUT is imposed on every individual and corporation using a utility within the City. Utilities subject to the tax include electric, gas, water, telephone, cellular and international calls. The current tax rate is 5.5 %. On January 2014, the City Council unanimously voted to modernize and reduce the UUT's rate from 6.0% to 5.5% and was subsequently approved by the voters in November of 2014. Currently, MuniServices provides the City with Sales & Use Tax and UUT compliance, auditing, consulting services and the Sales Tax Analysis Reporting System (STARS) software application; however, the current agreement will lapse at the end of this calendar year. As such, on February 11, 2016 a Request for Proposals (RFP No. 16 -022) for Revenue Auditing, Recovery, Reporting, Analysis, and Legislative /State Agency Liaison and Implementation Monitoring services for Sales and Use Tax and UUT was released and posted on the City's online bid management and publication system. Two proposals for the Sales and Use Tax component were received. They were subsequently reviewed by a three - member committee comprised of staff from Finance & Management Services Agency and the Community Development Agency. For the UUT component, only one proposal was received. 55B -2