ITEM 8-D

Council Meeting:  August 2, 1994

TO:       Mayor and City Council

FROM:     City Staff

SUBJECT:  Ordinance to Amend the Municipal Code to Provide a 1%
          Bidding Preference for Santa Monica Businesses for 3
          years.

INTRODUCTION

This staff report recommends the City Council introduce for first
reading the attached ordinance to amend sections 2.24.090(2) and
2.24.100 of the Municipal Code to provide a 1% bidding preference
for Santa Monica businesses submitting informal and formal bids
for which Sales Tax would be paid.  The bidding preferences would
be effective for a three-year period.

DISCUSSION

The City Council directed the City Attorney to amend the
Municipal Code to provide for a 1% bidding preference to help
City businesses.  The proposed bidding preference will assist
City businesses which have been uniquely burdened by the physical
damage resulting from the Northridge Earthquake.

The bidding preference would be in place for three years.  At the
end of the period, it is anticipated that City businesses will
have sufficiently recovered from the effects of the earthquake to
obviate the need for the bidding preference.  However, staff will
confer with the business community and submit a report on the
matter to the Council prior to the expiration of the three year
period.

To implement the 1% bidding preference, the Purchasing Agent
will: 1) for bid comparison purposes, reduce all bids from City
businesses for which Sales Tax would be paid by the City by 1%;
and 2) compare the lowest 1% reduced City-business-bid to the
lowest non-City business bid.  If the 1% reduced City-business-
bid is equal to or lower than the lowest bid from a non-City
business, the bid would be awarded at the amount bid to the City
business, all other evaluation factors being equal.  The 1%
additional cost paid by the City would be recouped through the
additional City share of Sales Tax generated by the purchase.

BUDGET/FINANCIAL IMPACT

During the three-year 1% bidding preference period, the cost of
purchases which would otherwise have been made from businesses
located outside the City could increase up to 1%.  However, the
resulting increase in purchasing volume from businesses located
in the City of Santa Monica would result in additional City Sales
Taxes, and other economic benefits to the City so that the net
fiscal impact to the City would be insignificant.

RECOMMENDATION

It is recommended that the City Council introduce for first
reading the attached ordinance to amend Sections 2.24.090(2) and
2.24.100 of the Municipal Code to provide a 1% Bidding Preference
for Santa Monica businesses for a three-year period.

Prepared By:   Marsha Jones Moutrie, City Attorney
               C.M. Dennis, Director of Finance
               Pam Wortham, Purchasing Agent