Agenda

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Finance Committee

Meeting Date:	05/11/2021
FROM:	Bill Gallardo

Subject:

Amendment and Novation Agreement and Authorization to Examine Sales and Use Tax Records from the California Department of Tax and Fee Administration

RECOMMENDATION

Approve the amendment and novation agreement with Avenu Insights and MuniServices, LLC and adopt the resolution authorizing the examination of sales and use tax records from the California Department of Tax and Fee Administration (CDTFA) to MuniServices, as well as authorize City staff.

BACKGROUND/DISCUSSION

The State of California Revenue and Taxation Code Section 7056 authorizes the examination of confidential sales and use tax data to officers or employees of local jurisdictions who are designated by resolution of the legislative body of the jurisdiction. The review of confidential information is governed by state law and sets certain requirements and conditions for the disclosure of sales and use tax records. State law also establishes criminal penalties for the unlawful disclosure of sales and use tax information.

In 1987, the City Council authorized Municipal Resource Consultants, as a representative of the City, to examine confidential sales and use tax records. In 2002, the City Council adopted Resolution 02-102. This Resolution designated MBIA Muniservices Company (now operating under the branding name of Avenu Insights and Analytics (Avenu)). The 2002 Resolution also designated the Financial Services Director and the Financial Services Manager - Revenue as City representatives to review sales tax information. However, since then, titles for these positions have changed and additional staff involvement is needed. Currently, the Administrative Services Director, Revenue & Budget Manager, Senior Fiscal Analyst and the sales tax consultant, Avenu, examine and monitor Brea's sales tax records to ensure the tax is appropriately allocated to Brea.

On August 21, 2019 and after a successful Request for Proposal (RFP) process, the City contracted with Avenu Insights to perform sales tax audit, analysis and projections. Although, Avenu is the official branding name of the company, it still operates under MuniServices, LLC for sales tax examination purposes for many agencies. With the attached Amendment and Novation Agreement, the Assuming Party (MuniServices, LLC) becomes entitled to all rights, title, and interest of the Assigning Party (Avenu Insights & Analytics, LLC). This document will be forwarded to the CDTFA to be placed on record.

This adopting resolution further formalizes the Administrative Services Director, the Financial Services Manager, the Revenue & Budget Manager, and the Senior Fiscal Analyst's ability to work with the CDTFA. The resolution also authorizes the City Manager to designate in writing to the State Board any other officer or employee of the City that may need to examine sales and use tax records.

SUMMARY/FISCAL IMPACT

The Amendment and novation agreement updates the records of the California Department of Tax and Fee Administration, and updates the authorized designated list of City employees by title that will be allowed to examine sales and use tax records of the California Department of Tax and Fee Administration. There is no impact to the City's General Fund as a result of this action.

RESPECTFULLY SUBMITTED

William Gallardo, City Manager
Prepared by: Faith Madrazo, Revenue & Budget Manager
Concurrence: Cindy Russell, Administrative Services Director

Attachments
Amendment & Novation Agreement
Resolution