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Finance Highlights 2006 1004
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Finance Highlights 2006 1004
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6/6/2007 4:01:51 PM
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11/3/2006 3:13:07 PM
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CM City Clerk-City Council
CM City Clerk-City Council - Document Type
Committee Highlights
Document Date (6)
10/4/2006
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_CC Agenda 2006 1106
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\City Clerk\City Council\Agenda Packets\2006\Packet 2006 1106
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<br />Chan shared the data requested by Council from the previous meeting comparing revenue <br />received from 2004-2005 to 2005-2006 when the Business License Tax audit began. Data shows <br />that there was ail increase $87K in penalties alone plus $50K in taxes and fees. <br /> <br />Young inquired why seniors received 50% waivers and the rationale for the administrative <br />practice in giving waivers. Baloca explained that waivers were given to customers who filed <br />complaints and to owners who could demonstrate a reasonable claim of ignorance to the <br />ordinance or a significant hardship. Waivers were granted only to residential property owners <br />since there is a greater likelihood that the owners were not aware of the tax. <br /> <br />Jermanis explained that in the past, the BLT for Rental Property was $42 and that a substantial <br />number of owners did not pay. As a result, the City contracted with MBIA to conduct an audit <br />on Rental Property Owners not paying the BLT. The process also includes MBIA sending <br />Rental property owners a bill for the $42annual fee plus $100 penalty fee for each unpaid year. <br />MBIA receives a 45% compensation of the total amount billed. Baloca clarified that the 45% is <br />paid to MBIA even when the City provides a waiver. <br /> <br />Mayor Young suggested working with local Real Estate and property management companies to <br />educate and inform investors or new owners about the Rental Property BL T. Baloca agreed and <br />added that the City will be preparing a mailer to Real Estate companies so that ignorance can be <br />avoided as an excuse. <br /> <br />Stephens suggested using Internal Revenue Service rules in defining Family. Jermanis shared his <br />concern with the increase of staff time to notify owners, invoice and follow up with their <br />payments and penalties on top of verifying the family relationship. Jermanis suggested giving the <br />owners the opportunity to pay and also give them the time to complain and apply for a waiver. <br />The administrative procedures for waiving penalties could also be changed, instead of changing <br />the BL T fees since it would require voter approval. <br /> <br />Mayor Young recommended embarking on an annual newsletter or newspaper reminding <br />business owners of the BLT, including rates and due dates. <br /> <br />3. Review of the City's Investment Program <br /> <br />As requested, staff brought back additional information regarding the City's investment program <br />and the portfolio Managers performance (Chandler Asset Management). Baloca explained that <br />the City's investment is currently split 50/50 between Chandler and LAIF. The relationship with <br />Chandler began with the intention of eventually transitioning staff to a hands-off approach and <br />allowing Chandler to have control over the portfolio's structure decision making and investment <br />purchases. However, staff had decided that it was in the best interest of the City to maintain <br />purchasing control and structural oversight of the portfolio. To-date, the City has shortened the <br />portfolio benchmark to 1 to 3 years and benefited from a higher earning yield and a more liquid <br />portfolio. <br /> <br />Based on a $40 million portfolio, Baloca explained that Chandlers' annual fee is approximately <br />$4IK. Baloca further explained that having different brokers may provide more competition to <br />Chandler and result in an arumal savings. Currently, even if Chandler does not perform any <br />trades they will still receive approximately $41K for managing the portfolio while the <br />commission to a broker can range from $.10 to $1.50 per government bond trade. This may be <br />more advantageous for the City in regards to cost. <br />
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