AgdaPkt 2020-12-21 Amended Joint SA PFA

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6.A. - Page 2 of 80 BACKGROUND The City engages revenue enhancement firms to provide guidance and direction in relation to several of the City's most significant revenue streams, including property tax revenue, business license revenue and sales and use tax revenues. Use Tax is very similar to sales tax but it is based on the location where the product is to be used, as opposed to where it was sold. Due to this characteristic of use tax, online sales from out of state vendors has become an increasing portion of the City's revenues. Typically, a revenue enhancement consultant will analyze data relating to these revenues and work with the City to provide more sophisticated, and more accurate, revenue forecasts. In addition, these consultants meet quarterly with City staff to discuss factors specific to Redwood City, as well as overall economic influences on these revenue streams, which are approximately 65 percent of the General Fund revenues. On April 17, 2020 the contract for Property Tax Consulting Services with MuniServices, LLC expired and on July 15, 2020 the contract for Sales and Use Tax Consulting Services and Business License Compliance Services with MuniServices, LLC expired. Prior to the July expiration date, it staff decided to send out one Request for Proposal (RFP) for all of these services. The RFP was posted to the City's website on June 10, 2020 and closed for submittals on June 26, 2020. The City received two proposals by the posted deadline; one from MuniServices, LLC and one from HdL Companies and HdL Coren and Cone. A third proposal was received after the RFP deadline, and therefore could not be considered. In order to fairly evaluate the proposals, the following steps were taken: • A team of five staff from the Administrative Services Department and the Community Development and Transportation Department reviewed both proposals and participated in a discussion regarding specific information in the proposals with respect to cost, experience, and methodology. Each staff member informally recommended a proposer for each of the services to be provided based on these criteria. • A panel of three Administrative Services Department (Finance Division) staff interviewed a team from each of the two proposers, posing the same five questions to each team. The topics of the questions included all aspects of the RFP with some emphasis on procedures to maximize the Use Tax revenue. • The Assistant City Manager/Administrative Services Director interviewed each team from the two proposers. ANALYSIS Selection of Revenue Enhancement Consultant As part of the preparation for engaging a revenue enhancement firm, staff identified several areas where a more robust approach to enhancing revenues was desirable. Due to the level of development in the City, it was determined that a more engaged approach to use tax consulting would increase the likelihood Page 2 of 7 City of Redwood City 1017 Middlefield Road, Redwood City, CA. 94063 Tel: 650-780-7000 www.redwoodcity.ore 11