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HomeMy WebLinkAboutAgenda Report - May 18, 2022 C-13CITY OF Z CALIFORNIA COUNCIL COMMUNICATION AGENDA ITEM C-/3 AGENDA TITLE: Adopt a Resolution Authorizing the City Manager to Execute Amendment No. 3 to the Professional Service Agreement with Hinderliter de Llamas and Associates of Brea, to Continue to Provide Sales, Use and Transaction Tax Services for the City and Measure L, Business License Tax and Administration Services, Business License Tax Audit, Transient Occupancy Tax Administration (TOT) and Short Term Rental Administration Services MEETING DATE PREPARED BY May 18, 2022 Revenue Manager RECOMMENDED ACTION: Adopt a resolution authorizing the City Manager to execute Amendment No. 3 to the Professional Services Agreement with Hinderliter de Llamas and Associates of Brea, to continue to provide Sales, Use and Transaction Tax Services for the City and Measure L, Business License Tax and Administration Services, Business License Tax Audit, Transient Occupancy Tax Administration (TOT) and Short Term Rental Administration Services. BACKGROUND INFORMATION: HdL has provided sales tax audit, economic analysis, recovery, and consulting services to the City of Lodi for over 30 years. HdL is the pre- eminent provider of these services in California due to their years of experience, established relationships, and interface with the California Department of Tax and Fee Administration (CDTFA). In June 2017, the City Council approved a five year agreement, which expires on May 31, 2022, with HdL to continue performing sales tax audit, economic analysis, recovery and consulting services, The cost of the contract was funded through the General Fund. HdL, in its history with the City, has recovered substantial amounts of money through audits of CDTFA (formerly State Board of Equalization) by identifying non or underreporting businesses and ensuring those businesses accurately report past and future sales tax revenues. In January 2019, the City Council approved Amendment No. 1 adding Transaction and Use Tax Services or Measure L. HdL's service in assistance with forecasting economic activity and auditing business activity for the purpose of revenue recovery was critical to the success of Measure L. These services help ensure the Measure L tax is being uniformly collected on eligible transactions, the businesses are treated equally under Measure L, and that the City receives the full revenue from Measure L as authorized by the voters. APPROVED: 4 Stephen Schwabauer, City Manager In February 2020, the City Council approved Amendment No. 2 adding ongoing consultation for Business License Administration, Transient Occupancy Tax and Short -Term Rental Administration Services. HdL leverages its database for TOT and business license tax services. They perform auditing and revenue recovery functions for these revenues, similar to how they perform the City's sales and use tax services. With HdL's assistance, the customer service operations is better able to utilize staff time and resources to provide more responsive service to the City's customers. HdL has continuously improved revenue for Business License taxes and TOT, since the inception of HdL in 2020. See charts below: TOT Business License Revenue 2018 2019 2018 2019 2020 2021 2022 Projected $ 1,250,000.00 $ 1,375,000.00 $ 1,475,000.00 $ 1,155,810.00 $ 1,800,000.00 Received $ 1,429,686.47 $ 1,444,760.75 $ 1,525,277.52 $ 1,703,226.60 $ 1,824,301.13 Difference $ 179,686.47 $ 69,760.75 $ 50,277.52 $ 547,416.60 $ 24,301.13 $ 318,562.77 TOT 2018 2019 2020 2021 2022 Projected $ 800,000.00 $ 950,000.00 $ 1,000,000.00 $ 525,000.00 $ 800,000.00 Received $ 866,827.99 $ 735,601.16 $ 987,430.66 $ 899,933.71 $ 1,118,562.77 Difference $ 66,827.99 $ 214,398.84 $ (12,569.34) $ 374,933.71 $ 318,562.77 The City now requests to extend its current contract with HdL an additional two years, until May 31, 2024, to provide services for Sales Tax, Transaction Tax (Measure L), Business License Tax and Transient Occupancy Tax services. The compensation for Business License Tax, Transient Occupancy Tax and Short -Term Rental Services will increase to $13.92 per Business License and $802.92 per monthly TOT filing and $750 for Quarterly filings. These fees will be indexed to CPI -U each January and all other fees will remain the same. FISCAL IMPACT. Based on the increase price in business license, short term rentals, and TOT services the estimated cost will be approximately $160,000 annually. Estimates are based on current volume of all business licenses and TOT's. Actual costs will be based primarily on transactions and reduced by collection recoveries. For both Sales Tax and Measure L tax, HdL is compensated for periodic reports at a nominal fee and for audit services on a revenue recovered basis. HdL shares in some of the recovered taxes owed that were not paid and in prospective tax revenue for a period after a successful audit. The table below shows the breakdown of these fees. Throughout the City's relationship with HdL, the City has benefited greatly from these services with HdL returning substantial revenue to the City above the cost of service. Tax Category Fee for Periodic Reporting Audit Services on Recovered Revenue Audit Services on Future Revenue Sales Tax $_6,600 Near 15_% of all past 15_% of due recovered future revenue revenue for the next 8 quarters Measure L $1,200 Near _25_% of all past The City shall due recovered retain all future revenue revenue from successful audits FUNDING AVAILABLE. Fiscal Year 2022/23 Business License and TOT account number 10020203.72450 Fiscal Year 2022/2023 Sales Tax and Audit Services 10095000-72450 Fiscal Year 2022/2023 Measure L Transactions Tax 10395000-72450 OjrVC6� Xv�w Andrew Keys Deputy City Manager/internal Services Director &I-9 5w�lsl- Tarra Sumner (May 12, 2022 07:18 PDT) Tarra Sumner Revenue Manager CITY OF LODI THIRD AMENDMENT TO AGREEMENT FOR SALES, USE, TRANSACTIONS TAX, BUSINESS LICENSE ADMINISTRATION, TRANSIENT OCCUPANCY TAX, AND SHORT TERM RENTAL ADMINISTRATION SERVICES 1. PARTIES AND DATE. This Third Amendment to the Agreement for Sales, Use and Transactions Tax Services ("First Amendment") is entered into on the day of . 2022, by and between the CITY of Lodi, organized under the laws of the State of California, with its principal place of business at 221 W. Pine Street, Lodi, CA 95240 ("CITY") and Hinderliter de Llamas and Associates, a California corporation, with its principal place of business at 120 S. State College Blvd., Suite 200, Brea, CA 92821 ("Consultant"). CITY and Consultant are sometimes individually referred to herein as "Party" and collectively as "Parties." 2. RECITALS. 2.1 Aureemont. The Patties entered into that certain Agreement for Sales, Use and Transaction Tax Services dated July 24, 2017 ("Agreement"). 2.2 First Amendment, The Agreement was amended on January 11, 2019 to add Transaction and Use Tax services for Measure L. 2.3 Second Amendment. The Agreement was amended on February 12, 2020 to add ongoing consultation for Business License Administration, Transient Occupancy Tax and Short- Term Rental. 2.4 Third Amendment. The Parties now desire to amend the Agreement to extend the contract term to May 31, 2024 for Sales Tax, Transaction Tax (Measure L), Business License Tax and Transient Occupancy Tax services. This Third Amendment also updates Compensation Section Ill Consideration of the Agreement for Business License Tax and Transient Occupancy Tax services is hereby amended as follows. Business License Tax Administration Services 1. Citimmnisnlion - HdL's compensation for performing Operations Management Services related to business license is a fee of $13.92 per new registration or processed account. City will be invoiced monthly or quarterly for activity during the prior period. For the purpose of compensation calculation, processed account means any account for which renewals/returns are processed or which were sent a renewal notice. 2. 0111 Ad" ustn ie nt — Fees will be increased as of January 1 st of each calendar year with reference to the 12 -month percent change in the most recently published annual Consumer Price Index for All Urban Consumers (CPI -U), West Region, as reported by the U.S. Bureau of Labor Statistics (the "CPI Change"). Each annual increase in the Fees will be equal to the greater of two percent (2%) or the actual CPI Change and the lesser often percent (10%) or the actual CPI Change. For example, if the actual CPI Change is 1.5%, then the annual increase will be 2%, if the actual CPI Change is 3.5%, then the annual increase will be 3.5%, and if the actual CPI Change is 12%, then the annual increase will be 10%. 3. [r,wc.l l,XDC1l_. CN — Travel and lodging expenses are billed at cost and apply to all meetings; including process, pre -installation, installation, training, and support. HdL is dedicated to conserving public funds and ensures any travel costs are indeed required and reasonable. Transient Occupancy Tax Services I-IdL's flee for performing Transient Occupancy Tax Administration Services is as follows. Transient Occupancy Tax Administration — (includes Audits) Y $802.92 per property / year + CPI (Monthly Filers) ➢ $750.00 per property / year + CPI (Quarterly Filers) 1. 'i ravel I :x peivws — Travel and lodging expenses are billed at cost and apply to all meetings; including process, pre -installation, installation, training, and support. HdL is dedicated to conserving public funds and ensures any travel costs are indeed required and reasonable. ( 1'l Aditistment — Fees will be increased as of January 1 st of each calendar year with reference to the 12 -month percent change in the most recently published annual Consumer Price Index for All Urban Consumers (CPT -U), West Region, as reported by the U.S. Bureau of Labor Statistics (the "CPI Change"). Each annual increase in the Fees will be equal to the greater of two percent (2%) or the actual CPl Change and the lesser of ten percent (10%) or the actual CPI Change. For example, if the actual CPI Change is 1.5%, then the annual increase will be 2%, if the actual CPI Change is 3.5%, then the annual increase will be 3.5%, and if the actual CPl Change is 12%, then the annual increase will be 10%. Short Term Rental Administration Services Short Term Rental Administration Services shall be provided at 15% of all revenue collected. 2.5 Renrlinin-1 D'OvisiOns of A gree nrn[. Except as otherwise specifically set forth in this Third Amendment, the remaining provisions of the Agreement shall remain in full force and effect. CITY OF LODI By: City Manager ATTEST: By: City Clerk HINDERLITER DE LLAMAS & ASSOC. M. Andrew Nickerson, President APPROVED AS TO FORM: I: City Attorney KL CITY OF LODI SECOND AMENDMENT TO AGREEMENT FOR SALES, USE AND TRANSACTIONS TAX SERVICES 1. PARTIES AND DATE. This Second Amendment to the Agreemenl For Safes, Use and Tran actions Tax Sofvices first Amendmeint"1 is entered into on the j, iay of��_ ��'and between the ' CITY of Lodi, organized under the laws of the State of California witFt its principal place of business at 300 W. Pine Street, Lodi, CA 95241 ("CITY") and Hinderliter de Llamas and Associates, a California corporation, with its principal place of business at 120 S, State College Blvd., Suite 200, Brea, CA 92821 ("Consuitant"). CITY and Consultant are sometimes individually referred to herein as "Party" and collectively as "Parties." 2. RECITALS. 2.1 Agreement. The Parties entered into that certain Agreement for Sales, Use and Transaction Tax Services dated July 24, 2017 ("Agreement"). 2.2 First Amendment. The Parties entered into Agreement dated January 11, 2019. 2.3 Second An-ienrlment. The Parties now desire to amend the Agreement for ongoing consultation for Business License Administration, Transient Occupancy Tax and Short - Term Rental. Business License Tax Administration Services Tax_R9grstrgh0e7 Database HdL will transfer the City's existing databases as they relate to business license into HdL's internal administration tools. HdL will maintain the data and provide copies of data or reports at the City's request. City will not be required to use or maintain any software in house for managing the business license registry. ➢ Reopwal Processing — Send active business license accounts a renewal notice within 30 days of the renewal period end date. Accounts will receive all applicable forms necessary to complete the renewal process. New Account P►ocessvxi — HdL will process any new business license applications and complete the new account registration process in a timely fashion. Pavaloot PostinalprocessirU — HdL will process all payments for new and renewal accounts. License accounts will be updated with payment information and revenues will be remitted to the City net banking and related processing fees on no less than a monthly basis. Business Support C;eoter— HdL will provide businesses with multiple support options for registering, renewing, making payments and for general inquiries. Businesses will have access to our license specialists Monday through Friday, 8:OOam to 5:OOpm Pacific, via phone, mail, e-mail, fax, and the Business Support Center On -Line. v On -Line Filing & Payfnoot_ Proms: io,, — HdL will make available options for businesses to visit a website, ling ed to the City's website, to submit online transactions. Local Tax Compliance Services HdL will ensure a level playing field for the business community and maximize revenues to the City. Discovery services will be conducted to identify and register businesses which are subject to licensure or taxation. Audit services will identify under reported tax liability for business and lodging providers. Collections Services will coltect known debt from businesses that did not pay in full during the registration or renewal process. The scope of work to be performed will be mutually agreed upon by HdL and City prior to implementation. Discovery — Discovery services are designed to identify entities subject to licensure/taxation that are not currently registered or otherwise non-compliant. a. Lead r'dwi iiiyalion — Develop a list of entities subject to licensure/taxation within the City. b. FYception Resolution — Compare the list to City registration databases to remove properly registered businesses and identify and remove other potential exceptions. c. Ca?��aliarrca Communicatinui Process — Initiate contact with confirmed entities through a series of City approved communication methods. HdL will make every effort to simplify the process for taxpayers, utilizing a variety of mediums for communication including mail, telephone, email, and web -site access. Potential non-compliant entities are notified of their options to comply or dispute their non-compliant status. HdL offers extended office hours for support via our Business Support Center available to taxpayers 8:OOam — 5:OOpm Monday - Friday. d. Oncr.uIner2l 5r balission f Processir� — Review Taxpayer submissions such as applications for completion and accuracy prior to processing. Collect additional documentation such as a home occupabon permit and forward to other City departments either as a pre -requisite or as a courtesy for the taxpayer and other departments. All submissions are filed and stored electronically and made available to the City upon request. e. Invoicing — Once application has been approved, invoice entity indicating detailed tax calculations and balances owed. Taxpayers are given the opportunity to pay their balances via mail, online, and other methods. HdL will provide Taxpayers continued access to the Business Support Center for any questions or disputes arising from the invoice process. f. Rernili lt�c — Upon collection of all requirements including payment, application and other prerequisites, HdL will prepare a remittance package including payment documentation as well as copies of all taxpayer correspondence and relevant information. Remittances are done on no less than a monthly basis. Remittances packages done electronically via the HdL electronic remittance process will include Applications and other relevant information an electronic farmtat. Revenues feceived are deposited into an HdL trust account and funds are distributed to the City in one payment net HdL's fees - 9 Audit Audit services are designed to identify businesses that are registered but not properly reporting or paying the correct amounts. Services to be performed may include; a. identify potential underreporting and/or misclassified businesses by comparing City records with HdL business inventories. b. Review/audit entities mutually agreed to by City and HdL that are identified as potential underreporting businesses or other entities requiring review. c. Submit audit summaries to City staff and meet with staff to review and discuss further actions. d. Educate businesses on proper reporting practices. e. Invoice and collect identified deficiencies. �. City's responsibilities a. Data — City will provide its relevant business databases, such as the business license registry (registrations and payments), and any other information necessary for the compliance process orto facilitate HdL's invoicing of services, to HdL according to a schedule acceptable to both HdL and the City. City agrees to provide the data as long as this Agreement is active, and thereafter for so long as HdL's right to invoice for services rendered continues. b. City agrees to use reasonable and diligent efforts to collect, or to assist HdL in the collection of, deficiencies identified by HdL pursuant to this Agreement. Short Tenn Rental Administration STR Identification & Monitoring HdL compiles a list of all actively posted short term rentals available from a wide array of sources. Lists are compiled and aggregated to accommodate duplicate listings from various sites. During the identification and monitoring process, HdL will: a. Scan over 20 different rental sites, including global aggregators like HomeAway/VRBO, Airbnb, Turnkey.com, and Booking.com, national aggregators like Vacasa and Turnkey and small, local property management firms.; b. Match Listings to specific parcels using GIS and property tax assessor data; c. Create comparison reports to determine which properties may already be compliant or registered and paying taxes d. Provide visual map of all listings within the City; e. Record listing details such as start date, various sites linked to, other information necessary for documenting evidence of STR activity; and f. Continually monitor activity to identify and record new listings and closures to ensure accurate real-time identification and monitoring. Education, Registration, and Compliance Using the list of active STR listings, HdL conducts a series of City approved education -based programs ranging from mailers to direct phone contacts. Each packet and contact contain all the information necessary to obtain registration and comply with local requirements. HdL assists STR hosts throughout the program with information and support with all aspects of becoming compliant. During this program, HdL will: a. Validate listing to ensure proper identification and filter out records that may lead to erroneous contacts. b. Notify non-compliant entities with a series of education -based packets designed to garner compliance; c. Provide a support center for assistance with general questions, support, and assistance with filing and paying returns. d. Provide online portal with links to FAQs, education packets, and support for registering, filing returns, and making payments online. e. Follow up with non-compliant accounts to obtain registration f. Work with City to identify additional requirements and ensure collection of data necessary to enforcement procedures. g. Establish optional implementation items such as amnesty programs, back tax and penalty provisions, and other pre -registration programs. Transient Occupancy Tax. Administration Services HdL's Transient Occupancy Tax Audit Service employs a business -friendly approach which educates hoteliers in transient occupancy tax regulations and filing procedures, ensures compliance, and maximizes agency revenues. The process incorporates the following: Ordinance and Filing Procedure Review — Analysis of Transient Occupancy Tax ordinances and agency procedures are conducted to identify possible deficiencies or other administration related issues. Recommendations are made by the audit team for items such as to best practices, form design, and potential ordinance modifications to insure the most effective policies and controls. Analysis Report— HdL's audit team will obtain and conduct a review of the most recent 36 months of transient occupancy tax filings. In order to verify and augment the data, the audit team will compile a variety of supplemental infnrmation Qn each property, including number of rooms, occupancy rate, physical condition, and business dynamics, Data is then further scrutinized in order to identify unusual or suspicious reporting and/or other variables that indicate cause for further review. Information and findings are documented in the analysis report for review with the Agency. Analysis Review — Upon completion of the analysis report, meetings are scheduled with the agency to review the results as well as identify and recommend lodging provlaers who require additional investigation or examination to determine their compliance with the Agency's ordinance. Audit Notification & Scheduling — Lodging providers selected by HdL and approved by the Agency for an audit are sent a letter and scheduled for a Compliance Analysis Audit. Every effort is made to promote a positive experience for the taxpayer. Lodging providers will be reminded of the documents required for the audit that were discussed in webinars and previous communications. Lodging providers are afforded the opportunity to schedule flexible appointment times by contacting the Business Support Center or visiting our online support center. Compliance Analysis & Audit—The HdL audit team reviews the books and records of the lodging provider to determine compliance with transient occupancy tax regulations. HdL validates taxable gross rents, exemptions, bank statements, daily/monthly summaries, and other relevant information for determining compliance. Supporting documentation for relevant items such as exemptions will also be documented for accuracy. Audit & Compliance Report — Upon completion of the audit and analysis, and prior to additional actions, a compliance report is generated and reviewed with the Agency. The report indicates specific results of the reviews and recommended actions. Documentation will be included with the report to assist the Agency and HdL in determining next steps. Deficiency and Commendation Notification — Upon final review with the Agency, lodging providers that are found to have deficiencies are notified of the findings as well as payment and appeal processes. Appointments are also scheduled to review the findings and educate taxpayers on proper filing procedures designed to prevent future errors and deficiencies. Lodging providers found to be compliant are sent a commendation letter thanking them for their cooperation and compliance. Invoicing & Collections — Lodging providers found to be underreporting are invoiced through the standard Agency approved collections process identical to the procedures approved for other Programs. Balances are collected and remitted along with supporting documentation to the Agency through approved remittance processes. 2.4 Section III Consideration of the Agreement is hereby amended as follows; Business License Tax Administration Services 1. Comp_gnsahon - HdL's compensation for performing Operations Management Services related to business license is a fee of $13.00 per new registration or processed account, per year. City will be invoiced monthly or quarterly for activity during the prior period. For the purpose of compensation calculation, processed account means any account for which renewals/returns are processed or which were sent a renewal notice. 2. CPI AcllL.1:511 WA II — Fees for Operations Management Services are adjusted at the beginning of each calendar year by the change in the Consumer Price Index — West Urban (CPI-WU) as reported by the Bureau of Labor Statistics. Each annual adjustment will not be less than two percent (2%) or greater than ten percent (10%). 3. Travel Expensas — Travel and lodging expenses are billed at cost and apply to all meetings; including process, pre -installation, installation, training, and support. HdL is dedicated to conserving public funds and ' ensures any travel costs are indeed required and reasonable. Local Tax Compliance Services 1. Discoveiy, — HdL's fee for performing discovery services shall be a contingency fee of 35% of the revenues received as a result of the service. This fee applies to monies received for the current tax/license period and any other prior period collected, including monies received for taxes, penalties, interest, and fees. a. City Discovery,_C3is_r.,u i — HdL's fee for following up on accounts that are identified and confirmed as non-compliant by the City shall be a contingency fee of 25% of the revenues received as a result of the service. This fee also applies to delinquent business liran8e fav amounts referred by the City as failing to make payment or properly renew an existing license. 2. Audit — HdL's fee for performing Audit services shall be a contingency fee of 35% of the revenues received as a result of the service. This fee applies to monies received for the current tax/license period and any other prior period collected, including monies received for taxes, penalties, interest, and fees. 3. Collection — HdL's fee for performing collections services shall be a contingency fee of 25% of the revenues received as a result of the service, This fee applies to monies received for the current tax/license period and any other prior period collected, including monies received for taxes, penalties, interest, and fees. 4. 0}rion to waive tax recovery — City may, at its discretion, elect to waive or reduce the tax recovery for a business. Should the City elect to waive all, or a portion of the deficiency identified by HdL, HdL shall be entitled to compensation in the amount of one half (1/2) of the compensation HdL would have otherwise earned on the waived/reduced amount. Deficiencies which are uncollectible due to insolvency or dissolution of the customer, or for deficiencies which are otherwise incapable of collection (e.g, statute of limitations or other legal defense) shall not be considered a voluntary election to waive by the City, and thus HdL would not be entitled to compensation for these amounts. 5. Travel Expenses — Travel and lodging expenses are billed at cost and apply to all meetings; including process, pre -installation, installation, training, and support. HdL is dedicated to conserving public funds and ensures any travel costs are indeed required and reasonable. Transient Occupancy Tax Services HdL's fee for performing Transient Occupancy Tax Administration Services is as follows Transient Occupancy Tax Administration — (includes Audits) $750.00 per property / year + CPI (Quarterly Filers) r $650.00 per property I year + CPI (Annual Filers) 1. Travel Expenses — Travel and lodging expenses are billed at cost and apply to all meetings; including process, pre -Installation, installation, training, and support. HdL is dedicated to conserving public funds and ensures any travel costs are indeed required and reasonable. CPI MiLlStMen) — Fees for the Transient Occupancy Tax Administration Services are adjusted at the beginning of each calendar year by the change in the Consumer Price Index— West Urban (CPI-WU) as reported by the Bureau of Labor Statistics. Each annual adjustment will not be less than two percent (2%) or greater than ten percent (10%). Short Term Rental Administration Services Short Term Rental Administration Services shall be provided at 15% of all revenue collected. Payment HdL will provide detailed invoices for all work completed. City w:l! sulrmit payment to HdL within 30 days of receiving the invoice. 2,5 R,-, 1 m 1g{'irovislon.s of A. r rgpni w. Except as othennrise specifically set forth in this Second Amendment, the remaining provisions of the Agreement shall remain In full force and effect, CITY OF LODI By: - ,' lutanager Fwk�t5--t-' -As Rft&VEa-A5--T'-G-!'4R{�4r HINDERLITER DE LLAMAS & ASSOC. By: A. row i . erson, President G4y-QeFk �s%shznt Ci� %i' Erb Approved so W Form: ZRC:� D. MAGt]ICH ttorney AMENDMENT NO. 1 TO AGREEMENT FOR PROFESSIONAL SERVICES This Amendment No. 1 amends only Exhibits A and B to the Agreement for Professional Services entered into by the Parties on July 24, 2017 pursuant to Resolution No. 2017-130 and designated in CITY records as Contract No. 6771, to add additional services and fees to the current scope of services. No services are reduced and no other modification is made to Contruct No. 6771 with the exccptioji of those set [orch hernia. This Amendment No, 1 is made and entered into as of the �t�ciay of � � a ;-' 4 by and between the CITY OF LODI, a municipal corporation hereinafter referred to as "CITY" and HINDERLITER, DE LLAMAS AND ASSOCIATES a California Corporation, hereinafter referred to as "CONTRACTOR" (collectively the "Parties"). I. RECITALS WHEREAS, transactions tax revenues can be increased through a system of continuous monitoring, identification, and correction of allocation errors and reporting deficiencies, and WHEREAS, an effective program of transactions and use tax management can provide for more accurate budget forecasting and financial planning; and WHEREAS, CITY desires the combination of data entry, report preparation, and data analysis necessary to effectively manage its 2018 Measure "L" transactions and use tax base the recovery of revenues either unreported or erroneously allocated to other jurisdictions; and WHEREAS, CONTRACTOR has the programs, equipment and personnel required to deliver the transactions and use tax related services referenced herein; THEREFORE, CITY and CONTRACTOR, for the consideration hereinafter described, mutually agree as follows: II. AMENDMENT TO EXHIBIT A — ADDITIONAL SERVICES The CONTRACTOR shall perform the following additional services; A. DEFICIENCYIALLOCATION REVIEWS AND RECOVERY 1. CONTRACTOR shall conduct on-going reviews to identify and correct unreported transactions and use tax payments and distribution errors thereby generating previously unrealized revenue for the CITY. Said reviews shall include: (i) Comparison of county -wide local tax allocations to transactions tax for brick and mortar stores and other cash register -based businesses, where clearly all transactions are conducted on-site within the Measure "L" CITY boundaries, and therefore subject to transactions tax. (ii) Review of any significant one-time use tax allocations to ensure that there is corresponding transaction tax payments for taxpayers with nexus within the CITY boundaries. (iii) Review of state-wide transactions tax allocations and patterns to identify any obvious errors and omissions. (iv) Identification and follow-up with any potentially large purchasers of supplies and equipment (e.g, hospitals, universities, manufacturing plants, agricultural operations, refineries) to ensure that their major vendors are properly reporting corresponding transactions tax payments to the Measure "L" Transactions Tax District. 2. CONTRACTOR will initiate, where the probability of an error exists, contacts with the appropriate taxpayer management and accounting officials to verify whether current tax receipts accurately reflect the local sales activity, Such contacts will be conducted in a professional and courteous manner so as to enhance CITY's relations with the business community. 3. CONTRACTOR shall prepare and submit to the California Department of Tax and Fee Administration ("CDTFA") all information necessary to correct any allocation errors and deficiencies that are identified, and shall follow-up with the individual businesses and the CDTFA to ensure that all back quarter payments due the CITY are recovered. /!1 B. DATA BASE MANAGEMENT, REPORTS AND STAFF SUPPORT 1. CONTRACTOR shall establish a database containing all applicable CDTFA registration data for each business within the Measure "L" District boundaries holding a seller's permit account. Said database shall also identify the quarterly transactions and use tax allocations under each account for the most current and previous quarters where available. 2. CONTRACTOR shall provide updated reports each quarter identifying changes in allocation totals by individual businesses, business groups and by categories. Quarterly aberrations due to State audits, fund transfers, and receivables, along with late or double payments, will also be identified. Quarterly reconciliation worksheets to assist finance officer with budget forecasting will be included. 3. CONTRACTOR shall advise and work with CITY staff on planning and economic questions related to maximizing revenues, preparation of revenue projections, and general information on sales, transactions, and use tax questions. 4. CONTRACTOR shall make available to CITY the HdL proprietary software program and Measure "L" database containing all applicable registration and quarterly allocation information for CITY business outlets registered with CDTFA. The database will be updated quarterly. C. CONFIDENTIALITY 1. Section 7056 of the California Revenue and Taxation Code specifically limits the disclosure of confidential taxpayer information contained in the records of CDTFA. Section 7056 specifies the conditions under which CITY may authorize persons other than CITY officers and employees to examine State Sales, Use and Transactions Tax records. The following conditions specified in Section 7056(b)(1) of the California Revenue and Taxation Code are hereby made part of this Amendment No. 1. 2. CONTRACTOR is authorized by this Amendment No. 1 to examine sales, use or transactions and use tax records of CDTFA provided to CITY pursuant to contract under the conditions established by the California Revenue and Taxation Code, 3. 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 is authorized by resolution to examine the information. 4. CONTRACTOR is prohibited from performing consulting services for a retailer, as defined in California Revenue and Taxation Code Section 6015, during the term of Contract No. 6771. 5. CONTRACTOR is prohibited from retaining the information contained in, or derived from those sales or transactions and use tax records, after Contract No. 6771 has expired, Information obtained by examination of CDTFA records shall be used only for purposes related to collection of local sales and use tax or for other govenunental functions of the CITY as set forth by resolution adopted by the City Council pursuant to Section 7056(b) of the California Revenue and Taxation Code. The resolution shall desienate the CONTRACTOR as a person, authorized to examine sales and use tax records and certify that this Amendment No. 1 meets the requirements set forth above and in Section 7056(b)(1) of the California Revenue and Taxation Code. IV. AMENNDMENT TO EXHIBIT B — COMPENSATION FOR ADDITIONAL SERVICES A. CONTRACTOR shall be paid $100 monthly billed quarterly for the transaction district tax reports that we include with the quarterly sales tax analyses. CONTRACTOR shall be paid 25% of the initial amount of new transactions or use tax revenue received by the CITY as a result of audit and recovery work performed by CONTRACTOR (hereafter referred to as "Audit Fees"). New revenue shall not include any amounts determined and verified by CITY or CONTRACTOR to be increment attributable to causes other than CONTRACTOR'S work pursuant to this Amendment No. 1. In the event that CONTRACTOR is responsible 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 attributable to its efforts prior to the application of the Audit Fees. Audit Fees will apply to state fund transfers received for those specific quarters identified as being missing and/or deficient following completion of the audit by CONTRACTOR and confirmation of corrections by CDTFA, but shall not apply prospectively to any future quarter. CONTRACTOR shall provide CITY with an itemized quarterly invoice showing all formula calculations and amounts due for Audit Fees. CONTRACTOR shall obtain prior approval from CITY for each specific business for which payment of Audit Fees will be expected. Said approval shall be deemed given when the City Manager or his/her designated represeiitative, signs a Work 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. B. Above sum 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 CDTFA staff. C. Extra work beyond the additional services set forth in this Amendment No. I shall not be performed by CONTRACTOR or reimbursed or paid for by CITY unless such extra work is specifically authorized in writing by City Manager or his/her designated representative. CONTRACTOR shall be compensated for any additional services in the amounts and in the manner as agreed to by the CITY and CONTRACTOR at the time the CITY's written authorization is given to CONTRACTOR for the performance of said services. D. Any invoices not paid in accordance with the thirty (30) day payment terms set forth in Contract No, 6771, shall accrue monthly interest at a rate equivalent to ten percent (10%) per annum until paid. E. CONTRACTOR unilaterally retains the right to divide any recovery bills in excess of $25,000 over a one (1) year period (Four (4) quarterly billings). F. CONTRACTOR shall provide CITY with an itemized quarterly invoice showing all formula calculations and amounts due for the audit fee (including, without limitation, a detailed listing of any corrected misallocations), which shall be paid by CITY no later than 30 days following the invoice date. CITY: CITY OF LODI, a municipal corporation t Date:- 9 �s 019 Approveen as to forsp C 6. Attorney t CONTRACTOR: HINUERLITER, DE LLAMAS AND ASSOCIATES By. T — . A Fi1r.57': n' "r'w�t'S'�fJi1, '1'�y1� �nl � r '•r Date 12/3118 _ IENNEMR M. PERRAIOLO r • City Clerk AGREEMENT FOR PROFESSIONAL SERVICES ARTICLE 1 PAR7IES AND PURPOSE Section 1.1 Pa Io THIS AGREEMENT Is entered Into on vuad-T, 2017, by and between the CITY OF LODI, a municipal corporation (hereinafter "CITY'), and HINDERL•ITER, de LLAMAS v AND ASSOCIATES (hereinafter'CONTRACTOR"), Section 1.2 Purppse CITY selected the CONTRACTOR to provide the services required In accordance with attached Scope of Services, Exhibit A, attached and incorporated by this reference. CITY wishes to enter Into an agreement with CONTRACTOR for SALES TAX AND ECONOMIC ANALYSIS SERVICES (hereinafter "Project") as set forth In the Scope of Services attached here as Exhibit A. CONTRACTOR acknowledges that it is qualified to provide such services to CITY. ARTICLE 2 SCOPE OF SERVICES Section 2.1 Scopo of Services CONTRACTOR, for the benefit and at the direction of CITY, shall perform the Scope of Services as set forth In Exhibit A. Section 2.2 Virne For Cummencemant ,and Com intlon of Work CONTRACTOR shall commence work pursuant to this Agreement, upon receipt of a written notice to proceed from CITY or on the date set forth in Section 2.6, whichever occurs first and shall perform all services diligently and complete work under this Agreement based on a mutually agreed upon timellne or as otherwise designated In the Scope of Services, CONTRACTOR shall submit to CITY such reports, diagrams, drawings and other work products as may be designated in the Scope of Services. CONTRACTOR shall not be responsible for delays caused by the failure of CITY staff to provide required data or review documents within the appropriate time frames. The review time by CITY and any other agencies Involved in the project shall not be counted against CONTRACTOR's contract performance period. Also, any delays due to 1 weather, vandalism, acts of God, etc., shall not be counted. CONTRACTOR shall remain In contact with reviewing agencies and make all efforts to review and return all comments. Section 2.3 Maetin is CONTRACTOR shall attend meetings as may be set forth In the Scope of Services, Section 2.4 Staff'rn ! CONTRACTOR acknowledges that CITY has relied an CONTRACTOR's capabilities and on the qualifications of CONTRACTOR's principals and staff as Identlfled In Its proposal to CITY. The Scope of Services shall be performed by CONTRACTOR, unless agreed to otherwise by CITY In writing. CITY shall be notified by CONTRACTOR of any change of Project Manager and CITY is granted the right of approval of all original, additional and replacement personnel at CITY's sole discretion and shall be notified by CONTRACTOR of any changes of CONTRACTOR's project staff prior to any change, CONTRACTOR represents It is prepared to and can perform all servlces wlthln the Scope of Services (Exhibit A) and is prepared to and can perform all services specified therein. CONTRACTOR represents that It has, or will have at the time this Agreement is executed, all licenses, permits, qualifications, Insurance and approvals of whatsoever nature are legally required for CONTRACTOR to practice Its profession, and that CONTRACTOR shall, at its own cost and expense, keep In effect during the life of this Agreement all such licenses, permits, qualifications, Insurance and approvals, and shall Indemnify, defend and hold harmless CITY against any costs associated with such licenses, permits, qualifications, Insurance and approvals which may be Imposed against CITY under this Agreement. Section2.5 Unless prior written approval of CITY Is obtained, CONTRACTOR shall not enter Into any subcontract with any other party for purposes of providing any work or services covered by this Agreement. Section 2.6 Term The term of this Agreement commences on June 1 , 2017 and terminates upon the completion of the Scope of Services or on May 31 , 2022, whichever occurs first. 2 ARTICLE 3 COMPENSATION Section 3.1 COfnpert_,tltl )n CONTRACTOR's compensation for all work under this Agreement shall conform to the provisions of the Fee Proposal, attached hereto as Exhibit B and Incorporated by this reference. CONTRACTOR shall not undertake any work beyond the scope of this Agreement unless such additional work Is approved In advance and In writing by CITY. Section 3.2 Mcthnrl of Pa marl CONTRACTOR shall submit Invoices for completed work on a monthly basis, or as otherwise agreed, providing, without limitation, details as to amount of hours, Individual performing sold work, hourly rate, and Indicating to what aspect of the Scope of Services said work Is attributable, CONTRACTOR's compensation for all work under this Agreement shall not exceed the amount of the Fee Proposal. Section 3.3 Costs The Fee Proposal shall Include all reimbursable costs required for the performance of the Scope of Services. Payment of additional reimbursable costs considered to be over and above those inherent In the original Scope of Services shall be approved In advanced and in writing, by CITY. Section 3.4 Auditln CITY reserves the right to periodically audit all charges made by CONTRACTOR to CITY for services under this Agreement. Upon request, CONTRACTOR agrees to furnish CITY, or a designated representative, with necessary Information and assistance needed to conduct such an audit. CONTRACTOR agrees that CITY or Its delegate will have the right to review, obtain and copy all records pertaining to performance of this Agreement. CONTRACTOR agrees to provide CITY or Its delegate with any relevant information requested and shall permit CITY or Its delegate access to Its premises, upon reasonable notice, during normal business hours for the purpose of Interviewing employees and Inspecting and copying such books, records, accounts, and other material that may be relevant to a matter under investigation for the purpose of determining compliance with this requirement. CONTRACTOR further agrees to maintain such records for a period of three (3) years after final payment under this Agreement, 3 ARTICLE 4 MISCELLANEOUS PROVISIONS Section 4.1 Nondiscrimblatlan In performing services under this Agreement, CONTRACTOR shall not discriminate In the employment of Its employees or in the engagement of any sub CONTRACTOR on the basis of race, color, religion, sex, sexual orientation, marital status, national origin, ancestry, age, or any other criteria prohibited by law. Section 4.2 ADA Cprnpllanre In performing services under this Agreement, CONTRACTOR shall comply with the Americans with Disabilities Act (ADA) of 1990, and all amendments thereto, as well as all applicable regulations and guidelines issued pursuant to the ADA. Section 4.3 Indemnification and Rv_sp . I llilfor D�rtymp� CONTRACTOR to the fullest extent permitted by law, shall Indemnify and hold harmless CITY, Its elected and appointed officials, directors, officers, employees and volunteers from and against any claims, damages, losses, and expenses (Including reasonable attorney's fees and costs), arising out of performance of the services to be performed under this Agreement, provided that any such claim, damage, loss, or expense Is caused by the negligent acts, errors or omissions of CONTRACTOR, any subcontractor employed directly by CONTRACTOR, anyone directly or Indirectly employed by any of them, or anyone for whose acts they may be liable, except those injuries or damages arising out of the active negligence, sole negligence, or sole willful misconduct of the City of Lodi, Its elected and appointed officials, directors, officers, employees and volunteers. CITY may, at Its election, conduct the defense or participate In the defense of any claim related In any way to this Indemnification. If CITY chooses at Its own election to conduct Its own defense, participate In Its own defense, or obtain independent legal counsel in defense of any claim related to this Indemnification, CONTRACTOR shall pay all of the costs related thereto, Including without Ilmitation reasonable attorney fees and costs, The defense and Indemnification obligations required by this Agreement are undertaken In addition to, and shall not In any way be limited by the Insurance obligations set forth herein. Section 4.4 No Personal Liabllft+ Neither the City Council, nor any other officer or authorized assistant or agent or City employee shall be personally responsible for any liability arising under this Agreement. 4 Section 4.6 R108pnnsiblUtV of CITY CITY shall not be held responsible for the care or protection of any material or parts of the work described In the Scope of Services prior to final acceptance by CITY, except as expressly provided herein. Section 4.6 Itjauratic a Reg Lilrenlent9 for CONTRACTOR CONTRACTOR shall take out and maintain during the life of this Agreement, Insurance coverage as set forth in Exhibit C attached hereto and Incorporated by this reference. Sectlon 4.7 Successors and Asslnns CITY and CONTRACTOR each bind themselves, their partners, successors, assigns, and legal representatives to this Agreement without the written consent of the others. CONTRACTOR shall not assign or transfer any Interest in this Agreement without the prior written consent of CITY. Consent to any ouch transfer shall be at the sole discretion of CITY. Section 4.8 Notices Any notice required to be given by the terms of this Agreement shall be In wrRing signed by an authorized representative of the sender and shall be deemed to have been given when the same is personally served or upon receipt by express or overnight delivery, postage prepaid, or three (3) days from the time of mailing If sent by first class or certified mall, postage prepaid, addressed to the respective parties as follows: To CITY: City of Lodi 221 West Pine Street P.O. Box 3006 Lodi, CA 95241-1910 Attn: Andrew Keys To CONTRACTOR: Hinderliter, de llamas and Associates 1340 Valley Vuste Drive Suite 200 Diamond Bar, CA 91766 Section4.9 Cooperation of CITY CITY shall cooperate fully and In a timely manner In providing relevant Information it has at Its disposal relevant to the Scope of Services. Section 4.10 GC7N-1—RACTOR _I_s Not an G+riWWO Of CIE CONTRACTOR agrees that in undertaking the duties to be performed under this Agreement, It shall act as an independent contractor for and on behalf of CITY and not an employee of CITY. CITY shalt not direct the work and means for accomplishment of 5 the services and work to be performed hereunder. CITY, however, retains the right to require that work performed by CONTRACTOR meet specific standards without regard to the manner and means of accomplishment thereof. Section 4.11 fartnfnation CITY may terminate this Agreement, with or without cause, by giving CONTRACTOR at least ten (10) days written notice. Where phases are anticipated within the Scope of Services, at which an Intermediate decision Is required concerning whether to proceed further, CITY may terminate at the conclusion of any such phase. Upon termination, CONTRACTOR shall be entitled to payment as set forth In the attached Exhibit B to the extent that the work has been performed. Upon termination, CONTRACTOR shall Immediately suspend all work on the Project and deliver any documents or work In progress to CITY. However, CITY shall assume no liability for coats, expenses or lost profits resulting from services not completed or for contracts entered into by CONTRACTOR with third parties in reliance upon this Agreement. Section 4.12 Confidentlalit� CONTRACTOR agrees to maintain confidentiality of all work and work products produced under this Agreement, except to the extent otherwise required by law or permitted In writing by CITY. CITY agrees to maintain confidentiality of any documents owned by CONTRACTOR and clearly marked by CONTRACTOR as "Confidential" or "Proprietary", except to the extent otherwise required by law or permitted in writing by CONTRACTOR. CONTRACTOR acknowledges that CITY Is subject to the California Public Records Act. Section 4.13 AjipIlcable I..aw, Jurisdietlon, Sevrra i_iity,-y- Attorne s f=09 - This Agreement shall be governed by the laws of the State of California. Jurisdiction of litigation arising from this Agreement shall be venued with the San Joaquin County Superior Court. If any part of this Agreement Is found to conflict with applicable laws, such part shall be Inoperative, null, and vold Insofar as It is In conflict with said laws, but the remainder of this Agreement shall be In force and effect, In the event any dispute between the parties arises under or regarding this Agreement, the prevailing party In any litigation of the dispute shall be entitled to reasonable attorney's fees from the party who does not prevall as determined by the San Joaquin County Superior Court. 6 Section 4,14 City Bvslness 4_Icon3e l�nr�ulremant CONTRACTOR acknowledges that Lodi Municipal Code Section 3.01.020 requires CONTRACTOR to have a city business license and CONTRACTOR agrees to secure such license and pay the appropriate fees prior to performing any work hereunder. Section 4.16 Caktions The captions of the sections and subsectlons of this Agreement are for convenience only and shall not be deemed to be relevant In resolving any question or interpretation or intent hereunder, Section 4.16 Intnclration and Modlfiratiom This Agreement represents the entire understanding of CITY and CONTRACTOR as to those matters contained herein. No prior oral or written understanding shall be of any force or effect with respect to those matters covered hereunder, This Agreement may not be modified or altered except In writing, signed by both parties, Seetlon 4,17 Contract Terms Prevail All exhibits and this Agreement are Intended to be construed as a single document. Should any Inconsistency occur between the speclfic terms of this Agreement and the attached exhibits, the terms of this Agreement shall prevail. Seetlon 4.18 Sew-rability The Invalidity In whole or in part of any provision of this Agreement shall not void or affect the validity of any other provision of this Agreement, Section 4.18 Ownersi iFi n} l]n�i.nnrait.� All documents, photographs, reports, analyses, audits, computer media, or other material documents or data, and working papers, whether or not In final form, which have bean obtained or prepared under this Agreement, shall be deemed the property of CITY. Upon CITY's request, CONTRACTOR shall allow CITY to Inspect all such documents during CONTRACTOR's regular business hours. Upon termination or completion of services under this Agreement, all Information collected, work product and documents shall be delivered by CONTRACTOR to CITY within ten (10) calendar days, CITY agrees to Indemnify, defend and hold CONTRACTOR harmless from any liability resulting from CITY's use of such documents for any purpose other than the purpose for which they were Intended. 7 Section 4.20 ftthorItY The undersigned hereby represent and warrant that they are authorized by the parties to execute this Agreement. Section 4.21 Fedoral ransit Funding Conditi�s ❑ If the box at left is checked, the Federal Transit Funding conditions attached as Exhibit D apply to this Agreement. In the event of a conflict between the terns of this Agreement or any of Its other exhibits, and the Federal Transit Funding Conditions, the Federal Transit Funding Conditions wig control. IN WITNESS WHEREOF, CITY and CONTRACTOR have executed thlso Agreement as of the date first above written. Doc ID: CAsPAvA12018 8 CITY OF LODI, a municipal corporation ATTEST: � r 'I�t •P �r r JlJa1 �V1111f�h_ � _ -. J MIFER M •ERRAIOLO STErPH SCMAM JER C1iy Clerk Clly Manager APPROVED AS TO FORM: Hinderlker, de Llamas and Associates JANICE D, MAODICH, City Attorney By. - Name: And Nlrkerson Title: President Attachments: Exhibit A — Scope of Services Exhibit B —Fes Proposal Exhibit C — Insurance Requirements Exhibit D — Federal Transit Funding Condition, (If applicable) Funding Source: 11009 sW,()- 7 FnsO (Buainen8 Unit& Account No.) Doc ID: CAsPAvA12018 8 EXHIBIT A SCOPE OF SERVICES The CONTRACTOR shall perform the following services (collectively, the "Services"): A. SALES TAX AND ECONOMIC ANALYSIS SERVICES 1. CONTRACTOR shall establish a special database that identities the name, address and quarterly allocations of all sales tax producers within the CITY for the most Current and all quarters back to fiscal year 1988- 1988 or earlier, if the CITY has prior historical sales tax data available on computer readable magnetic media. This database will be utilized to generate special reports to the CITY on: major sales tax producers by rank and category, sales tax activity by categories, or business districts, Idents icatlon of reporting aberrations, and per capita and outlet comparisons with regional and statewide sales. 2. CONTRACTOR shall provide updated reports following each calendar quarter identifying changes In sales by individual businesses, business groups and categories and by geographic area_ These reports may Include, without limitation, quarterly aberrations due to State audits, fund transfers, and receivables along with late or double payments, and quarterly reconciliation worksheets to assist with budget forecasting. CONTRACTOR shall most quarterly with CITY. 3. CONTRACTOR shall additionally provide following each calendar quarter a summary analysis for the CITY to share with Council Members Chambers of Commerce, other economic development Interest groups and the public that analyze CITY'S sales tax trends by major groups, and geographic areas without disclosing confidential Information. 4. CONTRACTOR shall make available to CITY staff CONTRACTOR's web -based sales tax computer software program containing sellers permit and quarterly allocation information for all in -city business outlets registered with the Board of Equalization and updated quarterly. This software shall allow CITY staff to search businesses by street address, account number, business name, business type and keyword, arrange data by geographic area, and print out a variety of reports. B. ALLOCATION AUDIT AND RECOVERY SERVICES 1, CONTRACTOR shall conduct initial and on-going sales, use and transactions tax audits to identify and correct distribution and allocation errors, and to proactively affect favorable registration, reporting or formula changes thereby generating previously unrealized sales, use and transactions tax income for the CITY and/or recovering misallocated tax from previously properly registered taxpayers, Common errors that will be monitored and corrected Include, but are not limlted to: transposition errors resulting In misallocations; erroneous consolidation of multiple outlets; formula errors, misreporting of "point of sale" to the wrong location; delays in reporting new outlets; misallocating use tax payments to the allocation pools or wrong jurisdiction; and erroneous fund transfers and adjustments. Z. CONTRACTOR shall initiate contacts with state agencies, and sales management and accounting officials in companies that have businesses where a probability of error exists to verify whether current tax receipts accurately reflect the local safes activity. Such contacts will be conducted in a professional and courteous manner. 3. CONTRACTOR shall (1) prepare and submit to the Board of Equalization information for the purpose of correcting allocation errors that are Identified and (II) follow-up with individual businesses and the State Board of Equalization to promote recovery by the CITY of back or prospective quarterly payments that may be owing. 4. If during the course of its audit, CONTRACTOR finds businesses located in the CITY that are properly reporting sales and use tax but have the potential for modifying their operation to provide an even greater share to the CITY, CONTRACTOR may so advise CITY and work with those businesses and the CITY to encourage such changes. C. CONSULTING AND OTHER OPTIONAL SERVICES CONTRACTOR may, from time to time In its sole discreticn, consult with CITY staff, including without limitation, regarding (1) technical questions and other Issues related to sales, use and transactlons tax; (it) utilization of reports to enhance business license collection efforts; and (III) sales tax projectlons for proposed annexations, economic development projects and budget planning. In addition to the foregoing optional consulting services, CONTRACTOR may, from time to time In its sole discretion, perform other optional Services, including without limitation, negotiating/review of tax sharing agreements, establishing purchasing corporations, and meeting with taxpayers to encourage self- assessment of use tax. EXHIBIT B COMPENSATION A. CONTRACTOR shall provide the sales tax and economic analysis Services described in Section II -A above for a fee of $550 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 paid by CITY no later than 30 days after the invoice date. The monthly fee shall increase annually following the month of the Effective Data 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 cease to be published, any reasonably comparable index selected by CONTRACTOR. B. 1. CONTRACTOR shall be further paid 15% of all new. and recovered sales, use and transections tax revenue received by the CITY as a result, in whole or In part, of the allocation audit and recovery services described in Section II -B above (hereafter referred to as "audit fee"), Including without limitation, any reimbursement or other payment from any state fund and any point of sale misallocations. 2. The audit fee shall be paid even if CITY assists, works in parallel with, and/or Incurs attorneys' fees or other costs or expenses In connection with any of the relevant Services. Among other things, the audit fee applies to state fund transfers received for back quarter reallocations and monies received In the first eight consecutive reporting quarters following completion of the allocation audit by CONTRACTOR and confirmation of corrections by the State Board of Equalization. CITY shall pay audit fees upon CONTRACTOR'S submittal of evidence of CONTRACTOR'S work in support of recovery of subject revenue, including, without limitation, copies of BOE 549-S petition forms of any other correspondence between CONTRACTOR and the Board of Equalization or the taxpayer, 3. For any Increase in the tax reported by businesses already properly making tax payments to CITY, It shall be CONTRACTOR's responsibility to support in Its invoices the audit fee attributable, in whole or in part, to CONTRACTOR's Services, C. CONTRACTOR shall Invoice CITY for any consulting and other optional Services rendered to CITY in accordance with Section II -C above based on the following hourly rates on a monthly or a quarterly basis, at CONTRACTOR's option. All such invoices shall be payable by CITY no later than 30 days following the Invoice date. CITY shall not be Invoiced for any consulting Services totaling less than an hour in any month. The hourly rates In affect as of the Effective Date are as follows: Principal $295 per hour Programmer $250 per hour Senior Analyst $196 perhour Analyst $100 per hour CONTRACTOR may change such hourly rates from time to time upon not less than 30 days' prior written notice to CITY. D. Any invoices not paid In accordance with the Thirty (30) day payment terms, shall accrue monthly interest at a rate equivalent to ten percent (10%) per annum until paid, E. CONTRACTOR unilaterally retains the right to divide any recovery bills In excess of $25,000 over a one (1) year period (Four (4) quarterly billings). F, CONTRACTOR shall provide CITY with an itemized quarterly Invoice showing all formula calculations and amounts due for the audit fee (including, without limitation, a detailed listing of any corrected misallocatlons), which shall be paid by CITY no later than 30 days following the Invoice date. EXHIBIT C In,1gMn_ca Ra ulrgmgn! far C glrac(Qf The Contractor shall take out and maintain during the life of this Agreement, Insurance coverage its listed below. These Insurance policies shall protect Contractor and any subcontractor performing work covered by this Agreement from claims for darnages for personal Injury, Including socldental death, as well as from clalms for property damages, which may Orlon from Conliector's operations under this Agreernant, whether such opsretione be by Contractor, or by any auhcontrauar. or by anyone directly or in dire city employed by either of them, and the amount of such Insurance shall he cue follows: GoMPFE1F itiME.rtA_ til $4,000,000 Each Occu rrenc@ $5,000,000 General Aggroaste C 's �ISLtLk [1ULU_fr�[]t�ll C_LIAtIIt.L7•.Y. $1,000,000 Combined Single Limit Such Insurance shall cover liability arising out of any vahtole (including, awned, hired and non -hired vehicles) operated In performing any and oll sarvlces pureusnt to this Agreement. Coveraga shall be vollten on ISO form CA 00 0112 90, or a later verafon, that provides liability eoveraga at least as broad as thfs fain. PMEEESSI4NALLI66JUT-Y I-ERRQR$ ANRQM1ULQ $ $1,000,000 Each Occurrence All limits are to be dseignated striclly for the Clty of Lodi, Its elected and appointed hoards, commial lona, colors, agents, employees, and vol uhis era. Ali deductibles c aslRlnaured reten0vlis (SIR) mu at be dIWes ad to City's Alsk Manager for approval and shag not reduce the Iflnits of HebllHy set forlh hereinabove. Insurance polleiea centatning any deductible or SIR provision shall provide, or be endaraed to provide, that the deductible or Sift may bo eetlatled by either the Named Insureds) or the 0Ity of Lodi. It Is required that any available Insurance proceeds broader than Or In atrraes of Irta specllad minimum Insurance coverage requirements andlar limits set forth above, shall be available to Cily cue an additional insured. Fu irisimars, the requirements for coverage and limits shall be (I) the minimum onvernge and limite spaci led In these Insurance requlremenls; or (II) the broader coverage and me cimum limits of coverage of any Insurance policy or proceeds ayslfabls to the Contractor; whichever 1@ greater. Contractor agrees and stipulates that any ineurance coverage provided to the City of Lodi ehatl provide for a claims period Following terminaf on of coverage which is at least consistent vAlh the claims period or statutes of Ilmitatlona found In the Callfamis Tort Claims Act (California Government Code Section 910 at seq.). A copy of the cerOficate(s) of Insurance with the following endorsements shall be furnished to the City: (a) AtlillilUr�,rl A7l+JsJ9�}n2 �rl4��r]4i +LIMA Pursuant to, a @operate. endorsement (150 form CG 2010 (1 V86) or a (star version, that provldea Ilablllty coverage at least as breed as this form) such Insurance as is affordad by thla policy shall also apply to the City of Lodl, its etecied and appointed boards, commissions, officers, agents, employees, and volunteers as additional named Insureds. An eddlitonal named Insured endoraoment Is also required for Auto Liability. (b) QLr t- aUjlhl NO 11 4;r3MiK�Mlllnl Addigonall insurance coverage under the Contractor's policy shall be "primary and non-contributory" and will not seek contribution from City's Insurance cur self-insurance and shall be at least as broad as ISD form CO 20 0104 13. NATE; (1) The a1n3ei address of thef Q lF �M must be shown along with (a) and (b) above: 221 West Pine Street, Lodi. California, 90240; (2) The Insurance aerinirate must state, on Its tach or @s an endorsement, a description of the prate at That Itis Inauring. (c) 'mtii "L?1_Silh1.4J?}IFail Include a waiver of subrogation against the City of Lodi, its elected and appointed boards, commissions, offfcare, agsnta, employees, and volunteers. A watverls squired for General Llab lity and Arrto Lisblllty. Page 1 I of 2 pages Risk: rev,012019 InaIirancu —RD yIUILi�nlu_LrCnrrtrnclar (continued) (d)I 1 -3-QL-Q4YpsaQ 'The Ilrnlis of Insurance coverage required may be astieiled by a combinetlon of primary and umbrella or exceaa Insurance. Any umbrella or excess insurance of Contmotor shell cordaln, Orbe endoread to conlain, a provlefon that Such Coverage Shall elan apply an a primary and non-contributory basis lar the benefit of the City before the City's own insurance or self-Ineurenco shall be called upon to protect the City as a named inaured. (e) Sriverrallrll(y pf liilm'nsI ,;1au59 The term "Insured" Is uaed severally and not caiiectively, but the Inclusion herein of more then one Insured shall not operate to increase the Ilmlt of the company's liability. (f) Phhli{:rp of Tnoln,Pap Qf-rt.fr.uw m(_rytit nw', -A tram Iii Thle policy may not be canceled nor the coverage reduced by the company without 30 days' prior written notice of such canceNatlon or reduction In coverage to Ute Risk Manager, City of Lodi, 221 West Pine St., Lodi, CA 95240, (p) (;QL1Iinrrlly2 unQr P$w All policies strafl be In effect on or before the first day of the Term of thle Agreement. At least thirty (30) days prior to the explmllon of each Insurance policy, Contractor shall Almish a cartiffcsta(e) showing that a new or oxiondnd pollcy has been obtalnod whlch meets the Minimum requlromenle of tits Agrooment. Contractor snuli pravhto Proof of centlnulrhq Inas-Ince on at least an annual basis during the Torm. If Conlrauoi s insurance lapsea or In discontinued for any reason, Contractor shall irrrnadtstely noilfy the Cily and immediately obtain replacement insurance. (h) FalJr�y7_G.4i1717i1 It Contractor falls or refusee to obtain and malnlaln the required insurance, or falls to provide proof of coverage, the City may obtain the insurance. Contractor shall m1mburee the City for pramlume paid, with Intareat on the premium paid by the Clly et the maximum allowable iegsl rete then In effect In California. Thr City ahall ootlfy Cont rector of such payment of pr>emluma wlIhin thirty (341 dnya of pnymeni Mail ng the amount paid, the narhofs) a lin Inourer(a), and rale of Inluroal Cori Iraclor aIta11 pay srrch rolnhburaomant and interest on the first (1") day or lire month ff}Ilnwirg Iiho Gity'e napes. Notwjthslanding any other provision of this Agreement, If Contractor falls or relllsea to obtaln or maintain Insurance as required by this agreement, or fella to provide proof of Insurance, the Gty may termlrote this Agreement upon such breach, upon such lorminntion, Canlractor shell Imrnedlately coxae use of tura Site or farilitles and commence and dillgently, pursue the removal of any and all of Its personal property from The elte or fncllillas. (� qu}lliligcl iriatU9-rW All insurance required by the terms of this Agreement must be provided by Insurers licensed to do business fn the Slate of California which are rated at lease "A-, VI' by the AM Best Ratings Guide, and whloh are acceptable to the City. Non -admitted surplus lines caldera mny be accepted provided they ala included on the meet recent list of California eligible surplus lines Innurers (LESLI let) and otherwlse meet City requirements. worl;orrl oro snllon Inahra ea The Contractor ahall take out and maintain during the life of iiia Agreement, Worker'rs Compennnunn Insurance for all of Lonlfaclnfs nrnplreyeae employed at the alto of the project and, W any work Is aublrll, Contractor shall require ilra avbronlractor simNarly to provide Workaea Compansatton insurance for all of the latlgl'a employees uninas such ernpleyeas are covarad by the protection afforded by the Contractor. in coat any class of employees engaged In hazardous work under this Agroomont at tate alto of tho project Is rat protucted under the Worker's Compensation Statute, the Contractor shall wouldo and ahnll cause each suhconlractor to provide Insurance ror the protecilon of said employees. A waiver of subrogation is required for workers 0em0a11e0t10n Inatire nco. TIN pollcy may not ha canceled nor tha cove►agq reduced without 30 days' prier wfthen notice of ouch cnnceliallon or reduclinn In unvarage to the Rlr;k Mannger. City of Lodi. 221 Wrist pine St., Lodi, CA 952d0. HIOTE; The City reserves the right to obtain a full oertlrled copy of any Insurance pollcy or endorsements required. i✓ailure to exercise this right ahall not constitute a waiver of the Cfty's right to exaralns after the effeatfve date. Page 21 of 2 pages j Risk: rev,03,2016 RESOLUTION NO. 2022-125 A RESOLUTION OF THE LODI CITY COUNCIL AUTHORIZING THE CITY MANAGER TO EXECUTE AMENDMENT NO. 3 TO THE PROFESSIONAL SERVICES AGREEMENT WITH HINDERLITER DE LLAMAS, OF BREA, TO CONTINUE TO PROVIDE SALES, USE AND TRANSACTION TAX SERVICES FOR THE CITY AND MEASURE L, BUSINESS LICENSE TAX AND ADMINISTRATIVE SERVICES, BUSINESS LICENSE TAX AUDIT, TRANSIENT OCCUPANCY TAX ADMINISTRATION (TOT) AND SHORT-TERM RENTAL ADMINISTRATION SERVICES WHEREAS, Hinderliter de Llamas and Associates (HdL) has provided sales tax audit, economic analysis, recovery and consulting services to the City of Lodi for over 30 years; and WHEREAS, HdL is the preeminent provider of these services in California due to their years of experience, established relationships, and interface with the California Department of Tax and Fee Administration (CDTFA); and WHEREAS, HdL's agreement with the City of Lodi will expire on May 31, 2022; and WHEREAS, HdL has recovered substantial amounts of money through audits of CDTFA by identifying non- or under -reporting businesses and ensuring those businesses accurately report past and future sales tax revenues; and WHEREAS, HdL has continuously improved revenue for Business License taxes and TOT since the inception of HdL in 2020; and WHEREAS, the compensation for Business License Tax, Transient Occupancy Tax and Short -Term Rental Services will increase to $13.92 per Business License, $802.92 per monthly TOT filing, and $750 for quarterly filings. These fees will be indexed to CPI -U each January and all other fees will remain the same; and WHEREAS, staff recommends extending its current contract with HdL an additional two years until May 31, 2024, to provide services for Sales Tax, Transaction Tax (Measure L), Business License Tax and Transient Occupancy Tax. NOW, THEREFORE, BE IT RESOLVED that the Lodi City Council does hereby authorize the City Manager to execute Amendment No. 3 to the Professional Services Agreement with Hinderliter de Llamas and Associates, of Brea, California, to continue to provide Sales, Use and Transaction Tax Services for the City and Measure L, Business License Tax and Administrative Services, Business License Tax Audit, Transient Occupancy Tax Administration (TOT) and Short -Term Rental Administration Fees through May 31, 2024; and BE IT FURTHER RESOLVED, pursuant to Section 6.3q of the City Council Protocol Manual (adopted 11/6/19, Resolution No. 2019-223), the City Attorney is hereby authorized to make minor revisions to the above -referenced document(s) that do not alter the compensation or term, and to make clerical corrections as necessary. Dated: May 18, 2022 I hereby certify that Resolution No. 2022-125 was passed and adopted by the City Council of the City of Lodi in a regular meeting held May 18, 2022 by the following votes: AYES: COUNCIL MEMBERS — Hothi, Khan, Nakanishi, and Mayor Chandler NOES: COUNCIL MEMBERS — None ABSENT: COUNCIL MEMBERS — Kuehne ABSTAIN: COUNCIL MEMBERS — None OLIVIA NASHED City Clerk 2022-125