shadow revenue: where it is and how to find it · avenu set up a program that identified all rental...
TRANSCRIPT
An Avenu Webinar Series
Shadow Revenue:Where It Is and How to Find It
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Lisa VaralliVice President, Avenu
Antonio BanuelosCity of Richmond, CA
Today’s Speakers:
Patrick ScottSenior Vice President, Avenu
Presentation Agenda
• Who is Avenu?
• The Need for Funding in Communities
• How Revenue Goes Uncollected
• Case Study: Richmond, CA
• Discovery & Recovery: The 3-Phase Process
• Other Case Studies
• Ongoing Benefits
• Q&A Session
• Special Offer
Who is Avenu Insights & Analytics?
Revenue Enhancement
• Discovery Recovery
• Compliance Auditing
• Misallocation
• Data & Analytics
• Finance & Revenue Solutions
Administration
• License & Tax Administration
• Records Solutions
• Justice Solutions
• IT Managed Solutions
• Property Tax Solutions
• Pension Administration
The Need for Funding in Communities
• 61 municipal bankruptcies since 2010*
• Cities have seen slowed growth of the General Revenue Fund to only 0.9% in 2017, with expenditures up to 2.0%**
*Data from Governing Magazine / **Data from the National League of Cities
How Revenue Goes Uncollected
• Transient nature of some businesses
• Unlicensed contractors provide services outside their municipality
• Home-based businesses that aren’t licensed
• Rental income activity that’s subject to business tax
• Lack of jurisdictional resources to track non-compliance
How much is yourmunicipality losing tononcompliance?
Case Study:Richmond, California
Case Study: Richmond, CA
City Statistics
Population: 105,000
Government employees: 750
Annual budget: $372M
General fund: $168M
Property Tax22%
Sales & Use Tax25%
Utility Tax29%
Other Taxes11%
Other Revenue13%
2018-2019 FY GENERAL FUND REVENUE BUDGET: $168M
*CHART DATA FROM 2018-2019 OPERATING BUDGET
Case Study: Richmond, CA
The Situation
Rents were rising in
the San Francisco
suburbs, but
licensing fees did not
Increasing
number of
complaints on
conditions of
rentals
City reached out to
property owners about
rental conditions and
paying license fee, but
received minimal/no
response
Rolled out rental
control and inspection
programs to find that
most owners weren’t
aware of rental
requirements
Case Study: Richmond, CA
What Changed
Avenu set up a program that identified all rental property owners and
short-term rentals.
Avenu was able to get the attention of the unresponsive property
owners, along with new non-compliant prospects
Property owners were now educated about proper
licensing and the law
Data collection Analysis Outreach
Case Study: Richmond, CA
Results
2,795 unlicensed businesses identified
More than $2.2M in new revenue collected
$360,000 anticipated annual increase in business tax revenue
Only 24% compliant prior to Avenu vs. 70% compliant post-Avenu
Incremental increases in new revenue from additional taxes,
penalties, and interest
Discovery & Recovery
Preparation
30 days
Testing Phase
60 days
Active Phase
(ongoing)
Three-Phase Process
Discovery & Recovery: Phase 1
Preparation (30 days)
Acquire jurisdiction’s
registry of businesses
Obtain 3rd party data on
businesses within a
jurisdiction
Research ordinances, taxes,
and license fees
Analyze and compare data
sets
Compile list of non-
compliant businesses
Discovery & Recovery: Phase 2
Testing Phase (60 days)
Outreach to select businesses to
encourage compliance
Manage incoming license
applications & payments
Taxpayer support
Submit funds to city
Discovery & Recovery: Phase 3
Active Phase (ongoing)
Expand mailing to all non-compliant businesses
Manage incoming license applications & payments
Submit funds to city
Regular reporting
Discovery & Recovery Cycle
Build business inventory & identify
non-compliant prospects
Outreach; mail compliance forms to
businesses & taxpayer consultations
Receive/reconcile filings and payments, perform compliance
review
Distribute funds and detailed reporting to
municipality
Data collection & analysis
A Model for All Local Governments
Warren County, KY
• $140,000 recovered in first 90 days
• 4% of total annual program revenue
• 528 applications/returns received
• 296 accounts paid in full
A Model for All Local Governments
City of Vestavia Hills, AL
• $1,669,750 recovered since 2004
• 2,927 previously unregistered businesses
now pay required taxes and fees
• Creation of level playing field —
where all businesses pay fair share
• Credible and uniform enforcement
of compliance
“Well-run cities need sustainable revenue, and Avenu’s tools and expertise enable us to identify and take advantage of new revenue opportunities.”
— Jeff DownesCity Manager
Vestavia Hills, Alabama
Ongoing Benefits
Fund projects that otherwise wouldn’t have been possible
Enrich your community
Decrease the burden on honest taxpayers who pay more with higher tax rates to cover shortfall
Level the playing field
Recovering lost revenue is only part of your story.
Questions?
Free Assessment of Shadow Revenue
Know how much you’re not collecting in two steps:
• Give us a few data points
• Meet within 30 days to get results
Send your inquiry to [email protected]
