COUNTY OF SAN MATEO

Inter-Departmental Correspondence

Controller’s Office

DATE:

April 26, 2010

BOARD MEETING DATE:

May 11, 2010

SPECIAL NOTICE/HEARING:

None

VOTE REQUIRED:

Majority

TO:

Honorable Board of Supervisors

FROM:

Kanchan Charan, Deputy Controller

SUBJECT:

Approval of Modifications to the Compensation Schedule for the County’s Collection of Special Assessments

RECOMMENDATION:

Adopt a resolution approving the modification of the compensation schedule set forth in the Agreements for Compensation to County of San Mateo for Collection of Special Assessments with cities and special districts for FY 2010/11.

BACKGROUND:

Currently, as a service to cities and special districts, the County collects certain special assessment charges through the countywide property tax bill. Special assessments are charges against real properties that receive a direct benefit as a result of an improvement (e.g., street sidewalks, street lights, etc.). Parcels subject to a particular assessment are usually located within a benefit assessment geographic unit and there is a link between the property and the degree of benefit provided. In exchange for collecting such special assessments, the County is compensated pursuant to agreements with each of the affected cities and special districts.

The current compensation schedule for the County’s collection of special assessment charges was last updated by the Board of Supervisors prior to the FY 2009/10, and is as follows:

$1.35 per transaction if submitted in electronic format (diskette, CD, magnetic tape, or electronic mail), unless fees collected are 5%, or more of total charges in which case the rate will remain at $.33 per transaction.

$25 per transaction for each correction after the tax roll has been prepared.

Any city or special district whose fees amount to $10.00 or less will be waived due to its immaterial fiscal impact.

Prior to 2009, the schedule of charges was last updated in 2003 and 1980.

DISCUSSION:

Although the County’s processing and collection costs have risen steadily since 1980, the County has not correspondingly modified its compensation schedule each year. Although the County did adjust its compensation schedule in 1980, in 2003, and most recently in 2009, the Controller believes that the most efficient way for the County to ensure that it is recovering an adequate amount of its collection costs is to provide for the automatic adjustment of its compensation schedule based on the annual adjustment, if any, to the County’s Labor Service Charge rate announced by the County Manager’s Office in connection with the County’s budgeting process. Further, historically the County’s transaction charges were substantially decreased (i.e., from $1.35 per transaction per parcel to $0.33 per transaction per parcel) if the fees to be paid exceeded 5% of the total charges to be collected. The Controller believes that a more equitable procedure would be to limit total collection fees at 5%.

Per the terms of the current agreements, the Office of the Controller notified each of the affected cities and special districts on March 24, 2010, of the following proposed modifications to the County’s compensation schedule:

$1.35 per parcel for each special assessment to be collected, if submitted in electronic format (diskette, CD, magnetic tape, or electronic mail), unless the aggregate amount of the fees to be paid pursuant to this subsection (a) exceeds 5% of total special assessment charges collected by the County on behalf of [Name of City or Special District] pursuant to this Agreement, in which case [Name of City or Special District] agrees that, as payment pursuant to this subsection, it will pay the County an amount equal to 5% of such total special assessment charges collected by the County. The parties further agree that the “per parcel” fee set forth herein shall be subject to a percentage increase or decrease each fiscal year in accordance with the annual change in the County Labor Service Charge rate announced by the County Manager’s Office in connection with the County’s budgeting process.

$25 for each correction submitted by [Name of City or Special District] to the tax roll after the tax roll has been prepared to the extent such corrections are necessary due to errors in the proofs approved by [Name of City or Special District] prior to August 10th.

Any city or special district, whose fees amount to $10.00 or less, will be waived due to its immaterial fiscal impact.

Although certain cities and/or special districts have indicated disagreement with the proposed modifications, the Office of the Controller recommends that the Board of Supervisors approve such modifications to the compensation schedule. Consistent with the procedures undertaken to modify the compensation schedule in 2009, the Controller will negotiate an approved form of agreement with the cities and special districts and present such agreements for the Board’s approval in June.

County Counsel has reviewed and approved the Resolution and proposed modifications to the County’s compensation schedule as to form.

The proposed modifications to the County’s compensation schedule contribute to the Shared Vision 2025 outcome of a Collaborative Community by allowing the County to more efficiently ensure that it is recovering an adequate amount of its collection costs each year without the need to repeated amend its existing agreements with cities and special districts.

Performance Measure(s):

Measure

FY 2009-10
Projected

FY 2010-11
Projected

Net County Cost as a percentage of Program Total Requirements

-24%

-24%

FISCAL IMPACT:

Using the new rates, we estimate a revenue increase of approximately $64,048, which would reduce the Controller’s Net County Cost.