Finance Highlights 2006 1004 - Laserfiche WebLink

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