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Auditor‑Controller outlines limits on A‑87 billing, host‑compliance results and staffing needs for TOT collections
Summary
Auditor‑Controller Shamice Cubison told the board the county cannot bill schools or most special districts for A‑87 cost allocations, described options to spread A‑87 charges across departmental budgets, and reviewed results and concerns from a Granicus/Host Compliance contract used to identify transient occupancy tax noncompliance.
Shamice Cubison, Mendocino County Auditor‑Controller/Treasurer‑Tax Collector, briefed the Board of Supervisors on A‑87 cost allocation rules, recommended accounting changes, and provided an update on transient occupancy tax (TOT) compliance efforts.
Cubison said state laws and education codes prevent billing school districts and some special districts for federal cost allocations (A‑87). "We're actually not allowed to bill the schools and we're not allowed to bill the special districts for the A‑87," she said, noting the county nonetheless includes those agencies in the allocation so other departments do not pay their share. She said the county recovers roughly $450,000–$500,000 from special districts as a property‑tax administration fee where legally permissible.
Cubison proposed considering spreading A‑87 allocations directly to most departmental budget units so departments would see the full internal service costs. She said that approach is common in other California counties and could improve transparency and fee‑setting, though it may be painful initially and would likely be introduced in a budget adjustment.
On TOT enforcement, Cubison reviewed a contract initiated about 18 months earlier with Granicus/Host Compliance. The county completed phase 1 (data scrubbing) and identified about 30 accounts out of compliance; collections from that effort totalled roughly $350,000, but Cubison cautioned about the distribution of that total — about $200,000 came from a single account that underwent multiple ownership changes. She also noted data‑matching issues (for example, counting units versus accounts) and recommended further validation before expanding contract phases.
Staff told supervisors the vendor arrangement was a mostly flat contract for the reporting portal and data scrubbing; staff is reconsidering whether to move into a collection phase with the vendor. Cubison said the county also needs additional staff and county counsel support to pursue more complicated TOT enforcement matters and that an offer has been made for a chief deputy treasurer/tax collector who could take on complex cases if the candidate accepts.
Supervisors asked about collection mechanics and whether TOT obligations remain with prior owners after a sale; Cubison said outcomes depend on the ability to validate reservations and revenues and on timing of ownership changes. She also said prior efforts had likely achieved about 95% compliance in a prior large validation push, but new properties and ownership turnovers mean enforcement is ongoing.
Why it matters: A‑87 allocation policy affects internal cost visibility and departmental budgets; better TOT compliance could produce non‑general‑fund revenue but requires staff time and legal support. The board did not take action but received the report.
