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HDL - Hinderliter, De Llamas and Associates - 2014-06-01
Dept. ID FN17-004 Page 1 of 3 Meeting Date: 3/20/2017 CITY OF HUNTINGTON BEACH REQUEST FOR. CITY COUNCIL ACTION MEETING DATE: 3/20/2017 SUBMITTED TO: Honorable Mayor and City Council Members SUBMITTED BY: Fred A. Wilson, City Manager PREPARED BY: Lori Ann Farrell Harrison, Chief Financial Officer SUBJECT: Approve and authorize execution of Amendment No. 2 with Hinderliter, de Llamas and Associates in an amount not to exceed $115,000 for Sales and Use Tax Auditing Services and increase Appropriations and Professional Services Authoritv accordingly Statement of Issue: Approval is requested to amend the three-year professional services contract with Hinderliter, de Llamas and Associates (HDL), the City's Sales and Use Tax Auditing consultant, from $100,000 to $215,000 to cover additional payments owed to HDL for their sales and use tax analysis and auditing services. Pursuant to the contract, HDL is entitled to a 15 percent revenue recovery fee for additional revenue received by the City due to HDL's in-depth sales and use tax audits. The Finance Department's FY 2016/17 General Fund budget and Professional Services Authority will also need to be amended by an equal amount to cover the payments. Increased sales tax revenue resulting from these audits will more than offset this cost. Financial Impact: This action will result in a $115,000 increase to the three-year contract with Hinderliter, de Llamas and Associates which ends on June 30, 2017. The contract amendment will cover increased costs resulting from sales and use tax audits performed by HDL that have resulted in $685,000 in increased sales tax revenue to the City. The contract with HDL includes a 15 percent audit recovery fee for misallocations identified by HDL that are subsequently corrected by the State Board of Equalization (BOE) for return to the City. Payments currently owed to HDL for successful audit recoveries total approximately $103,000. A contract amendment of $115,000 will cover this cost, plus any additional audit recovery fees through the contract end date. There is sufficient revenue to support this request due to the increased sales tax revenue received by the City due to HDL's audits and subsequent corrections approved by the BOE. The Finance Department's FY 2016/17 General Fund Budget and Professional Services Authority will also need to be increased by $115,000 to cover these payments. The remainder of the increased sales and use tax revenue generated by HDL will help ensure a balanced budget this year. Recommended Action: A) Approve and authorize the Mayor and City Clerk to execute "Amendment No. 2 to Agreement Between the City of Huntington Beach and Hinderliter, de Llamas and Associates for Sales and Use Services;' and, B) Increase Appropriations and Professional Services Authority in the Finance Department Accordingly. Item 7. - 1 I-fB -52- Dept. ID FN17-004 Page 2 of 3 Meeting Date: 3/20/2017 Alternative Action(s): Do not approve the recommended action and direct staff accordingly. Analysis: The City of Huntington Beach's FY 2016/17 Adopted Budget reflects $39 million in projected sales and use tax revenue. This revenue is deposited into the City's General Fund and it helps to finance core services such as public safety, recreation, library, public works and other community programs. Ensuring that the City receives its fair share of funding is essential as each dollar helps fund these core public services. The State Board of Equalization determines all sales and use tax allocations to local jurisdictions. While the great majority of sales and use tax revenues remitted to local governments are correct, occasionally mistakes do occur. To ensure allocations made by the State Board of Equalization (BOE) are as accurate as possible, the City entered into a three-year professional services contract with Hinderliter, de Llamas and Associates for the period of June 1, 2014, through June 1, 2017, after a competitive Request for Proposals (RFP) process. The contract is comprised of two parts: 1) An annual fee of $9,600 for comprehensive sales and use tax analyses and reports with detailed taxpayer and industry specific information; and, 2) A sales and use tax audit service that identifies misallocations by the State BOE and then petitions the BOE for corrections on the City's behalf. The audit recovery service has a 15 percent fee for all revenue recovered, up to a maximum of eight quarters, due to the extensive work and documentation it entails, as well as testifying before the BOE if needed. Currently, 344 cities utilize HDL to assist in the tracking, monitoring and auditing of sales and property tax allocations by the State. As sales and use tax information is proprietary pursuant to State law, jurisdictions choosing to hire a specialized auditing firm to verify the tax allocations made by the State must have City Council authorization allowing the firm access to the City's sales and use tax information. HDL extensively analyzes sales and use tax data to ensure BOE allocations are correct on their clients' behalf. This specialized firm identifies and corrects various tax allocation errors including, but not limited to the following: • Sales misreported as "use tax" transactions. • "Point of Sale" revenues misreported to administrative offices or other locations. • Misallocations occurring because sales from multiple retail outlets, order desks, or offices are credited to a single location. • Misallocations due to jurisdiction miscoding. • "Use tax" transactions exceeding $500,000 not allocated to the host agency. • Construction -related sales listed as "installation" rather than "over-the-counter". • Warehouses that function as a "point of sale" but not identified as such. • Misallocations that occur due to zip code, boundary, or jurisdictional discrepancies. HDL has identified businesses whose sales and use tax remittances to the State were erroneously allocated to other jurisdictions due to one or more of the aforementioned reasons. The requested contract amendment is to compensate HDL for audit activities that resulted in $685,000 in additional revenues to the City. Of this amount, a large portion ($655,000) relates to a single vendor and the misapplication of sales tax rules (versus use tax rules) for a large computer products supplier located in another city. In this case, the BOE ruled that large sums of revenue were misallocated over several years and must be re -distributed to other cities. Pursuant to the contract, HDL's audit recovery fee is 15 percent of new sales and use tax revenue received by the City, for up to eight quarters, resulting from their successful audits. Thus, the recovery of $685,000 in revenues results in the need to raise the contract by $115,000 to pay HDL its audit recovery fees ($103,000), and any additional potential recoveries through June 30, 2017. -53- Item 7. - 2 Dept. ID FN17-004 Page 3 of 3 Meeting Date: 3/20/2017 Please note that extensive procedures are in place by the City's Finance Department to ensure that HDL is only paid for additional tax revenue received by the City attributable to their efforts. Staff has created an internal six step procedure to confirm amounts HDL submits for payment including obtaining copies of State Board of Equalization letters to HDL confirming BOE approval of their audit findings made on our behalf (Attachment 2 — Redacted Sample). In addition, pursuant to the contract, payments are not made to HDL until the increased sales tax revenue is actually received by the City as a result of their audit work, which is also confirmed by the Finance Department by reviewing proprietary sales and use tax reports provided by the BOE. The Finance Department's FY 2016/17 Adopted Budget in the General Fund and Professional Services Authority will also need to be amended by $115,000 to cover the required contract amendment. The City has received $685,000 in additional General Fund revenue due to the petitions filed on our behalf by HDL; hence, sufficient funds are available to support this request. Staff recommends that the remainder of the revenue recovered by HDL remain in the General Fund to help ensure a balanced budget, as there appears to be a slight weakening in certain categories of General Fund revenue through the first half of the fiscal year. Environmental Status: Not applicable. Strategic Plan Goal: Strengthen economic and financial sustainability. Attachment(s): 1. Amendment No. 2 to Agreement between the City of Huntington Beach and Hinderliter, de Llamas and Associates for Municipal Sales Tax and Use Services. 2. Sample of State Board of Equalization Letter Announcing HDL Audit Review Decision Regarding a Huntington Beach business. Item 7. - 3 HB -54- AMENDMENT NO. 2 TO AGREEMENT BETWEEN THE CITY OF HUNTINGTON BEACH AND HINDERLITER, DE LLAMAS AND ASSOCIATES FOR MUNICIPAL SALES TAX AND USE SERVICES THIS AMENDMENT is made and entered into by and between the CITY OF HUNTINGTON BEACH, a California municipal corporation, hereinafter referred to as "City," and HINDERLITER, DE LLAMAS AND ASSOCIATES, a California corporation, hereinafter referred to as "Consultant." WHEREAS, City and Consultant are parties to that certain agreement, dated December 15, 2014, entitled "PROFESSIONAL SERVICES CONTRACT BETWEEN THE CITY OF HUNTINGTON BEACH AND HINDERLITER, DE LLAMAS AND ASSOCIATES FOR MUNICIPAL SALES TAX AND USE SERVICES," which agreement shall hereinafter be referred to as the "Original Agreement," and City and Consultant executed Amendment No. 1 to the Original Agreement on August 30, 2016, and Since the execution of the Original Agreement, City and Consultant wish to amend the Original Agreement to reflect the additional work to be performed by Consultant, and the additional compensation to be paid in consideration thereof by City to Consultant, City. NOW, THEREFORE, it is agreed by City and Consultant as follows: ADDITIONAL WORK Consultant shall provide to City such additional services as required by 2. ADDITIONAL COMPENSATION In consideration of the additional services to be performed hereunder as described in Section 1 above, City agrees to pay Consultant, and Consultant agrees to accept from City as full payment for services rendered, an additional sum not to exceed One Hundred Fifteen Thousand ($115,000.00), in addition to the Original amount of Seventy-five Thousand Dollars ($75,000.00) and the additional sum of Twenty-five Thousand Dollars in Amendment No. 1, for a new total not to exceed sum of Two Hundred Fifteen Thousand Dollars ($215,000.00). 16-5566/148806/DO REAFFIRMATION Except as specifically modified herein, all other terms and conditions of the Original Agreement shall remain in full force and effect. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by and through their authorized officers CONSULTANT: CITY OF HUNTINGTON BEACH, HINDERLITER, DE LLAMAS AND a municipal corporation of the State ASSOCIATES, a California corporation of California By: Andrew ickerson, President print name ITS: (circle one) Chairma reside Nice President AND By: Jeffrey ch Chief Financial Off print name ITS: (circle one) Secretary/Chief Financial Officer/ Asst. Secretary — Treasurer 16-5566/148806/DO 2 Chief Financial Officer APPROVED AS TO Attorney VV-0 l Lti Zs l t e ACOR" CERTIFICATE OF LIABILITY INSURANCE [_DA�IJMMIDD/YYYY) 111 4/2016 THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE HOLDER. THIS CERTIFICATE DOES NOT AFFIRMATIVELY OR NEGATIVELY AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW. THIS CERTIFICATE OF INSURANCE DOES NOT CONSTITUTE A CONTRACT BETWEEN THE ISSUING INSURER(S), AUTHORIZED REPRESENTATIVE OR PRODUCER, AND THE CERTIFICATE HOLDER. IMPORTANT: If the certificate holder is an ADDITIONAL INSURED, the policy(ies) must have ADDITIONAL INSURED provisions or be endorsed. If SUBROGATION IS WAIVED, subject to the terms and conditions of the policy, certain policies may require an endorsement. A statement on this certificate does not confer rights to the certificate holder in lieu of such endorsement(s). Partee Insurance Associates, Inc. 584 S. Grand Avenue Covina, CA 91724-3409 CONTPRODUCER NAME: Ana Arancibia PHONE FAX (A/C, No EXt): 626-966-1791 Arc No): 626-331-8132 ADDRESS: analauraa alteeinsurance.com INSURER(S) AFFORDING COVERAGE NAIC # INSURERA: Ohio Security Insurance Company 24082 www.parteeinsurance.com License #0786033 INSURED Hinderliter de Llamas & Associates 1340 Valley Vista Drive #201 INSURERB: American Fire and Casualty Company 24066 INsuRERc: Twin City Fire Insurance Company 29459 INSURERD: Diamond Bar CA 91765 INSURER E : INSURER F : COVERAGES CERTIFICATE NUMBER: 39R31RRF REVISION NUMBER: THIS IS TO CERTIFY THAT THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED. NOTWITHSTANDING ANY REQUIREMENT, TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT TO WHICH THIS CERTIFICATE MAY BE ISSUED OR MAY PERTAIN, THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS, EXCLUSIONS AND CONDITIONS OF SUCH POLICIES. LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS. INSR LTR I OF INSURANCE ADDTYPE INSD SUER POLICY NUMBER EFF MM/DDYYW POLICY YX MMI D YPOLICY YY LIMITS A , COMMERCIAL GENERAL LIABILITY ✓ BKS56441197 11/15/2016 11/15/2017 EACH OCCURRENCE $ 1,000,000 CLAIMS -MADE � OCCUR DA AGE PREM SESOEa oNcu once $ 500,000 MED EXP (Any one person) $ 15,000 PERSONAL & ADV INJURY $ 1,000,000 GEN'L AGGREGATE LIMIT APPLIES PER: GENERAL AGGREGATE $ 2,000,000 ✓ POLICY JEa LOG PRODUCTS - COMP/OPAGG $ 2,000,000 $ OTHER: A AUTOMOBILE LIABILITY ✓ BAS56441197 11/15/2016 11/15/2017 COMBINEDSINGLE$(Ea 1,000,000 BODILY INJURY (Per person) $ ✓ ANY AUTO OWNED SCHEDULED AUTOS ONLY AUTOS BODILY INJURY (Per accident) $ PROPERTY DAMAGE Per accident $ HIRED NON -OWNED AUTOS ONLY AUTOS ONLY B ,/ UMBRELLA LIAB V OCCUR USA56441197 11/15/2016 11/15/2017 EACH OCCURRENCE $ 3000,000 AGGREGATE $ 3,000,000 EXCESS LIAB CLAIMS -MADE DED I ✓ I RETENTION$10,000 $ A WORKERS COMPENSATION EMPLOYERS' UABIUTY N ANYPROPRIETORIPARTNER/EXECUTIVE YIN XWS56441197 11/15/2016 11/15/2017 ,/ STATUTE Or E.L. EACH ACCIDENT $ 1,000,000 OFFICERIMEMBER EXCLUDED? ❑ (Mandatory in NH) NIA E.L. DISEASE - EA EMPLOYEE $ 1,000,000 If yes, describe under DESCRIPTION OF OPERATIONS below E.L. DISEASE -POLICY LIMIT $ 1,000,000 C PROFESSIONAL LIABILITY 72PGO246728 11/15/2016 11/15/2017 EACH CLAIM $1,000,000 CLAIMS MADE FORM RETRO 2/15/2003 AGGREGATE $2,000,000 DEDUCTIBLE $25,000 DESCRIPTION OF OPERATIONS I LOCATIONS I VEHICLES (ACORD 101, Additional Remarks Schedule, may be attached if more space is required) The City of Huntington Beach, its officers, elected or appointed officials, employees, agents and volunteers are named as additional insured as respects to the General Liability and Auto Liability. *30 days notice of cancellation except *10 days for non payment CFRTIFICATF NOI DFR CANCFI I ATION Clt of Huntington Beach yy g 2000 Main Street SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE THE EXPIRATION DATE THEREOF, NOTICE WILL BE DELIVERED IN ACCORDANCE WITH THE POLICY PROVISIONS. Huntington Beach CA 92648 AUTHORIZED REPRESENTATIVE 7� Sylvia Coronado U 1988-2015 ACORD CORPORATION. All rights reserved. ACORD 25 (2016/03) The ACORD name and logo are registered marks of ACORD 12.R.R16R5 I HTN0F.-1 1 16/17 (iT�/RA/XS/➢7('/PT, - RTHPFRTTTFR nNT,Y I Ana Aranclhia I II/14/2016 3:.5.5:.54 PM IPnTI I P—P. 1 of i POLICY NUMBER: BKS56441197 COMMERCIAL GENERAL LIABILITY CG 20 26 04 13 THIS ENDORSEMENT CHANGES THE POLICY, PLEASE READ IT CAREFULLY. ADDITIONAL INSURED - DESIGNATED PERSON OR ORGANIZATION This endorsement modifies insurance provided under the following: COMMERCIAL GENERAL LIABILITY COVERAGE PART SCHEDULE Name Of Additional Insured Person(s) Or Organization(s): City of Huntington Beach its officers, elected or appointed officials, employees, agents and volunteer 2000 Main Street Huntington Beach CA 92648 Information required to complete this Schedule, if not shown above, will be shown in the Declarations. A. Section II - Who Is An Insured is amended to include as an additional insured the person(s) or organization(s) shown in the Schedule, but only with respect to liability for "bodily in- jury", "property damage" or "personal and advertising injury" caused, in whole or in part, by your acts or omissions or the acts or omissions of those acting on your behalf: 1. In the performance of your ongoing oper- ations; or 2. In connection with your premises owned by or rented to you. However: 1. The insurance afforded to such additional insured only applies to the extent permit- ted by law; and 2. If coverage provided to the additional in- sured is required by a contract or agree- ment, the insurance afforded to such additional insured will not be broader than that which you are required by the contract or agreement to provide for such additional insured. B. With respect to the insurance afforded to these additional insureds, the following is added to Section III - Limits Of Insurance: If coverage provided to the additional insured is required by a contract or agreement, the most we will pay on behalf of the additional insured is the amount of insurance: 1. Required by the contract or agreement; or 2. Available under the applicable Limits of Insurance shown in the Declarations; whichever is less. This endorsement shall not increase the ap- plicable Limits of Insurance shown in the Dec- larations. CG 20 26 04 13 © Insurance Services Office, Inc., 2012 .12R.31-R5 I HINDE-1 1 16/17 C,L/RA/XS/W0PL - HT11DERLITER ONLY I Any A,. ihi. 1 11/14/2016 2:5.5:.54 PH (PDT) I Pao. 2 �f 9 Page 1 of 1 THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY. CA 20 48 02 99 DESIGNATED INSURED ENDORSEMENT The endorsement modifies insurance provided under the following: BUSINESS AUTO COVERAGE FORM GARAGE COVERAGE FORM MOTOR CARRIER COVERAGE FORM TRUCKERS COVERAGE FORM With respect to coverage provided by this endorsement, the provisions of the Coverage Form apply unless modified by the endorsement. This endorsement identifies person(s) or organization(s) who are "insureds" under the WHO IS AN IN- SURED provision of the Coverage Form. This endorsement does not alter coverage provided in the Cov- erage Form. This endorsement changes the policy effective on the inception date of the policy unless another date is indicated below. Endorsement Effective Policy Number 11 /15/2016 BAS 56441197 Named Insured HDL SOFTWARE, LLCf fP, HINDERLITER DE LLAMAS & ASSOCIATES Countersigned b —� (Authorized Representative) SCHEDULE Name of Person(s) or Organization(s) City of Huntington Beach its officers, elected or appointed officials, employees, agents and volunteer 2000 Main Street Huntington Beach CA 92648 (If no entry appears above, information required to complete this endorsement will be shown in the Declara- tions as applicable to this endorsement.) Each person or organization shown in the Schedule is an "insured" for LIABILITY COVERAGE, but only to the extent that person or organization qualifies as an "insured" under the WHO IS AN INSURED provision contained in SECTION II of the Coverage Form. CA 20 48 02 99 Copyright, Insurance Services Office, Inc., 1998 32R316R5 I HINDE-1 116/17 FL/BA/X9/W(1/PL - HINDERLITER ONLY I Ana Arancihia 1 11/14/2016 3:55:54 PH (PDTI I Paae 9 of 9 Page 1 of 1 � STATE OF CALIFORNIA STATE BOARD OFEQUALIZATION mmvEOnGERUNNER AUDIT DETERMINATION AND REFUND SECTION, mxCon First District, 450wSTREET, sACRAmswm.CALIFORNIA r/ONA MA, CPA poBOX swun/o`mAunxMewTn.cme^ore-0o3y »=~^ District, San Francisco TELsp*ome (916)327-8631 JenumeE.voRTnw FAX (n1a)44o�z4V ,m,umuw*u°��m,m=* vwn°uoeuaov, o*x,L.*m,me r=mDistrict, *=gec~"* Hindedher,doLlamas &Associates Attention: Matt Hindediter 134OValley Vista DrSte 20] Diamond Bar CA 81766'3913 BUSINESS TAX AND FEE DEPARTMENT DECISION Dear Mr. Hinderliter-, Slate Contro;lef oAVmJ. GAm Cxscifive Director This letter io|nresponse to your petition concerning the above referenced account on behalf of the City of Huntington Beach (30014)Pursuant to Regulation 1807(b)(2). our decision is to grant your petition. We have confirmed the quarterly misallocation of local tax. Accordingly, afund transfer has been completed for 2Q1 5 to reallocate local tax to this jurisdiction. If you disagree with this decision, please oubmit your written objection to David Davis. Supervisor, Allocation Group, at the address listed above within 38 days from the date of this letter. Your appeal must state the specific facts on which your disagreement is baned, and include all additional information in your possession that supports your position atthis time. If we do not hear from you within this pehod, our decision will become final and we will consider the matter closed. cc: City of Huntington Beach 8i HaneemLanona Tax Auditor Allocation Group ml� T�°�7_� ^°�^^" ,. u City of Huntington Beach 2000 Main Street ♦ Huntington Beach, CA 92648 (714) 536-5227 ♦ www.huntingtonbeachca.gov Office of the City Clerk Robin Estanislau, City Clerk March 21, 2017 Hinderliter, De Llamas & Associates Attn: Matt Hinderliter 1340 Valley Vists Dr. Ste. 200 Diamond Bar, CA 91765-3913 Dear Mr. Hinderliter: Enclosed is a duplicate original of the fully executed "Amendment No. 2 to Agreement Between the City of Huntington Beach and Hinderliter, De Llamas and Associates for Municipal Sales Tax and Use Services." Sincerely, Robin Estanislau, CMC City Clerk RE:pe Enclosure Sister Cities: Anjo, Japan ♦ Waitakere, New Zealand AMENDMENT NO. 1 TO AGREEMENT BETWEEN THE CITY OF HUNTINGTON BEACH AND HINDERLITER, DE LLAMAS AND ASSOCIATES FOR MUNICIPAL SALES TAX AND USE SERVICES THIS AMENDMENT is made and entered into by and between the CITY OF HUNTINGTON BEACH, a California municipal corporation, hereinafter referred to as "City," and HINDERLITER, DE LLAMAS AND ASSOCIATES, a California corporation, hereinafter referred to as "Consultant." WHEREAS, City and Consultant are parties to that certain agreement, dated December 15, 2014, entitled "PROFESSIONAL SERVICES CONTRACT BETWEEN THE CITY OF HUNTINGTON BEACH AND HINDERLITER, DE LLAMAS AND ASSOCIATES FOR MUNICIPAL SALES TAX AND USE SERVICES," which agreement shall hereinafter be referred to as the "Original Agreement," and Since the execution of the Original Agreement, City and Consultant wish to amend the Original Agreement to reflect the additional work to be performed by Consultant, and the additional compensation to be paid in consideration thereof by City to Consultant, NOW, THEREFORE, it is agreed by City and Consultant as follows: 1. ADDITIONAL WORK Consultant shall provide to City such additional services as required by City. 2. ADDITIONAL COMPENSATION In consideration of the additional services to be performed hereunder as described in Section 1 above, City agrees to pay Consultant,,and Consultant agrees to accept from City as full payment for services rendered, an additional sum not to exceed Twenty-five Thousand ($25,000.00), in addition to the Original amount of Seventy-five Thousand Dollars ($75,000.00), for a new total not to exceed sum of One Hundred Thousand Dollars ($100,000.00). REAFFIRMATION Except as specifically modified herein, all other terms and conditions of the Original Agreement shall remain in full force and effect. RLS 6/1/16/16-5279/137250/DO IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by and through their authorized officers CONSULTANT: HINDERLITER, DE LLAMAS AND ASSOCIATES, a California corporation By: OQLS—Li�:" Andrew Nickerson, President print name ITS: (circle one) Chairman/President/Vice President AND By: 47 JSM S6ifilefir, Chief Financial Officer print name ITS: (circle one) Secretary/Chief Financial Officer/ Asst. Secretary — Treasurer RLS 6/l/16/16-5279/137250/DO 2 CITY OF HUNTINGTON BEACH, a municipal corporation of the State INITIATED AND APPROVED: - , A jZ,& &4e�e l Chief Financial Officer APPROVED AS TO FORM: Attorney plan (o%2 %0 r„ , APPROVED: Receive and File City Clem s , surf ily INSURANCE AND INDEMNIFICATION WAIVER MODIFICATION REQUEST fir,.Buch a 1. Requested by: Janet Lockhart 2. Date: 8/17/16 3. Name of contra cto r/pe rm ittee: Hinderliter, De Llamas and Associates 4. Description of work to be performed: Sales Tax Analysis and Revenue Recovery 5. Value and length of contract: 3 years NTE $100K 6. Waiver/modification request: Current deductible of vendor is $25K, City requires $1 OK 7. Reason for request and why it should be granted: Vendor has $1 million in coverage per city requirement. 8. Identify the risks to the City in approving this waiver/modification: No Risk to City. Department Head Signature Date: APPROVALS Approvals must be obtained in the order listed on this form. Two approvals are required for a request to be granted. Approval fr m the City Administrator's Office is only required if Risk Managemen and he City Attorney's Office disagree. 1. Ris Management Approved ❑ Denied Si nature Date 2. City Attorney's Office Approved El Denied Signature Date 3. City Manager's Office ❑ Approved ❑ Denie - Signature Date If approved, the completed waiver/modification request is to be submitted to the City Attorney's Office along with the contract for approval. Once the contract has been approved, this form is to be filed with the Risk Management Division of Human Resources HDL Insurance Waiver, Form- docx 8/17/2016 10:33:00 AM HINDE-1 OP ID: DF CERTIFICATE OF LIABILITY INSURANCE DAT 11/17D/YYYY) 1/17/16 THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE HOLDER. THIS CERTIFICATE ODES NOT AFFIRMATIVELY OR NEGATIVELY AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW. THIS CERTIFICATE OF INSURANCE DOES NOT CONSTITUTE A CONTRACT BETWEEN THE ISSUING INSURER(S), AUTHORIZED REPRESENTATIVE OR PRODUCER, AND THE CERTIFICATE HOLDER. IMPORTANT: If the certificate holder Is an ADDITIONAL INSURED, the polley(les) must be endorsed. If SUBROGATION IS WAIVED, subject to the terms and conditions of the policy, certain policies may require an endorsement. A statement on this certificate does not confer rights to the cerilfleate holder In lieu of such endorsements . PRODUCER 626-966-1791 Parise Insurance Assoc.,lnc. License #0786033 626-331-6132 684 S. Grand Avenue Covina, CA 91724.3409 Wayne M. Pertee CIC, CWCA NAME: CT PHONE a F No M. anoae INSURERS AFFORDING COVERAGE NMG# IINSURERA:Ohio Security Insurance Co INSURED Hlnderliter de Liamas & Associates, HDL Properties, LLC INSURER a: American Fire and Casualty Co INSURERC:Twin CityFire Insurance Co. INSURERO: HDL Software LLC 1340 Valley Vista Drive #200 Diamond Bar, CA 91765 INSURERE: INSURER. ----------- THIS IS TO CERTIFY THAT THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED. NOTWITHSTANDING ANY REQUIREMENT, TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT TO WHICH THIS CERTIFICATE MAY BE ISSUED OR MAY PERTAIN, THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS, EXCLUSIONS AND CONDITIONS OF SUCH POLICIES. LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS. LRADDL T TYPE OF INSURANCE SUER POLICY NUMBER ML C EFF MOB Y EXP LIh1n3 A OENERAL LIABILITY X COIAMERCIALOENERALLIABILITY CLAIMS•hV1DE I OCCUR X BKS56441197 11115115 11115l16 EACHOCCURRENCE S 1,000,00 PAMAQ MI'E ToSES Eaoaur nce S 600,0001 MEG EXP (Anyone tson) $ 15,00 PERSONAL &AOVINJURY $ 1,000,00 GENERAL AGGREGATE S 2,000,00 GENI AGGREGATE LIMIT APPLIES PER: X POLICY PRO- LOC PRODUCTS - COMPIOPAGO S 2,000,00 S A AUTOMOBILE X LIABILITY ANYAUTO ALL OWNED SCHEDULED AUTOS AUTOS HIREOAUTOS AUTOS NoNoWNED BAS56441197 11118/15 11115116 CO&I Ali Ea acclde 1,000, 00 BODILY INJURY (Per perw) $ BODILY INJURY (Per aWderll) $ PROPERTY DAMAGE Pa .P.C= $ S B X I UMBRELLA LIAB EXCESS LU10 X OCCUR CLAIMS -MADE USABS441197 11115115 11/15116 EACH OCCURRENCE S 3,000,00 AGGREGATE s 3,000,00 OE X ETENTION S 10,000 $ A WORKERS COMPENSATION AND EMPLOYERS' LIABILITY YIN ANY PROPRIETORIPARTNEWEXECUTWE OFFICERIMEMBER EXCLUDEo9 ❑ (Myyaeesndalori In NnO OESLtda TIONOFe0PERATiONSbeibw N I A XWS56441197 11/15/15 11115116 X VNCST T OTH• l TS ER E.L. EACH ACCIDENT S 1,000,00 E.L. DISEASE - EA EMPLOYEE S 1,000,00 DISEASE 1,A C Professlolnal Llab Clalms Made Form IRETRO 72PGO246728 2115/03 11/15/15 11115116 Ea/1m 99 S 1 ITt/S1 Dad 26,00 DESCRIPTION OF OPERATIONS I LOCATIONS I VEHICLES (Attach AGORD 101, Addilloreal Remarks Schedule, Irmore space Is requited( *31) day notice of cancellation, 10 days for nonpayment. APPROVED ORM The City of Huntington Beach, its officers, elected or appointed officials, employees, agents and volunteers are named Additional Insured as respects General Liability, B ICHA E. ATES CITY ATTORNEY CITY OF HUNTINGTON BEACH City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 ACORD 26 (2010/06) HUNBEAC SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE THE EXPIRATION DATE THEREOF, NOTICE WILL BE DELIVERED IN ACCORDANCE WITH THE POLICY PROVISIONS, AUTHORIZED REPRESENTATIVE 01988-2010 ACORD The ACORD name and logo are reglatered marks of ACORD TION. All ►iahlw nnapruprN 1? POLICY NUMBER: BKS56441197 COMMERCIAL GENERAL LIABILITY CG 20 26 04 13 THIS ENDORSEMENT CHANGES THE POLICY. PLEASEREAD IT CAREFULLY, ADDITIONAL INSURED -DESIGNATED PERSON OR ORGANIZATION This endorsement modifies Insurance provided under the following; COMMERCIAL GENERAL LIABILITY COV15RAGE PART SCHEDULE Name Of Additional Insured Person(s) Or Organization(s): The City of Huntington Beach, Its officers, elected or appointed officals, employees, agents and volunteers 2000 Main Street Huntington Beach, CA 92648 Information required to complete this Schedule, If not shown above, will be shown In the 0eclarallons, A. Section II -Who, Is Afi Insured Is amended to Include as an additional Insured the person(s) or organization(s) shown in the Schedule, but only with respect to liability for "bodily In- jury', "property damage' or "personal and advertising Injury" caused, In whole or in part, by your pcls or omissions or the acts or omissions of those acting on your behalf: 1. Ih the performance of your ofigoing oper- ations; or 2. In connection with your premises owned by of ranted to you. However: 1. The insurance afforded to such additional Insured only oppllas to the extent permit- ted by law; and 2. If coverage provided to the additional in- sured is required by a contract or agree- ment, the Insurance afforded to such additional insured will not be broader than that which you are required by the contract or agreement to pravlde for such additional insured. CG 20 26 04 13 B. With respect to the Insurance afforded to these additional insureds, the following Is adder! to Section III - Limits Of Insurance: If coverage provided to the additional Insured Is required by a contract or agreement, the most we will pay on behalf of the additional Insured Is the amount of insurance: 1. Required by the contract or agreement; or 2. Available under the applicable Limits of insurance shown In the Declarations; whlchever Is less. This endorsement snail not Increase the ap- plicable Limits of Insurance shown in the Dec- larations, © Insurance Services Office, Inc., 2012 Page 1 of 1 CONTRACTS SUBMITTAL TO CITY CLERK'S OFFICE H� To: JOAN FLYNN, City Clerk C= ran rn zC 0-<O =0 Name of Contractor: HDL a) -n 3XI < rn Purpose of Contract: For Example: Audit Services or Water Quality Testing Huntington Lake — Huntington GeRtral Park Sales tax & use audit consulting services Amount of Contract: $25,000 Copy of contract distributed to: The original insurance certificate/waiver distributed Initiating Dept. —M to Risk I Management F] Finance Dept. ❑ ORIGINAL bonds sent to Treasurer F-1 2-. Name/Extension City Attorney's Office Date: A0 /47� "Ij (:r M IA)� fL7— L IJ4 COPY G:AttyMisc/Contract Forms/City Clerk Transmittal 60 / 75`1 1'57elt�7— l 2 3 4 5 6 7 0 9 10 ll 12 13 14 15 16 |7 18 19 20 21 22 23 24 25 26 27 20 29 PROFESSIONAL SERVICES CONTRACT BETWEEN THE CITY OF HUNTINGTON BEACH AND B[NDERLlTBRDELLAMAS AND ASSOCIATES FOR MUNICIPAL SALES TAX AND USE SERVICES Table ofContents ScopeofServices ..................................................................................................... l City Staff Ammimtaooc—.-----.--------.-----.---------2 Term; Time ofPerformance ..................................................................................... 2 Compensation .-------..-----_—.------------.--.---.2 ExtraWork ............................................................................................................... 2 MethodofPayment .................................................................................................. 3 Disposition ofPlans, Estimates and Other Documents ........................................... 3 HoldHarmless ......................................................................................................... 3 Professional Liability Insurance ............................................................................. 4 Certificate ofInsurance ............................................................................................ 5 Independent Contractor ............................................................................................ h Termination of Agreement -----------------------------6 Assignment and Delegation -----------.-----------------6 ----___...-----_------------------..7 City Employees and Officials .................................................................................. 7 Notices......................................................................................... 7 Consent.................................................................................................................... 8 Modification............................................................................................................. 0 Section Headings -------.-------.---------.------.--.8 Interpretation of this Agreement -------.-------.-----.—.---0 Duplicate Original ----___---,_—_---------.----------9 Immigration ___--______--_—___----------------.--.9 Legal 8cn'icea Subcontracting Prohibited ................................................................ 9 Fees.......................................................................................................... |0 Survival..................................................................................................................... l0 GoverningLaw ......................................................................................................... l0 Signatories ____—______,------_-------------------l0 Entirety ______________—__—___------------------]0 PROFESSIONAL SERVICES CONTRACT BETWEEN THE CITY OF HUNTINGTON BEACH AND HINDERLITER, DE LLAMAS AND ASSOCIATES FOR MUNICIPAL SALES TAX AND USE SERVICES THIS AGREEMENT ("Agreement") is made and entered into by and between the City of Huntington Beach, a municipal corporation of the State of California, hereinafter referred to as "CITY," and HINDERLITER, DE LLAMAS AND ASSOCIATES, a California Corporation, hereinafter referred to as "CONSULTANT." WHEREAS, CITY desires to engage the services of a consultant to provider municipal sales tax and use tax services; and Pursuant to documentation on file in the office of the City Clerk, the provisions of the Huntington Beach Municipal Code, Chapter 3.03, relating to procurement of professional service contracts have been complied with; and CONSULTANT has been selected to perform these services, NOW, THEREFORE, it is agreed by CITY and CONSULTANT as follows: 1. SCOPE OF SERVICES CONSULTANT shall provide all services as described in Exhibit "A," which is attached hereto and incorporated into this Agreement by this reference. These services shall sometimes hereinafter be referred to as the 'PROJECT." CONSULTANT hereby designates Andy Nickerson who shall represent it and be its sole contact and agent in all consultations with CITY during the performance of this Agreement. agree/ surfnet/professional sves 50 to 100 10/12 1 of I I 61 2. CITY STAFF ASSISTANCE CITY shall assign a staff coordinator to work directly with CONSULTANT in the performance of this Agreement. 3. TERM; TIME OF PERFORMANCE Time is of the essence of this Agreement. The services of CONSULTANT are to commence on June 1, 2014 (the "Commencement Date"). This Agreement shall automatically terminate three (3) years from the Commencement Date, unless extended or sooner terminated as provided herein. All tasks specified in Exhibit "A" shall be completed no later than 3 years from the Commencement Date. The time for performance of the tasks identified in Exhibit "A" are generally to be shown in Exhibit "A." This schedule may be amended to benefit the PROJECT if mutually agreed to in writing by CITY and CONSULTANT. In the event the Commencement Date precedes the Effective Date, CONSULTANT shall be bound by all terms and conditions as provided herein. 4. COMPENSATION In consideration of the performance of the services described herein, CITY agrees to pay CONSULTANT on a time and materials basis at the rates specified in Exhibit "B," which is attached hereto and incorporated by reference into this Agreement, a fee, including all costs and expenses, not to exceed seventy five thousand Dollars ($75,000). 5. EXTRA WORK In the event CITY requires additional services not included in Exhibit "A" or changes in the scope of services described in Exhibit "A," CONSULTANT will undertake such work only after receiving written authorization from CITY. Additional agree/ surfnet/professional svcs 50 to 100 10/12 2 of I I compensation for such extra work shall be allowed only if the prior written approval of CITY is obtained. 6. METHOD OF PAYMENT CONSULTANT shall be paid pursuant to the terms of Exhibit "1B." 7. DISPOSITION OF PLANS, ESTIMATES AND OTHER DOCUMENTS CONSULTANT agrees that title to all materials prepared hereunder, including, without limitation, all original drawings, designs, reports, both field and office notices, calculations, computer code, language, data or programs, maps, memoranda, letters and other documents, shall belong to CITY, and CONSULTANT shall turn these materials over to CITY upon expiration or termination of this Agreement or upon PROJECT completion, whichever shall occur first. These materials may be used by CITY as it sees fit. 8. HOLD HARMLESS CONSULTANT hereby agrees to protect, defend, indemnify and hold harmless CITY, its officers, elected or appointed officials, employees, agents and volunteers from and against any and all claims, damages, losses, expenses, judgments, demands and defense costs (including, without limitation, costs and fees of litigation of every nature or liability of any kind or nature) arising out of or in connection with CONSULTANT's (or CONSULTANT's subcontractors, if any) negligent (or alleged negligent) performance of this Agreement or its failure to comply with any of its obligations contained in this Agreement by CONSULTANT, its officers, agents or employees except such loss or damage which was caused by the sole negligence or willful misconduct of CITY. CONSULTANT will conduct all defense at its sole cost and expense and CITY shall approve selection of CONSULTANT's counsel. This indemnity shall agree/ surfnet/professional svcs 50 to 100 10/12 3 of 11 apply to all claims and liability regardless of whether any insurance policies are applicable. The policy limits do not act as limitation upon the amount of indemnification to be provided by CONSULTANT. 9. PROFESSIONAL LIABILITY INSURANCE CONSULTANT shall obtain and furnish to CITY a professional liability insurance policy covering the work performed by it hereunder. This policy shall provide coverage for CONSULTANT's professional liability in an amount not less than One Million Dollars ($1,000,000.00) per occurrence and in the aggregate. The above - mentioned insurance shall not contain a self -insured retention without the express written consent of CITY; however an insurance policy "deductible" of Ten Thousand Dollars ($10,000.00) or less is permitted. A claims -made policy shall be acceptable if the policy further provides that: A. The policy retroactive date coincides with or precedes the initiation of the scope of work (including subsequent policies purchased as renewals or replacements). B. CONSULTANT shall notify CITY of circumstances or incidents that might give rise to future claims. CONSULTANT will make every effort to maintain similar insurance during the required extended period of coverage following PROJECT completion. If insurance is terminated for any reason, CONSULTANT agrees to purchase an extended reporting provision of at least two (2) years to report claims arising from work performed in connection with this Agreement. If CONSULTANT fails or refuses to produce or maintain the insurance required by this section or fails or refuses to furnish the CITY with required proof that agree/ surfnet/professional svos 50 to 100 10/12 4 of 11 insurance has been procured and is in force and paid for, the CITY shall have the right, at the CITY's election, to forthwith terminate this Agreement. Such termination shall not effect Consultant's right to be paid for its time and materials expended prior to notification of termination. CONSULTANT waives the right to receive compensation and agrees to indemnify the CITY for any work performed prior to approval of insurance by the CITY. 10. CERTIFICATE OF INSURANCE Prior to commencing performance of the work hereunder, CONSULTANT shall furnish to CITY a certificate of insurance subject to approval of the City Attorney evidencing the foregoing insurance coverage as required by this Agreement; the certificate shall: A. provide the name and policy number of each carrier and policy; B. state that the policy is currently in force; and C. shall promise that such policy shall not be suspended, voided or canceled by either party, reduced in coverage or in limits except after thirty (30) days' prior -written notice; however, ten (10) days' prior written notice in the event of cancellation for nonpayment of premium. CONSULTANT shall maintain the foregoing insurance coverage in force until the work under this Agreement is fully completed and accepted by CITY. The requirement for carrying the foregoing insurance coverage shall not derogate from CONSULTANT's defense, hold harmless and indemnification obligations as set forth in this Agreement. CITY or its representative shall at all times have the right to demand the original or a copy of the policy of insurance. CONSULTANT shall pay, in a prompt and timely manner, the premiums on the insurance hereinabove required. agree/ surfnet/professional sves 50 to 100 10/12 5 of 11 11. INDEPENDENT CONTRACTOR CONSULTANT is, and shall be, acting at all times in the performance of this Agreement as an independent contractor herein and not as an employee of CITY. CONSULTANT shall secure at its own cost and expense, and be responsible for any and all payment of all taxes, social security, state disability insurance compensation, unemployment compensation and other payroll deductions for CONSULTANT and its officers, agents and employees and all business licenses, if any, in connection with the PROJECT and/or the services to be performed hereunder. 12. TERMINATION OF AGREEMENT All work required hereunder shall be performed in a good and workmanlike manner. CITY may terminate CONSULTANT's services hereunder at any time with or without cause, and whether or not the PROJECT is fully complete. Any termination of this Agreement by CITY shall be made in writing, notice of which shall be delivered to CONSULTANT as provided herein. In the event of termination, all finished and unfinished documents, exhibits, report, and evidence shall, at the option of CITY, become its property and shall be promptly delivered to it by CONSULTANT. 13. ASSIGNMENT AND DELEGATION This Agreement is a personal service contract and the work hereunder shall not be assigned, delegated or subcontracted by CONSULTANT to any other person or entity without the prior express written consent of CITY. If an assignment, delegation or subcontract is approved, all approved assignees, delegates and subconsultants must satisfy the insurance requirements as set forth in Sections 9 and 10 hereinabove. agree/ surfnet/professional sves 50 to 100 10/12 6 of 11 14. COPYRIGHTS/PATENTS CITY shall own all rights to any patent or copyright on any work, item or material produced as a result of this Agreement. 15. CITY EMPLOYEES AND OFFICIALS CONSULTANT shall employ no CITY official nor any regular CITY employee in the work performed pursuant to this Agreement. No officer or employee of CITY shall have any financial interest in this Agreement in violation of the applicable provisions of the California Government Code. 16. NOTICES Any notices, certificates, or other communications hereunder shall be given either by personal delivery to CONSULTANT's agent (as designated in Section 1 hereinabove) or to CITY as the situation shall warrant, or by enclosing the same in a sealed envelope, postage prepaid, and depositing the same in the United States Postal Service, to the addresses specified below. CITY and CONSULTANT may designate different addresses to which subsequent notices, certificates or other communications will be sent by notifying the other party via personal delivery, a reputable overnight carrier or U. S. certified mail -return receipt requested: TO CITY: City of Huntington Beach ATTN: Carol Molina Espinoza 2000 Main Street Huntington Beach, CA 92648 agree/ surfnet/professional svcs 50 to 100 10/12 7 of 11 TO CONSULTANT: Hinderliter, de Llamas and Associates ATTN: Andy Nickerson 1240 Valley Vista Dr., Ste 200 Diamond Bar, CA 91765 17. CONSENT When CITY's consent/approval is required under this Agreement, its consent/approval for one transaction or event shall not be deemed to be a consent/approval to any subsequent occurrence of the same or any other transaction or event. 18. MODIFICATION No waiver or modification of any language in this Agreement shall be valid unless in writing and duly executed by both parties. 19. SECTION HEADINGS The titles, captions, section, paragraph and subject headings, and descriptive phrases at the beginning of the various sections in this Agreement are merely descriptive and are included solely for convenience of reference only and are not representative of matters included or excluded from such provisions, and do not interpret, define, limit or describe, or construe the intent of the parties or affect the construction or interpretation of any provision of this Agreement. 20. INTERPRETATION OF THIS AGREEMENT The language of all parts of this Agreement shall in all cases be construed as a whole, according to its fair meaning, and not strictly for or against any of the parties. If any provision of this Agreement is held by an arbitrator or court of competent jurisdiction to be unenforceable, void, illegal or invalid, such holding shall not invalidate or affect the remaining covenants and provisions of this Agreement. No covenant or provision shall be deemed dependent upon any other unless so expressly provided here. As used in this Agreement, the masculine or neuter gender and singular or plural number shall be deemed to include the other whenever the context so indicates or requires. Nothing contained herein shall be construed so as to require the commission of any act agree/ surfnet/professional svcs 50 to 100 10/12 8 of 11 contrary to law, and wherever there is any conflict between any provision contained herein and any present or future statute, law, ordinance or regulation contrary to which the parties have no right to contract, then the latter shall prevail, and the provision of this Agreement which is hereby affected shall be curtailed and limited only to the extent necessary to bring it within the requirements of the law. 21. DUPLICATE ORIGINAL The original of this Agreement and one or more copies hereto have been prepared and signed in counterparts as duplicate originals, each of which so executed shall, irrespective of the date of its execution and delivery, be deemed an original. Each duplicate original shall be deemed an original instrument as against any party who has signed it. 22. IMMIGRATION CONSULTANT shall be responsible for full compliance with the immigration and naturalization laws of the United States and shall, in particular, comply with the provisions of the United States Code regarding employment verification. 23. LEGAL SERVICES SUBCONTRACTING PROHIBITED CONSULTANT and CITY agree that CITY is not liable for payment of any subcontractor work involving legal services, and that such legal services are expressly outside the scope of services contemplated hereunder. CONSULTANT understands that pursuant to Huntington Beach City Charter Section 309, the City Attorney is the exclusive legal counsel for CITY; and CITY shall not be liable for payment of any legal services expenses incurred by CONSULTANT. agree/ surfnet/professional sves 50 to 100 10/12 9 of 11 24. ATTORNEY' S FEES In the event suit is brought by either party to construe, interpret and/or enforce the terms and/or provisions of this Agreement or to secure the performance hereof, each party shall bear its own attorney's fees, such that the prevailing party shall not be entitled to recover its attorney's fees from the nonprevailing party. 25. SURVIVAL Terms and conditions of this Agreement, which by their sense and context survive the expiration or termination of this Agreement, shall so survive. 26. GOVERNING LAW This Agreement shall be governed and construed in accordance with the laws of the State of California. 27. SIGNATORIES Each undersigned represents and warrants that its signature hereinbelow has the power, authority and right to bind their respective parties to each of the terms of this Agreement, and shall indemnify CITY fully for any injuries or damages to CITY in the event that such authority or power is not, in fact, held by the signatory or is withdrawn. 28. ENTIRETY The parties acknowledge and agree that they are entering into this Agreement freely and voluntarily following extensive arm's length negotiation, and that each has had the opportunity to consult with legal counsel prior to executing this Agreement. The parties also acknowledge and agree that no representations, inducements, promises, agreements or warranties, oral or otherwise, have been made by that party or anyone acting on that party's behalf, which are not embodied in this Agreement, and that that party has not executed this Agreement in reliance on any representation, inducement, agree/ surfnet/professional svcs 50 to 100 10/12 10 of 11 promise, agreement, warranty, fact or circumstance not expressly set forth in this Agreement. This Agreement, and the attached exhibits, contain the entire agreement between the parties respecting the subject matter of this Agreement, and supersede all prior understandings and agreements whether oral or in writing between the parties respecting the subject matter hereof. 29. EFFECTIVE DATE This Agreement shall be effective on the date of its approval by the City Attorney. This Agreement shall expire when terminated as provided herein. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by and through their authorized officers. CONSULTANT, Hinderliter, de Llamas and Associates .� By: Andrew Nickerson print name ITS: (circle one) Chairm resid�tNice President AND By: &&7 .4_— Jeffrey Schmehr print name ITS: (circle one) Secretar ChiefFinancia] fficer/Asst. Secretary — Treasurer agree/ surfnet/professional sves 50 to 100 10/12 11 of 11 CITY OF HUNTINGTON BEACH, a municipal corporation of the State of California / . , A City Manager INITIATED AND PPROVED: �&— X"T Vk Lori Ann Farrell, Director of Finance AP R VED AS TO FORM: U " J C'ty Attorney Date v I '"� )EXHIBIT "A" A. STATEMENT OF WORK: (Narrative of work to be performed) The City desires the provision of services that include report generation and data analysis necessary to effectively manage the City's municipal sales tax base as well as recover revenues erroneously allocated to other jurisdictions. B. CONSULTANT'S DUTIES AND RESPONSIBILITIES: 1) CONFIDENTIALITY Section 7056 of the State of California Revenue and Taxation code specifically limits the disclosure of confidential taxpayer information contained in the records of the State Board of Equalization. This section specifies the conditions under which a CITY may authorize persons other than CITY officers and employees to examine State Sales and Use Tax records. The following conditions specified in Section 7056 (b), (1) of the State of California Revenue and Taxation Code are hereby made part of this agreement: A. CONSULTANT is authorized by this Agreement to examine sales, use or transactions and use tax records of the Board of Equalization provided to CITY pursuant to contract under the Bradley -Burns Uniform Sales and Use Tax Law. B. CONSULTANT is required to disclose information contained in, or derived from, those sales, use or transactions and use tax records only to an officer or employee of the CITY who is authorized by resolution to examine the information. EXHIBIT A C. CONSULTANT is prohibited from performing consulting services for a retailer, as defined in California Revenue & Taxation Code Section 6015, during the term of this Agreement. D. CONSULTANT is prohibited from retaining the information contained in, or derived from those sales or transactions and use tax records, after this Agreement has expired. Information obtained by examination of Board of Equalization records shall be used only for purposes related to collection of local sales and use tax or for other governmental functions of the CITY as set forth by resolution adopted pursuant to Section 7056 (b) of the Revenue and Taxation Code. The resolution shall designate the CONSULTANT as a person authorized to examine sales and use tax records and certify that this Agreement meets the requirements set forth above and in Section 7056 (b), (1) of the Revenue and Taxation Code. 2) SALES AND USE TAX INFORMATION SERVICES & ECONOMIC ANALYSIS a) Provide a user-friendly software program accessible to City staff with an electronic database of the City's sales and use tax data. The software and database would be used to facilitate monitoring, analysis and forecasting of sales and use tax revenue. The database will include the following features at a minimum: i) All sales tax producers in the City of Huntington Beach, including business name, address, State Board of Equalization (SBOE) account number and current (e.g., quarterly) and historical sales tax allocations. EXHIBIT A ii) Ability for the City to create and maintain subsets of the information based on geographic features. iii) Ability to define and print reports by business type and/or category. iv) Ability to export all data to a spreadsheet. b) Provide training to City staff on the use of the software program described above. c) Provide written sales tax reports on a fiscal year quarterly basis to the City in a timely manner, following the receipt of the quarterly distribution report. Such reports would be provided during a quarterly meeting at the City with key Finance and City personnel. The reports should include, but not be limited to, the following: i) Historical sales and use tax revenue trends of major industry groups within the City of Huntington Beach. ii) Top sales tax generators ranked by the amount of sales and use tax produced. iii) Analysis of sales trends by business category, identifying by business the major increases and decreases each quarter (i.e., largest deviating businesses). iv) Comparisons to other local, county and state jurisdictions. v) Sales and use tax projections updated quarterly. vi) Sales tax revenue by geographic area vii) Information regarding state and federal legislative issues, including an analysis of their potential impact on the City of Huntington Beach. viii) Creation and provision of a non -confidential newsletter in electronic format (e.g., *.pdf or similar electronic format) each quarter for the City suitable for public dissemination. EXHIBIT A ix) Other reports as mutually agreed upon. d) Provision of assistance with sales and use tax revenue trends, analysis and related questions throughout the fiscal year; consultation on projections of sales and use tax revenue during the City's annual budget development process. 3) REVENUE RECOVERY AND REPORTING a) Identify the specific procedures you will use to detect, correct, and recover misallocated revenue for the City of Huntington Beach, including, but not limited to: i) Identify and correct the sales/use tax reporting errors of businesses within the City that are not properly registered based on their business activities in the City. ii) Identify and correct the reporting of businesses that are improperly reporting tax to. state and county pools (i.e. classifying sales tax as use tax), thereby depriving the City of sales tax revenue. iii) Detect, document and correct sales/use tax reports errors and omissions in order to generate new, previously unrealized, revenue for the City. iv) Determine if the State Board of Equalization had prior knowledge of the error(s), which could entitle the City to collect revenue from additional periods. b) Monitor and analyze the quarterly distribution reports with a focus on the following: EXHIBIT A i) Accounts with previously reported point -of -sale distribution errors to ensure that corrections are made for current quarters and all eligible previous quarters. ii) Major accounts comprising 90% or more of the City's total sales and use tax revenue to identify any irregularities or unusual deviations from the normal pattern (e.g. negative funds transfers, significant decreases, unusual increases, etc.) and ensure that the City is not receiving less revenue than it is entitled to receive. c) Identify opportunities for the City to recover the local allocation on purchase transactions subject to tax and facilitate the recovery of such funds. d) Assist the City with strategies to preserve and enhance sales and use tax generated by existing businesses within the City. 4) ADDITIONAL SERVICES Consultant shall, at the request of the City: a) Work with City staff on questions related to proper tenant mix for maximum sales tax returns; b) Advise City business license staff on utilization of reports to enhance business license collection efforts; c) Train internal staff in the fundamentals of sales tax auditing should the City opt to resume responsibility for future follow up. EXHIBIT A d) Any software offered as part of Section 1 of the Scope of Services, should meet the following basic specifications: i) SQL Server Database format ii) VMWare Virtual Server Compatible iii) Window GUI or Web -based interface C. CITY'S DUTIES AND RESPONSIBILITIES: 1. The City shall authorize the Consultant to examine the confidential sales tax records of the City in compliance with Section 7056 of the Revenue and Taxation Code. 2. The City shall provide any information or assistance that may readily be available such as business license records, which identify owners and telephone numbers of specific businesses within the City and copies of monthly sales tax allocation reports received from the Board of Equalization. D. WORK PROGRAM/PROJECT SCHEDULE: To be determined. EXHIBIT A >EXHIBIT "B" Payment Schedule 1. Charges for time during travel are normally not reimbursable and will only be paid if such time is actually used in performing services for CITY or as otherwise arranged with CITY. 2. CONSULTANT shall be entitled to payments toward the fees set forth herein in accordance with the following: Fixed Fee of Two Thousand Four Hundred Dollars ($2,400.00) per quarter for basic services including ongoing analysis, reports, legislative support and unlimited access to HdL's team members for sale and use tax related questions, as well as training and support for internal implementation of a program of use tax maximization. In addition to the fixed fee, Hinderliter, de Llamas and Associates (HdL) shall charge a fee of 15% of all new sales and use tax revenue received by the City (including reimbursement from the Sales and Use Tax Compensation Fund outlined in Section 97.68 of the Revenue and Taxation Code) as a result of audit and recovery work performed by the firm. This audit fee applies to monies received in the first eight consecutive reporting quarters beginning with the receipt of the audit revenue and includes retroactive back quarter adjustments obtained by the firm. Total fees shall not exceed Seventy Five Thousand Dollars ($75,000.00) for the term of the contract. Consultant agrees to inform the City when Consultant is at the point of reaching the maximum limit per year. Consultant shall not continue with any work effort over the amount of the maximum limit per year unless first authorized in writing by the City authorized representative(s). Audit fees are billed only after completion of the audit, submittal of corrections to the State Board of Equalization and receipt of revenues by the city. Bills are submitted only for recoveries previously approved by the city on a Work Authorization Form. HdL does not bill a city for audit revenues until the client has actually received said monies. Further, if during the billing cycle, a taxpayer receives a refund for overpayment of taxes generated during that cycle, HdL credits back any proportionate share of the fee that may have been levied. 100% of all new revenue generated by HdL flows to the City after the completion of the eight quarters. The fee constitutes the full reimbursement to HdL and covers all direct and indirect costs incurred by the firm under this contract. This includes all salaries of our employees, travel expenses and service contracting costs as well as the software to be delivered to the City of Huntington Beach under this proposal. Invoices are submitted quarterly after the city has received the revenue from the audit correction. The invoice includes a printout showing the name, address, and sales tax registration number of each company, and the specific amount of revenue allocated by the State Board of Equalization to the City for those businesses. Exhibit B If a misallocation correction involves additional revenue from a company that had already been partially allocating revenues to the City, the City and HdL will agree in a Work Authorization, prior to billing, the methodology for identifying the incremental revenue attributable to HdL's work. 3. Delivery of work product: A copy of every memorandum, letter, report, calculation and other documentation prepared by CONSULTANT shall be submitted to CITY to demonstrate progress toward completion of tasks. In the event CITY rejects or has comments on any such product, CITY shall identify specific requirements for satisfactory completion. 4. CONSULTANT shall submit to CITY an invoice for each progress payment due. Such invoice shall: 1) Reference this Agreement; 2) Describe the services performed; 3) Show the total amount of the payment due; 4) Include a certification by a principal member of CONSULTANT's firm that the work has been performed in accordance with the provisions of this Agreement; and 5) For all payments include an estimate of the percentage of work completed. Upon submission of any such invoice, if CITY is satisfied that CONSULTANT is making satisfactory progress toward completion of tasks in accordance with this Agreement, CITY shall approve the invoice, in which event payment shall be made within thirty (30) days of receipt of the invoice by CITY. Such approval shall not be unreasonably withheld. If CITY does not approve an invoice, CITY shall notify CONSULTANT in writing of the reasons for non -approval and the schedule of performance set forth in Exhibit "A" may at the option of CITY be suspended until the parties agree that past performance by CONSULTANT is in, or has been brought into compliance, or until this Agreement has expired or is terminated as provided herein. 5. Any billings for extra work or additional services authorized in advance and in writing by CITY shall be invoiced separately to CITY. Such invoice shall contain all of the information required above, and in addition shall list the hours expended and hourly rate charged for such time. Such invoices shall be approved by CITY if the work performed is in accordance with the extra work or additional services requested, and if CITY is satisfied that the statement of hours worked and costs incurred is accurate. Such approval shall not be unreasonably withheld. Any dispute between the parties concerning payment of such an invoice shall be treated as separate and apart from the ongoing performance of the remainder of this Agreement. Exhibit B HINDE-1 OP ID: At ,A "_ CERTIFICATE OF LIABILITY INSURANCE DATEQif�1^!Y) 11N411114 THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE HOLDER. THIS CERTIFICATE DOES NOT AFFIRMATIVELY OR NEGATIVELY AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW. THIS CERTIFICATE OF INSURANCE DOES NOT CONSTITUTE A CONTRACT BETWEEN THE ISSUING 1NSURER(S), AUTHORIZED REPRESENTATIVE OR PRODUCER, AND THE CERTIFICATE HOLDER. IMPORTANT: if the certificate holder is an ADDITIONAL INSURED, the pollcy(les) must be endorsed. If SUBROGATION IS WAIVED, subjec o the terms and conditions of the policy, certain policies may require an endorsement. A statement on this certificate does not confer rights to the certificate holder In lieu of such endorsemenE s . PRODUCERamrm 626-966-1751 Partea Insurance Assoc.,Inc. License f#0786033 626�31-$18 584 S. Grand Avenue Covina, CA 91724.3409 Wayne M. Partse CIC, CWCA NAME: PHONE FAA No, : No AD RI A ADDRESS: INSURERS AFFORDING COVERAGE NAIC € INSURER A: West American Insurance INSURED HindQriiter de Llamas & Associates HDL Properties, LLC HDL Software, LLC 1340 Valley Vista Drive #200 Diamond Bar, CA 91765 INSURERS:Ohio SecuritV insurance Cc INSURERO:American Fire and Casualty Co INSURERD:TWIn City Fire Insurance Co. INSURERR: COVERAGES CERTIFICATE NUMBER- REVISION NUMBER: THIS IS TO CERTIFY THAT THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED. NOTWITHSTANDING ANY REQUIREMENT, TERN OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT TO WHICH THIS CERTIFICATE MAY BE ISSUED OR MAY PERTAIN, THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS, EXCLUSIONS AND CONDITIONS OF SUCH POLICIES. LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS. 1 SR TYPE OF INSURANCE OLIO UMBE POLCYEXP LIMITS GENERAL LIABtLrrY - EACH OCCURREPCE S 1,000,00 A X CO..%WZRCIALGENF�LIPEILrfY X BKW55740802 11115114 11/15/15 TO RENTED DPR'YrtlsEs Eaocarrence S 500,00 q at as MADE 1 A OCO-P R%ED EXP tAny orte per<�) $ 15,00( PERSONAL & ADV INJURY 1,000,00 GENERAL AGGREGATE $ 2,000,00 GENt ACCREGATE UNIT APP-IES PER: PRODUCTS - CQ"PICA AGG S 2,000,00 X I POLICY PRO- LOCI I$ AUTOMOBILE LIABILITY Ea accident $ 1r000,00 BODILY INJRY(Per person) $ B X ANYAIJro BAS55740802 11/15/14 11115115 BODILY IN,:LRY(Per acadent) S ALL OVVWD SC7EDULED ALIfOS ALTOS HIRED AUTOS �N-01hTED OS Y D)AMAGE Per aui dc $ $ X UMBRELLA LIAS X OCCYk2 EACH OCCUZFZENCE $ 3,000,00 AGGREGATE $ 3,000,00 C EXCESS LIAR CLA1M&4MADE JUSA55740802 11/15/14 11/16115 CEO X RETENTION 1©000 B WORKERS COMPENSATION AND EMPLOYERS' LIABILITY ANY PROPRBTorzeARTNERE)�Ecur-ivE Y� OFFICER&ENSER EXCLUCED7 (Mandatory in NH) NIA XWS55740802 11/15114 11/16115 W Y `ATU- IrrS 0� E.L. EACH ACCtDEW $ 1,000,00 E.L. DISEASE - EAEt.PLOYE $ 1,000,00 UndeI�ryyes.descrih100FO oESCR1PTIQN aF OPERATIONS bean E_L.DISEASE -POLICY LIMIT 1,000,00 D Professional Llab 72PGO246728 11115A4 11/15/15 Ea/Agg $1m/$1 IT Claim Made Form RETRO: 2115/03 Ded 25,00 DESCRIPTION OF OPERATIONS 1 LOCATIONS VEHICLES (Attach ACORD 1e9, Additional Remarks Schedule, If more space is required) O t� 1Y1 UG® ASr_V The City of Huntington Beach, its officers, elected or appointedofficials, P— employees, agents and volunteers are named as additional insured under the v. *30 days notice of cancellation except *10 days for non payment Byl �fv G/ lchaei Gates, City Attorney HUNBEAC SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE THE EXPIRATION DATE THEREOF, NOTICE WILL BE DELIVERED IN ACCORDANCE WITH THE POLICY PROVISIONS. City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 AUTHORIZED REPRESENTATIVE O 1988-2010 ACORD CORPORATION. All rights reserved. ACORD 25 (2010/05) The ACORD name and logo are registered marks of ACORD HOLDER CODE HUNSEAC HINDS-i PAGE 2 NOTEPAD... INSURER'S NWE Hinderliter de Llamas & _ OP ID: AL DATE 11114114 nd in regards to Auto liability per endorsement. day notice of cancellation applies except *10 days for non payment POLICY NUMBER: BKW55740802 COMMERCIAL GENERAL LIABILITY CG 20 26 07 04 THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY. _ __ This endorsement modifies insurance provided under the following: COMMERCIAL GENERAL LIABILITY COVERAGE PART SCHEDULE Name Of Additional Insured Person(s) Or Oraanization(s) I City of Huntington Beach, its officers, elected or appointed officials, employees, agents and volunteers 2000 Main Street Huntington Beach, CA 92648 Information required to complete this Schedule, if not shown above, will be shown in the Declarations. J Section II — Who Is An Insured is amended to in- clude as an additional insured the person(s) or organi- zations) shown in the Schedule, but only with respect to liability for "bodily injury', "property damage" or "personal and advertising injury' caused, in whole or in part, by your acts or omissions or the acts or omis- sions of those acting on your behalf: A. In the performance of your ongoing operations; or B. In connection with your premises owned by or rented to you. CG 20 26 07 04 0 ISO Properties, Inc., 2004 Page 1 of 1 11 POLICY NUMBER: BAS55740802 COMMERCIAL AUTO CA 20 48 02 99 THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY. This endorsement modifies insurance provided under the following: BUSINESS AUTO COVERAGE FORM GARAGE COVERAGE FORM MOTOR CARRIER COVERAGE FORM TRUCKERS COVERAGE FORM With respect to coverage provided by this endorsement, the provisions of the Coverage Form apply unless modi- fied by this endorsement. This endorsement identifies person(s) or organization(s) who are "insureds" under the Who Is An Insured Provi- sion of the Coverage Form. This endorsement does not alter coverage provided in the Coverage Form. This endorsement changes the policy effective on the inception date of the policy unless another date is indicated below. Endorsement Effective: 11/15/2014 - Countersigned By; Authorized Representative) Named Insured: HINDERLITER OE LLAMAS &ASSOCIATES SCHEDULE Name of Person(s) or Organizations):city of Huntington Beach, its officers, elected or appointed officials, employees, agents and volunteers 2000 Main Street, Huntington Beach, CA 92648 (If no entry'appears above, information required to complete this endorsement will be shown in the Declarations as applicable to the endorsement.) . Each person or organization shown In the Schedule is an ."insured" for Liability Coverage, but only to the extent that person or organization qualifies as an "insured" under the Who Is An Insured Provision contained in Section It of the Coverage Form. CA 20 48 02 99 Copyright, Insurance Services Office, Inc., 1998 Page 1 of 1 , Sul NlY INSURANCE AND INDEMNIFICATION WAIVER MODIFICATION ���REQUEST r. i i 1. Requested by: Jim Sloboian 2. Date: 5-14-4 3. Name of contractor/permittee: Hinderliter, Del -lamas & Associates_(HdL) 4. Description of work to be performed: Municipal Sales and Use Tax Audit Services 5. Value and length of contract: 75.000 over 3 years 6. Waiver/modification request: HDUs professional service liability dedecitble is $25K and the city requires $1 OK. 7. Reason for request and why it should be granted: They meet all other city requirements. 8. ldentifv the risks to the Citv in approvinq this waiver/modification: There is no risk for the 5-14-2014 Date: APPROVALS Approvals must be obtained in the order listed on this form. Two approvals are required for a request to be granted. Approval from the City Administrator's Office is only required if Risk Management and the City Attorney's Office disagree . 1. isk Management f Approved ❑ Denied Signature D to 2. City Attorney's Office 1 pproved ❑ Denied Signatur Date 3. City Manager's Office ❑ Approved ❑ Denied Signature Date If approved, the completed waiverlmodification request is to be submitted to the City Attorney's Office along with the contract for approval. Once the contract has been approved, this form is to be filed with the Risk Management Division of Human Resources Insurance Waiver Form.doc 11 /1712014 5:14:00 PM aka M, �. j CITY OF x BEACH Professional ApprovalForm CFCQ NiY����t�� PAR T I Date: 3/20/2014 Project Manager Name: Carol Molina -Espinoza Requested by Name if different from Project Manager: Jim Slobojan Department: Finance RECEIVED MAR 2 5 2014 Finance Department PARTS I OF THE PROFESSIONAL SERVICES CONTRACTS APPROVAL FORM MUST BE COMPLETED BY THE REQUESTING DEPARTMENT AND SIGNED BY THE CITY MANAGER, FOR APPROVAL, BEFORE PROCEEDING WITH THE SOLICITATION OR CONTRACT PROCESS. PART I MUST BE FILED WITH ALL APPROVED CONTRACTS. 1) Briefly provide the purpose for the agreement: Provide sales tax & use audit consulting services 2) Estimated cost of the services being sought: $ 75,000 3) Are sufficient funds available to fund this contract? ® Yes ❑ No If no, please explain: 4) Check below how the services will be obtained: ❑ A Bid solicitation process in accordance to the MC 3.03.060 procedures will be conducted. ® MC 3.03.08(b) — Other Interagency Agreement procedure will be utilized. ❑ MC 3.03.08 — Contract Limits of $30,000 or less exempt procedure will be utilized. 5) Is this contract generally described on the list of professional service contracts approved by the City Council? If the answer to this question is "No," the contract will require approval from the City Council.) ® Yes _ El No Fiscal S�ceWanager Signature (Purchasing Approval) 6) Amount, Business Unit (8 digits) and Object Code (5 digits) where funds are budgeted (Please note that a budget check will occur at the object code level): Date Account number a Contractual Dollar Amount Business unit. object # Year 1(estimate) Year 2 (estimate) Year 3(estimate) 10035204.69365 $25,000.00 $25,000.00 $25,000.00 $ $ $ udget Appro, D_epartm�t Head n� DirecWof Financ lce_( hature(s) Signature Assistani y Manager's Signature 21MMAoil IMM.RINNIM City Manager's Signature D to Lr to Li Date Date �-&_ Dat professional service approval form - part i.doc REV: December /2013 CITY OF HUNTINGTON BEACH - Professional Service Approval Form PART Il RECEIVED MAY 0 5 2014 Date: 5/2/2014 Project Manager: Carol Molina -Espinoza Requested by Name if different from Project Manager: Jim Slobojan Finance Department Department: Finance PARTS I & II OF THE PROFESSIONAL SERVICES CONTRACTS APPROVAL FORM MUST BE COMPLETED BY THE REQUESTING DEPARTMENT AND SIGNED FOR APPROVAL. PART I & 11 MUST BE FILED WITH ALL APPROVED CONTRACTS. 1) Name of consultant: HDL 2) Contract Number: FIN 2014-07 (Contract numbers are obtained through Finance Administration x 5630) 3) Amount of this contract: $75,000 Account number Contractual Dollar Amount Business unit. object # Year 1(estimate) Year 2 (estimate) Year 3(estimate) 10035204.69365 $25, 000 $25, 000 $25, 000 4) Is this contract less than $50,000? ❑ Yes ® No 5) Does this contract fall within $50,000 and $100,000? ® Yes ❑ No 6) Is this contract over $100,000? ❑ Yes ® No (Note: Contracts requiring City Council Approval need to be signed by the Mayor and City Clerk. Make sure the appropriate signature page is attached to the contract.) 7) Were formal written proposals requested from at least three available qualified consultants? ® Yes ❑ No 8) Attach a list of consultants from whom proposals were requested (including a contact telephone number.) 9). Attach Exhibit A, which describes the proposed scope of work. 10) Attach Exhibit B, which describes the payment terms of the contract. (Purchasing) Budget Ma ger Approval Signature Directo of Finance (or designee Signature s-Z__ - Date Date ,> W / L-( Date 2014 3 yr interagency hdl- part 2.doc REV: December /2013 Attachment # 3 CITY OF HUNTINGTON BEACH PROFESSIONAL SERVICES LISTING FISCAL YEAR 2013/14 Finance Accounting Services Audit Professional Services/Other Professional Services Budget Management Sales tax auditing and consulting services Property tax auditing and consulting services Retiree Insurance Fund (702), Retirement Supplemental (703), Mello Roos (406) Consultinq services Amount Amount Requested Vendor, Requester Date . $140,000 67,000.00 NextLevel Jack Marshal 3/11/2014 42,800.00 Vavrinek, Trine, Dahle 3/12/2014 $20,000 25,000.00 HDL Carol/Jim 3-Yr contract at $25K/yi $20,000 20,000.00 Hinderliter De LI, Jim 3/25/2014 $54,500 Avail Balance 79,700 City of Huntington Beach FY 13114 Funds Available by Business Unit Report 5/5/2014 Object FY 13/14 FY 13/14 FY 13114 FY 13/14 Account Revised Actual Encumbrance Available 10035204 - Budget Management 51110 - Base Salaries 451,550.00 183,343.01 268,206.99 51270 -Other Pay 0.00 2,705.50 -2,705.50 51115 - Additional Pay 0.00 2,705.50 -2,705.50 51100 - Salaries - Permanent -40,307.38 -40,307.38 51100 - Salaries - Permanent 411,242.62 186,048.51 225,194.11 52000 - Salaries - Temporary 25,071.44 -25,071.44 53000 - Salaries - Overtime 0.00 0.00 54110 - Vacation Leave Pay Out 0.00 19,634.10 -19,634.10 54000 - Termination Pay Outs 0.00 19,634.10 -19,634.10 55110 - CalPERS Employer Cost 97,405.00 39,905.33 57,499.67 55120 - Cal PERS Employee Cost 9,125.00 3,917.17 5,207.83 55100 - CaIPERS Payable 106,530.00 43,822.50 62,707.50 55150 - Retirement Supplement 21,762.00 12,747.00 9,015.00 55175 - Workers' Compensation 6,995.00 2,084.03 4,910.97 55255 - Kaiser 4,934.58 -4,934.58 55260 - Blue Shield - HMO 2,072.89 -2,072.89 55265 - PERS Med - Kaiser 3,971.15 -3,971.15 55266 - Teamster - UHC HMO 5,823.14 -5,823.14 55200 - Health Insurance 39,170.00 39,170.00 55200 - Health Insurance 39,170.00 16,801.76 22,368.24 55350 - Vision Care 1,158.00 491.40 666.60 55375 - Disability 2,045.00 1,164.86 880.14 55400 - Dental Insurance 4,896.00 1,960.30 2,935.70 55425 - Retiree Medical 10,529.62 6,142.29 4,387.33 55450 - Life Insurance 358.00 140.72 217.28 55300 - Other Insurances 18,986.62 9,899.57 9,087.05 56010 - Deferred Compensation 254.00 134.04 119.96 56020 - FICA Medicare 6,395.00 3,189.50 3,205.50 55000 - Benefits -17,658.26 -17,658.26 55000 - Benefits 182,434.36 88,678.40 93,755.96 51000 - PERSONAL SERVICES 593,676.98 319,432.45 274,244.53 63000 - Equipment and Supplies 0.00 0.00 68575 - Training - Tuition 740.00 -740.00 68550 - Training 740.00 -740.00 V 68500 - Conferences and Training 740.00 -740.00 r 69365 - Other Professional Services 29,878.68 0.00 -29,878.68---,, 69300 - Professional Services 45,125.00 45,125.00 69300 - Professional Services 45,125.00 29,878.68 0.00 15,246.32 69505 - Cont Svcs - Other 47,096.25 32,374.25 13,072.00 1,650.00 69450 - Other Contract Services 47,096.25 32,374.25 13,072.00 1,650.00 60000 - OPERATING EXPENSES 92,221.25 62,992.93 13,072.00 16,156.32 50000 - EXPENDITURES 685,898.23 382,425.38 13,072.00 290,400.85 Attachment # 3 CITY OF HUNTINGTON BEACH PROFESSIONAL SERVICES LISTING FISCAL YEAR 2013114 Finance [pvision/Fund ,.`� DescriptionAmount Amount Requested 67,000.00 42,800.00 Vendor, Requester NextLevel Jack Marshal Vavrinek, Trine, Dahle Date - 3/11/2014 3/12/2014 _ Accounting Services Audit Professional Services/Other Professional Services _ $140,000 Budget Management Sales tax auditing and consulting services '$20,000 25,000.00 20,000.00 sales tax and aui Carol/Jim Hinderliter De LI, Jim 3-Yr contract at $25K/yi 3/25/20141 Property tax auditing and consulting services $20;000 Retiree Insurance Fund (702), Retirement Supplemental (703), Mello Roos (406) Consultinq services $54,500- Avail Balance 79,700 City of Huntington Beach FY 13/14 Funds Available by Business Unit Report 3/28/2014 Object FY 13/14 FY 13/14 FY 13/14 FY 13/14 Account Revised Actual Encumbrance Available 110035204 - Budget Management 51110 - Base Salaries 451,550.00 142,638.21 308,911.79 51270-Other Pay 0.00 1,830.70 -1,830.70 51115 -Additional Pay 0.00 1,830.70 -1,830.70 51100 - Salaries - Permanent -40,307.38 -40,307.38 51100 - Salaries - Permanent 411,242.62 144,468.91 266,773.71 52000 - Salaries - Temporary 23,869.28 -23,869.28 53000 - Salaries - Overtime 0.00 0.00 54110 - Vacation Leave Pay Out 0.00 16,898.13 -16,898.13 54000 - Termination Pay Outs 0.00 16,898.13 -16,898.13 55110 - CalPERS Employer Cost 97,405.00 30,987.17 66,417.83 55120 - CalPERS Employee Cost 9,125.00 2,986.20 6,138.80 55100 - CalPERS Payable 106,530.00 33,973.37 72,556.63 55150- Retirement Supplement 21,762.00 10,926.00 10,836.00 55175 - Workers' Compensation 6,995.00 1,664.97 5,330.03 55255 - Kaiser 3,941.04 -3,941.04 55260 - Blue Shield - HMO 1,655.53 -1,655.53 55265 - PERS Med - Kaiser 2,713.31 -2,713.31 55266 - Teamster - UHC HMO 4,649.87 -4,649.87 55200 - Health Insurance 39,170.00 39,170.00 55200 - Health Insurance 39,170.00 12,959.75 26,210.25 55350 - Vision Care 1,158.00 381.42 776.58 55375 - Disability 2,045.00 890.30 1,154.70 55400 - Dental Insurance 4,896.00 1,497.46 3,398.54 55425 - Retiree Medical 10,529.62 5,264.82 5,264.80 55450 - Life Insurance 358.00 107.72 250.28 55300 - Other Insurances 18,986.62 8,141.72 10,844.90 56010 - Deferred Compensation 254.00 101.04 152.96 56020 - FICA Medicare 6,395.00 2,562.66 3,832.34 55000 - Benefits -17,658.26 -17,658.26 55000 - Benefits 182,434.36 70,329.51 112,104.85 51000 - PERSONAL SERVICES 593,676.98 255,565.83 338,111.15 63000 - Equipment and Supplies 0.00 0.00 68575 - Training - Tuition 740.00 -740.00 68550 - Training 740.00 -740.00 68500 - Conferences and Training 740.00 -740.00 69365 - Other Professional Services 10,750.00 11,444.29 -22,194.29 69300 - Professional Services 45,125.00 45,125.00 69300 - Professional Services 45,125.00 10,750.00 11,444.29 22,930.71 69505 - Cont Svcs - Other 47,096.25 29,926.25 15,520.00 1,650.00 69450 - Other Contract Services 47,096.25 29,926.25 15,520.00 1,650.00 60000 - OPERATING EXPENSES 92,221.25 41,416.25 26,964.29 23,840.71 50000 - EXPENDITURES 685,898.23 296,982.08 26,964.29 361,951.86 ;01AUFF04 City Council Agenda Report Meeting Date: July 2, 2013 �== Department: Finance f cf�16ER 20•,g9 SUBJECT: AWARD OF CONTRACT FOR SALES TAX AND PROPERTY TAX AUDIT AND REPORTING SERVICES RECOMMENDED ACTION(S): 1. Approve the selection of Hinderliter de Llamas and Associates ("HdL") for Sales Tax and Property Tax Audit and Reporting Services and HdL Coren & Cone for Property Tax Services. 2. Authorize the Mayor to sign, and the City Clerk attest, the agreement with Hinderliter de Llamas and Associates for Sales Tax Services and the agreement with HdL Coren & Cone for Property Tax Services. EXECUTIVE SUMMARY: On April 16, 2013, the City Council approved the Request for Proposals ("RFP") for Sales Tax and Property Tax Audit and Reporting Services. Staff recommends City Council approve a three-year Major Accounts Agreement with Hinderliter, de Llamas and Associates ("HdL") to provide Sales Tax and Property Tax Audit and Reporting Services. Sufficient funds are included in the Proposed Fiscal Year 2013-2014 Operating Budget for these services. BACKGROUND: Services for sales tax auditing and reporting services are currently provided by Hinderliter, de Llamas and Associates ("HdL"). Sales tax auditing and reporting services include quarterly updates regarding sales tax generation for every business in Lake Forest and research on as as -need basis. These updates are useful in identifying sales tax trends, projecting sales tax revenue for budgetary purposes, evaluating loss of revenue from businesses closing or moving, and tracking additional revenue from new businesses. Importantly, these services also include verification that businesses identified as operating within Lake Forest are accurately reported by the State to ensure the appropriate allocation of sales taxes to the City; this service can result in a new, future allocation of funds from the state once the initial misallocations are corrected. The City's current property tax auditing and reporting services provider is MuniServices. Property tax auditing and reporting services include: research regarding property tax issues; the maintenance of a database with all properties located within Lake Forest; reports showing property tax categories; major property taxpayers; any parcels with assessment appeals pending; tracking of property transfers; and, completions of new construction. The services also include parcel location verification ensuring that property taxes are properly allocated to the City and the correction of any misallocations. DISCUSSION: Pursuant to City Council authorization received on April 16, 2013, staff initiated a competitive procurement process to solicit and receive proposals for Sales Tax and Property Tax Audit and Reporting Services for a three-year term with two optional one-year extensions. Two firms responded with proposals, Hinderliter de Llamas and Associates ("HdL") and MuniServices. A selection committee comprised of the Assistant City Manager, Director of Finance, and Accounting Manager reviewed the proposals. Selection Process Both firms met the minimum scoring criteria on the technical proposal review, meaning the firms averaged a minimum of 70 points, which qualified each firm for an interview with the selection committee. The chart below reflects the scores for the proposals, interviews, and the combined score for each firm. Firm Technical Review Qualifications Interview Rater #1 HdL 91 94 185 Rater #2 HdL 83 85 168 Rater #3 HdL 93 92 185 Total: I I Total: 538 Firm Technical Review Qualifications Interview Rater #1 MuniServices 83.5 80 163.5 Rater #2 MuniServices 80 80 160 Rater #3 MuniServices 89 86 175 Total: Total: 498.5 Upon comparing the combined scores from the proposals and interviews above, the top ranking firm was Hinderliter de Llamas and Associates ("HdL"). HdL is a sales and property tax audit firm with 30 years of experience. HdL has provided sales tax services to the City since 1991 and provided property tax services to the City from 1991 to 2008. At the conclusion of the interview and ranking process, staff reviewed the cost proposals of each firm. The costs of each proposal were broken out into two categories, one for sales tax services and the other for property tax services. Cost Proposal Analysis Sales Tax Services HdL proposes a fee of 15% of all new sales and use tax revenue received by the City as a result of audit and recovery work performed. The audit fee applies to monies received in the first eight consecutive reporting quarters beginning with the receipt of the audit revenue and includes retroactive back quarter adjustments. NluniServices proposes a fee of 20% of all new sales and use tax revenue received by the City as a result of audit and recovery work performed. The audit fee applies to five quarters after the date of correction and all eligible prior quarters back to and including the three quarters prior to the Date of Knowledge quarter. The Date of Knowledge is the quarter during which MuniServices notifies the State Board of Equalization (SBE) of the existence of a misallocation. HdL was $7,200 lower than NluniServices for the annual fee. The annual fee includes ongoing analysis, reports, legislative support, and unlimited access to HdL's team members for sales and use tax related questions. Chart 1 below provides a summary of each firm's Sales Tax fees. Chart 1 — Sales Tax Services Cost Analysis Sales Tax Services HdL NluniServices Audits 15% 20% Annual Pees $4,800 $12,000 Property Tax Services Property tax services are compensated in the same manner as sales tax services. Both firms charge a 25% contingency fee on reallocations for the fiscal year during which the misallocation was discovered. Additionally, both firms also charge an annual fee for reporting services and database management. HdL's annual fee was higher than NluniServices by $10,250. Chart 2 below provides a summary of each firm's property tax fees. Chart 2 — Property Tax Services Cost Analysis Property Tax Services HdL Coren & Cone MuniServices Audits 25% 25% Annual Fees $18,250 $8,000 Cost Proposal Summary Taken together, annual fees for HdL are slightly higher at $23,250 than MuniServices ($20,000). In terms of sales tax services, HdL charges for eight quarters instead of five (MuniServices). However, HdL clients pay a lower contingency fee for sales tax audits (15% vs. 20%) which staff estimates will save the City money over the proposed term of the contract. For comparative purposes and to facilitate the City Council's review of the cost proposal analysis staff combines below Charts 1 and 2 from the previous section of this report. Chart 3 — Summary of Cost Proposal Comparison Sales Tax Services HdL MuniServices Audits 15% 20% Annual Fees $4,800 $12,000 PropertyPropeLty Tax Services Audits 25% 25% Annual Fees $18,250 $8,000 Total $23,250 $20,000 Staff concludes that Hinderliter de Llamas and Associates ("HdU) best suits the needs of the City and recommends a sales and property tax audit and reporting service contract be awarded to that firm. While under the HdL umbrella of companies, the property tax contract component would be with HdL Coren & Cone. By merging both services under the HdL brand, it can integrate the sales and property tax software to maximize revenue collections and save additional staff time by not communicating with two completely different vendors. Additionally, while MuniServices property tax annual fee is lower than HdL, staff notes that MuniServices customer support and timely reporting on issues related to property tax will likely be insufficient for up -coming City requirements related to the new housing sub -divisions in the Opportunities Study Area (OSA). Given the current complexity of California's property tax system, staff feels HdL's advanced software and database technology and the firm's ability to provide timely customer service is a significant value added by the firm. These additional, enhanced services are even more important during the next 3-5 years as roughly 4,000 homes are constructed in the OSA. Staff recommends two agreements be awarded to HdL Companies, one for sales tax audit and reporting services (HdL Sales Tax attachment 2) and the other for property tax audit and reporting services (HdL Coren & Cone attachment 3). References Staff checked several references for HdL (Attachment 1). Among many others, HdL provides sales tax and property tax audit and reporting services for the cities of Mission Viejo, Rancho Santa Margarita, and Tustin. All three cities highly recommend this service provider. HdL responds promptly to requests and provides thorough, accurate work. Based on the references checked, staff believes HdL would be able to provide high quality services meeting the needs of the City. FISCAL IMPACT: The cost of sales tax audit services is a 15% contingency fee of the misallocated sales taxes discovered and $4,800 per year for information and reporting services. The cost of property tax audit services is a 25% contingency fee on reallocations of property taxes and $18,250 per year for information and reporting services. Staff budgeted $28,800 in the adopted Fiscal Year 2013-14 operating budget for the proposed services; consequently, sufficient funds will exist upon adoption of the budget. ATTACHMENTS: 1. References 2. Agreement with HdL (Sales Tax) 3. Agreement with HdL Coren and Cone (Property Tax) Submitted By: Keith D. Neves, Director of Finance/City Treasurer Approved By: Robert C. Dunek, City Manager Aklachment I REFERENCE DIECKS 14 dt COREIN & CONE PROPERTY TAX ALJ DIT Aria REPORTING SE RVICES CITY OF LAKE FOREST PROFESSIONAL CONSULTANT SERVICES AGREEMENT PARTIES AND DATE. This Agreement is made and entered into this day of - 2013, by and between the City of Lake Forest, a municipal corporation, organized under the laws of the State of California, with its principal place of business at 25550 Commercentre Drive, Suite 100, Lake Forest, California, 92630 ("City") and Hinderliter; de Llamas and Associates ("HdL") a California corporation, with its principal place of business at 1340 Valley Vista Drive, Suite 200, Diamond Bar, CA 91765 ("Consultant"), City and Consultant are sometimes individually referred to herein as "Party" and collectively as "Parties." 2. RECITALS. 2.1 Consultant. Consultant desires to perform and assume responsibility for the provision of certain professional Sales Tax consulting services required by the City on the terms and conditions set forth in this Agreement. Consultant represents that it is experienced in providing professional Sales Tax consulting services to public clients, is licensed in the State of California, and is familiar with the plans of City. 2.2 Project. City desires to engage Consultant to render such professional Sales Tax consulting services as set forth in this Agreement. 3. TERMS. 3.1 Scope of Services and Term. 3.1.1 General Scope of Services. Consultant promises and agrees to furnish to the City all labor, materials, tools, equipment, services, and incidental and customary work necessary to fully and adequately supply the professional Sales Tax consulting services necessary for the Project ("Services"). The Services are more particularly described in Exhibit "A" attached Hereto and incorporated herein by reference. All Services shall be subject to; and performed in accordance with, this Agreement, the exhibits attached hereto and incorporated herein by reference, and all applicable local, state and federal laws, rules and regulations. 3.1.2 Term. The term of this Agreement shall be from July 1, 2013 to July 1, 2016, unless earlier terminated as provided herein. The City shall have the unilateral option, at its sole discretion, to renew this Agreement automatically for no more than two additional one- year terms. Consultant shall complete the Services within the term of this Agreement, and shall meet any other established schedules and deadlines. 3.2 Responsibilities of Consultant. 3.21 Independent Contractor; Control and Payment of Subordinates. The Services shall be performed by Consultant or under its supervision. Consultant will determine BBK: June 2010 the means, methods and details of performing the Services subject to the requirements of this Agreement. City retains Consultant on an independent contractor basis and not as an employee. Consultant retains the right to perform similar mrdifferent services for others during the term of this Agreement. Any additional personnel performing the Services under this Agreement ombehalf ofConsultant shall also not beemployees ofCity and shall mtall times be under Consultant's exclusive direction and control, Neither Qty, nor any ofits officials, officers, dinaotore, employees or agents shall have control over the conduct of Consultant or any of Consultant's offioers, emp|oyees, or agents, except as set forth in this Agreement. Consultant shall pay all wages, sa/aries, and other amounts due such personnel inconnection with their performance of Services under this Agreement and as required by law. Consultant shall be responsible for all reports and obligations respecting such additional personne|, induding, but not limited to-, social security texes, income tax withholding, unemployment insmrenos, disability insurance, and workers' compensation insurance. 32.2 Schedule of Services. Consultant shall perform the Services expeditious|y, within the barrn of this Aoreennemt, and in accordance with the Schedule of Services set forth in Exhibit "B" attached hereto and incorporated herein by reference. Consultant represents that it has the professional and technical personnel required to perform the Services in conformance with such conditions. In order to facilitate Consultant's conformance with the Sohedu/e. City shall respond to Consultant's submittals in a timely manner, Upon request of City, Consultant shall provide e more detailed schedule of anticipated performance tomeet the Schedule ofServices. 3.2.3 Conformance to Applicable Reguirements. All work prepared by Consultant shall besubject tothe approval of'City 3.2.4 Substitution of Key Personnel. Consultant has represented to City that certain key personnel will perform and coordinate the Services under this Agreement. Should one ormore ofsuch personnel become unevei|mb|e. Consultant may substitute other personnel of at least equal competence upon written approval of City. In the event that City and Consultant cannot mAnye as to the substitution of hey personnel, Ob/ shall be entitled to terminate this Agreement for cause. As discussed ba|mm' enypennonne| who fail orrefuse to perform the Services in a manner acceptable to the City, or who are determined by the City to be un000peretive, imoompehynt, m threat to the adequate or timely completion of the Project or e threat to the safety of persons or pmpedy, shall be promptly removed from the Project by the Consultant atthe request ofthe City, The key personnel for performance ofthis Agreement are asfollows: Andrew Nickerson, President. 3.25 . The City hereby designates Keith D. Neves. Director of Finance/City Treasurer, or his designee, to act as its representative in all matters pertaining to the administration and performance of this Agreement ("City's Representative"). Cdy'o Representative shall have the power to act on behalf ofthe City for review and approval of all products submitted by Consultant but not the authority to enlarge the Scope of Work or change the total compensation due to Consultant under this Agreement. The City Manager shall be authorized to act on City's behalf and to execute all necessary documents which enlarge the Scope of Work or change the COnmu/tynfs total compensation subject to the provisions contained in Section 3.3 ofthis Agreement. Consultant shall not accept direction or orders from any person other than the City Manager, City's Representative or his/her designee. 32.8, Consultant hereby designates Andrew Nickerson, President, or his designee, to act as its representative for the performance of this 2 Agreement ("Consultant's Representative"). Consultant's Representative shall have full authority to represent and act on behalf of the Consultant for all purposes under this Agreement. The Consultant's Representative shall supervise and direct the Services, using his/her best. skill and attention, and shall be responsible for all means, methods, techniques, sequences, and procedures and for the satisfactory coordination of all- portions of the Services under this Agreement. 3.2.7 Coordination of Services. Consultant agrees to work closely with City staff in the performance of Services and shall be available to City's staff, consultants and other staff at all reasonable times.. 3.2.8 Standard of Care: Performance of Employees: Consultant shall perform all Services under this Agreement in a skillful and competent manner, consistent with the standards generally recognized as being employed by professionals in the same discipline in the State of California. Consultant represents and maintains that it is skilled in the professional calling necessary to perform the Services. Consultant warrants that all employees and subconsultants shall have sufficient skill and experience to perform the Services assigned to. them. Finally, Consultant represents that it, its employees and subconsultants have all licenses, permits, qualifications and approvals of whatever nature that are legally required to perform the Services, and that such licenses and approvals shall be maintained throughout the term of this Agreement. As provided for in the indemnification provisions of this Agreement, Consultant shall perform, at its own cost and expense and without reimbursement from the City, any services necessary to correct errors or omissions which are caused by the Consultant's failure to comply with the standard of care provided for herein. Any employee of the Consultant or its sub -consultants who is determined by the City to be uncooperative, incompetent, a threat to the adequate or timely completion of the Project, a threat to the safety of persons or property, or any employee who fails or refuses to perform the Servicesin a manner acceptable to the City, shall be promptly removed from the Project by the Consultant and shall not be re-employed to perform any of the Services or to work on the Project. 3.2.9 Laws and Regulations. Consultant shall keep itself fully informed of and in compliance with all local, state and federal laws, rules and regulations in any manner affecting the performance of the Project or the Services, including all Cal/OSHA requirements, and shall give all notices required by law. Consultant shall be liable for all violations of such laws and regulations in connection with Services_ If Consultant performs any work knowing it to be contrary to such laws; rules and regulations, Consultant shall be solely responsible for all costs arising therefrom. Consultant shall defend, indemnify and hold City, its officials, directors, officers, employees, agents, and volunteers free and harmless, pursuant to the indemnification provisions of this Agreement, from any claim or liability arising out of any failure or alleged failure to comply with such laws, rules or regulations. 3.2.10 Insurance. 3.2.10.1 Time for Compliance. Consultant shall not commence work under this Agreement until it has provided evidence satisfactory to the City that. it has secured all insurance required under this section. In addition, Consultant shall not allow any subconsultant to commence work on any subcontract until it has provided evidence satisfactory to the City that the subconsultant, has secured all insurance required under this section. 3.2.1Q2 Types of Insurance Required. As a condition precedent to the effectiveness of this Agreement for work to be performed hereunder, and without limiting the BBK: June 2010 indemnity provisions of the Agreement, the Consultant, in partial performance of its obligations under such Agreement, shall procure and maintain in full force and effect during the term of the Agreement the following policies of insurance. If the existing policies do not meet the insurance requirements set forth herein, Consultant agrees to amend, supplement or endorse the policies to do so. (A) Commercial General Liability: Commercial General Liability Insurance which affords coverage at least as broad as Insurance Services Office "occurrence" form CG 0001, or the exact equivalent, and shall be no less than $1,000,000 per occurrence and no less than $2,000,000 in the general aggregate. Defense costs shall be paid in addition to the limits. The policy shall contain no endorsements or provisions limiting coverage for (1) contractual liability; (2) cross liability exclusion for claims or suits by one insured against another; or (3) contain any other exclusion contrary to the Agreement. (B) Automobile Liability Insurance: Automobile Liability Insurance with coverage at least as broad as Insurance Services Office Form CA 0001 covering "Any Auto" (Symbol 1), or the exact equivalent, covering bodily injury and property damage for all activities shall be in an amount of not less than $1,000,000 combined limit for each occurrence. (C) Workers' Compensation:.. Workers' Compensation Insurance, as required by the State of California and Employer's Liability Insurance with a limit of not less than $1,000,000 per accident for bodily injury and disease. (D) Professional Liability: Professional Liability insurance with minimum limits of $1,000,000, Covered professional services shall specifically include all work to be performed under the Agreement and delete any exclusions that may potentially affect the work to be performed (for example, any exclusions relating to lead, asbestos, pollution, testing, underground storage tanks, laboratory analysis, soil work, etc.). If coverage is written on a claims -made basis, the retroactive date shall precede the effective date of the initial Agreement and continuous coverage will be maintained or an extended reporting period will be exercised for a period of at least three (3) years from termination or expiration of this Agreement. 3.2.10.3 Endorsements. Required insurance policies shall not be in compliance if they include any limiting provision or endorsement that has not been submitted to the City for approval. (A) The policy or policies of insurance required by Section 3.2.10.2(A). Commercial General Liability, shall be endorsed to provide the following: (1) Additional Insured: The City, its officials, officers, employees, agents, and volunteers shall be additional insureds with regard to liability and defense of suits or claims arising out of the performance of the Agreement. Additional Insured Endorsements shall not (1) be restricted to "ongoing operations"; (2) exclude "contractual liability"; (3) restrict coverage to "sole" liability of Consultant, or (4) contain any other exclusions contrary to the Agreement. (2) Cancellation: Required insurance policies shall not be canceled or the coverage reduced until a thirty (30) day written notice of BBK: June 2010 4 cancellation has been served upon the City except ten (10) days shall be allowed for non-payment of premium. (B) The policy or policies of insurance required by Section 3:2.10.2(B) Automobile Liability, and Section 3.2.10.2(D) Professional Liability, shall be endorsed to provide the following: (1) Cancellation: Required insurance policies shall not be canceled or the coverage reduced until a thirty (30) day written notice of cancellation has been served upon the City except ten (10) days shall be allowed for non-payment of premium. (C) The policy or policies of insurance required by Section 3.2.10.2(C), Workers' Compensation, shall be endorsed to provide the following: (1) Waiver of Subrogation: A waiver of subrogation stating that the insurer waives all rights of subrogation against the indemnified parties. (2) Cancellation: Required insurance policies shall not be canceled or the coverage reduced until a thirty (30) day written notice of cancellation has been served upon the City except ten (10) days shall be allowed for non-payment of premium. 3.2.10.4 Primary and Non -Contributing Insurance. All insurance coverages shall be primary and any other insurance, deductible, or self-insurance maintained by the indemnified parties shall not contribute with this primary insurance. Policies shall contain or be endorsed to contain such provisions. 3.2.10.5 Waiver of Subrogation. Required insurance coverages shall not prohibit Consultant from waiving the right of subrogation prior to a loss. Consultant shall waive all subrogation rights against the indemnified parties. Policies shall contain or be endorsed to contain such provisions. 3.2.10.6 Deductible. Any deductible or self -insured retention must be approved in writing by the City and shall protect the indemnified parties in the same manner and to the same extent as they would have been protected had the policy or policies not. contained a deductible or self -insured retention. 3.2.10.7 Evidence of Insurance. The Consultant, concurrently, with the execution of the Agreement, and as a condition precedent to the effectiveness thereof, shall deliver either certified copies of the required policies, or original certificates and endorsements on forms approved by the City. The certificates and endorsements for each insurance policy small be signed by a person authorized by that insurer to bind coverage on its behalf. At least fifteen (15 days) prior to the expiration of any such policy, evidence of insurance showing that such insurance coverage has been renewed or extended shall be filed with the City. If such coverage is cancelled or reduced, Consultant shall, within ten (10) days after receipt of written notice of such cancellation or reduction of coverage, file with the City evidence of insurance showing that the required insurance has been reinstated or has been provided through another insurance company or companies. BBK: June 2010 3.2.10.8 Failure to Maintain Coverage. Consultant agrees to suspend and cease all operations hereunder during such period of time as the required insurance coverage is not in effect and evidence of insurance has not been furnished to the City. The City shall have the right to withhold any payment due Consultant until Consultant has fully complied with the insurance provisions of this Agreement. In the event that the Consultant's operations are suspended for failure to maintain required insurance coverage, the Consultant shall not be entitled to an extension of time for completion of the Services because of production lost during suspension. 3.2,10.9 Acceptability of Insurers. Each such policy shall be from a company or companies with a current A.M. Best's rating of no less than AVII and authorized to do business in the State of California; or otherwise allowed to place insurance through surplus line brokers under applicable provisions of the California Insurance Code or any federal law. 3.2.10.10 Insurance for Subconsultants. All Subconsultants shall be included as additional insureds under the Consultant's policies, or the Consultant shall be responsible for causing Subconsultants to purchase the appropriate insurance in compliance with the terms of these Insurance Requirements, including adding the City as an Additional Insured to the Subconsultant's policies. Consultant shall provide to City satisfactory evidence as required under Section 3.2.10.1 of this Agreement. 3.2.11 Safety. Consultant shall execute and maintain, its work so as to avoid injury or damage to any person or property. In carrying out its Services, the Consultant shall at all times be in compliance with all applicable local, state and federal laws, rules and regulations, and shall exercise all necessary precautions for the safety of employees appropriate to the nature of the work and the conditions under which the work is to be performed. Safety precautions, where applicable, shall include, but shall not be limited to: (A) adequate life protection and life saving equipment and procedures; (B) instructions in accident prevention for all employees and subconsultants, such as safe walkways, scaffolds, fall protection ladders, bridges, gang planks, confined space procedures, trenching and shoring, equipment and other safety devices, equipment and wearing apparel as are necessary or lawfully required to prevent accidents or injuries; and (C) adequate, facilities for the proper inspection and maintenance of all safety measures. 3.3 Fees and Payments. 3.3.1 Compensation. Consultant shall receive compensation, including authorized reimbursements, for all Services rendered under this Agreement at the rates set forth in Exhibit "C" attached hereto and incorporated herein by reference. The total compensation shall not exceed one hundred thirty three thousand two hundred dollars ($133,200) without written approval of the City Council or City Manager as applicable. Extra work may be authorized, as described below, and if authorized, will be compensated at the rates and manner set forth in this Agreement. 3.3.2 Payment of Compensation. Consultant shall submit to City a quarterly invoice which indicates work completed and hours of Services rendered by Consultant. The invoice shall describe the amount of Services provided since the initial commencement date, or since the start of the subsequent billing periods, as appropriate, through the date of the invoice. City shall, within 30 days of receiving such invoice, review the invoice and pay all non -disputed and approved charges thereon. If the City disputes any of Consultant's fees, the City shall give written notice to Consultant within thirty (30) days of receipt of an invoice of any disputed fees BBK: June 2010 set forth therein. 3.3.3 Reimbursement for Expenses. Consultant shall not be reimbursed for any expenses unless authorized in writing by City, or included in Exhibit "C" of this Agreement. 3.3.4 Extra Work. At any time during the term of this Agreement, City may request that Consultant perform Extra Work. As used herein, "Extra Work" means any work which is determined by City to be necessary for the proper completion of the Project, but which the Parties did not reasonably anticipate would be necessary at the execution of this Agreement. Consultant shall not perform, nor be compensated for, Extra Work without written authorization from the City. For agreements in excess of $30,000.00, the City Manager may approve additional work not to exceed 10% of the original Agreement compensation, ($13,320), as set forth in Section 3.3.1. Any additional work in excess of this amount shall be approved by the City Council. 3.3.5 Rate Increases. In the event that this Agreement is renewed pursuant to Section 3.1.2, the rate set forth in Exhibit "C" may be adjusted each year at the time of renewal as set forth in Exhibit "C." 3.3.6 Prevailing Wages. Consultant is aware of the requirements of California Labor Code Section 1720, et seq., and 1770, et seg., as well as California Code of Regulations, Title 8, Section 16000, et seq., ("Prevailing Wage Laws"), which require the payment of prevailing wage rates and the performance of other requirements on "public works" and "maintenance" projects. If the Services are being performed as part of an applicable "public works" or "maintenance" project, as defined, by the Prevailing Wage Laws, and since the total compensation is $1,000 or more, Consultant agrees to fully comply with such Prevailing Wage Laws. City shall provide Consultant with a copy of the prevailing rates of per diem wages in effect at the commencement of this Agreement. Consultant shall make copies of the prevailing rates of per diem wages for each craft, classification or type of worker needed to execute the Services available to interested parties upon request, and shall post copies at the Consultant's principal place of business and at the project site. Consultant shall defend, indemnify and hold the City, its officials, officers, employees, agents, and volunteers free and harmless from any claim or liability arising out of any failure or alleged failure to comply with the Prevailing Wage Laws, 3.4 Accounting Records. 3.4.1 Maintenance and Inspection. Consultant shall maintain complete and accurate records with respect to all costs and expenses incurred under this Agreement. All such records shall be clearly identifiable. Consultant shall allow a representative of City during normal business hours to examine, audit, and make transcripts or copies of such records and any other documents created pursuant to this Agreement. Consultant shall allow inspection of all work, data, documents, proceedings, and activities related to the Agreement for a period of three (3) years from the date of final payment under this Agreement. 3.5 General: Provisions. 3.5.1 Termination of Agreement. 3.5.1.1 Grounds for Termination. City may, by written notice to BBK: June 20'0 7 Consultant, terminate the whole or any part of this Agreement at any time and without cause by giving written notice to Consultant of such termination, and specifying the effective date thereof, at least seven (7) days before the effective date of such termination. Upon termination, Consultant shall be compensated only for those services which have been adequately rendered to City, and Consultant shall be entitled to no further compensation. Consultant may not terminate this Agreement except for cause. 3.5.1.2 Effect of Termination. If this Agreement is terminated as provided herein, City may require Consultant to provide all finished or unfinished Documents and Data and other information of any kind prepared by Consultant in connection with the performance of Services under this Agreement. Consultant shall be required to provide such document and other information within fifteen (15) days of the request. 3.5.1.3 Additional Services. In the event this Agreement is terminated in whole or in part as provided herein, City may procure, upon such terms and in such manner as it may determine appropriate, services similar to those terminated. 3.5.2 Delivery of Notices. All notices permitted or required under this Agreement shall be given to the respective parties at the following address, or at such other address as the respective parties may provide in writing for this purpose: Consultant: Hinderliter, de Llamas and Associates 1340 Valley Vista Drive, Suite 200 Diamond' Bar, CA 91765. ATTN.- Andrew Nickerson, President. City: City of Lake Forest 25550 Commercentre Drive, Suite 100 Lake Forest, CA 92630 ATTN: City Clerk Such notice shall be deemed made when personally delivered or when mailed, forty- eight (48) hours after deposit in the U.S. Mail, first class postage prepaid and addressed to the party at its applicable address. Actual notice shall be deemed adequate notice on the date actual notice occurred, regardless of the method of service. 3.5.3 Ownership of Materials.and Confidentiality: 3.5.3.1 Document's & Data; Licensing of Intellectual Property. This Agreement creates a non-exclusive and perpetual license for City to copy, use, modify, reuse, or sublicense any and all copyrights, designs, and other intellectual property embodied in plans, specifications, studies, drawings, estimates, and other documents or works of authorship fixed in any tangible medium of expression, including but not limited to, physical drawings or data magnetically or otherwise recorded on computer diskettes, which are prepared or caused to be prepared by Consultant under this Agreement ("Documents & Data"). Consultantshall require all subconsultants to agree in writing that City is granted a non-exclusive and perpetual license for any Documents & Data the subconsultant prepares under this Agreement. Consultant represents and warrants that Consultant has the legal right to license any and all Documents & Data. Consultant makes no such representation and warranty in regard to Documents & Data which were prepared by design professional& other than Consultant or provided to Consultant: by the City. City shall not be limited in any way in its use of the Documents & Data at any time, BBK: June 2010 8 provided that any such use not within the purposes intended by this Agreement shall be at City's sole risk. 3.5.3.2 Confidentiality. All ideas, memoranda, specifications, plans, procedures, drawings, descriptions, computer program data, input record data, written information, and other Documents & Data either created by or provided to Consultant in connection with the performance of this Agreement shall be held confidential by Consultant. Such materials shall not, without the prior written consent of City, be used by Consultant for any purposes other than the performance of the Services. Nor shall such materials be disclosed to any person or entity not connected with the performance of the Services or the Project. Nothing furnished to Consultant which is otherwise known to Consultant or is generally known, or has become known, to the related industry shall be deemed confidential. Consultant shall not use City's name or insignia, photographs of the Project, or any publicity pertaining to the Services or the Project in any magazine, trade paper, newspaper, television or radio production or other similar medium without the prior written consent of City. 3.5.3.3 Confidential Information. The City shall refrain from releasing Consultant's proprietary information ("Proprietary Information") unless.the City's legal counsel determines that the release of the Proprietary Information is required by the California Public Records Act or other applicable state or federal law, or order of a court of competent jurisdiction, in which case the City shall notify Consultant of its intention to release Proprietary Information. Consultant shall have five (5) working days after receipt of the Release Notice to give City written notice of Consultant's objection to the City's release of Proprietary Information. Consultant shall indemnify, defend and hold harmless the City, and its officers, directors, employees, and agents from and against all liability, loss, cost or expense (including attorneys fees) arising out of a legal action brought to compel the release of Proprietary Information. City shall not release the Proprietary Information after receipt of the Objection Notice unless either: (1) Consultant fails to fully indemnify, defend (with City's choice of legal counsel), and hold City harmless from any legal action brought to compel such release, and/or (2) a final and non - appealable order by a court of competent jurisdiction requires that City release such information. 3.5.4 Harassment Policy. Consultant shall provide a copy of the City's Harassment Policy to each of its employees assigned to perform the tasks under this Agreement. Consultant shall submit to the Citys Personnel Manager a statement signed by each of its employees who are assigned to perform the Services under this Agreement certifying receipt of City's Harassment Policy and certifying that they have read the Harassment Policy. A finding by the City that any of Consultant's employees has harassed a City employee shall be grounds for appropriate discipline, up to and including such employee's removal from performance of this Agreement at City's request. 3.5.5 Fraud Policy. Consultant shall provide a copy of the City's Fraud Policy to each of its employees assigned to perform the tasks under this Agreement. Consultant shall submit to the City's Personnel Manager a statement signed by Consultant and by each of its employees who are assigned to perform the Services under this Agreement certifying receipt of City's Fraud Policy and certifying that they have read the Fraud Policy. A finding by the City that any of Consultant's employees have committed fraud against the City shall be grounds for appropriate discipline, up to and including such employee's removal from performance of this Agreement at City's request. Consultant shall reimburse the City for any costs and expenses associated with fraud against the City. BBK: June 2010 9 3.5.6 Cooperation: Further Acts. The Parties shall fully cooperate with one another, and shall take any additional acts or sign any additional documents as may be necessary, appropriate or convenient to attain the purposes of this Agreement. 3.5.7 Attorney's Fees. If either party commences an action against the other party, either legal, administrative or otherwise, arising out of or in connection with this Agreement, the prevailing party in such litigation shall be entitled to have and recover from the. losing party reasonable attorney's fees and all other costs of such action. 3.5.8 Indemnification. 3.5.8.1 Scope of indemnity. To the fullest extent permitted by law, Consultant shall defend, indemnify and hold the City, its directors, officials, officers, employees, volunteers and agents free and harmless from any and all claims, demands, causes of action, costs, expenses, liability, loss, damage or injury of any kind, in law or equity, to property or persons, including wrongful death, in any manner arising out of, pertaining to, or incident to any alleged acts, errors or omissions, or willful misconduct of Consultant, its officials, officers„ employees, subcontractors, consultants or agents in connection with the performance of the Consultant's Services, the Project or this Agreement, including without limitation the payment of all consequential damages, expert witness fees and attorneys fees and other related costs and expenses. Notwithstanding the foregoing, to the extent Consultant's Services are subject to Civil Code Section 2782.8, the above indemnity shall be limited, to the extent required by Civil Code Section 2782.8, to claims that arise out of, pertain to, or relate to the negligence, recklessness. or willful misconduct of the Consultant. 3.5.8.2 Additional Indemnity Obligations. To the fullest extent permitted by law, Consultant shall defend, with counsel of City's choosing and at Consultant's own cost, expense and risk, any and all claims, suits, actions or other proceedings of every kind covered by Section 3.5.8.1 that may be brought or instituted against City or its directors, officials, officers, employees, volunteers and agents. Consultant shall pay and satisfy any judgment, award or decree that may be rendered against City or its directors, officials, officers, employees, volunteers and agents as part of any such claim, suit, action or other proceeding. Consultant shall also reimburse City for the cost of any settlement paid by City or its directors, officials, officers, employees, agents or volunteers as part of any such claim, suit, action or other proceeding. Such reimbursement shall include payment for City's attorney's fees and costs, including expert witness fees. Consultant shall reimburse City and its directors, officials, officers, employees, agents, and/or volunteers, for any and all legal expenses and costs incurred by each of them in connection therewith or in enforcing the indemnity herein provided. Consultant's obligation to indemnify shall not be restricted to insurance proceeds, if any, received by the City, its directors; officials officers, employees, agents, or volunteers. 3.5.9 Entire Agreement. This Agreement contains the entire Agreement of the parties with respect to the subject matter hereof, and supersedes all prior negotiations, understandings or agreements. This Agreement may only be modified by a writing signed by both parties. 3.5.10 Governing Law. This Agreement shall be governed by the, laws of the State of California. Venue shall be in Orange County. 3.5.11 Time of Essence. Time is of the essence for each and every provision of this Agreement. BBK: June 2010 10 3.5.12 City's Right to Employ Other Consultants. City reserves right to employ other consultants in connection with this Project. 3.5.13 Successors and Assigns. This Agreement shall be binding on the successors and assigns of the parties. 3.5.14 Assignment or Transfer. Consultant shall not assign, hypothecate, or transfer, either directly or by operation of law, this Agreement or any interest herein without the prior written consent of the City. Any attempt to do so shall be null and void, and any assignees, hypothecates or transferees shall acquire no right or interest by reason of such attempted assignment, hypothecation or transfer. 3.5.15 Construction; References; Captions. Since the Parties or their agents have participated fully in the preparation of this Agreement, the language of this Agreement shall be construed simply, according. to its fair meaning, and not strictly for or against any Party. Any term referencing time, days or period for performance shall be deemed calendar- days and not work days. All references to Consultant include all personnel, employees, agents, and subconsultants of Consultant, except as otherwise specified in this Agreement. All references to City include its elected officials, officers, employees, agents, and volunteers except as otherwise specified in this Agreement. The captions of the various articles and paragraphs are for convenience and ease of reference only, and do not define, limit, augment, or describe the scope, content, or intent of this Agreement. 3.5.16 Amendment; Modification. No supplement, modification, or amendment of this Agreement shall be binding unless executed in writing and signed by both Parties. 3.5.17 Waiver. No waiver of any default shall constitute a waiver of any other default or breach, whether of the same or other covenant or condition. No waiver, benefit, privilege, or service voluntarily given or performed by a Party shall give the other Party any contractual rights by custom, estoppel, or otherwise. 3.5.18 No Third -Party Beneficiaries. There are no intended third party beneficiaries of any right or obligation assumed by the Parties. 3.5.19 Invalidity; Severability. If any portion of this Agreement is declared invalid, illegal, or otherwise unenforceable by a court of competent jurisdiction, the remaining provisions shall continue in full force and effect. 3.5.20 Prohibited Interests. Consultant maintains and warrants that it has not employed nor retained any company or person, other than a bona fide employee working solely for Consultant, to solicit or secure this Agreement. Further, Consultant warrants that it has not paid nor has it agreed to pay any company or person, other than a bona fide employee working solely for Consultant, any fee, commission, percentage, brokerage fee, gift or other consideration contingent upon or resulting from the award or making of this Agreement. For breach or violation of this warranty, City shall have the right to rescind this Agreement without liability. For the term of this Agreement, no member, officer or employee of City, during the term of his or her service with City, shall have any direct interest in this Agreement, or obtain any present or anticipated material benefit arising therefrom. 3.5.21 E_gual Opportunity Employment. Consultant represents that it is an equal opportunity employer and it shall not discriminate against any subconsultant, employee or BBK: June 2010 11 applicant for anlpoymmrd because of race, meligion, onloc neUome| origin, handbep, ancestry, sex orage, Such non'dioohmination shall include, but not belimited to, all activities related to initial emp\oyment, upgrading, demotion, transfer, recruitment or recruitment advertising, layoff or termination. Consultant shall also comply with all relevant provisions of City'a Minority Business Enterprise program, Affirmative Action Plan or other related programs or guidelines currently ineffect orhereinafter enacted. 3.5.22 Labor Certification, By its signaturehenaunder Consultant certifies that it is aware of the provisions of Section 3700 of the California Labor Code which require every employer to be insured against liability for Worker's Compensation or to undertake self- insurance in oocondenma with the provisions of that Code, and agrees to comply with such provisions before commencing the performance ofthe Services. 3.5.23 Authority to Enter Agreement. Consultant has all requisite power and authority to conduct its business and to sxeoute, de|ivar, and perform the Agreement. Each Party warrants that the individuals who have signed this Agreement have the legal power, right, and authority tomake this Agreement and bind each respective Party. 3.5.24 Cou.nterparts. This Agreement may besigned in comnterparts, each of which shall constitute anoriginal, 3.6 Subcontracting. 3,61 Prior Approval Required. Consultant shall not subcontract any portion of the work required bvthis Agreement, except as expressly stated herein, without prior written approval of City. Subcontracts, if any, shall contain a provision making them subject to all provisions stipulated in this Agreement, CITY OF LAKE FOREST Scott Vuigta.Mayor .� Attest: � City Clerk Approved as to Form: ` Bv . City Attorney 12 H/NDER0TER,DELLAMAS AND ASSOCIATES `` ~\ BV- Andrew Nickerson, President Jeff r Szhmehr, Chief Financial EXHIBIT "A" SCOPE. OF SERVICES Consultant shall provide but not be limited to the following scope of services: Sales Tax 1. Misallocated Revenue a. Identification and correction i) Identify and correct the sales/use tax reporting errors of businesses within the City that are not properly registered based on their business activities in the City. ii) Identify and correct the reporting of businesses that are improperly reporting tax to state and county pools (i.e. classifying sales tax as use tax), thereby depriving the City of sales tax revenue. iii) Detect, document and correct sales/use tax reports errors and omissions in order to generate new, previously unrealized revenue for the City. iv) Determine if the State Board of Equalization ("SBOE") had prior knowledge -of the error(s), which could entitle the City to collect revenue from additional periods. b. Monitor and analyze the quarterly distribution reports with a focus on the following: i) Those accounts with previously reported point -of -sale distribution errors to ensure that the corrections are made for current quarters and all eligible back quarters. ii) Those major accounts comprising 90% or more of the City's total sales and use tax revenue to identify any irregularities. or unusual deviations from the normal pattem (e.g. negative funds transfers, significant decreases, unusual increases. etc.) and ensure that the City is not receiving less revenue than it is entitled to receive. c. Identify opportunities for the City to recover the local allocation on purchase transactions subject to tax, and facilitate the recovery of such funds. d. Assist the City with strategies to preserve and enhance sales and use tax generated by existing businesses within the City. 2. Sales And Use Tax Reporting Services a. Provide an electronic database of the City's sales and use tax. data to the City to facilitate monitoring, analysis and forecasting. The database will include the following features at a minimum: i) All sales tax producers in the City, including business name, address, SBOE account number and current and historical sales tax allocations. ii) Quarterly updates. iii) Ability for the City to create and maintain subsets of the information based on geographic features. iv) Ability to define and print reports. v) Ability to export all data to a spreadsheet. BBK: June 2010 A-1 b. Provide written quarterly sales tax reports and attend quarterly meetings with the City bzdiscuss activity inthe reports. The reports will include the following: i) Top sales tax generators ranked bythe amount ofsales and use tax produced. ii) Analysis of sales trends by business category, identifying by business the major increases and decreases each quarter. iii) Comparisons toother local, county and state jurisdictions. iv) Sales and use tax projections, updated quarterly. v) Information regarding state and federal legislative issumm, including an analysis of their potential impact mnthe City, vi) Other reports oamutually agreed upon. 3. On -Going Consultation a. During the term of the contract, Consultant shall serve as the City'eresource staff on EXHIBIT "B" SCHEDULE OF SERVICES Consultant shall provide the services described in Exhibit "A" as directed by the City. BEK: June 2010 B-11 EXHIBIT "C" COMPENSATION Consultant shall be paid for services rendered in accordance with Section 3.3 of the Agreement„ and as described above under Scope of Work, the not -to -exceed fee of one hundred thirty three thousand two hundred dollars ($133,200) over the entire term of the Agreement. Consultant will be paid as set forth below. CONTRACTOR shall establish the sales and transactions tax databases, shall provide the ongoing reports and analysis and shall make available the computer software program and databases referenced above for a fee of $400 per month, commencing with the month of the Effective Date (hereafter referred to as "monthly fee"). The monthly fee shall be invoiced quarterly in arrears, and shall be payable no later than 30 days after invoice date. The monthly fee shall increase annually following the month of the Effective Date by the percentage increase in the `CPI" for the preceding twelve month period. In no event shall the monthly fee be reduced by this calculation. For purposes of this Agreement, the "CPI" shall mean the Consumer Price Index - All Urban Consumers for the surrounding statistical metropolitan area nearest CITY, All Items (1982-84 = 100), as published by the U.S. Department of Labor, Bureau of Labor Statistics, or, if such index should ceased to be published, any reasonably comparable index selected by CONTRACTOR. CONTRACTOR shall be further paid 15% of all new and recovered sales, transactions and/or use tax revenue received by the CITY as a result, in whole or in part, of audit and recovery work performed by CONTRACTOR (hereafter referred to as "audit fees"), including any reimbursement from the Sales and Use Tax Compensation Fund as outlined in Section 97.68 of the Revenue and Taxation Code, In the event that CONTRACTOR is responsible, in whole or in part, for an increase in the tax reported by businesses already properly making tax payments to the CITY, it shall be CONTRACTOR'S responsibility to separate and support the incremental amount that is attributable, in whole or in part, to its efforts prior to the application of the audit fee. Said audit fees will apply to state fund transfers received for back quarter reallocations and monies received in the first eight consecutive reporting quarters following completion of the audit by CONTRACTOR and confirmation of corrections by the State Board of Equalization. CONTRACTOR shall provide CITY with an itemized quarterly invoice showing all formula calculations and amounts due for audit fees, which shall be payable no later than 30 days following invoice date. CONTRACTOR shall obtain CITY approval prior to beginning the work of correcting tax reporting methodology or "point of sale" for specific businesses where said payment of the percentage fee will be expected. Said approval shall be deemed given when the City Manager, or his designated representative, signs a Sales Tax Audit Authorization form, a copy of which is attached as "Exhibit A." CITY shall pay audit fees upon CONTRACTOR'S submittal of evidence of State Fund Transfers and payments to CITY from businesses identified in the audit and approved by the CITY. The audit fees shall be payable on all new and/or recovered tax revenues received from approved businesses as a consequence, in whole or in part, of the audit, and even if CITY, of its own volition, assists with the audit, works in parallel with the audit, and/or expends attorney's fees or other out-of-pocket costs in connection with any of the foregoing. The above sums shall constitute full reimbursement to CONTRACTOR for all direct and indirect expenses incurred by CONTRACTOR in performing audits including the salaries of CONTRACTOR'S employees, and travel expenses connected with contacting local and out-of- state businesses and Board of Equalization representatives. 38K: June 2010 C-1 EKH|8R^D~ CONFIDENTIALITY Section 7O58ofthe State ofCalifornia Revenue and Taxation code speoficeUylimits the disclosure of confidential taxpayer information contained 'in the records of the State Board of Equalization. This section specifies the conditions under which a CITY may authorize persons other than CITY officers and employees to examine State Sales and Use Tax records, The following conditions specified in Section 7056 (b), (1) of the State of California Revenue and Taxation Code are hereby made part ofthis agoaemen+.- & CONTRACTOR inauthorized bythis Agreement toexamine sales, use o/ transactions and use tax records of the Board of Equalization provided to CITY pursuant to contract under the Bradley -Burns Uniform Sales and Use Tax Law. B. CONTRACTOR is required to disclose information contained in, or derived from, those sales, use or transactions and use tax records only to an officer or employee of the CITY who isauthorized byresolution 0oexamine the information. C� CONTRACTOR inprohibited from per -forming consulting services for a retailer, aadefined inCalifornia Revenue & Taxation Code Section S815.during the term ofthis Agreement. D. CONTRACTOR is prohibited from retaining 'the information contained in, or derived from those sales or transactions and use tax records, after this Agreement has expired. Information obtained by examination of Board of Equalization records shall be used only for purposes related to collection of local sales and use tax or for other governmental functions of the CITY as set forth by resolution adopted pursuant to Section 7056 (b) of the Revenue and Taxation Code. The resolution shall designate 'the CONTRACTOR asoperson authorized to examine sales and use tax records and certify that Lhis Agreement meets the requirements set forth above and inSection 7058(b) (1)ofthe Revenue and iaxadonCode.