By Bob Balgemann

After seeing success being realized by the neighboring cities of Rockford and Belvidere, the Machesney Park Village Board in January 2019 hired Azavar Governmental Solutions, Inc., out of Chicago, for a series of revenue audits to be certain it was receiving all the money it was due.

Village Administrator Tim Savage and Finance and Human Resources Manager Michelle Johannsen proposed the search. They explained the village relied heavily on revenue that depended on proper reporting and calculations by the various utility companies and the state of Illinois. Among those revenue sources were sales tax, local use tax, franchise fees, and cable franchise fees.

“We are committed to maximizing municipal revenues and maintaining a high standard of financial management,” the administrators stated in a report at that time. “And therefore we met with Azavar Governmental Solutions to discuss their revenue review services that could be applied to the various revenue streams collected by the village.”

The village was founded in 1981, was established on a foundation of outsourcing and continues to have a small administrative staff. Given that, staff believed it would be best to utilize the resources and expertise of Azavar in that area.

Azavar began business in 2005 and from that time has conducted more than 500 audits and worked with 150 municipalities, recovering millions of dollars in revenues for governments,” they continued.

The agreement approved by the village board, in conjunction with two other municipalities, resulted in the company receiving 40 percent of the found revenue, with 60 percent going to the village, for 36 months. The village is in the second year of that agreement.

Belvidere is receiving 55 percent of those dollars with Azavar getting 45 percent.

Recent finding

Most recently the Machesney Village Board approved Resolution 33-R-20, resulting in a settlement of $29,339.87 from Comcast. The unanimous approval came as part of a multi-issue consent agenda, meaning there was one motion, one second, and one vote, with no discussion.

The settlement, according to a report prepared by Acting Village Administrator James Richter II and Manager Johannsen for the June 15 village board meeting, was made up of the following two components:

• Address errors – Azavar’s audit found 126 addresses that were not appropriately included in the village. Those have been corrected so that going forward, calculations and revenue will be accurate.

Further, Azavar went back five years and calculated the amount that was underpaid to the village, applied interest, and determined $21,630.37 was owed to the village.

• Gross revenue calculation – Azavar has identified sources of revenue generated by Comcast that were wrongly excluded from the definition of gross revenue and, therefore, were not included in the franchise fee calculation.

Two years ago, an in-depth, 10-community analysis was completed that required significant time and costs from those parties to identify the proper calculation. Comcast has agreed to compensate other communities based on the weighted average of the results of those audits, which is $1.70 per subscriber. There are 4,535 subscribers in the village and, therefore, another $7,709.50 is owed the village, for a total settlement of $29,339.87.

Azavar will bill the village at the rate of 45 percent for back taxes and 40 for future franchise fee revenue that the village receives from Comcast for the next 36 months.

As part of the settlement, the Richter-Johannsen information states the village will be getting reports from Comcast retroactive to April 1, 2020, and continuing through Sept. 30, 2021, for address changes. “So, the amounts owed to Azavar will be based on actual dollars remitted to the village for those months and, for the remaining months, an average will be used,” the reported states.

The village is budgeting $285,000 this year in cablevision fees. That compares with an actual income of $306,317 in the 2017-18 fiscal year; $297,433 in 2018-19; and a budgeted $290,000 in 2019-20, with a revenue estimate of $292,825.

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