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Hinderliter, De Llamas and Associates - 2020-08-01
f,. r fWMOV&'D -7--0 City of Huntington Beach File #: 20-1753 MEETING DATE: 7/20/2020 REQUEST FOR CITY COUNCIL ACTION SUBMITTED TO: Honorable Mayor and City Council Members SUBMITTED BY: Oliver Chi, City Manager PREPARED BY: Dahle Bulosan, Chief Financial Officer Subject: Approve and authorize execution of a Professional Services Contract between the City of Huntington Beach and Hinderliter, De Llamas and Associates, for Sales and Use Tax Auditing Services Statement of Issue: City Council approval is requested to authorize a three-year professional services contract between the City and Hinderliter, De Llamas and Associates (HdL) to provide professional sales and use tax auditing services. Financial Impact: The proposed new contract includes an annual fixed fee for a total of$16,200 in fixed fees. In addition, HDL would receive 15 percent of any new sales and use tax revenue received by the City as a result of its extensive audit and sales and use tax recovery work, if the tax recovery work is approved by the State Board of Equalization (BOE). This audit fee applies to additional monies received in the first six consecutive reporting quarters beginning with the receipt of the audit revenue, and includes retroactive back-quarter adjustments obtained by the firm. Sufficient appropriation ($75,000 per year for three years) is budgeted in the Finance Department (account 10035201) for year one of the contract. Future years of the contract will be funded through out-year budgets to cover the remaining contract commitment. Payments will only be made for audit recoveries if approved by the BOE and after the revenue has been received by the City. The City received approximately $1.4 million in additional sales tax revenue from a comprehensive multi-year audit recovery project performed by HdL. This recovery was performed under the current contract with HDL that is expiring on July 31, 2020. Recommended Action: Approve and authorize the Mayor and City Clerk to execute a "Professional Services Contract Between the City of Huntington Beach and Hinderliter, De Llamas and Associates, for Sales and Use Tax Auditing Services." Alternative Action(s): City of Huntington Beach Page 1 of 4 Printed on 7/17/2020 powered LegistarTM File #: 20-1753 MEETING DATE: 7/20/2020 Do not approve the recommended action, and direct staff accordingly. Analysis: The City of Huntington Beach's FY 2020/21 Adopted Budget reflects $42.2 million in projected sales and use tax revenue. This revenue is deposited into the City's General Fund and helps to finance core services, such as public safety, recreation, library, public works and other community programs. Ensuring the City receives its fair share of funding is critical as each dollar helps to fund these essential services. The State Board of Equalization (BOE) determines all sales and use tax revenues remitted to local governments; however, occasionally mistakes do occur. To ensure that allocations made by the BOE are as accurate as possible, the City has utilized the services of HdL since 1988 to act on behalf of the City to pursue misallocated funds. The City's most recent contract with HdL is a three-year contract, which ends on July 31, 2020. To ensure competitive pricing going forward, and re-evaluate the existing pool of firms providing sales tax auditing services, a Request for Proposals (RFP) was issued on April 23, 2020, to reconsider the pool of vendors that are eligible to perform this service. As a result of the RFP, proposals were received from three firms: Hinderliter, de Llamas and Associates (HdL); MuniServices, LLC; and Sotomayor & Associates. The proposals were evaluated by a committee of Finance Department and Administration Department staff on the basis of the following: 1) Ability to provide the required services; 2) Approach to accomplishing the work plan; 3) Experience in providing similar services to other jurisdictions successfully; and 4) Cost. HdL is recommended as the chosen firm based on the complete responsiveness to the RFP requirements, and their experience in providing the required services. After a competitive RFP process, the City is requesting approval to enter into a three-year professional services agreement with HdL totaling $225,000. Currently, 500 local government agencies in 11 states 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 client's behalf. The audit recovery service has a 15 percent fee for all revenue recovered, up to a maximum of six quarters, due to the extensive work and documentation it entails, as well as testifying before the BOE if needed. This specialized firm identifies and corrects various tax allocation errors including, but not limited to, the following: • Sales reported as "use tax" transactions. • "Point of Sale" revenues misreported to administrative offices or other locations. • Misallocations occurring because sales from multiple retail outlets, order desk, 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 sales" but not identified as such. City of Huntington Beach Page 2 of 4 Printed on 7/17/2020 poweredlo LegistarT" File #: 20-1753 MEETING DATE: 7/20/2020 • Misallocations that occur due to zip code, boundary, or jurisdictional discrepancies. Below is a summary of the fixed cost and recovery fees responsive to the Request for Proposal: Consultant Annual Flat Fee Recovery Fees Dther HdL Year 1: $ 0 15% contingency fee ontingency applies to 6 quarters Year 2: $ 6,000 15% contingency fee Dontingency applies to 6 quarters Year 3: $10.200 15% contingency fee ontingency applies to 6 quarters Vendor#2 $5,000 % contingency fee ontingency applies to 5 quarters after the Date of Subject to annual orrection and all eligible prior quarters back to CPI Eind including the 3 quarters prior to the Date of Knowledge quarter with a maximum of 9 total uarter Staff analyzed and reviewed the proposals based on a variety of factors, including the consultant's responsiveness to the RFP; qualifications and relevant experience; references; and resumes of key staff. Staff is recommending HdL to provide Sales and Use Tax Auditing Services as defined in Exhibit A and Exhibit B of the contract. HdL's experience in identifying 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, is exceptional. The requested contract is to compensate HdL for audit activities that result in additional revenues to the City. Under the current three-year contract, HdL recovered approximately $1.4 million in revenue from the BOE on behalf of the City of Huntington Beach. Please note that procedures are in place by the City's Finance Department to help ensure that HdL is only paid for additional tax revenue received by the City attributable to their efforts. Staff has created an internal multi-step procedure to confirm amounts HdL submits for payment including obtaining copies of the BOE letters to HdL that confirm BOE approval of their audit findings made on behalf of the City. 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 detailed proprietary sales and use tax reports provided by the BOE. Environmental Status: Not applicable. Strategic Plan Goal: Enhance and maintain high quality City services Enhance and maintain the infrastructure Strengthen long-term financial and economic sustainability Enhance and modernize public safety service delivery Attachment(s): 1. Professional Services Contract between the City of Huntington Beach and Hinderliter, De City of Huntington Beach Page 3 of 4 Printed on 7/17/2020 powered7q Legistar'"^ I File #: 20-1753 MEETING DATE: 7/20/2020 Llamas and Associates for Sales and Use Tax Auditing Services 2. Professional Services Rating Sheets City of Huntington Beach Page 4 of 4 Printed on 7/17/2020 powered74 LegistarTM PROFESSIONAL SERVICES CONTRACT BETWEEN THE CITY OF HUNTINGTON BEACH AND HINDERLITER, DE LLAMAS AND ASSOCIATES FOR SALES AND USE TAX AUDITING 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 provide professional sales and use tax auditing 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 ICONSULTANT 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. 2. CITY STAFF ASSISTANCE CITY shall assign a staff coordinator to work directly with CONSULTANT in the performance of this Agreement. Page 1 of 11 3. TERM; TIME OF PERFORMANCE Time is of the essence of this Agreement. The services of CONSULTANT are to commence on August 1, 2020 (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 three 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 Two Hundred Twenty-Five Thousand Dollars ($225,000.00). 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 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 "B." Page 2 of 11 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 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 Page 3 of 11 ($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 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: Page 4 of 11 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. 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 Page 5 of 11 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. 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 Page 6 of 11 overnight carrier or U. S. certified mail-return receipt requested: TO CITY: TO CONSULTANT: City of Huntington Beach Hinderliter, de Llamas and Associates ATTN: Dahle Bulosan ATTN: Andy Nickerson 2000 Main Street 120 S. State College Blvd., Ste 200 Huntington Beach, CA 92648 Brea, CA 92821 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 Page 7 of 11 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 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 Page 8 of 11 CITY; and CITY shall not be liable for payment of any legal services expenses incurred by CONSULTANT. 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 Page 9 of 11 Agreement, and that that party has not executed this Agreement in reliance on any representation, inducement, 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 Council. 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. (SIGNATURES ON SEPARATE PAGE) Page 10 of 11 CONSULTANT, CITY OF HUNTINGTON BEACH, a municipal corporation of the State of HINDERLITER, DE LLAMAS California AND ASSOCIATES Mayor By: — L oy Lamas CEIVED AND FILE: print name ITS: (circle one) Chairman/Presidenv Vice President City Clerk A INITIATED AND APPROVED: 13v: GaryChief Operations Officer print name Chief Financial Officer ITS: (circle one) Secretary/Chief Financial Officer/Asst. Secretary- Treasurer REVIEWED AND APPROVED: City Manager APPROVED AS TO FORM: City Attorney k� COUNTERPART Page 11 of 11 CONSULTANT, CITY OF HUNTINGTON BEACH, a municipal corporation of the State of HINDERLITER, DE LLAMAS California AND ASSOCIATES yor By: RECEIVED AND FILE: print name ITS: (circle one) Chairman/President/Vice President City,Clerk ?�II-b D AND INITIATED AND APPROVED: By: print name ie Financial Officer ITS: (circle one) Secretary/Chief Financial Officer/Asst. Secretary - Treasurer nEEWED A APPROVED: City Manager APPROVED AS TO FORM: City Attorney COUNTERPART Page 11 of 11 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: I. 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 California Department of Tax and Fee Administration(CDFTA). 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, California Department of Tax and Fee Administration(CDFTA) 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 California Department of Tax and Fee Administration(CDFTA)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: As needed EXHIBIT A EXHIBIT "B" Payment Schedule(Hourly Payment) A. Hourly Rate CONSULTANT'S fees for such services shall be based upon the following hourly rate and cost schedule: Principal $325 per hour Programmer$294 per hour Senior Associate$245 per hour Analyst$195 per hour B. Travel Charges for time during travel are not reimbursable. C. Billing 1, All billing shall be done monthly in fifteen (15) minute increments and matched to an appropriate breakdown of the time that was taken to perform that work and who performed it. 2. Each month's bill should include a total to date. That total should provide, at a glance, the total fees and costs incurred to date for the project. 3. A copy of memoranda, letters, reports, calculations and other documentation prepared by CONSULTANT may be required to 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 monthly payment due. Such invoice shall: A) Reference this Agreement; B) Describe the services performed; C) Show the total amount of the payment due; D) 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 E) 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. 1 Exhibit B 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. 2 Exhibit B EXHIBIT "B" Payment Schedule(Fixed Fee Payment) l. CONSULTANT shall be entitled to monthly progress payments toward the fixed fee set forth herein in accordance with the following progress and payment schedules. Fixed Fee per below schedule per month 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. Year 1 -$0; Year 2 - $500; Year 4$850 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 six (6) 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 One Hundred Fifty Thousand Dollars ($150,000.00) 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 California Department of Tax and Fee Administration(CDFTA) 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 finn 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 California Department of Tax and Fee Administration(CDFTA)to the City for those businesses. 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. Exhibit B 2. 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. 3. CONSULTANT shall submit to CITY an invoice for each monthly progress payment due. Such invoice shall: A) Reference this Agreement; B) Describe the services performed; C) Show the total amount of the payment due; D) 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 E) 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. 4. 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 PROFESSIONAL SERVICES CONTRACT BETWEEN THE CITY OF HUNTINGTON BEACH AND HINDERLITER,DE LLAMAS AND ASSOCIATES FOR SALES AND USE TAX AUDITING SERVICES Table of Contents 1 Scope of Services.................................................................................................... 1 2 City Staff Assistance............................................................................................... 2 3 Term;Time of Performance.................................................................................... 2 4 Compensation.......................................................................................................... 2 5 Extra Work.............................................................................................................. 2 6 Method of Payment................................................................................................. 3 7 Disposition of Plans,Estimates and Other Documents........................................... 3 8 Hold Harmless......................................................................................................... 3 9 Professional Liability Insurance.............................................................................4 10 Certificate of Insurance........................................................................................... 5 11 Independent Contractor........................................................................................... 6 12 Termination of Agreement.......................................................1.............................. 6 13 Assignment and Delegation..................................................................................... 6 14 Copyrights/Patents.................................................................................................. 7 15 City Employees and Officials.................................................................................. 7 16 Notices.........................................................................................7 17 Consent.................................................................................................................... 8 18 Modification............................................................................................................ 8 19 Section Headings..................................................................................................... 8 20 Interpretation of this Agreement............................................................................. 8 21 Duplicate Original................................................................................................... 9 22 Immigration.............................................................................................................. 9 23 Legal Services Subcontracting Prohibited................................................................ 9 24 Attorney's Fees...............................................................................................I.......1. 10 25 Survival.................................................................................................................... 10 26 Governing Law.............................................................................................................10 27 Signatories................................................................................................................ 10 28 Entirety..................................................................................................................... 10 29 Effective Date.................................................................................11 (MM/DDfY r A CERTIFICATE OF LIABILITY INSURANCE DAT]/gyO2OYYY) 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). PRODUCER CONTACT NAME: Audrey Curtis Woodruff Sawyer PHONE FAX 2 Park Plaza,Suite 500 No rmi:949.435.7345 ac Ne:949.476.3118 Irvine CA 92614 ADORESs: acurtis@woodruffsawyer.com INSURE S AFFORDING COVERAGE NAIL 0 INSURER A:National Fire Insurance Company of Hartford 20478 INSURED HDLCCMP-01 INSURERB:Continental Insurance Company 35289 Hinderliter de Llamas&Associates HdL Software, LLC. INSURERC:Continental Casualty Company 20443 120 S State College Blvd., Suite 200 INSURERD:Lloyds of London Brea CA 92821 INSURER E:Federal Insurance Company 20281 IINSIJAERF: COVERAGES CERTIFICATE NUMBER:229183472 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 ADDLSUGR ICY EFF POLICY EXP LiR TYPE OF INSURANCE POLICY NUMBER MMI /YYYY MM/D YY LIMITS A X COMMERCIAL GENERAL LIABILITY Y 6056953483 5/26/2020 5/26/2021 EACH OCCURRENCE $1,0D0,0D0 DAMAGE TO RENTED CLAIMS-MADE a OCCUR PREMISES Ea ocarronce $1,000,000 MED EXP(Any oneperson) $15,000 PERSONAL 6ADV INJURY $1.000,000 GENL AGGREGATE LIMIT APPLIES PER: GENERAL AGGREGATE $2,000,000 POLICY❑PRO- JECT ❑LOC PRODUCTS-COMP/OPAGG S2,000,000 X P OTHER $ A AUTOMOBILE LIABILITY Y 6056953466 5/26/2020 51 W021 MBINED SINGLE LIMIT $1,000.000 Ea accident X ANY AUTO BODILY INJURY(Per person) S OWNED SCHEDULED AUTOS ONLY AUTOS BODILY INJURY(Per accident) $ X HIRED NON-OWNED PROPERTY DAMAGE $ AUTOS ONLY AUTOS ONLY Per accident B X UMBRELLA UAB X OCCUR 6056953502 5/26/2020 5/26/2021 EACH OCCURRENCE $3.000.000 EXCESS LIM CLAIMS-MADE AGGREGATE $3,000.000 DIED X I RETENTION$in nnn I $ B WORKERS COMPENSATION 6056953497 5/26/2020 5/26/2021 X g7ATUTE ER B AND EMPLOYERS'LIABILITY YIN 6056677063 5/26/2020 5/26/2021 ANYPROPRIETORIPARTNER/EXECUTIVE ❑ NIA E.L.EACH ACCIDENT $1,000,000 OFFICEWMEMBER EXCLUDED? (Mandatory in NH) E.L.DISEASE-EA EMPLOYEE $1.000.000 If yyes,describe under -- -- DESCRIPTION OF OPERATIONS below I I E.L.DISEASE-POLICY LIMIT $1.000.000 D Professional Liat:ildy/Claim Made MPLI007920 5/26/2020 5/26/2021 Each C11 WApgregale $2.000.000 C CyberLiabidy 6078657761 5126/2020 5/26/2021 CyberLlmit $2.000.000 Crime ' 82556901 5/26/2020 5126/2021 Come Dmill $1,000,000 DESCRIPTION OF OPERATIONS I LOCATIONS)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 included as additional insured as respects to the General Liability and Auto Liability per attached forms. APPROVED AS TO FORM By: ICHAEL E.G S CERTIFICATE HOLDER CANCELLATION r! SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE THE EXPIRATION DATE THEREOF, NOTICE WILL BE DELIVERED IN City of Huntington Beach, Its Officers,elected Or appointed ACCORDANCE WITH THE POLICY PROVISIONS. officials,employees,agents and volunteers 2000 Main Street AUTHORIZED REPRESENTATIVE Huntington Beach CA 92648 ( f ©1988-2015 ACORD CORPORATION. All rights reserved. ACORD 25(2016103) The ACORD name and logo are registered marks of ACORD CNA Business Auto Policy 5. Other Insurance a. For any covered "auto" you own, this Coverage Form provides primary insurance. For any covered "auto" you don't own, the insurance provided by this Coverage Form is excess over any other collectible insurance. However, while a covered "auto" which is a "trailer" is connected to another vehicle, the Covered Autos Liability Coverage this Coverage Form provides for the "trailer" is: (1) Excess while it is connected to a motor vehicle you do not own; or (2) Primary while it is connected to a covered "auto" you own. b. For Hired Auto Physical Damage Coverage, any covered "auto" you lease, hire, rent or borrow is deemed to be a covered "auto" you own. However, any "auto" that is leased, hired, rented or borrowed with a driver is not a covered "auto". c. Regardless of the provisions of Paragraph a. above, this Coverage Form's Covered Autos Liability Coverage is primary for any liability assumed under an "insured contract". d. When this Coverage Form and any other Coverage Form or policy covers on the same basis, either excess or primary, we will pay only our share. Our share is the proportion that the Limit of Insurance of our Coverage Form bears to the total of the limits of all the Coverage Forms and policies covering on the same basis. 6. Premium Audit a. The estimated premium for this Coverage Form is based on the exposures you told us you would have when this policy began. We will compute the final premium due when we determine your actual exposures. The estimated total premium will be credited against the final premium due and the first Named Insured will be billed for the balance, if any. The due date for the final premium or retrospective premium is the date shown as the due date on the bill. If the estimated total premium exceeds the final premium due, the first Named Insured will get a refund. b. If this policy is issued for more than one year, the premium for this Coverage Form will be computed annually based on our rates or premiums in effect at the beginning of each year of the policy. 7. Policy Period, Coverage Territory Under this Coverage Form, we cover "accidents" and "losses" occurring: a. During the policy period shown in the Declarations; and b. Within the coverage territory. The coverage territory is: (1) The United States of America; (2) The territories and possessions of the United States of America; (3) Puerto Rico; (4) Canada; and (5) Anywhere in the world if a covered "auto" of the private passenger type is leased, hired, rented or borrowed without a driver for a period of 30 days or less, provided that the "insured's" responsibility to pay damages is determined in a "suit" on the merits, in the United States of America, the territories and possessions of the United States of America, Puerto Rico or Canada, or in a settlement we agree to. We also cover "loss" to, or "accidents" involving, a covered "auto" while being transported between any of these places. Form No:CA 00 01 10 13 Policy No:6056953486 Policy;Page: 12 of 16 Policy Effective Date:05126i2020 Underwriting Company: National Fire Insurance Company of Hartford, 151 N Franklin St,Chicago, IL Policy Page: 30 of 75 60606 0 Copyright Insurance Services Office,Inc., 2012 CNA Technology General Liability Extension Endorsement K. Other Person Or Organization/Your Work Any person or organization who is not an additional insured under Paragraphs A. through J. above. Such additional insured is an Insured solely for bodily injury, property damage or personal and advertising injury for which such additional insured is liable because of the Named Insured's acts or omissions. The coverage granted by this paragraph does not apply to any person or organization: 1. who is specifically scheduled as an additional insured on another endorsement to this Coverage Part; nor 2. for bodily injury or property damage included within the products-completed operations hazard except to the extent all of the following apply: a. this Coverage Part provides such coverage; b. the written contract or agreement described in the opening paragraph of this ADDITIONAL INSUREDS Provision requires the Named Insured to provide the additional insured such coverage; and c. the bodily injury or property damage results from your work that is the subject of the written contract or agreement, and such work has not been excluded by endorsement to this Coverage Part. 2. ADDITIONAL INSURED-PRIMARY AND NON-CONTRIBUTORY TO ADDITIONAL INSURED'S INSURANCE A. The Other Insurance Condition in the COMMERCIAL GENERAL LIABILITY CONDITIONS Section is amended to add the following paragraph: If the Named Insured has agreed in writing in a contract or agreement that this insurance is primary and non-contributory relative to an additional insured's own insurance, then this insurance is primary, and the Insurer will not seek contribution from that other insurance. For the purpose of this Provision 2., the additional insured's own insurance means insurance on which the additional insured is a named insured. B. With respect to persons or organizations that qualify as additional insureds pursuant to paragraph I.K.of this endorsement,the following sentence is added to the paragraph above: Otherwise, and notwithstanding anything to the contrary elsewhere in this Condition, the insurance provided to such person or organization is excess of any other insurance available to such person or organization. 3. BODILY INJURY—EXPANDED DEFINITION Under DEFINITIONS,the definition of bodily Injury is deleted and replaced by the following: Bodily injury means physical injury, sickness or disease sustained by a person, including death, humiliation, shock, mental anguish or mental injury sustained by that person at any time which results as a consequence of the physical injury,sickness or disease. 4. BROAD KNOWLEDGE OF OCCURRENCE/NOTICE OF OCCURRENCE Under CONDITIONS, the condition entitled Duties in The Event of Occurrence, Offense, Claim or Suit Condition is amended to add the following provisions: A. BROAD KNOWLEDGE OF OCCURRENCE The Named Insured must give the Insurer or the Insurer's authorized representative notice of an occurrence, offense or claim only when the occurrence, offense or claim is known to a natural person Named Insured, to a partner, executive officer, manager or member of a Named Insured, or to an employee designated by any of the above to give such notice. B. NOTICE OF OCCURRENCE CNA74872XX(1-15) Policy No:6056953483 Page 5 of 14 Endorsement No: 1 Effective: 05/26=0 Insured Name: Hinderliter,de Llamas&Associates I HDL Software, LLC Copyright CNA All Rights Reserved. Includes copyrighted material of Insurance Services Office,Inc.,with its permission. POLICY NUMBER: 6056953466 COMMERCIAL AUTO CA20481013 THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY. DESIGNATED INSURED FOR COVERED AUTOS LIABILITY COVERAGE This endorsement modifies insurance provided under the following: AUTO DEALERS COVERAGE FORM BUSINESS AUTO COVERAGE FORM MOTOR CARRIER COVERAGE FORM With respect to coverage provided by this endorsement, the provisions of the Coverage Form apply unless modified by this endorsement. This endorsement identifies person(s)or organization(s)who are"insureds"for Covered Autos Liability Coverage under the Who Is An Insured provision 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. Named Insured: Hlnderliterde Llamas&Associates Endorsement Effective Date: 71912020 SCHEDULE Name Of Person(s)Or Organization(s): 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. Each person or organization shown in the Schedule is Covered Autos Liability Coverage in the Business an"insured"for Covered Autos Liability Coverage,but Auto and Motor Carrier Coverage Forms and only to the extent that person or organization qualifies Paragraph D.2. of Section I — Covered Autos as an "insured" under the Who Is An Insured Coverages of the Auto Dealers Coverage Form. provision contained in Paragraph A.1. of Section If— CA 20 48 10 13 Copyright, Insurance Services Office, Inc.,2011 Page 1 of 1 CNA CNA Paramount Additional Insured - Designated Person or Organization Endorsement This endorsement modifies insurance provided under the following: COMMERCIAL GENERAL LIABILITY COVERAGE PART SCHEDULE Name Of Additional Insured Person Or Organization: city of Huntington Been,its officers,elided or appointed officials.employees,agents and 2000 Main Street Huntington Beach,CA 92648 Information required to complete this Schedule,if not shown above,will be shown in the Declarations. It is understood and agreed that the section entitled WHO IS AN INSURED is amended with the addition of the following: A. The person or organization shown in the Schedule is an Insured, but only with respect to such person or organization's liability for bodily injury, property damage or personal and advertising injury caused in whole or in part, by: the Named Insured's acts or omissions, or the acts or omissions of those acting on the Named Insured's behalf: 1. in the performance of the Named Insured's ongoing operations; or 2. in connection with premises owned by or rented to the Named Insured. B. However, if coverage for the additional insured is required by written contract or written agreement, subject always to the terms and conditions of this policy, including the limits of insurance, the Insurer will not provide such additional insured with: 1. coverage broader than required by such contract or agreement;or 2. a higher limit of insurance than required by such contract or agreement. C. The coverage granted by this endorsement does not apply to bodily injury or property damage included within the products-completed operations hazard. Any coverage granted by this endorsement shall apply solely to the extent permissible by law. All other terms and conditions of the Policy remain unchanged. This endorsement,which forms a part of and is for attachment to the Policy issued by the designated Insurers, takes effect on the effective date of said Policy at the hour stated in said Policy, unless another effective date is shown below, and expires concurrently with said Policy. CNA74745XX(1-15) Policy No: 6056953463 Pagel of 1 Endorsement No:TBD PoIUWCompany-CNA Paramount Effective Date: 7/9/2020 Insured Name: HdL Companies Copyright CNA All Rights Reserved. Includes copyrighted material of Insurance Services Office,Inc.,with its permission. CITY OF HUNTINGTON BEACH Professional Service Approval Form PART I Date: 4/20/2020 Project Manager Name: Dahle Bulosan Requested by Name if different from Project Manager: Paulina Flores Department: Finance 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: Consultant to provide sales and use tax audit, compliance, and revenue recovery and reporting services for the City of Huntington Beach 2) Estimated cost of the services being sought: $ 330,000 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 ❑ No AQ�l ��ro Principal Finance Analyst Signature(Purchasing Approval) I Date 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): Account number Contractual Dollar Amount Business unit. object# Fiscal Year Fiscal Year Fiscal Year Fiscal Year FY 20/21 FY 21/22 FY 23/24 10035201.69365 $110000 $110000 $110000 $ 60*yly� $ $ $ $ el4l_� Budge proval D to D16partment Head Signature(s) Date Chief Financial Officer Signature Date Assistant City Manager's Signature —Dake APPROVED DENIED ❑ anager's Si ature Me professional service approval form-part i-sales tax audit REV: 10/2019 - CITY OF HUNTINGTON BEACH Professional Service Approval Form PART II Date: 7/9/2020 Project Manager: Dahle Bulosan Requested by Name if different from Project Manager: Paulina Flores 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: Hinderliter, de Llamas and Associates 2) Contract Number: FIN 20-0001 3) Amount of this contract: $225,000 Account number Contractual Dollar Amount Business unit. object# Fiscal Year Fiscal Year Fiscal Year Fiscal Year 20/21 21/22 22/23 10035201.69365 $75,000 $75,000 $75,000 $ 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 If No, please explain: 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. d Department Head Signature to 0/-" Purchasing Approval Signature Date - 4A" 1gl& Budg6f'Mari6ger Approval Signature Date 1 1,12,1 Chief Financial Officer(or designee) Signature Vate professional service approval form- part ii REV: 05/2020 PROFESSIONAL SERVICES SERVICE: Sales & Use Tax Auditing & Analysis Services SERVICE DESCRIPTION: Provide sales tax and use tax auditing, projection, recovery and other revenue audit services. VENDOR: Hinderliter, de Llamas and Associates (HdL) OVERALL RANKING: 1 SUBJECT MATTER EXPERTS/RATERS: 1. Senior Finance Analyst-Finance; 2. Senior Accountant—Finance; 3. Senior Administrative Analyst-Fire I. MINIMUM QUALIFICATIONS REVIEW • Written Proposal Score: 1,321.50 VENDOR NAME—Minimum Qualifications Review Total Weighted Maximum Criteria Score Score Compliance with RFP 139 150 Technical Approach 350 375 Qualifications 325 375 Clarity 150 150 Cost 287.5 375 References 70 75 Local Vendor Preference NA NA Total 1,321.5 1,500 II. DUE DILIGENCE REVIEW • Interview Ranking: 1 HdL—Summary of Review • Leader in providing sales tax audit and analysis services to local municipalities throughout California. Servicing approximately 500 local government agencies in 11 states. • Very well qualified having served governmental entities for over 35 years providing revenue enhancement and consulting services to local governments. • Excellent staffing includes former Finance Directors and leading industry experts. • Lobbyist with State Board of Equalization; • Excellent relationship with City staff. Currently provide sales and use tax auditing services to the City. • References:Excellent references from the cities of Riverside, Costa Mesa, Santa Monica, Yorba Linda, and Glendale. HdL—Pricing • Annual service fee (Y1 $0; Y2$6,00; Y3$10,200. • 15% contingency fee recovered amounts. • Contingency fee applies to 6 quarters 102 PROFESSIONAL SERVICES SERVICE: Sales & Use Tax Auditing & Analysis Services SERVICE DESCRIPTION: Provide sales tax and use tax auditing, projection, recovery and other revenue audit services. VENDOR: Vendor #2 OVERALL RANKING: 2 SUBJECT MATTER EXPERTS/RATERS: 1. Senior Finance Analyst-Finance; 2. Senior Accountant—Finance; 3. Senior Administrative Analyst-Fire I. MINIMUM QUALIFICATIONS REVIEW • Written Proposal Score: 1 ,290 VENDOR NAME—Minimum Qualifications Review Total Weighted Maximum Criteria Score Score Compliance with RFP 130 150 Technical Approach 300 375 Qualifications 317.5 375 Clarity 130 150 Cost 345 375 References 55 75 Local Vendor Preference NA NA Total F 1,277.5 1,500 II. DUE DILIGENCE REVIEW • Interview Ranking: 2 Vendor#2—Summary of Review • Active provider of audit and analysis services in local government sector throughout California. Servicing approximately 350 government municipalities throughout the State of California.. • Well qualified: served governmental entities for over 40 years. • Recipient of industry-wide recognition by being listed on GovTech 100 for their role in supporting their local government clients. • Have expert Government Relations team and lobbyist in Sacramento that monitors legislative and regulatory activity. • References: Solid references from the cities of Santa Ana. Brea, and Anaheim. Vendor#2— Pricing • $5,000 annual service fee (subject to annual CPI) • 8% contingency fee • Contingency fee applies to 5 quarters after the Date of Correction and all eligible prior quarters back to and including the 3 quarters prior to the Date of Knowledge quarter with a maximum of 9 total quarters 103 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 July 30, 2020 Hinderliter, de Llamas and Associates Attn: Andy Nickerson 120 S. State College Blvd., Suite 200 Brea, CA 92821 Dear Mr. Nickerson: Enclosed is a copy of the fully executed copy of the "Professional Services Contract between the City of Huntington Beach and Hinderliter, De Llamas and Associates for Sales and Use Tax Auditing Services" approved by the Huntington Beach City Council on July 20, 2020. Sincerely, ram. 9,47 Robin Estanislau, CIVIC _ City Clerk RE:ds Enclosure Sister Cities: Anjo, Japan ♦ Waitakere, New Zealand