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CITY OF SAN BERNARDINO - REQUEST FOR COUNCIL ACTION
Dept: Public Services
Or,r"f~'L
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Subject A resolution authorizing the Mayor of the City
of San Bernardino to execute on behalf of the City an
agreement between Transport Tax Consulting, Inc.
(ITC) and the City of San Bernardino for fuel excise tax
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reVIew serVIces.
From: Lynn Merrill, Director
Date: September 12, 2000
Council Meeting Date: October 2, 2000
Synopsis of Previous Council Action
Recommended Motion:
Adopt resolution
~/IW
Lynn Merrill
Contact person:
Lynn Merrill
Phone:
5140
Supporting data attached: Staff Report, Resolution, Agreement
Ward:
All
FUNDING REQUIREMENTS:
Amount:
FY 2001-2002
50% of actual refunds
estimated at $36,000
Source:
635-341-5505
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Council Notes:
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Agenda Item No.~
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CITY OF SAN BERNARDINO - REQUEST FOR COUNCIL ACTION
STAFF REPORT
SUBJECT
A Resolution authorizing the Mayor of the City of San Bernardino to execute on behalf of the City
an agreement between Transport Tax Consulting, Inc. (ITC) and the City of San Bernardino for
fuel excise tax review services.
BACKGROUND
Fuel excise taxes are added onto the purchased price of fuel. These taxes, however, are for on-
highway use of vehicles. Most cities and agencies, including San Bernardino, do not have a
mechanism in place to detennine how many miles are off-highway use versus on-highway use,
resulting in an overpayment of fuel excise taxes.
Transport Tax Consulting, Inc. (ITC) approached city staff with an opportunity to recapture
overpaid fuel excise taxes and permanently reduce future excise taxes. As part of their proposal
(Attachment 1), TIC will do the following:
1. Conduct a field study (approximately 2 to 3 months in duration) in order to document actUal on
and off highway fuel use of all City equipment and vehicles.
2. File an appeal with the State Board of Equalization (SBE) and obtain approval for documented
off-highway fuel use.
3. Upon receipt of approval, file tax returns and obtain refunds.
The process of documenting off-highway use and the appeal process with the SBE are time
consuming and require specialized expertise. TIC, Inc. possesses this highly specialized tax audit
and accounting expertise in this area to successfully pursue tax refunds and minimize fuel taxes paid
in the future. City staff does not currently possess such specialized expertise and knowledge. As part
of this proposal, TIC, Inc. will train City staff to ensure future deductions are the maximum
allowable and are properly supported. In addition, TIC, Inc. would represent the City before the
SBE through the entire refund process until SBE approval is obtained.
The proposed tax review would allow the City to permanently receive refunds on properly
documented non-taxable fuel use. TIC, Inc. estimates this process will save the City approximately
$12,000 annually. TIC Inc.'s compensation for the tax review is based solely on refunds actually
received by the City as a direct result of TIC, Inc.'s efforts. There is no fee if the refunds are
disallowed. As compensation, TIC, Inc. would receive 50% of the amount of refunds from non-
taxable fuel use prior to state approval, up to the SBE maximum of 36 months past usage. Any
refunds received from future non-taxable fuel use (after the date of state approval) would be kept
100% by the City. TIC, Inc. will assume all costs, including employees travel, lodging, meals, and
other costs incidental to the work performed. The City of Visalia has completed the appeal process
and has received refunds. The City of Riverside has completed the appeal process and is awaiting
refunds. Both contracts were similarly 50% compensation for past refunds with the cities keeping
100% of future refunds.
"
The appeal process with the SBE takes generally 1-2 years before approval. Once approved, refunds
can be obtained easily on an annual, quarterly, or monthly basis. The City of Riverside has
completed the field study and lTC, Inc. is currently at the appeal stage with an estimate of $1200 to
$1600 per month in refunds. Riverside was unable to find another vendor currently performing
these services. The City of Visalia has completed the appeal process with the help of lTC, Inc. and
received over $86,000 in past refunds from 1993 to 1998 (prior to 50% payment to lTC, Inc.) and
receives quarterly refunds of between $3800 and $4500. City of San Bernardino staff was unable to
find another vendor who could provide this service.
FINANCIAL IMPACT
There will be no fee if the refund request is disallowed by the State. If allowed, 50% of past refunds
will be paid to lTC upon receipt. Gross refunds are estimated by lTC of $12,000 annually for three
(3) years for a total of $36,000. Due to the lengthy appeal process with the SBE, this revenue
amount and an expenditure amount equal to 50% will be included in the FY 2001-2002 budget. The
initial term of this Agreement shall be two (2) years from the date first shown on this Agreement
and is subject to termination by either party upon thirty (30) days written notice to the other. There
may be up to three (3) one-year extensions.
RECOMMENDATION
That the Resolution be adopted to authorize the Mayor to execute on behalf of the City an
agr~ent betv:'een Transport Tax Consulting, Inc. and the City of San Bernardino for fuel excise
tax reView serVIce.
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RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF SAN
BERNARDINO AUTHORIZING THE MAYOR TO EXECUTE ON BEHALF OF
THE CITY AN AGREEMENT BETWEEN TRANSPORT TAX CONSULTING, INC.
(TTC) AND THE CITY OF SAN BERNARDINO FOR FUEL EXCISE TAX REVIEW
SERVICES.
I HEREBY CERTIFY that the foregoing resolution was duly adopted by the Mayor and
Common Council of the City of San Bernardino at a
meeting thereof, held on
the
day of
,2000, by the following vote, to wit:
Council Members:
Ayes
N:tYs
Abstain
Absent
ESTRADA
LIEN
MCGINNIS
SCHNETZ
SUAREZ
ANDERSON
MCCAMMACK
City Clerk
The foregoing resolution is hereby approved this
,2000.
day of
Approved as to form and
Legal conte t;
James F. e
Judith Valles, Mayor
City of San Bernardino
BY:
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SERVICES AGREEMENT
THIS AGREEMENT is entered into this _ day of , 2000, between
Transport Tax Consulting, Inc. ("CONTRACTOR") and the CITY OF SAN BERNARDINO
("CITY)".
WITNESSETH:
A. WHEREAS, CITY has need for fuel excise tax review and,
B. WHEREAS, CONTRACTOR is competent, experienced and able to perform
said services: and,
C. WHEREAS, CONTRACTOR has provided the most advantageous and best
responsible proposal for providing said services;
NOW THEREFORE, the parties hereto agree as follows:
1. CONTRACTOR shall furnish tax review services including but not limited to a field study,
an appeal with the State Board of Equalization, filing of tax returns, obtaining refunds, and
training CITY staff.
2. Over the term of this Agreement, CONTRACTOR shall be paid for such services 50% of the
amount of refunds from past non-taxable fuel use. Refunds for non-taxable fuel use after the
,date of state approval will be kept 100% by CITY.
3, CONTRACTOR shall provide the Public Services Department with an invoice in arrears
upon receipt of refunds and shall be provided payment within thirty (30) days therefrom.
CITY retains the right to challenge all or any part of an invoice.
4. The initial term of this Agreement shall be two (2) years from the date first shown above and
is subject to termination by either party upon thirty (30) days written notice to the other.
There may be up to three (3) one-year extensions.
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5. CONTRACTOR shall indemnify, defend and hold CITY, its officers, employees and agents
harmless from any claim, demand, liability, suit, judgment or expense (including, without
limitation, reasonable costs of defense) arising out of or related to CONTRACTOR's
performance of this agreement, except that such duty to indemnify, defend and hold harmless
shall not apply where injury to person or property is caused by CITY's willful misconduct or
sole negligence. The costs, salary and expenses of the City Attorney and members of his
office in enforcing this Agreement on behalf of the City shall be considered as "attorney's
fees" for the purposes of this paragraph.
6. While not restricting or limiting the foregoing, during the term of this Agreement,
CONTRACTOR shall maintain in effect policies of comprehensive public, general, and
automobile liability insurance, in the amount of $1,000,000 combined single limit, and
statutory worker's compensation coverage, and shall file copies of said policies with the
CITY's Risk Manager prior to undertaking any work under this Agreement. The policies
shall name the CITY as an additional insured and shall provide for ten (10) day notification
to the CITY if said policies are terminated or materially altered.
7. CONTRACTOR shall perform work tasks as directed by the Public Services Department, but
for all intents and purposes, CONTRACTOR shall be an independent contractor and not an
agent or employee ofthe CITY.
8. In the performance of this Agreement and in the hiring and recruitment of employees,
CONTRACTOR shall not discriminate on the basis of race, creed, color, religion, sex,
physical handicap, ethnic background or country of origin.
9. Any notice to be given pursuant to this Agreement shall be deposited with the United States
Postal Service, postage prepaid and addressed as follows:
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TO THE CITY:
Public Services Director
300 North 'D' Street
San Bernardino CA 92418
TO THE CONTRACTOR
Transport Tax Consulting, Inc.
929 N. Val Vista Dr. Ste. 107103
Gilbert, AZ 85234
Nothing in this paragraph shall be construed to prevent the giving of notice by
personal service.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day
and date first above shown.
Date: by:
Transport Tax Consulting, Inc.
e Signature
CITY OF SAN BERNARDINO
Date: by:
Judith Valles
Mayor
City of San Bernardino
ATTEST:
Rachel Clark, City Clerk
Approved as to form
and legal content:
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October 6, 2000
Transport Tax Consulting, Inc.
929 N. Val Vista Drive, Suite 107103
Gilbert, AZ 85234
Dear Sir,
At the Mayor and Common Council meeting of October 2, 2000, the City of San Bernardino
adopted Resolution 2000-302 - Resolution authorizing an agreement between Transport Tax
Consulting, Inc. and the City of San Bernardino for fuel excise tax review services.
Enclosed is one (1) original agreement. Please sign in the appropriate location and return the
original agreement to the City Clerk's Office, Attn: Michelle Taylor, P.O. Box 1318, San
Bernardino, CA 92402, as soon as possible.
Please retain a copy of the executed agreement for your files.
Please be advised that the resolution and agreement will be null and void if not executed by
December 1, 2000.
If you have any questions, please do not hesitate to contact me at (909)384-5002.
Sincerely,
Michelle Taylor
Senior Secretary
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** FOR OFFICE USE ONLY - NOT A PUBLIC DOCUMENT **
RESOLUTION AGENDA ITEM TRACKING FORM
Item # '2...\
k2r
Resolution # 'Ca::f) - 302
Abstain..e-- Absent z...
Meeting Date (Date Adopted): ! 0'- "Z.;-O 0
Vote: Ayes I\~-" Nays
Change to motion to amend original documents: -
Reso. # On Attachments: ~
Contract term;
Date Sent to Mayor; \().-4-o0 Date Returned from Mayor;
Date of Clerk's Signature: \0 -5 .00 Reso. Log Updated;
ICJ-~-cG
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Null/Void After: 1"2. '(-00
Date of Mayor's Signature: l(j -4-00
Seal Impressed; V
Date Memo Sent to Department for Signature:
See Attached: - Date Returned:
Date Letter Sent to Outside Party for Signature: to -(,,-00 See Attached:./ Date Returned: I ()-, 3'-( )(;
60 Day Reminder Letter Sent on 30tb day: See Attached; -=-
90 Day Reminder Letter Sent on 45th day: See Attached: -
Note on Resolution of Attachment stored separately: ====-
Direct City Clerk (circle I): PUBLISH, POST, RECORD W/COUNTY Date:
Request for Council Action & Staff Report Attached:
Updated Prior Resolutions (Other Than Below);
Updated CITY Personnel Folders (6413, 6429, 6433,10584,10585,12634):
Updated CDC Personnel Folders (5557);
Updated Traffic Folders (3985, 8234, 655, 92-389):
Copies Distributed to:
City Attorney /
Parks & Rec.
Code Compliance Dev. Services
Police Public Services../ Water
Notes:
-
See Attached: -
Yes ./ No By
Yes No / By
-
Yes No II'" By
-
Yes No ,/ By
Yes Nol By
EDA
Finance /
MIS
Others:
BEFORE FILING. REVIEW FORM TO ENSURE ANY NOTATIONS MADE HERE ARE TRANSFERRED TO THE
YEARLY RESOLUTION CHRONOLOGICAL LOG FOR FUTURE REFERENCE (Contract Term. etc.)
Ready to File: /hI
Date; 10-/6 --CO