TO:
Honorable Mayor and Members of the City Council
THROUGH:
Bruce Moe, City Manager
FROM:
Steve S. Charelian, Finance Director
Julie Bondarchuk, Financial Controller
SUBJECT:Title
Consideration of a Resolution Approving Amendment No. 1 to the Professional Services Agreement with Harris & Associates for Direct Assessment Services to Increase the Maximum Compensation to $93,000, and Extend the Term of the Agreement. (Finance Director Charelian).
ADOPT RESOLUTION NO. 22-0073
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Recommended Action
RECOMMENDATION:
Staff recommends that the City Council adopt Resolution No. 22-0073 approving an amendment to an existing contract with Harris & Associates to increase the maximum compensation to $93,000, and extend the term of the agreement to administer the City’s direct assessments.
FISCAL IMPLICATIONS:
While the contract amount requested is $93,000, these funds will be utilized for services rendered on an as-needed basis in response to the complexity and work required to administer each assessment.
The fee to administer the direct assessments is approximately $31,000 annually. Included in this amount is $14,000 for the administration of the utility underground assessment districts (UUADs). The City currently collects an administrative fee to place the UUAD direct assessments. Staff recommends this fee be reallocated from reimbursement of City overhead to direct assessment administration by an outside agency. The administrative fee from the UUADs is anticipated to cover 100% of the contract costs associated with the UUAD administration. The remaining $17,000 is budgeted in the FY 2022-2023 budget.
The fee may vary if there is a need for delinquency management due to nonpayment, additional reporting services as a requirement for a debt issuance, or additional services as requested by the City.
BACKGROUND:
The City places direct assessments on parcels annually to fund programs like the UUADs, Street Lighting and Landscaping, and Stormwater. The process to place assessments onto the tax roll takes approximately two months, starting in July and ending in September.
Once assessments are submitted to the County, staff is required to continually check the County website to correct any exceptions. Exceptions can include parcels that have split, combined, or have been re-numbered. There can also be changes in the use code where a parcel changes from a single-family residence, multi-family residence, various types of commercial use, or vacant land. All of these changes may potentially trigger a change in the assessment depending on the type of change. Staff must research all of these exceptions and submit revisions to the County. The process is labor intensive and takes a significant amount of staff time to complete.
Based on the increasing complexity, volume, and reporting requirements, the City’s bond counsel has recommended that City staff consider a specialized firm to administer these direct assessments.
DISCUSSION:
The complexity and time spent on the administration of the direct assessments have increased over the past couple of years. Reporting requirements for bond disclosures along with the increased number of assessments has placed an increased burdened on staff to process these assessments in a timely manner. The consequences of not placing the assessments on the tax roll by a specified deadline include not being able to assess the parcel for the tax year and consequently, billing these assessments directly through the City. Billing these assessments directly through the City adds an additional process, which must be tracked manually for payment and delinquencies. This tracking is a requirement of the bond issuance for UUADs and adding an additional process convolutes the tracking and creates room for error.
The City had three assessments in Fiscal Year 2019-2020: UUAD Refunding 2018, Stormwater, and Street Lighting and Landscaping. Three additional assessments were added in Fiscal Year 2020-2021 as a direct result of the debt issuance to fund three new utility undergrounding districts. With interest from the community in forming more districts to underground additional utility lines, the number of direct assessments will likely increase.
More importantly, placing direct assessments on the tax roll is not a task specialized by City staff. By contracting with an outside agency that specializes in direct assessments, the City can be assured that assessments and delinquencies will be handled appropriately and in a timely manner. Moreover, a specialized firm is more likely to be updated on changes in assessment procedures from the County as well as any compliance requirements associated with the various assessments.
Harris & Associates currently handles the City’s Street Lighting and Landscaping assessment for $7,550 annually. Based on past performance and excellent service, staff recommends that the City Council adopt Resolution No. 22-0073 amending the current contract with Harris & Associates to include all of the City’s direct assessments, and increasing the maximum compensation to $93,000.
PUBLIC OUTREACH:
After analysis, staff determined that public outreach was not required for this agreement.
ENVIRONMENTAL REVIEW:
The City has reviewed the proposed activity for compliance with the California Environmental Quality Act (CEQA) and has determined that the activity is not a “Project” as defined under Section 15378 of the State CEQA Guidelines; therefore, pursuant to Section 15060(c)(3) of the State CEQA Guidelines the activity is not subject to CEQA. Thus, no environmental review is necessary.
LEGAL REVIEW:
The City Attorney has approved the agreement as to form.
ATTACHMENT:
1. Resolution No. 22-0073
2. Amendment No. 1 - Harris & Associates
3. Agreement - Harris & Associates (2020)