Auditors to Comb $90 Million in Santa Monica Tax Receipts

The City of Santa Monica is expected Tuesday to hire outside auditors to comb through receipts for an estimated $90 million in taxes collected from hotels, businesses licenses and through public and private parking fees.

MuniServices, LLC, a California-based firm, is set to be awarded a five-year contract not to exceed $400,000 to audit and provide compliance services on the amounts the City collects from the Business License, Parking Facility and Transient Occupancy taxes.

The contract is recommended for approval by City staff as part of the consent agenda for the City Council’s meeting.

Such audits are ordered often by the City. Doing so has helped it recover an additional $1 million in the last three years from the three taxes, according to City staff.

All three taxes bring in significant revenue for the City and its more than $1 billion biennial budget.

Business licenses for about 23,000 business in Santa Monica annually generate approximately $31 million a year, the report said.

The City also levies a 10-percent tax on private and public parking fees from about 200 such business operators, generating more than $11 million annually, officials said.

Topping those two categories of income for the City is the Transient Occupancy Tax. The 14-percent hotel tax is levied on about 40 hotels and other providers of lodging, as well as “a number of home share businesses” in Santa Monica, according to staff.

All told, the hotel tax boosts City revenue by about $48 million a year, the report said.

MuniServices has been working with the City since 2013 and its current contract expires June 30. The company also holds a City contract for audit and related work on the Utility Users tax.

City officials notified 251 bidders for the contract set to be voted on Tuesday. Of those, 31 vendors downloaded the paper work and four firms – MuniServices, Hdl Software, LLC, Sotomayor and Associates and Davis Farr LLP – submitted proposals.

“MuniServices had competitive pricing and was also the most qualified firm, thereby providing the best value for the service,” the staff report said.

“Staff anticipates that revenue recoveries from the audits will offset a significant portion, if not all, of the costs.”