HomeMy WebLinkAbout25-Finance D
CITY OF SAN BERNARDINO - REQUEST FOR COUNCIL 0 y I
From: Barbara Pachon, Finance Subject: Resolution authorizing the
Director execution of an agreement with
MuniServices, LLC to provide
Dept: Finance analysis and audit services for the
transactions and use tax collected by
Date: September 14, 2007 the State Board of Equalization and
resolution authorizing designated
representative to receive transaction
and use tax records from the State
Board of Equalization and rescinding
Resolution 87-130.
Council Meeting: 1011107
Synopsis of Previous Council Action:
April 20, 1987 Resolution 87-130 designating Municipal Resource Consultants
as the authorized City Representative to examine sales and use
tax records, and designating the Director of Finance and City
Auditor as the Officers authorized to receive information
contained in, or derived from, the sales and use tax records.
April 20, 1987 Resolution 87-131 authorizing the execution of an agreement with
Municipal Resource Consultants, a partnership of John Austin and
Allen Charkow, to provide sales tax audit and information services.
Recommended motions: /
Adopt Resolutions /
Signature
Contact person: Barbara Pachon, Director of Finance Phone: 5242
Supporting data attached: Staff Report, Attachments Ward: All
FUNDING REQUIREMENTS: Amount: $9,000 + 25% of audit findings
Source: 001-092-5502
Finance:
Council Notes:
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Agenda Item No.
CITY OF SAN BERNARDINO - REQUEST FOR COUNCIL ACTION
STAFF REPORT
SUBJECT:
Resolution authorizing the execution of an agreement with MuniServices, LLC to provide analysis and
audit services for the City of San Bernardino's transactions and use tax collected by the State Board of
Equalization, and also a resolution designating the City Manager, Director of Finance, Deputy Director
of Finance and MuniServices, LLC as authorized representatives to receive and examine transactions
and use tax records from the State Board of Equalization pertaining to transactions and use taxes
collected by the Board of Equalization for the City of San Bernardino.
BACKGROUND:
On November 7, 2006, San Bernardino voters approved Measures Z and YY, creating a new .25% local
transactions and use tax increase effective April 1, 2007. The State Board of Equalization (BOE) is the
agency responsible for administering and auditing all transactions and use tax activity for all cities in
California. As a back up to ensure that the City of San Bernardino receives all of the transactions and
use tax revenues due to the City, the City uses sales tax auditors, MuniServices, LLC, to perform
additional audits and reviews of transactions and use tax activity above and beyond audits done by the
State Board of Equalization. Now that the City's new .25% local transactions and use tax has been in
effect for almost six months the City needs to authorize MuniServices, LLC to begin audit and review
work on the new transactions and use tax over and above what the BOE already does. A resolution
authorizing the City Manager to execute an updated agreement with MuniServices, LLC needs to be
approved by the Mayor and Council to accomplish this.
MuniServices, LLC, has been auditing the City's sales tax records since 1987. Because they have the
capability to download and review information on a broader scale direct from the BOE for multiple
clients, MuniServices can conduct audits and catch mistakes much faster and more efficiently than
possible by City staff. In addition to audit services, MuniServices, LLC also provides the City with
various reports used by the Finance Department to track and project the City's sales tax revenue.
MuniServices also coordinates with the taxpayer and/or BOE to correct any misallocated or
underreported sales tax due to the City. It is expected that the initial audit will catch and correct
misallocated and underreported taxes by businesses within the City of San Bernardino. Because
businesses outside the City of San Bernardino city limits, especially those out of state, may not be
familiar with our district tax, or familiar with California's transactions and use tax regulations in
general, most of MuniServices, LLC'S ongoing corrective work will most likely be with those
businesses.
MuniServices, LLC compensation will continue at the same rate even though the new Measure Z tax is
being added to the scope of services currently provided by MuniServices. The City of San Bernardino
currently pays $9,000 per year ($2,250 per quarter) for the preparation and analysis of the quarterly
transactions and use tax reports (called STARS Digest) prepared by MuniServices from the data
received from the BOE. After a year, this fee will increase by the Consumer Prince Index as reported
by the Bureau of Labor Statistics. This fee also covers any analysis of proposed sales tax legislation and
research of various sales tax issues that may come up from the City. Compensation for transactions and
use tax audit services, including the new tax, will remain at the current 25% contingency fee. This fee
applies to six quarters after the date of correction and all eligible prior quarters back to and including the
three quarters prior to the date of knowledge quarter. It should be noted that MuniServices, LLC actual
compensation for audit work is entirely predicated and contingent upon their ability to find and correct
A)0 - l 6 /0-/-0-?
mistakes. If the audit work done by MuniServices, LLC does not produce additional sales tax revenue
to the City of San Bernardino then there is no compensation paid to MuniServices, LLC for this audit
work.
The second resolution included with this item is an updated resolution that designates MuniServices,
LLC as well as the City Manager, the Director of Finance and the Deputy Director of Finance as the
authorized City of San Bernardino representatives to receive and examine the transactions and use tax
records from the State Board of Equalization. At the recommendation of the State Board of
Equalization, all designations in the resolution are done by entity name and position/title rather than
individual name. By doing this, there would be an automatic transfer of authority when personnel
changes occur, eliminating the need for a new resolution each time a designated individual leaves the
City. This will allow a continued flow of information into the City, without a break, should a designated
individual leave the City. Regardless of the individual who holds a designated position, the City's sales
tax auditors as well as management staff in the City need the transactions and use tax data from the State
Board of Equalization.
FINANCIAL IMPACT:
Sufficient funds have already been included in the City of San Bernardino's Non-Departmental,
Contractual Services Budget for FY 2007-2008 to pay MuniServices, LLC for transactions and use tax
quarterly reports and audits.
RECOMMENDATION:
Adopt Resolutions
RESOLUTION NO. C (OPY
1
2 RESOLUTION OF THE CITY OF SAN BERNARDINO AUTHORIZING
THE EXECUTION OF AN AGREEMENT WITH MUNISERVICES, LLC TO
3 PROVIDE ANALYSIS AND AUDIT SERVICES FOR THE CITY OF SAN
BERNARDINO'S TRANSACTIONS AND USE TAX COLLECTED BY THE
4 STATE BOARD OF EQUALIZATION.
5 BE IT RESOLVED BY THE MAYOR AND COMMON COUNCIL OF THE
6 CITY OF SAN BERNARDINO AS FOLLOWS:
7 SECTION 1: The City Manager of the City of San Bernardino is hereby authorized
8 and directed to execute on behalf of said City an Agreement with MuniServices, LLC to
9 provide analysis and audit services for the City of San Bernardino transactions and use tax
10
collected by the State Board of Equalization, a copy of which is attached hereto, marked
11
12 Exhibit "A" and incorporated herein by reference as fully as though set forth at length.
13 SECTION 2: The authorization to execute the above mentioned agreement is
14 rescinded if the parties to the agreement fail to sign it within sixty (60) days of the passage
15 of this resolution.
16
17
18
19
20
21
22
23
24
25
26
27
28
1
RESOLUTION OF THE CITY OF SAN BERNARDINO AUTHORIZING
1 THE EXECUTION OF AN AGREEMENT WITH MUNISERVICES, LLC TO
PROVIDE ANALYSIS AND AUDIT SERVICES FOR THE CITY OF SAN
2 BERNARDINO'S TRANSACTIONS AND USE TAX COLLECTED BY THE
3 STATE BOARD OF EQUALIZATION.
4 I HEREBY CERTIFY that the foregoing resolution was duly adopted by the Mayor
5
and Common Council of the City of San Bernardino at a meeting
6
7 thereof, held on the day of , 2007, by the following vote, to wit:
g COUNCILMEMBERS AYES NAYS ABSTAIN ABSTAIN
9 ESTRADA
10 BAXTER
11
BR SIKER
12
DERRY
13
14 KELLEY
15 JOHNSON
16 MCCAMMACK
17
18
Rachel G. Clark, City Clerk
19
20 The foregoing resolution is hereby approved this day of
21
2007.
22
23 Patrick J. Morris, Mayor
City of San Bernardino
24 Approved as to form:
25
26 JAMES F. PENMAN,
City Attorney
27
28 BY:
2
OFFICE OF THE CITY CLERK
RACHEL G.CLARK,C.M.C.-CITY CLERK
300 North"D"Street•San Bernardino•CA 92418-0001
909.384.5002•Fax: 909.384.5158
San Be Da Ino www.sbcity.org
SM
October 25, 2007
MuniServices, LLC
7335 N. Palm Bluffs Ave.
Fresno, CA 93711
Attn: Legal Department
To Whom It May Concern:
At the Mayor and Common Council meeting of October 15, 2007, the City of San Bernardino
adopted Resolution 2007-428 — Resolution of the City of San Bernardino authorizing the
execution of an agreement with MuniServices, LLC to provide analysis and audit services for the
City of San Bernardino's Transactions and Use Tax collected by the State Board of Equalization.
Enclosed are one (1) original agreement and two (2) duplicate original agreements, to be
executed. Please sign in the appropriate locations and return the original and one (1) duplicate
original agreement to the City Clerk's Office, Attn: Margaret Fedor, P.O. Box 1318, San
Bernardino, CA 92402, as soon as possible. Please keep one (1) fully executed duplicate original
agreement for your records.
Please be advised that the agreement will be null and void if not executed within sixty (60)
days or by Friday, December 14, 2007.
Sincerely,
6�t f&Lo,-.)
Sandra Medina
Assistant to the City Clerk
Enclosure
CrrY OF SAN BERNARDINO
ADOPTED SHARED VALUES: Integrity•Accountability•Respect for Human Dignity•Honesty
MuniServices, LLC.
/I/ UNISERVICES 7335 North Palm Bluffs Avenue Fresno, California 93711
Phone: 800.800.8181 Fax: 559.275.0171
www.MuniServices.com
"Ile,
October 31, 2007 - >
Sl!!
Margaret Fedor
City Clerks Office
300 N. "D" Street
San Bernardino, California 92418
Re: Contract with MuniServices, LLC to Provide Audit Services
Dear Ms. Fedor:
For your records, here are two fully executed originals of the Consultant Services Agreement and
Addendums for Sales and Use Tax Audit Services, Sales/Use Tax Analysis and Reporting
Services, and Local District Tax Audit Services between MuniServices, LLC and The City of
San Bernardino.
If you have any questions or concerns please feel free to contact Marina Sloan, your client
services representative at 805.443.4442 or Eric Myers, General Counsel by phone at
559.271.6878, by fax at 559.312.2878 or by email at eric.myersgmuniservices.com.
Sincerely,
Patricia A. Dunn
Contracts Administrator
Enclosures
CITY OF SAN BERNARDINO
Interoffice Memorandum
CITY CLERK'S OFFICE
Records and Information Management (RIM) Program
DATE: November 2, 2007
TO: Veronica Martinez, Senior Secretary
Finance Department
FROM: Linda Sutherland, Deputy City Clerk ,
RE: Transmitting Documents—Resolution No. 2007-428
At the Mayor and Common Council meeting of October 15,2007, the City of San Bernardino
adopted Resolution No. 2007-428 — Resolution of the City of San Bernardino authorizing the
execution of an agreement with MuniServices, LLC to provide analysis and audit services for the
City of San Bernardino's Transactions and Use Tax collected by the State Board of Equalization.
Attached is a fully executed duplicate original agreement for your records.
I hereby acknowledge receipt of the above mentioned documents.
Signed:
Please sign and return
Date:
LS/mf
EXHIBIT "A"
SERVICES AGREEMENT Py
MUNISERVICES, LLC 0
THIS AGREEMENT is made and entered into this day of , 2007
("Effective Date"),by and between the CITY OF SAN BERNARDINO,a charter city("City"),and
MUNISERVICES, LLC., a Delaware limited liability company ("CONSULTANT").
WITNESSETH :
A. WHEREAS,CITY proposes to have CONSULTANT perform the services described
herein below; and
B. WHEREAS, CONSULTANT represents that it has that degree of specialized
expertise contemplated within California Government Code Section 37103 and holds all necessary
licenses to practice and perform the services herein contemplated; and
C. WHEREAS, CITY and CONSULTANT desire to contract for services as described
in Exhibits "A 1-3"; and
D. WHEREAS, no official or employee of CITY has a financial interest, within the
provisions of California Government Code Sections 1090-1092, in the subject matter of this
Agreement.
NOW, THEREFORE, for and in consideration of the mutual covenants and conditions
contained herein, the parties hereby agree as follows:
1.0. SERVICES PROVIDED BY CONSULTANT
1.1. Scope of Services. For the remuneration stipulated, CONSULTANT shall provide
the professional services described in the Scope of Services attached hereto as Exhibits "A 1-3" and
incorporated herein by this reference. If a conflict arises between the Scope of Service and this
Services Agreement (hereinafter "Agreement"), the terms of the Agreement shall govern.
1.2. Professional Practices. All services to be provided by CONSULTANT pursuant to
this Agreement shall be provided in a manner consistent with the standards of care, diligence and
skill ordinarily exercised by professional consultants in similar fields and circumstances in
accordance with sound professional practices. CONSULTANT also warrants that it is familiar with
all laws that may affect its performance of this Agreement and shall advise CITY of any changes in
any laws that may affect CONSULTANT's performance ofthis Agreement. CONSULTANT further
represents that no CITY employee will provide any services under this Agreement.
[F:\CALKIN S\Agreements\Mun i S ery ices.Agreement.wpd]
1.3. Warran . CONSULTANT warrants that it shall perform the services required by this
IF Agreement in compliance with all applicable Federal and California employment laws including,but
not limited to,those laws related to minimum hours and wages;occupational health and safety; fair
employment and employment practices;workers'compensation insurance and safety in employment;
and all other Federal, State and local laws and ordinances applicable to the services required under
this Agreement. CONSULTANT shall indemnify and hold harmless CITY from and against all
claims, demands, payments, suits, actions, proceedings and judgments of every nature and
description, including reasonable attorney's fees and costs (collectively, "Losses and Liabilities"),
presented, brought or recovered against CITY for, or on account of, any liability under any of the
above-mentioned laws, arising from or related to CONSULTANT's performance under this
Agreement,except to the extent that such Losses and Liabilities are caused by the gross negligence
or willful misconduct of CITY.
1.4. Non-discrimination. In performing this Agreement,CONSULTANT shall not engage
in, nor permit its officers, employees or agents to engage in, discrimination in employment of
persons because of their race, religion, color, national origin, ancestry, age, mental or physical
disability,medical condition,marital status,sexual gender or sexual orientation,except as permitted
pursuant to Section 12940 of the Government Code. Violation of this provision may result in the
imposition of penalties referred to in Labor Code Section 1735.
1.5 Non-Exclusive Agreement. CONSULTANT acknowledges that CITY may enter into
agreements with other consultants for services similar to the services that are subject to this
Agreement or may have its own employees perform services similar to those services contemplated
by this Agreement.
1.6. Delegation and Assignment. This is a personal service contract, and the duties set
forth herein shall not be delegated or assigned to any person or entity without the prior written
consent of CITY. CONSULTANT may engage a subcontractor(s) as permitted by law and may
employ other personnel to perform services contemplated by this Agreement at CONSULTANT's
sole cost and expense.
1.7 License Agreement. CITY agrees that it is bound by the terms of Exhibit 4,attached
hereto and incorporated by reference.
1.8 City Business Certificate. CONSULTANT shall obtain and maintain during the term
of this Agreement,a valid CITY Business Registration Certificate pursuant to Title 5 of the City of
San Bernardino Municipal Code and any and all other licenses,permits,qualifications,insurance and
approvals of whatever nature that are legally required of CONSULTANT to practice its profession,
skill or business, unless exempted by law from such requirement or requirements.
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2.0. COMPENSATION AND BILLING
2.1. Compensation.Except as provided herein,CONSULTANT shall be paid as set forth
in Exhibits "A 1-3" of the Scope of Services.
2.2. Additional Services. CONSULTANT shall not receive compensation for any services
provided outside the scope of services unless the CITY, prior to CONSULTANT performing the
additional services, approves such additional services in writing. It is specifically understood that
oral requests and/or approvals of such additional services or additional compensation shall be barred
and are unenforceable.
2.3. Method of Billing. CONSULTANT may submit invoices to CITY for approval. Said
invoice shall be based on the total of all CONSULTANT's services which have been completed to
CITY's sole satisfaction. CITY shall pay CONSULTANT's invoice within forty-five(45)days from
the date CITY receives said invoice. The invoice shall describe in detail,the services performed and
the associated time for completion. Any additional services approved and performed pursuant to this
Agreement shall be designated as "Additional Services" and shall identify the number of the
authorized change order, where applicable, on all invoices.
2.4. Records and Audits. Records of CONSULTANT's services relating to this
Agreement shall be maintained in accordance with generally recognized accounting principles and
shall be made available to CITY for inspection and/or audit at mutually convenient times for a period
of three (3) years from the Effective Date.
3.0. TERM AND NOTIFICATION.
3.1. Term. This Agreement shall commence on the Effective Date and continue for three
years, unless the Agreement is previously terminated as provided for herein.
3.2 Termination. CITY or CONSULTANT may terminate the services provided under
Section 1.1 of this Agreement upon thirty (3 0) days written notice to the other party. In the event
of termination, CONSULTANT shall be paid the reasonable value of services rendered to the date
of termination.
3.3 Documents. In the event of termination of this Agreement, all documents prepared
by CONSULTANT in its performance of this Agreement including, but not limited to, finished or
unfinished background investigations,shall be delivered to the CITY within ten(10)days of delivery
of termination notice to CONSULTANT, at no cost to CITY. Any use of uncompleted documents
without specific written authorization from CONSULTANT shall be at CITY's sole risk and without
liability or legal expense to CONSULTANT.
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4.0. INSURANCE
4.1. Minimum Scope and Limits of Insurance. CONSULTANT shall obtain and maintain
during the term of this Agreement all of the following insurance coverages:
(a) Commercial general liability, including premises-operations,
products/completed operations, broad form property damage, blanket
contractual liability, independent contractors, personal injury with a policy
limit of not less than One Million Dollars($1,000,000.00),combined single
limits, per occurrence and aggregate.
(b) Automobile liability for owned vehicles,hired,and non-owned vehicles,with
a policy limit of not less than One Million Dollars($1,000,000.00),combined
single limits, per occurrence and aggregate.
(c) Workers' compensation insurance as required by the State of California.
4.2. Notice. CONSULTANT will act reasonably to provide prompt notice to CITY if any
insurance required hereunder is terminated, materially changed, reduced or cancelled.
4.3. Certificates of Insurance. CONSULTANT shall provide to CITY certificates of
insurance showing the insurance coverages and required endorsements described above, in a form
and content approved by CITY, prior to performing any services under this Agreement.
4.4. Non-limiting. Nothing in this Section shall be construed as limiting in any way,the
indemnification provision contained in this Agreement,or the extent to which CONSULTANT may
be held responsible for payments of damages to persons or property.
5.0. GENERAL PROVISIONS
5.1. Entire Agreement: This Agreement constitutes the entire Agreement between the
parties with respect to any matter referenced herein and supersedes any and all other prior writings
and oral negotiations. This Agreement may be modified only in writing, and signed by the parties
in interest at the time of such modification. The terms of this Agreement shall prevail over any
inconsistent provision in any other contract document appurtenant hereto,including exhibits to this
Agreement.
5.2. Notices. Any notices, documents, correspondence or other communications
concerning this Agreement or the work hereunder may be provided by personal delivery, facsimile
or United States mail and shall be addressed as set forth below. Such communication shall be
deemed served or delivered: a) at the time of delivery if such communication is sent by personal
delivery;b)at the time of transmission if such communication is sent by facsimile; and c)48 hours
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after deposit in the U.S.Mail as reflected by the official U.S.postmark if such communication is sent
through regular United States mail.
IF TO CONSULTANT: IF TO CITY:
MuniServices, LLC CITY MANAGER
7335 N. Palm Bluffs Ave. City of San Bernardino
Fresno, CA 93711 300 North "D" Street
Attn: Legal Department San Bernardino, CA 92418
Email: legal @muniservices.com Telephone: (909) 384-5122
Fax: (909) 384-5138
5.3. Attorneys' Fees: In the event that litigation is brought by any party hereto in
connection with this Agreement, the prevailing party in a final non-appealable judgment shall be
entitled to recover from the opposing parry all costs and expenses, including reasonable attorneys'
fees,incurred by the prevailing party in the exercise of any of its rights or remedies hereunder or the
enforcement of any of the terms, conditions, or provisions hereof. The costs, salary and expenses
of the City Attorney and members of his office in enforcing this contract on behalf of the CITY shall
be considered as "attorneys' fees" for the purposes of this Agreement.
5.4. Governing. This Agreement shall be governed by and construed under the laws
of the State of California without giving effect to that body of laws pertaining to conflict of laws.
In the event of any legal action to enforce or interpret this Agreement, the parties hereto agree that
the sole and exclusive venue shall be a court of competent jurisdiction located in San Bernardino
County, California.
5.5. Assignment: Neither party hereto shall voluntarily or by operation of law assign,
transfer, sublet or encumber all or any part of its interest in this Agreement without the other party's
prior written consent. Any attempted assignment,transfer,subletting or encumbrance shall be void
and shall constitute a breach of this Agreement and cause for termination of this Agreement.
Regardless of CITY's consent, no subletting or assignment shall release CONSULTANT of
CONSULTANT's obligation to perform all other obligations to be performed by CONSULTANT
hereunder for the term of this Agreement.
5.6. Indemnity. CONSULTANT shall protect,defend,indemnify and hold harmless CITY
and its elected and appointed officials, boards, commissions, officers, attorneys, agents and
employees from any and all Losses and Liabilities arising from or in any way related to
CONSULTANT's acts, omissions and obligations under this Agreement, except to the extent such
Losses and Liabilities are caused by the gross negligence or willful misconduct of CITY.
CITY shall protect, defend, indemnify and hold harmless CONSULTANT and its
directors, officers, attorneys, agents and employees from any and all Losses and Liabilities arising
from or in any way related to CITY's acts, omissions and obligations under this Agreement,except
to the extent such Losses and Liabilities are caused by the gross negligence or willful misconduct
of CONSULTANT.
1
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5.7. Independent Contractor. CONSULTANT, at all times while performing under this
Agreement, is and shall be acting at all times as an independent contractor and not as an agent or
employee of CITY. CONSULTANT shall secure,at his expense,and be responsible for any and all
payment of wages, benefits and taxes including, but not limited to, Income Tax, 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 are required, in connection with the services to be performed hereunder. Neither
CONSULTANT nor its officers,agents and employees shall be entitled to receive any benefits which
employees of CITY are entitled to receive and shall not be entitled to workers' compensation
insurance, unemployment compensation, medical insurance, life insurance, paid vacations, paid
holidays, pension, profit sharing or social security on account of CONSULTANT and its officers',
agents'and employees'work for the CITY. This Agreement does not create the relationship of agent,
servant, employee partnership or joint venture between the CITY and CONSULTANT.
5.8 Conflict of Interest Disclosure. CONSULTANT or its employee may be subject to
the provisions of the California Political Reform Act of 1974 (the "Act"), which (1) requires such
persons to disclose financial interests that may be materially affected by the work performed under
this Agreement,and(2)prohibits such persons from making or participating in making decisions that
will have a foreseeable financial affect on such interest.
CONSULTANT shall conform to all applicable requirements of the Act. Failure to
do so constitutes a material breach and is grounds for termination of the Agreement by CITY.
5.9. Responsibility for Errors. CONSULTANT shall be responsible for its work and
results under this Agreement. CONSULTANT, when requested, shall furnish clarification and/or
explanation as may be required by the CITY's representative,regarding any services rendered under
this Agreement at no additional cost to CITY. In the event that an error or omission attributable to
CONSULTANT occurs, then CONSULTANT shall, at no cost to CITY, provide all other
CONSULTANT professional services necessary to rectify and correct the matter to the sole
satisfaction of CITY and to participate in any meeting required with regard to the correction.
5.10. Prohibited Employment. CONSULTANT shall not employ any current employee of
CITY to perform the work under this Agreement while this Agreement is in effect.
5.11. Costs. Each party shall bear its own costs and fees incurred in the preparation and
negotiation of this Agreement and in the performance of its obligations hereunder except as
expressly provided herein.
5.12. No Third Party Beneficiary Rights. This Agreement is entered into for the sole
benefit of CITY and CONSULTANT and no other parties are intended to be direct or incidental
beneficiaries of this Agreement and no third party shall have any right in,under or to this Agreement.
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5.13. Headings Paragraphs and subparagraph headings contained in this Agreement are
included solely for convenience and are not intended to modify, explain or to be a full or accurate
description of the content thereof and shall not in any way affect the meaning or interpretation of this
Agreement.
5.14. Amendments. Only a writing executed by all of the parties hereto or their respective
successors and assigns may amend this Agreement.
5.15. Waiver. The delay or failure of either party at any time to require performance or
compliance by the other of any of its obligations or agreements shall in no way be deemed a waiver
of those rights to require such performance or compliance. No waiver of any provision of this
Agreement shall be effective unless in writing and signed by a duly authorized representative of the
party against whom enforcement of a waiver is sought. The waiver of any right or remedy with
respect to any occurrence or event shall not be deemed a waiver of any right or remedy with respect
to any other occurrence or event, nor shall any waiver constitute a continuing waiver.
5.16. Severability. If any provision of this Agreement is determined by a court of
competent jurisdiction to be invalid or unenforceable for any reason, such determination shall not
affect the validity or enforceability of the remaining terms and provisions hereof or of the offending
provision in any other circumstance, and the remaining provisions of this Agreement shall remain
in full force and effect.
5.17. Counterparts. This Agreement may be executed in one or more counterparts, each
of which shall be deemed an original. All counterparts shall be construed together and shall
constitute one agreement.
5.18. Corporate Authority. The persons executing this Agreement on behalf of the parties
hereto warrant that they are duly authorized to execute this Agreement on behalf of said parties and
that by doing so, the parties hereto are formally bound to the provisions of this Agreement.
[F:\CALKINS\Agreements\MuniServices.Agreement.wpd] 7
SERVICES AGREEMENT
MUNISERVICES, LLC
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by and
through their respective authorized officers, as of the date first above written.
CITY OF SAN BERNARDINO MUNISERVICES, LLC.
Fred Wilson, City Manager Signature
Name and Title
APPROVED AS TO FORM:
JAMES F. PENMAN,
City Attorney
I
[FACALMN S\Agreements\M un i Services.Agreement.Nvpd 1 8
SCOPE OF SERVICES
EXHIBIT 1
SALES AND USE TAX AUDIT (SUTA) ADDENDUM
OBJECTIVES AND METHODS
MuniServices' sales and use tax audit service is designed to maximize the City's income - and
minimize the cost of lost revenue - by detecting and documenting misallocations of local district
tax (also knows as Transactions & Use Tax), Bradley-Burns sales tax and local use tax activity
within the statute of limitations on recoverability.
In performing the sales and use tax audit program MuniServices shall=
❑ Identify and correct the sales/use tax reporting errors of businesses that, based on the
nexus of their activities, are not properly registered with the City.
❑ 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) and thereby depriving the City of
sales tax revenue.
❑ Detect, document and correct sales/use tax reporting errors/omissions and thereby
generate new, previously unrealized revenue for the City.
❑ Ensure through comprehensive audit measures that the revenue information used for
ongoing economic analysis includes all sales/use tax generators.
❑ Assist the City with strategies to preserve and even enhance sales and use tax revenue
generated by existing businesses within the City.
MuniServices' proposed sales/use tax allocation audit services for the City includes five distinct
types of audits:
❑ Taxable Nexus Field audits
❑ Permitization audits
❑ Deficiency assessment audits
❑ Accounts payable audits
❑ Quarterly Distribution Report audits
TAXABLE NERDS FIELD AUDITS
MuniServices' initial and periodic taxable nexus field audits include a physical canvassing and
evaluation of sales/use tax generating businesses located in the City. In the absence of this
undertaking, significant misallocations will remain undetected. MuniServices' field audits focus
on those businesses located in the City from which the City has not been receiving sales/use tax
revenue. The result is new or `found' revenue for the City.
PERMITIZATION AUDITS
Wholesalers, contractors, processors, manufacturers and other non-retail businesses will
frequently not have a sales tax permit properly registered to the City in which they are located
because their business operations do not include a point-of-sale qualifying activity. However,
these companies will often generate local sales/use tax from the State Board of Equalization
(SBE) audit deficiency assessments, occasional sales (i.e., mergers and acquisitions), and self-
accrual of use tax on purchases. MuniServices' field audits facilitate the identification and
MuniServices,LLC Page 9 Local District Tax Audit Addendum
correction of improperly registered permits for companies having point-of-sale operations in the
City.
DEFICIENCY ASSESSMENT AUDITS
When the California State Board of Equalization audits taxpayers for sales/use tax compliance, it
is not uncommon for the taxpayer to receive a substantial deficiency assessment due to
underpayments and/or under-collections. In many cases, the local allocation portion of the
deficiency assessment is distributed in error to the State pool, county pools, or other jurisdictions.
Accordingly, MuniServices has developed proprietary criteria and techniques to detect and
correct SBE deficiency assessment misallocations and thus expand the benefits produced by
MuniServices' allocation audit service.
ACCOUNTS PAYABLE AUDITS
When California taxpayers purchase tangible personal property for which title passes out-of-
state, the transactions are subject to use tax (rather than sales tax) which is collected by the
vendor who in turn remits it to the SBE, with the local allocation typically distributed statewide
or countywide through the pools.
Under certain conditions, the seller may allocate the local tax by situs or the City may elect to
self-accrue the use tax and remit it directly to the SBE, in which case the local portion will come
back to the City in the same manner as sales tax.
MuniServices' accounts payable audit will include a review of the City's purchases to identify
opportunities for the City to capture the 1% local allocation on purchases subject to use tax and
the local district tax where applicable. In this regard, MuniServices will prepare the
documentation to facilitate the election, including assistance in preparing and filing the tax
returns.
QUARTERLY DISTRIBUTION REPORT AUDITS
Every three months, the City and MuniServices receive a Quarterly Distribution Report (QDR)
from the SBE with the local allocation amount reflected by permit number.
MuniServices' QDR audits detect and correct taxpayer reporting errors and thereby generate
new, previously unrealized sales/use tax revenue for the City. MuniServices' QDR audits focus
on those accounts where MuniServices observes a substantial decline in the sales/use tax revenue
allocation for a particular business entity in a given quarter. In most cases, accounts showing
zero balances have either relocated or simply reported late, in which case the payments will not
be reflected until the next quarter's QDR. Therefore, six months must lapse before the QDRs
indicate whether a zero balance account can be attributed to a late payment or a misallocation.
Cities and counties may only recover misallocated Bradley-Burns sales tax revenue for three
quarters prior to the SBE being notified of the reporting error and misallocated District tax
revenues for between three quarters and three years. Therefore QDR audits must be conducted
in a timely manner in order to preserve the opportunity for the City to recover misallocated
revenue. MuniServices shall conduct the QDR audit each and every quarter to minimize the
potential of lost revenue to the City.
SUTA DETECTION AND DOCUMENTATION
MuniServices shall represent the City for purposes of examining SBE records pertaining to sales
and use tax to identify errors and omissions. MuniServices' procedures for detecting and
documenting misallocations are as follows:
MuniServices,LLC Page 10 Local District Tax Audit Addendum
• Review applicable provisions of the City's municipal code and ordinance adopted by
the City to determine applicability.
• Procure a computer tape of sales/use tax permit records from the State Board of
Equalization (SBE).
• Analyze sales tax distribution reports provided by the SBE for five or more of the most
recent consecutive quarters.
• Clean-up, standardize and computerize data from City's quarterly sales tax
distribution reports provided by SBE for previous quarters, current quarter and each
future quarter service is provided.
❑ Prepare an aggregated list of business entities on electronic media; this list is derived
from multiple private and public sources (hard copy and electronic), including
specialized business listings and directories, the City's sales and use tax payment files,
and an electronic copy of the City's Business License Tax registry, updated no less
than twice per year.
❑ Clean, standardize and integrate, in address-order, each entity's business name,
address and payment file information, to eliminate redundancies, using MuniServices'
proprietary software.
❑ Physically canvas commercial/industrial area within the City's borders.
❑ Develop a target list of potential point of sale/use reporting errors/omissions based on:
1) An electronic comparison of MuniServices' comprehensive inventory against the
SBE's quarterly distributions for the City, and
2) An analysis of each potentially misallocated account based on proprietary guidelines
established by MuniServices.
❑ Meet - with designated City official(s) to review service objectives and scope,
MuniServices workplan schedule, public relations and logistical matters.
❑ Contact personnel in sales, operations and/or tax accounting at each target business to
determine whether a point-of-sale/use reporting error exists. (Note: this is
accomplished with the highest regard to discretion and professional conduct.
MuniServices' allocation audits are predicated on a noncontroversial, constructive
public relations approach which emphasizes the importance of each business to the
City and the mutual benefits of correcting reporting errors.)
❑ Provide to the City and SBE reports addressing each taxpayer reporting error
individually, including the business name, address, telephone number, California sales
tax permit number, individuals contacted, date(s) of contact, nature of business,
reason(s) for error, recommended corrective procedure and, if available, estimated
sales/use tax revenue which should be forthcoming to the City.
❑ MuniServices may also provide suggested language for letters to be sent to the
taxpayers and/or SBE from the City (or from MuniServices on behalf of the City)
urging cooperation in promptly correcting the distribution error.
❑ Respond to negative findings by SBE with timely reconfirmation documentation in
order to preserve the City's original dates of knowledge.
❑ Receive and process registration control record information monthly.
MuniServices, LLC Page 11 Local District Tax Audit Addendum
❑ Receive and process sales tax distribution reports quarterly.
1MW ❑ Coordinate with the taxpayer and State Board of Equalization to make the necessary
corrections and collect eligible back quarters amounts.
❑ Monitor and analyze the quarterly distribution reports with an audit focus on the
following:
1) Accounts with previously reported point-of-sale/use distribution errors to ensure
that the corrections are made for current quarters and all eligible back quarters.
2) Major accounts comprising 90% or more of the City's total sales tax revenue to
identify any irregularities or unusual deviations from the normal pattern (e.g.
negative fund transfers, significant decreases, unusual increases, etc.) and ensure
that the City is not receiving less revenue than it is entitled to.
3) Those accounts receiving deficiency assessments to ensure that the City receives
its local allocation
❑ Identify opportunities for the City to recover local allocation on purchase transactions
subject to use tax. MuniServices will prepare the necessary documentation to
facilitate recovery, including assistance in preparing and filing the returns.
SUTA DETECTION TIMING CONSIDERATIONS
For each misallocated account detected, MuniServices will coordinate with the business and SBE
to make the necessary corrections plus retroactive adjustments for eligible amounts of sales/use
tax improperly distributed in prior quarters. MuniServices coordinates and communicates
between typically four parties; sales/operations personnel at the taxpayer's local operation, tax
personnel at the company's corporate headquarters, and State Board of Equalization personnel
and the instate/out-of-state district offices. Correction of the account is considered to have been
made once the payments on identified taxpayer accounts are being properly allocated by the
taxpayer to the City in the period in which the payment was made.
As needed, MuniServices will represent the City before state officials, boards, commissions and
committees for the purpose of correcting sales tax distribution errors that have deprived the City
of revenue to which it is entitled.
TIMING
MuniServices shall commence auditing the sales/use tax and preparing the sales tax Query
System within 10 working days of receipt of a fully executed contract and Confidentiality
Resolution designating MuniServices as the authorized City Consultant to examine sales and use
tax records.
CONFIDENTIALITY PROVISIONS
MuniServices is authorized by this Agreement to examine district tax, sales tax and use tax
records of the State Board of Equalization provided to City pursuant to contract under the
Bradley-Burns Uniform Sales and Use Tax Law and California Revenue & Taxation Code
applicable to transactions and use taxes.
0 MuniServices is required to disclose information contained in, or derived from, those sales and
use tax records only to an officer or employee of the City who is authorized by resolution to
examine the information.
MuniServices,LLC Page 12 Local District Tax Audit Addendum
MuniServices is prohibited from performing consulting services for a retailer during the term of
this Agreement.
MuniServices is prohibited from retaining the information contained in, or derived from, those ,
sales and use tax records, after this Agreement has expired.
This Agreement, and MuniServices' and CITY's obligations with respect to confidentiality of
taxpayer data pursuant to the Bradley Burns Revenue and Taxation Code, shall continue until
final payment for all services rendered hereunder.
SUTA COMPENSATION
MuniServices' compensation for the Sales and Use Tax Audit Service shall be a 25% contingency
fee. This fee applies to revenue received for six quarters beginning with the quarter in which the
Date of Correction falls and all eligible prior quarters back to and including the three quarters
prior to the Date of Knowledge quarter for Bradley-Burns sales tax revenues and all eligible prior
quarters back to and including all corrected quarters prior to the Date of Knowledge quarter for
district tax revenues. As used herein, the Date of Knowledge is the quarter during which
MuniServices notifies the State Board of Equalization of the existence of a misallocation. As used
herein, the Date of Correction refers to the quarter in which the taxpayer has correctly reported
the local tax and the SBE distributes the local tax properly to City based on the taxpayer's
reporting. For QDR Misallocations detected and corrected, MuniServices' compensation shall
only include the quarters in which the misallocation actually occurred.
ADDITIONAL CONSULTING
City may request that MuniServices provide additional consulting services at any time during
the term of the Agreement to which this Addendum is attached. If MuniServices and City agree
on the scope of additional consulting services requested, then MuniServices shall provide the
additional consulting services on a Time and Materials basis. Depending on the personnel
assigned to perform the work, MuniServices standard hourly rates range from $75 per hour to
$300 per hour.
These additional consulting services will be invoiced no less frequently than monthly based on
actual time and expenses incurred.
CITY RESPONSIBILITIES
MuniServices' services performed hereunder may result in corrections of misallocations after
cessation of services by MuniServices for City. Therefore, City agrees that with regards to
misallocations identified to the State Board of Equalization whose Date of Knowledge occurred
during MuniServices' performance of services for City, that City's obligation to pay MuniServices
in accordance with the above compensation language shall survive expiration or termination of
this Agreement for any reason.
In the event that City identifies, documents, and notifies the State Board of Equalization of a
reporting error or misallocation as those terms are used herein, City agrees to notify
MuniServices of City's discovery no later than ten (10) days after the Date of Knowledge. If City
fails to so notify MuniServices and MuniServices later detects; documents, and reports the
misallocation or reporting error to the State Board of Equalization, or if MuniServices has
MuniServices,LLC Page 13 Local District Tax Audit Addendum
established a Date of Knowledge with the State Board of Equalization prior to notification to the
Board by City, then MuniServices shall be entitled to compensation for the affected account in
accordance with this Addendum.
Remainder of Page Intentionally Left Blank.
MuniServices,LLC Page 14 Local District Tax Audit Addendum
E MIBIT 2
LOCAL DISTRICT TAX AUDIT ADDENDUM
OBJECTIVES AND METHODS
Many California special taxing jurisdictions are not receiving the transactions and use tax
revenue to which they are entitled due to point of use and other types of taxpayer reporting
errors. District taxed are collected on a destination basis (where the tangible personal property
will be used or is delivered to) as opposed to Bradley-Burns tax, which is collected at the point of
sale. When businesses fail to properly report their transactions tax, it is distributed in error to
other jurisdictions or not collected at all. Almost all district tax error discoveries involve
companies that are correctly collecting and allocating the local Bradley-Burns tax. Accordingly,
MuniServices initial and ongoing audit service will assist in the detection and correction of
taxpayer reporting errors and generate new transactions and use tax revenue that would not
otherwise have been realized by the City. MuniServices has vast experience in auditing district
tax. District taxes and local Bradley-Burns taxes do not necessarily result in equivalent tax
dollars for an equal measure of tax rate, because they have different rules of application.
MuniServices currently audits district tax for the following jurisdictions: Bay Area Rapid Transit
District (BART), Los Angeles Metropolitan Transit Authority (LAMTA), Orange County Local
Transportation Authority, San Diego County Regional Transportation Commission, Santa Clara
Valley Transportation Authority, Town of Truckee, City of West Sacramento, and City of
Woodland.
DISTRICT TAX DETECTION AND DOCUMENTATION
MuniServices shall represent the City of purposes of examining State Board of Equalization
(SBE) records pertaining to district tax to identify errors and omissions. MuniServices'
procedures for detecting and documenting misallocations are as follows:
❑ Meet with designated CITY official(s) to review service objectives and scope,
MuniServices work plan schedule, public relations and logistical matters.
❑ Procure a computer tape of district tax permit records from the State Board of
Equalization (SBE).
❑ Clean-up, standardize and computerize data from City's quarterly transaction tax
distribution reports provided by SBE for previous quarters, current quarter and
each future quarter service is provided.
❑ Develop a target list of potential point-of-sale/delivery/use taxpayer reporting
errors of transactions and use tax generating businesses located in the City's
jurisdiction. These businesses are to be analyzed based on proprietary guidelines
established by MuniServices, formulated through expert knowledge of corporate
mergers and acquisitions, transactions versus use tax, businesses marking
organization and methods, commercial/industrial transactions and use tax
reporting practices, and other conditions contributing to reporting errors.
❑ Clean, standardize and integrate, in address-order, each entity's business name,
address and payment file information, to eliminate redundancies, using
MuniServices' proprietary software.
MuniServices,LLC Page 15 Local District Tax Audit Addendum
❑ Contact personnel in sales, operations and/ or tax accounting at each target
business to determine whether a destination based reporting error exists. (Note
this is accomplished with the highest regard to discretion and professional conduct.
MuniServices' allocation audits are predicated on a non-controversial, constructive
public relations approach which emphasizes the importance of each business to the
City and the mutual benefits of correcting reporting errors.)
❑ Provide to the City and SBE reports addressing each taxpayer reporting error
individually, including the business name, address, telephone number, California
sales tax permit number, individuals contracted, date(s) of contract, nature of
business, reason(s) for error, and estimated district tax revenue which should be
forthcoming to the City.
❑ MuniServices may also provide suggested language for letters to be sent to the
taxpayers and/ or SBE from the City (or from MuniServices on behalf of the City)
urging cooperation in promptly correcting the distribution error.
❑ Respond to negative findings by SBE with timely reconfirmation documentation in
order to preserve the City's original dates of knowledge.
❑ Receive and process registration control record information monthly.
❑ Receive and process transaction tax distribution reports quarterly.
❑ Coordinate with the taxpayer and SBE to make the necessary corrections and
collect eligible back quarters amounts.
❑ Monitor and analyze the quarterly distribution reports with an audit focus on the
following:
1. Accounts with previously reported destination based distribution errors to
ensure that the corrections are made for current quarters and all eligible back
quarters.
2. Major accounts comprising 90% or more of the City's total transaction, sales
and use tax revenue to identify any irregularities or unusual deviations from
the normal pattern (e.g. negative fund transfers, significant decreases, unusual
increases, etc.) and ensure that the City is not receiving less revenue that it is
entitled to.
3. Those accounts receiving deficiency assessments to ensure that the City
receives its local allocation.
DISTRICT TAX CORRECTION OF MISALLOCATIONSIUNDERRPORTING
For each misallocated or underreporting account detected, MuniServices will coordinate with the
taxpayer and/ or SBE to make the necessary corrections plus retroactive adjustments for
transactions and use tax amounts improperly distributed or uncollected in prior quarters. This
task is simply stated, but enormously complex and time-consuming. The following is a discussion
of the complexity of administering the program=
When MuniServices detects taxpayer-reporting errors, together with the reasons therefore, less
than half of MuniServices' audit work id accomplished. Most of MuniServices' audit work is
devoted to facilitating corrective action. This is largely due to the preponderance, of reporting
MuniServices,LLC Page 16 Local District Tax Audit Addendum
0 SERVICES AGREEMENT
MUNISERVICES, LLC
THIS AGREEMENT is made and entered into this day of 2007
("Effective Date"), by and between the CITY OF SAN BERNARDINO,a charter city("City"),and
MUNISERVICES, LLC., a Delaware limited liability company ("CONSULTANT").
WITNESSETH :
A. WHEREAS,CITY proposes to have CONSULTANT perform the services described
herein below; and
B. WHEREAS, CONSULTANT represents that it has that degree of specialized
expertise contemplated within California Government Code Section 37103 and holds all necessary
licenses to practice and perform the services herein contemplated; and
C. WHEREAS, CITY and CONSULTANT desire to contract for services as described
in Exhibits "A 1-3"; and
D. WHEREAS, no official or employee of CITY has a financial interest, within the
provisions of California Government Code Sections 1090-1092, in the subject matter of this
C, Agreement.
NOW, THEREFORE, for and in consideration of the mutual covenants and conditions
contained herein, the parties hereby agree as follows:
1.0. SERVICES PROVIDED BY CONSULTANT
1.1. Scope of Services. For the remuneration stipulated, CONSULTANT shall provide
the professional services described in the Scope of Services attached hereto as Exhibits "A 1-3"and
incorporated herein by this reference. If a conflict arises between the Scope of Service and this
Services Agreement (hereinafter "Agreement"), the terms of the Agreement shall govern.
1.2. Professional Practices. All services to be provided by CONSULTANT pursuant to
this Agreement shall be provided in a manner consistent with the standards of care, diligence and
skill ordinarily exercised by professional consultants in similar fields and circumstances in
accordance with sound professional practices. CONSULTANT also warrants that it is familiar with
all laws that may affect its performance of this Agreement and shall advise CITY of any changes in
any laws that may affect CONSULTANT's performance of this Agreement. CONSULTANT further
represents that no CITY employee will provide any services under this Agreement.
[F ACALKIN S\Agreements\Mun is ery ices.Agreement.wpd]
1.3. Warrantv. CONSULTANT warrants that it shall perform the services required by this
Agreement in compliance with all applicable Federal and California employment laws including,but
not limited to,those laws related to minimum hours and wages;occupational health and safety; fair
employment and employment practices;workers'compensation insurance and safety in employment;
and all other Federal, State and local laws and ordinances applicable to the services required under
this Agreement. CONSULTANT shall indemnify and hold harmless CITY from and against all
claims, demands, payments, suits, actions, proceedings and judgments of every nature and
description, including reasonable attorney's fees and costs (collectively, "Losses and Liabilities"),
presented, brought or recovered against CITY for, or on account of any liability under any of the
above-mentioned laws, arising from or related to CONSULTANT's performance under this
Agreement,except to the extent that such Losses and Liabilities are caused by the gross negligence
or willful misconduct of CITY.
1.4. Non-discrimination. In performing this Agreement,CONSULTANT shall not engage
in, nor permit its officers. employees or agents to engage in, discrimination in employment of
persons because of their race, religion, color, national origin, ancestry, age, mental or physical
disability,medical condition,marital status,sexual gender or sexual orientation,except as permitted
pursuant to Section 12940 of the Government Code. Violation of this provision may result in the
imposition of penalties referred to in Labor Code Section 1735.
1.5 Non-Exclusive Agreement. CONSULTANT acknowledges that CITY may enter into
agreements with other consultants for services similar to the services that are subject to this
Agreement or may have its own employees perform services similar to those services contemplated
by this Agreement.
1.6. Delegation and Assignment. This is a personal service contract, and the duties set
forth herein shall not be delegated or assigned to any person or entity without the prior written
consent of CITY. CONSULTANT may engage a subcontractor(s) as permitted by law and may
employ other personnel to perform services contemplated by this Agreement at CONSULTANT's
sole cost and expense.
1.7 License Agreement. CITY agrees that it is bound by the terms of Exhibit 4,attached
hereto and incorporated by reference.
1.8 City Business Certificate. CONSULTANT shall obtain and maintain during the term
of this Agreement,a valid CITY Business Registration Certificate pursuant to Title 5 of the City of
San Bernardino Municipal Code and any and all other licenses,permits,qualifications,insurance and
approvals of whatever nature that are legally required of CONSULTANT to practice its profession,
skill or business, unless exempted by law from such requirement or requirements.
[F:\C AL KINS\Agreements\Mun i Services.Agreement.wpd1 2
2.0. COMPENSATION AND BILLING
2.1. Compensation.Except as provided herein,CONSULTANT shall be paid as set forth
in Exhibits "A 1-3" of the Scope of Services.
2.2. Additional Services. CONSULTANT shall not receive compensation for any services
provided outside the scope of services unless the CITY, prior to CONSULTANT performing the
additional services, approves such additional services in writing. It is specifically understood that
oral requests and/or approvals of such additional services or additional compensation shall be barred
and are unenforceable.
2.3. Method of Billing. CONSULTANT may submit invoices to CITY for approval. Said
invoice shall be based on the total of all CONSULTANT's services which have been completed to
CITY's sole satisfaction. CITY shall pay CONSULTANT's invoice within forty-five(45)days from
the date CITY receives said invoice. The invoice shall describe in detail,the services performed and
the associated time for completion. Any additional services approved and performed pursuant to this
Agreement shall be designated as "Additional Services" and shall identify the number of the
authorized change order, where applicable, on all invoices.
2.4. Records and Audits. Records of CONSULTANT's services relating to this
Agreement shall be maintained in accordance with generally recognized accounting principles and
shall be made available to CITY for inspection and/or audit at mutually convenient times for a period
of three (3) years from the Effective Date.
3.0. TERM AND NOTIFICATION.
3.1. Term. This Agreement shall commence on the Effective Date and continue for three
years, unless the Agreement is previously terminated as provided for herein.
3.2 Termination. CITY or CONSULTANT may terminate the services provided under
Section 1.1 of this Agreement upon thirty (30) days written notice to the other party. In the event
of termination, CONSULTANT shall be paid the reasonable value of services rendered to the date
of termination.
3.3 Documents. In the event of termination of this Agreement, all documents prepared
by CONSULTANT in its performance of this Agreement including,but not limited to, finished or
unfinished background investigations,shall be delivered to the CITY within ten(10)days of delivery
of termination notice to CONSULTANT, at no cost to CITY. Any use of uncompleted documents
without specific written authorization from CONSULTANT shall be at CITY's sole risk and without
liability or legal expense to CONSULTANT.
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4.0. INSURANCE
4.1. Minimum Scope and Limits of Insurance. CONSULTANT shall obtain and maintain
during the term of this Agreement all of the following insurance coverages:
(a) Commercial general liability, including premises-operations,
products/completed operations, broad form property damage, blanket
contractual liability, independent contractors, personal injury with a policy
limit of not less than One Million Dollars ($1,000,000.00), combined single
limits, per occurrence and aggregate.
(b) Automobile liability for owned vehicles,hired,and non-owned vehicles,with
a policy limit of not less than One Million Dollars($1,000,000.00),combined
single limits, per occurrence and aggregate.
(c) Workers' compensation insurance as required by the State of California.
4.2. Notice. CONSULTANT will act reasonably to provide prompt notice to CITY if any
insurance required hereunder is terminated, materially changed, reduced or cancelled.
4.3. Certificates of Insurance. CONSULTANT shall provide to CITY certificates of
insurance showing the insurance coverages and required endorsements described above, in a form
and content approved by CITY, prior to performing any services under this Agreement.
4.4. Non-limiting. Nothing in this Section shall be construed a 1'
� g s limiting in any way,the
indemnification provision contained in this Agreement,or the extent to which CONSULTANT may
be held responsible for payments of damages to persons or property.
5.0. GENERAL PROVISIONS
5.1. Entire Agreement: This Agreement constitutes the entire Agreement between the
parties with respect to any matter referenced herein and supersedes any and all other prior writings
and oral negotiations. This Agreement may be modified only in writing, and signed by the parties
in interest at the time of such modification. The terms of this Agreement shall prevail over any
inconsistent provision in any other contract document appurtenant hereto,including exhibits to this
Agreement.
5.2. Notices. Any notices, documents, correspondence or other communications
concerning this Agreement or the work hereunder may be provided by personal delivery, facsimile
or United States mail and shall be addressed as set forth below. Such communication shall be
deemed served or delivered: a) at the time of delivery if such communication is sent by personal
delivery; b)at the time of transmission if such communication is sent by facsimile; and c)48 hours
[F:\CAL KIN S\Agreements\Mun iServices.Agreement.wpd] 4
after deposit in the U.S.Mail as reflected by the official U.S.postmark if such communication is sent
through regular United States mail.
IF TO CONSULTANT: IF TO CITY:
MuniServices, LLC CITY MANAGER
7335 N. Palm Bluffs Ave. City of San Bernardino
Fresno, CA 93711 300 North "D" Street
Attn: Legal Department San Bernardino, CA 92418
Email: legal @muniservices.com Telephone: (909) 384-5122
Fax: (909) 384-5138
5.3. Attorneys' Fees: In the event that litigation is brought by any parry hereto in
connection with this Agreement, the prevailing party in a final non-appealable judgment shall be
entitled to recover from the opposing party all costs and expenses, including reasonable attorneys'
fees,incurred by the prevailing party in the exercise of any of its rights or remedies hereunder or the
enforcement of any of the terms, conditions, or provisions hereof. The costs, salary and expenses
of the City Attorney and members of his office in enforcing this contract on behalf of the CITY shall
be considered as "attorneys' fees" for the purposes of this Agreement.
5.4. Governing Law. This Agreement shall be governed by and construed under the laws
of the State of California without giving effect to that body of laws pertaining to conflict of laws.
In the event of any legal action to enforce or interpret this Agreement, the parties hereto agree that
the sole and exclusive venue shall be a court of competent jurisdiction located in San Bernardino
County, California.
5.5. Assignment: Neither party hereto shall voluntarily or by operation of law assign,
transfer, sublet or encumber all or any part of its interest in this Agreement without the other party's
prior written consent. Any attempted assignment,transfer, subletting or encumbrance shall be void
and shall constitute a breach of this Agreement and cause for termination of this Agreement.
Regardless of CITY's consent, no subletting or assignment shall release CONSULTANT of
CONSULTANT's obligation to perform all other obligations to be performed by CONSULTANT
hereunder for the term of this Agreement.
5.6. Indemnity. CONSULTANT shall protect,defend,indemnify and hold harmless CITY
and its elected and appointed officials, boards, commissions, officers, attorneys, agents and
employees from any and all Losses and Liabilities arising from or in any way related to
CONSULTANT's acts, omissions and obligations under this Agreement, except to the extent such
Losses and Liabilities are caused by the gross negligence or willful misconduct of CITY.
CITY shall protect, defend, indemnify and hold harmless CONSULTANT and its
directors, officers, attorneys, agents and employees from any and all Losses and Liabilities arising
from or in any way related to CITY's acts, omissions and obligations under this Agreement, except
to the extent such Losses and Liabilities are caused by the gross negligence or willful misconduct
of CONSULTANT.
[F:\CALKINS\Agreements\MuniServices.Agreement.wpd] 5
5.7. Independent Contractor. CONSULTANT, at all times while performing under this
Agreement, is and shall be acting at all times as an independent contractor and not as an agent or
employee of CITY. CONSULTANT shall secure,at his expense,and be responsible for any and all
payment of wages, benefits and taxes including, but not limited to, Income Tax, 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 are required, in connection with the services to be performed hereunder. Neither
CONSULTANT nor its officers,agents and employees shall be entitled to receive any benefits which
employees of CITY are entitled to receive and shall not be entitled to workers' compensation
insurance, unemployment compensation, medical insurance, life insurance, paid vacations, paid
holidays, pension, profit sharing or social security on account of CONSULTANT and its officers',
agents'and employees'work for the CITY. This Agreement does not create the relationship of agent,
servant, employee partnership or joint venture between the CITY and CONSULTANT.
5.8 Conflict of Interest Disclosure. CONSULTANT or its employee may be subject to
the provisions of the California Political Reform Act of 1974 (the "Act"), which (1) requires such
persons to disclose financial interests that may be materially affected by the work performed under
this Agreement,and(2)prohibits such persons from making or participating in making decisions that
will have a foreseeable financial affect on such interest.
CONSULTANT shall conform to all applicable requirements of the Act. Failure to
do so constitutes a material breach and is grounds for termination of the Agreement by CITY.
5.9. Responsibility for Errors. CONSULTANT shall be responsible for its work and
results under this Agreement. CONSULTANT, when requested, shall furnish clarification and/or
explanation as may be required by the CITY's representative,regarding any services rendered under
this Agreement at no additional cost to CITY. In the event that an error or omission attributable to
CONSULTANT occurs, then CONSULTANT shall, at no cost to CITY, provide all other
CONSULTANT professional services necessary to rectify and correct the matter to the sole
satisfaction of CITY and to participate in any meeting required with regard to the correction.
5.10. Prohibited Employ. CONSULTANT shall not employ any current employee of
CITY to perform the work under this Agreement while this Agreement is in effect.
5.11. Costs. Each party shall bear its own costs and fees incurred in the preparation and
negotiation of this Agreement and in the performance of its obligations hereunder except as
expressly provided herein.
5.12. No Third Party Beneficiary Rights. This Agreement is entered into for the sole
benefit of CITY and CONSULTANT and no other parties are intended to be direct or incidental
beneficiaries of this Agreement and no third party shall have any right in,under or to this Agreement.
[F:\CALKWS\Agreements\muniSery ices.Agreement.wpd] 6
5.13. Headings Paragraphs and subparagraph headings contained in this Agreement are
included solely for convenience and are not intended to modify, explain or to be a full or accurate
description of the content thereof and shall not in any way affect the meaning or interpretation of this
Agreement.
5.14. Amendments. Only a writing executed by all of the parties hereto or their respective
successors and assigns may amend this Agreement.
5.15. Waiver. The delay or failure of either parry at any time to require performance or
compliance by the other of any of its obligations or agreements shall in no way be deemed a waiver
of those rights to require such performance or compliance. No waiver of any provision of this
Agreement shall be effective unless in writing and signed by a duly authorized representative of the
party against whom enforcement of a waiver is sought. The waiver of any right or remedy with
respect to any occurrence or event shall not be deemed a waiver of any right or remedy with respect
to any other occurrence or event, nor shall any waiver constitute a continuing waiver.
5.16. Severability. If any provision of this Agreement is determined by a court of
competent jurisdiction to be invalid or unenforceable for any reason, such determination shall not
affect the validity or enforceability of the remaining terms and provisions hereof or of the offending
provision in any other circumstance, and the remaining provisions of this Agreement shall remain
in full force and effect.
5.17. Counterparts. This Agreement may be executed in one or more counterparts, each
of which shall be deemed an original. All counterparts shall be construed together and shall
constitute one agreement.
5.18. Corporate Authority. The persons executing this Agreement on behalf of the parties
hereto warrant that they are duly authorized to execute this Agreement on behalf of said parties and
that by doing so, the parties hereto are formally bound to the provisions of this Agreement.
[F:\CAL KIN S\Agreements\MuniSery ices.Agreement.wpd] 7
SERVICES AGREEMENT
MUNISERVICES, LLC
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by and
through their respective authorized officers, as of the date first above written.
CITY OF SAN BERNARDINO MUNISERVICES, LLC.
Fred Wilson, City Manager Signature
Name and Title
APPROVED AS TO FORM:
JAMES F. PENMAN,
City Attorney
[F:\CALKINS\AgreementsNuniSery ices.Agreement.wpd] 8
errors by out-of-state headquartered distributors, contractors, processors, manufacturers and
lessors engaged in business-to-business sales in California. In terms of dollars, these companies
account for more that 90% of misallocations.
For these companies, there is considerable confusion due to the complexities posed by California's
transactions and use tax regulations. The reporting problems are further compounded when the
regulations are applied to multiple California locations, with each having a product/customer mix
of business-to-business sales, while some of the transactions are subject to transactions tax, and
others are subject to use tax and some are exempt.
DISTRICT TAX DETECTION TIMING CONSIDERATIONS
For each misallocated account detected, MuniServices will coordinate with the business and SBE
to make the necessary corrections plus retroactive adjustments for eligible amounts of district tax
improperly distributed in prior quarters. MuniServices coordinates and communicates between
typically four parties; sales/operations personnel at the taxpayer's local operation, tax personnel
at the company's corporate headquarters, and SBE personnel and the instate/out-of-state district
offices. Correction of the account is considered to have been made once the taxpayer is properly
allocating the payments on identified taxpayer accounts to the City in the period in which the
payment was made.
As needed, MuniServices will represent the City before state officials, boards, commissions and
committees for the purpose of correcting sales tax distribution errors that have deprived the City
of revenue to which it is entitled.
TIMING
MuniServices shall commence auditing the district tax and within 10 working days of receipt of a
fully executed contract and Confidentiality Resolution designating MuniServices as the
authorized City Consultant to examine district tax records.
CONFIDENTIALITY PROVISIONS
MuniServices is authorized by this Agreement to examine district tax, sales tax and use tax
records of the State Board of Equalization provided to City pursuant to contract under the
Bradley-Burns Uniform Sales and Use Tax Law and California Revenue & Taxation Code
applicable to transactions and use taxes.
IMuniServices is required to disclose information contained in, or derived from, those sales and
use tax records only to an officer or employee of the City who is authorized by resolution to
examine the information.
MuniServices is prohibited from performing consulting services for a retailer during the term of
this Agreement.
MuniServices is prohibited from retaining the information contained in, or derived from, those
sales and use tax records, after this Agreement has expired.
This Agreement, and MuniServices' and CITY's obligations with respect to confidentiality of
Taxpayer data pursuant to the Bradley Burns Revenue and Taxation Code, shall continue until
final payment for all services rendered hereunder.
MuniServices,LLC Page 17 Local District Tax Audit Addendum
DISTRICT TAX COMPENSATION
COMPENSATION
MuniServices' compensation for the City District Tax Audit Services is a 25% contingency fee.
This fee applies to six quarters after the Date of Correction and all eligible prior quarters back to
and including the three quarters prior to the Date of Knowledge quarter for District Tax
revenues and all eligible prior quarters back to and including all corrected quarters prior to the
Date of Knowledge quarter for district tax revenues.
The Date of Knowledge is the quarter during which MuniServices notifies the SBE of the
existence of a misallocation. The Date of Correction refers to the quarter in which the taxpayer
has correctly reported the local tax and the SBE distributes the local tax properly to City based
on the taxpayer's reporting, together with any prior period reallocations. For QDR
Misallocations detected and corrected, MuniServices' compensation shall only include the
quarters in which the misallocation actually occurred.
In most cases where MuniServices identifies District Tax errors, the business is already
reporting the local Bradley-Burns allocations correctly. Therefore, when MuniServices provides
the SUTA service for the City's Bradley-Burns revenues and the City's District Tax revenues,
MuniServices will not charge for both revenue sources only the Bradley-Burns portion of the
correction contained in our original SUTA agreement.
ADDITIONAL CONSULTING
City may request that MuniServices provide additional consulting services at any time during
the term of the Agreement to which this Addendum is attached. If MuniServices and City agree
on the scope of additional consulting services requested, then MuniServices shall provide the
additional consulting services on a Time and Materials basis. Depending on the personnel
assigned to perform the work, MuniServices standard hourly rates range from $75 per hour to
$300 per hour.
These additional consulting services will be invoiced no less frequently than monthly based on
actual time and expenses incurred.
CITY RESPONSIBILITES
MuniServices' services performed hereunder may result in corrections of misallocations after
cessation of services by MuniServices for City. Therefore, City agrees that with regards to
misallocations identified to the SBE whose Date of Knowledge occurred during MuniServices'
performance of services for City, that City's obligation to pay MuniServices in accordance with
the above compensation language shall survive expiration or termination of this Agreement for
any reason.
MuniServices, LLC Page 18 Local District Tax Audit Addendum
In the event that City identifies, documents, and notifies the SBE of a reporting error or
misallocation as those terms are used herein, City agrees to notify MuniServices of City's
discovery no later that ten (10) days after the Date of Knowledge. If City fails to so notify
MuniServices and MuniServices later detects, documents, and reports the misallocation or
reporting error to the SBE, or if MuniServices has established a Date of Knowledge with the SBE
prior to notification to the Board by City, then MuniServices shall be entitled to compensation for
the affected account in accordance with this Addendum.
MuniServices,LLC Page 19 Local District Tax Audit Addendum
MMIBIT 3
SALES/USE TAX ANALYSIS & REPORTING SERVICE (STARS) ADDENDUM
OBJECTIVES AND METHODS
MuniServices' STARS Digest provides a summary that features a general analysis
regarding statewide trends that may affect the City's sales tax plus a specific analysis of
the City's sales tax composition, changes and performance. Report graphically illustrates
the data and analysis presented in the Summary. Each MuniServices STARS Digest
includes the Quarterly Management Summary. The MuniServices STARS Digest also
includes specialized reports that provide analysis of the City's sales tax economic base and
performance for the latest complete quarter and benchmark year.
TIMING& REPORTS
MuniServices shall:
❑ Provide the City with quarterly updated STARS Digests.
❑ Install the STARS Query System on a City designated PC
❑ Update quarterly the City's sales tax registration and allocation data
from the State Board of Equalization (SBE) from MuniServices'
proprietary STARS Query System on IBM compatible PCs with Microsoft
Access export capacity. (note: STARS is provided in encrypted formats)
❑ Train authorized City staff in the use of the STARS Query System.
QUARTERLY STARS DIGEST
MuniServices will provide the City with quarterly updated bound STARS Digests including
accounts from which the City receives sales tax revenue. The primary reports included in
the STARS Digest are=
o Allocation Summary - Reconciles SBE advances, cleanup payments and
i pool allocations with budget projections to assist the City with revenue
forecasting and receipt monitoring.
❑ Cash Analysis - Quarterly aberrations due to SBE audits, fund transfers,
and other causes are also identified and analyzed for budget planning and
revenue forecasting purposes.
❑ Top 100 Five-Year - Historical performance of the top 100 accounts
comparing current benchmark year ranking and sales tax produced with
that of prior years.
❑ Top 100 Detail — Sales tax performance of the City's top 100 sales tax
accounts is shown in order of sales tax produced with the results for the
most recent five quarters prominently displayed. The proportion of City
Ap sales tax produced is also shown by each account.
MuniServices, LLC Page 20 STARS Addendum
❑ Economic Category Performance — An analysis of the changes that
occurred by economic category and segment with the specific businesses
responsible for the significant changes delineated.
❑ Significant Change Analysis — A report reflecting magnitude of change,
indicating which key businesses grew or declined, measured in absolute
dollars and percentages.
❑ Business Code Classification - This report shows the various business
codes assigned by the SBE and the accounts assigned those codes in order
of sales tax produced_ Five quarters of sales tax data are shown for each
significant account.
❑ Historical Economic Composition - Data are summarized by economic
category and segment by quarters and benchmark years. Percentage of
total sales tax generated by each category and segment is also shown to
indicate trends in sales tax composition as well as performance.
❑ Geo-Area Reports - Tracks sales tax performance within designated areas
of the City (e.g., key shopping centers, business parks, and downtown
/business districts,). Charts and printed reports are included for each geo-
area.
❑ Cross-Reference Reports - These reports allow the user to look up any
account shown in the STARS Digest by name, address or account number.
STARS QUERY SYSTEM
MuniServices shall install the STARS Query System (a software program) on a
City designated, IBM-compatible PC. Each quarter, MuniServices shall provide the City
with updated information from SBE on CD-ROM. The data shall be provided in an
encrypted format allowing the City to export sales tax information from the Query System
in an Access-compatible format.
❑ The Query System enables' City staff to analyze the contribution of
sales/use tax revenue from each taxpayer in the City on an individual,
grouped or sorted-order basis by business name, business type, permit
number, size ranking, street address, development, shopping center or
other geographic area. Reports may be generated by any year (i.e.,
calendar, fiscal, benchmark) or for any particular quarter for all periods
stored in the historical database.
The initial STARS Digest and Sales Tax Query System shall be delivered and installed
within 45 working days following receipt of a fully executed contract, confidentiality
resolution and the SBE sales tax registration and payment data. Subsequent quarterly
Query System updates and STARS reports will be delivered to the City within 30 days
following receipt of the quarterly distribution reports from the SBE.
MuniServices, LLC Page 21 STARS Addendum
COMPENSATION
The STARS Digest and Query System are available for an annual fixed fee of $9,000 per
year, paid $2,250 quarterly. The Annual Fee shall be adjusted at the beginning of each
calendar year by the percentage change in the Consumer Price Index — West Urban (CPI-
WU) as reported by the Bureau of Labor Statistics, with the first adjustment to occur at the
beginning of the Calendar year following the first full calendar year of service. The current
available CPI-WU is 206.2 based on December 2006 index. The adjustments thereafter will
be based on the CPI-WU from the last month of the prior calendar year. Each Annual Fee
adjustment shall not be less than two percent (2%) or greater than ten percent (10%).
i
9. LICENSE AGREEMENT
The STARS Query System is licensed software provided by MuniServices. The terms and
conditions of the STARS Query System License Agreement are provided to City upon
installation. By installing and using the STARS Query System, City agrees to be bound by
the terms of the License Agreement.
I
t
MuniServices, LLC Page 22 STARS Addendum
EXHIBIT 4
End-user notice and license agreement from MuniServices Company
Notice to end-user: Carefully read the following legal agreement ("license"). Installation or
use of the enclosed STARS Query System software and associated Data (together
"Software") on a computer system constitutes your acceptance of these terms. If.you do not
agree to the terms of this license, discontinue this installation and promptly delete the
Software from the computer system, destroy any copies you made of the Software or any
installation diskettes of the Software, and dispose of all written materials in your
possession regarding the Software. This License is effective until terminated. You may
terminate it at any time by destroying-the Software and all copies of it. It will also
terminate if you fail to comply with any term or condition of this License. You agree upon
termination to destroy the Software together with all copies of the Software.
License Grant: MuniServices Company grants to You a license to install and use one copy
of the Software on a single computer. Your license to use the Software is conditioned upon
Your compliance with the terms of this Agreement. A License is required for each
installation of the Software. You may make one (1) copy of the Software for archival
purposes only.
Copyright: The Software is protected by copyright laws and international treaty provisions.
You acknowledge that no title to the intellectual property in the Software is transferred to
You. You further acknowledge that title and full ownership rights to the Software will
remain the exclusive property of MuniServices Company, and You do not acquire any
0 rights to the Software except as expressly set forth in this license. The Software in source
code form remains a confidential trade secret of MuniServices Company and decompiling,
disassembling, or otherwise reverse engineering the Software in any way is prohibited as a
violation of those copyrights.
Prohibited Uses: You may not (a) use, copy, modify, alter, or transfer the Software or
documentation except as expressly provided in this License; (b) translate, disassemble,
decompile, reverse program or otherwise reverse engineer the Software; (c) sublicense or
lease the Software or its documentation; or (d) use a single installation of the Software in a
multi-user or multiple computer environment or in a rental, time sharing or computer
service business. Without prejudice to any other rights, MuniServices Company may
terminate this License if You fail to comply with its terms and conditions. In such event,
You must destroy all copies of the Software.
Limited Warranty: MuniServices Company warrants that the Software will perform
substantially in accordance with the accompanying written materials for a period of thirty
(30) days from the date of purchase.
End-User Remedies= If the Software does not conform to the "Limited Warranty" section
above, MuniServices Company's entire liability and Your sole and exclusive remedy shall
be, at MuniServices Company's option, either to (a) correct the error, or (b) help you work
around the error. The Limited Warranty is void if failure of the Software has resulted from
accident, abuse, or misapplication. Any replacement software will be warranted for the
remainder of the original Limited Warranty period.
MuniServices, LLC Page 23 End-User Agreement
r-
`r No other warranties: MuniServices Company does not warrant that the software is error
free, except for the express limited warranty in the "limited warranty" section.
MUNISERVICES COMPANY DISCLAIMS ALL OTHER WARRANTIES WITH RESPECT
TO THE SOFTWARE, EITHER EXPRESS OR IMPLIED, INCLUDING BUT NOT
LIMITED TO IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A
PARTICULAR, PURPOSE AND NON-INFRINGEMENT OF THIRD PARTY RIGHTS.
Some jurisdictions do not allow the exclusion of implied warranties or limitations of how
long an implied warranty may last, or the exclusion of limitation of incidental damages, so
the above limitations or exclusions may not apply to you. This warranty gives you specific
legal rights and you may also have other rights which vary from jurisdiction to jurisdiction.
No Liability for Consequential Damages: in no event shall MuniServices Company, or its
licensors, suppliers or licensees be liable to you for any consequential, special, incidental, or
indirect damages of any kind arising out of the performance or use of the software, even if
MuniServices Company has been advised of the possibility of such damages.
Governing Law= This Agreement is governed by the laws of the State of California, U.S.A.
without regard to its conflict of laws principals.
U.S. Government Restricted Rights: Use, duplication or disclosure of the Software by any
agency, department or other entity of the U.S. Government is restricted in accordance with
FAR 12.212 for civilian agencies and DF_ARS 227.7202 for military agencies. The Software
is a commercial product. Use of the Software by the U.S. Government is further restricted
by the terms of this License.
Acknowledgement: Your installation or use of this product for any period of time
constitutes your acceptance of this agreement and License and binds You to its terms,
contents and conditions.
MuniServices, LLC Page 24 End-User Agreement
0
SCOPE OF SERVICES
V
EXHIBIT 1
SALES AND USE TAX AUDIT (SUTA) ADDENDUM
OBJECTIVES AND METHODS
MuniServices' sales and use tax audit service is designed to maximize the City's income - and
minimize the cost of lost revenue - by detecting and documenting misallocations of local district
tax (also knows as Transactions & Use Tax), Bradley-Burns sales tax and local use tax activity
within the statute of limitations on recoverability.
In performing the sales and use tax audit program MuniServices shall:
❑ Identify and correct the sales/use tax reporting errors of businesses that, based on the
nexus of their activities, are not properly registered with the City.
❑ 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) and thereby depriving the City of
sales tax revenue.
❑ Detect, document and correct sales/use tax reporting errors/omissions and thereby
generate new, previously unrealized revenue for the City.
❑ Ensure through comprehensive audit measures that the revenue information used for
ongoing economic analysis includes all sales/use tax generators.
❑ Assist the City with strategies to preserve and even enhance sales and use tax revenue
generated by existing businesses within the City.
MuniServices' proposed sales/use tax allocation audit services for the City includes five distinct
types of audits:
❑ Taxable Nexus Field audits
❑ Permitization audits
❑ Deficiency assessment audits
❑ Accounts payable audits
❑ Quarterly Distribution Report audits
TAXABLE NEXUS FIELD AUDITS
MuniServices' initial and periodic taxable nexus field audits include a physical canvassing and
evaluation of sales/use tax generating businesses located in the City. In the absence of this
undertaking, significant misallocations will remain undetected. MuniServices' field audits focus
on those businesses located in the City from which the City has not been receiving sales/use tax
revenue. The result is new or `found' revenue for the City.
PERMITIZATION AUDITS
Wholesalers, contractors, processors, manufacturers and other non-retail businesses will
frequently not have a sales tax permit properly registered to the City in which they are located
because their business operations do not include a point-of-sale qualifying activity. However,
these companies will often generate local sales/use tax from the State Board of Equalization
(SBE) audit deficiency assessments, occasional sales (i.e., mergers and acquisitions), and self-
accrual of use tax on purchases. MuniServices' field audits facilitate the identification and
MuniServices,LLC Page 9 Local District Tax Audit Addendum
correction of improperly registered permits for companies having point-of-sale operations in the
City.
DEFICIENCY ASSESSMENT AUDITS
When the California State Board of Equalization audits taxpayers for sales/use tax compliance, it
is not uncommon for the taxpayer to receive a substantial deficiency assessment due to
underpayments and/or under-collections. In many cases, the local allocation portion of the
deficiency assessment is distributed in error to the State pool, county pools, or other jurisdictions.
Accordingly, MuniServices has developed proprietary criteria and techniques to detect and
correct SBE deficiency assessment misallocations and thus expand the benefits produced by
MuniServices' allocation audit service.
ACCOUNTS PAYABLE AUDITS
When California taxpayers purchase tangible personal property for which title passes out-of-
state, the transactions are subject to use tax (rather than sales tax) which is collected by the
vendor who in turn remits it to the SBE, with the local allocation typically distributed statewide
or countywide through the pools.
Under certain conditions, the seller may allocate the local tax by situs or the City may elect to
self-accrue the use tax and remit it directly to the SBE, in which case the local portion will come
back to the City in the same manner as sales tax.
MuniServices' accounts payable audit will include a review of the City's purchases to identify
opportunities for the City to capture the 1% local allocation on purchases subject to use tax and
the local. district tax where applicable. In this regard, MuniServices will prepare the
documentatj n to facilitate the election, including assistance in preparing and filing the tax
returns.
QUARTERLY DISTRIBUTION REPORT AUDITS
Every three months, the City and MuniServices receive a Quarterly Distribution Report (QDR)
from the SBE with the local allocation amount reflected by permit number.
MuniServices' QDR audits detect and correct taxpayer reporting errors and thereby generate
new, previously unrealized saies/use tax revenue for the City. MuniServices' QDR audits focus
on those accounts where MuniServices observes a substantial decline in the sales/use tax revenue
allocation for a particular business entity in a given quarter. In most cases, accounts showing
zero balances have either relocated or simply reported late, in which case the payments will not
be reflected until the next quarter's QDR. Therefore, six months must lapse before the QDRs
indicate whether a zero balance account can be attributed to a late payment or a misallocation.
Cities and counties may only recover misallocated Bradley-Burns sales tax revenue for three
quarters prior to the SBE being notified of the reporting error and misallocated District tax
revenues for between three quarters and three years. Therefore QDR audits must be conducted
in a timely manner in order to preserve the opportunity for the Citv to recover misallocated
revenue. MuniServices shall conduct the QDR audit each and every quarter to minimize the
potential of lost revenue to the City.
SUTA DETECTION AND DOCUMENTATION
MuniServices shall represe'.a the City for purposes of examining SSE records pertaining to sales
and use tax to identify errors and omissions. MuniServices' procedures for detecting and
documenting misallocations are as follows:
MuniServices, LLC Page 10 Local District Tax Audit Addendum
❑ Review applicable provisions of the City's municipal code and ordinance adopted by
the City to determine applicability.
❑ Procure a computer tape of sales/use tax permit records from the State Board of
Equalization (SBE).
❑ Analyze sales tax distribution reports provided by the SBE for five or more of the most
recent consecutive quarters.
❑ Clean-up, standardize and computerize data from City's quarterly sales tax
distribution reports provided by SBE for previous quarters, current quarter and each
future quarter service is provided.
❑ Prepare an aggregated list of business entities on electronic media; this list is derived
from multiple private and public sources (hard copy and electronic), including
specialized business listings and directories, the City's sales and use tax payment files,
and an electronic copy of the City's Business License Tax registry, updated no less
than twice per year.
❑ Clean, standardize and integrate, in address-order, each entity's business name,
address and payment file information, to eliminate redundancies, using MuniServices'
proprietary software.
❑ Physically canvas commercial/industrial area within the City's borders.
❑ Develop a target list of potential point of sale/use reporting errors/omissions based on:
1) An electronic comparison of MuniServices' comprehensive inventory against the
SBE's quarterly distributions for the City, and
2) An analysis of each potentially misallocated account based on proprietary guidelines
established by MuniServices.
❑ Meet with designated City official(s) to review service objectives and scope,
MuniServices workplan schedule, public relations and logistical matters.
❑ Contact personnel in sales, operations and/or tax accounting at each target business to
determine whether a point-of-sale/use reporting error exists. (Note: this is
accomplished with the highest regard to discretion and professional conduct.
MuniServices' allocation audits are predicated on a noncontroversial, constructive
public relations approach which emphasizes the importance of each business to the
City and the mutual benefits of correcting reporting errors.)
U. Provide to the City and SBE reports addressing each taxpayer reporting error
individually, including the business name, address, telephone number, California sales
tax permit number, individuals contacted, date(s) of contact, nature of business,
reason(s) for error, recommended corrective procedure and, if available, estimated
sales/use tax revenue which should be forthcoming to the City.
❑ MuniServices may also provide suggested language for letters to be sent to the
taxpayers and/or SBE from the City (or from MuniServices on behalf of the City)
urging cooperation in promptly correcting the distribution error.
❑ Respond to negative findings by SBE with timely reconfirmation documentation in
order to preserve the City's original dates of knowledge.
❑ Receive and process registration control record information monthly.
MuniServices, LLC Page 11 Local District Tax Audit Addendum
❑ Receive and process sales tax distribution reports quarterly.
❑ Coordinate with the taxpayer and State Board of Equalization to make the necessary
corrections and collect eligible back quarters amounts.
❑ Monitor and analyze the quarterly distribution reports with an audit focus on the
following.
1) Accounts with previously reported point-of-sale/use distribution errors to ensure
that the corrections are made for current quarters and all eligible back quarters.
2) Major accounts comprising 90% or more of the City's total sales tax revenue to
identify any irregularities or unusual deviations from the normal pattern (e.g.
negative fund transfers, significant decreases, unusual increases, etc.) and ensure
that the City is not receiving less revenue than it is entitled to.
3) Those accounts receiving deficiency assessments to ensure that the City receives
its local allocation
❑ Identify opportunities for the City to recover local allocation on purchase transactions
subject to use tax. MuniServices will prepare the necessary documentation to
facilitate recovery, including assistance in preparing and filing the returns.
SUTA DETECTION TIMING CONSIDERATIONS
For each misallocated account detected, MuniServices will coordinate with the business and SBE
to make the necessary corrections plus retroactive adjustments for eligible amounts of sales/use
0 tax improperly distributed in prior quarters. NluniServices coordinates and communicates
between typically four parties; sales/operations personnel at the taxpayer's local operation, tax
personnel at the company's corporate headquarters, and State Board of Equalization personnel
and the in-state/out-of-state district offices. Correction of the account is considered to have been
made once the payments on identified taxpayer accounts are being properly allocated by the
taxpayer to the City in the period in which the payment was made.
As needed, MuniServices will represent the City before state officials, boards, commissions and
committees for the purpose of correcting sales tax distribution errors that have deprived the City
of revenue to which it is entitled.
TmNG
MuniServices shall commence auditing the sales/use tax and preparing the sales tax Query
System wit:-tin 10 working days of receipt of a fully executed contract and Confidentiality
Resolution designating MuniServices as the authorized City Consultant to examine sales and use
tax records.
CONFIDENTIALITY PROVISIONS
MuniServices is authorized by this Agreement to examine district tax, sales tax and use tax
records of the State Board of Equalization provided to City pursuant to contract under the
Bradley-Burns Uniform Sales and Use Tax Law and California Revenue & Taxation Code
applicable to transactions and use taxes.
MuniServices is required to disclose information contained in, or derived from, those sales and
use tax records only to an officer or employee of the City who i_ authorized by resolution to
examine the information.
MuniServices, LLC Page 12 Locul District Tax Audit Addendum
MuniServices is prohibited from performing consulting services for a retailer during the term of
this Agreement.
MuniServices is prohibited from retaining the information contained in, or derived from, those
sales and use tax records, after this Agreement has expired.
This Agreement, and MuniServices' and CITY's obligations with respect to confidentiality of
taxpayer data pursuant to the Bradley Burns Revenue and Taxation Code, shall continue until
final payment for all services rendered hereunder.
SUTA COMPENSATION
MuniServices' compensation for the Sales and Use Tax Audit Service shall be a 25% contingency
fee. This fee applies to revenue received for six quarters beginning with the quarter in which the
Date of Correction falls and all eligible prior quarters back to and including the three quarters
prior to the Date of Knowledge quarter for Bradley-Burns sales tax revenues and all eligible prior
quarters back to and including all corrected quarters prior to the Date of Knowledge quarter for
district tax revenues. As used herein, the Date of Knowledge is the quarter during which
MuniServices notifies the State Board of Equalization of the existence of a misallocation. As used
herein, the Date of Correction refers to the quarter in which the taxpayer has correctly reported
the local tax and the SBE distributes the local tax properly to City based on the taxpayer's
reporting. For QDR Misallocations detected and corrected, MuniServices' compensation shall
only include the quarters in which the misallocation actually occurred.
ADDITIONAL CONSULTING
City may request that MuniServices provide additional consulting services at anv time during
the term of the Agreement to which this Addendum is attached. If MuniServices and City agree
on the scope of additional consulting services requested, then MuniServices shall provide the
additional consulting services on a Time and -Materials basis. Depending on the personnel
assigned to perform the work, MuniServices standard hourly rates range from $75 per hour to
$300 per hour.
These additional consulting services will be invoiced no less frequently than monthly based on
actual time and expenses incurred.
CITY RESPONSIBILITIES
MuniServices' services performed hereunder may result in corrections of misallocations after
cessation of services by MuniServices for City. Therefore, City agrees that with regards to
misallocations identified to the State Board of Equalization whose Date of Knowledge occurred
during MuniServices' performance of services for City, that City's obligation to pay MuniServices
in accordance with the above compensation language shall survive expiration or termination of
this Agreement for any reason.
In the event that City identifies, documents, and notifies the State Board of Equalization of a
reporting error or misallocation as those terms are used herein, City agrees to notify
MuniServices of City's discovery no later than ten (10) days after the Date of Knowledge. If City
fails to so notify MuniServices and MuniServices later detects, documents, and reports the
misallocation or reporting error to the State Board of Equalization, or if MuniServices has
MuniServices, LLC Page 13 Local District Tax Audit Addendum
established a Date of Knowledge with the State Board of Equalization prior to notification to the
Board by City, then MuniServices shall' be entitled to compensation for the affected account in
accordance with this Addendum.
Remainder of Page Intentionally Left Blank.
MuniServices, LLC Page 14 Local District Tax Audit Addendum
EXHIBIT 2
LOCAL DISTRICT TAX AUDIT ADDENDUM
iL
OBJECTIVES AND METHODS
Many California special taxing jurisdictions are not receiving the transactions and use tax
revenue to which they are entitled due to point of use and other types of taxpayer reporting
errors. District taxed are collected on a destination basis (where the tangible personal property
will be used or is delivered to) as opposed to Bradley-Burns tax, which is collected at the point of
sale. When businesses fail to properly report their transactions tax, it is distributed in error to
other jurisdictions or not collected at all. Almost all district tax error discoveries involve
companies that are correctly collecting and allocating the local Bradley-Burns tax. Accordingly,
MuniServices initial and ongoing audit service will assist in the detection and correction of
taxpayer reporting errors and generate new transactions and use tax revenue that would not
otherwise have been realized by the City. MuniServices has vast experience in auditing district
ax. District taxes and local Bradley-Burns taxes do not necessarily result in equivalent tax
dollars for an equal measure of tax rate, because they have different rules of application.
MuniServices currently- audits district tax for the following jurisdictions: Bay Area Rapid Transit
District (BART), Los Angeles Metropolitan Transit Authority (LAIVITA), Orange County Local
Transportation Authority, San Diego County Regional Transportation Commission, Santa Clara
Valley Transportation Authority, Town of Truckee, City of West Sacramento, and City of
Woodland.
DISTRICT TAX DETECTION AND DOCUMENTATION
MuniServices shall represent the City of purposes of examining State Board of Equalization
(SBE) records pertaining to district tax to identify errors and omissions. MuniServices'
procedures for detecting and documenting misallocations are as follows:
❑ Meet with designated CITY official(s) to review service objectives and scope,
MuniServices work plan schedule, public relations and logistical matters.
❑ Procure a computer tape of district tax permit records from the State Board of
Equalization (SBE).
❑ Clean-up, standardize and computerize data from City's quarterly transaction tax
distribution reports provided by SBE for previous quarters, current quarter and
each future quarter service is provided.
❑ Develop a target list of potential point-of-sale/delivery/use taxpayer reporting
errors of transactions and use tax generating businesses located in the City's
jurisdiction. These businesses are to be analyzed based on proprietary guidelines
established by MuniServices, formulated through expert knowledge of corporate
mergers and acquisitions, transactions versus use tax, businesses marking
organization and methods, commercial/industrial transactions and use tax
reporting practices, and other conditions contributing to reporting errors.
❑ Clean, standardize and integrate, in address-order, each entity's business name,
address and payment file information, to eliminate redundancies, using
MuniServices' proprietary software.
MuniServices, LLC Page 15 Local District Tax Audit Addendum
❑ Contact personnel in sales, operations and/ or tax accounting at each target
business to determine whether a destination based reporting error exists. (Note'
this is accomplished with the highest regard to discretion and professional conduct.
MuniServices' allocation audits are predicated on a noncontroversial, constructive
public relations approach which emphasizes the importance of each business to the
City and the mutual benefits of correcting reporting errors.)
❑ Provide to the City and SBE reports addressing each taxpayer reporting error
individually, including the business name, address, telephone number, California
sales tax permit number, individuals contracted, date(s) of contract, nature of
business, reason(s) for error, and estimated district tax revenue which should be
forthcoming to the City.
• MuniServices may also provide suggested language for letters to be ::ent to the
taxpayers and/ or SBE from the City (or from MuniServices on behalf of the City)
urging cooperation in promptly correcting the distribution error.
• Respond to negative findings by SBE with timely reconfirmation documentation in
order to preserve the City's original dates of knowledge.
❑ Receive and process registration control record information monthly.
❑ Receive and process transaction tax distribution reports quarterly.
❑ Coordinate with the taxpayer and SBE to make the necessary corrections and
collect eligible back quarters amounts.
❑ Monitor and analyze the quarterly distribution reports with_an audit focus on the
following:
1. Accounts with previously reported destination based distribution errors to
ensure that the corrections are made for current quarters and all eligible back
quarters.
2. Major accounts comprising 90% or more of the City's total transaction, sales
and use tax revenue to identify any irregularities or unusual deviations from
the normal pattern (e.g. negative fund transfers, significant decreases, unusual
increases, etc.) and ensure that the City is not receiving less revenue that it is
entitled to.
3. Those accounts receiving deficiency assessments to ensure that the City
receives its local allocation.
DISTRICT TAX CORRECTION OF MISALLOCATIONS/UNDERRPORTING
For each misallocated or underreporting account detected, MuniServices will coordinate with the
taxpayer and/ or SBE to make the necessary corrections plus retroactive adjustments for
transactions and use tax amounts improperly distributed or uncollected in prior quarters. This
task is simply stated, but enormously complex and time-consuming. The following is a discussion
of the complexity of administering the program:
When MuniServices detects taxpayer-reporting errors, together with the reasons therefore, less
than half of 1VIuniServices' audit work id accomplished. Most of MuniServices' audit work is
devoted to facilitating corrective action. This is largely due to the preponderance, of reporting
MuniServices, LLC Page 16 Local District Tax Audit Addendum
errors by out-of-state headquartered distributors, contractors, processors, manufacturers and
lessors engaged in business-to-business sales in California. In terms of dollars, these companies
account for more that 90'0 of misallocations.
For these companies, there is considerable confusion due to the complexities posed by California's
transactions and use tax regulations. The reporting problems are further compounded when the
regulations are applied to multiple California locations, with each having a product:customer mix
of business-to-business sales, while some of the transactions are subject to transactions tax, and
others are subject to use tax and some are exempt.
DISTRICT TAX DETECTION TIMING CONSIDERATIONS
For each misallocated account detected, MuniServices will coordinate with the business and SBE
to make the necessary corrections plus retroactive adjustments for eligible amounts of district tax
improperly distributed in prior quarters. MuniServices coordinates and communicates between
typically four parties; sales/operations personnel at the taxpayer's local operation, tax personnel
at the company's corporate headquarters, and SBE personnel and the instate/out-of-state district
offices. Correction of the account is considered to have been made once the taxpayer is properly
allocating the payments on identified taxpayer accounts to the City in the period in which the
payment was made.
As needed, MuniServices will represent the City before state officials, boards, commissions and
committees for the purpose of correcting sales tax distribution errors that have deprived the City
of revenue to which it is entitled.
TIMING
MuniServices shall commence auditing the district tax and within 10 working days of receipt of a
fully executed contract and Confidentiality Resolution designating MuniServices as the
authorized City Consultant to examine district tax records.
CONFIDENTIALITY PROVISIONS
MuniServices is authorized by this Agreement to examine district tax, sales tax and use tax
records of the State Board of Equalization provided to City pursuant to contract under the
Bradley-Burns Uniform Sales and Use Tax Law and California Revenue & Taxation Code
applicable to transactions and use taxes.
MuniServices is required to disclose information contained in, or derived from, those sales and
use tai, records only to an officer or employee of the City wl-n is authorized by resolution to
examine the information.
MuniServices is prohibited from performing consulting services for a retailer during the term of
this Agreement.
MuniServices is prohibited from retaining the information contained in, or derived from, those
sales and use tax records, after this Agreement has expired.
This Agreement, and MuniServices' and CITY's obligations with respect to confidentiality of
taxpayer data pursuant to the Bradley Burns Revenue and Taxation Code, shall continue until
final payment for all services rendered hereunder.
%luniServices,LLC Page 17 Local District Tax Audit Addendum
DISTRICT TAX COMPENSATION
COMPENSATION
MuniServices' compensation for the City District Tax Audit Services is a 25% contingency fee.
This fee applies to six quarters after the Date of Correction and all eligible prior quarters back to
and including the three quarters prior to the Date of Knowledge quarter for District Tax
revenues and all eligible prior quarters back to and including all corrected quarters prior to the
Date of Knowledge quarter for district tax revenues.
The Date of Knowledge is the quarter during which MuniServices notifies the SBE of the
existence of a misallocation. The Date of Correction refers to the quarter in which the taxpayer
has correctly reported the local tax and the SBE distributes the local tax properly to City based
on the taxpayer's reporting, together with any prior period reallocations. For QDR
Misallocations detected and corrected, MuniServices' compensation shall only include the
quarters in Nvhich the misallocation actually occurred.
In most cases where MuniServices identifies District Tax errors, the business is already
reporting the local Bradley-Burns allocations correctly. Therefore, when MuniServices provides
the SUTA service for the City's Bradley-Burns revenues and the City's District Tax revenues,
MuniServices will not charge for both revenue sources only the Bradley-Burns portion of the
correction contained in our original SUTA agreement.
ADDITIONAL. CONS UT—TING
City may request that MuniServices provide additional consulting services at any time during
the term of the Agreement to which this Addendum is attached. If MuniServices and City agree
on the scope of additional consulting services requested, then MuniServices shall provide the
additional consulting services on a Time and Materials basis. Depending on the personnel
assigned to perform the work, MuniServices standard hourly rates range from $75 per hour to
$300 per hour.
Theae additional consulting services will be invoiced no less frequently than monthly based on
actual time and expenses incurred.
CITY RESPONSIBILITES
MuniServices' services performed hereunder may result, in corrections of misallocations after
cessation of services by MuniServices for City. Therefore, City agrees that with regards to
misallocations identified to the SBE whose Date of Knowledge occurred during MuniServices'
performance of services for City, that City's obligation to pay MuniServices in accordance with
the above compensation language shall survive expiration or termination of this Agreement for
any reason.
A
MuniServices.LLC Page 18 Local District Tax Audit Addendum
In the event that City identifies, documents, and notifies the SBE of a reporting error or
misallocation as those terms are used herein, City agrees to notify MuniServices of City's
discovery no later that ten (10) days after the Date of Knowledge. If City fails to so notify
MuniServices and MuniServices later detects, documents, and reports the misallocation or
reporting error to the SBE, or if MuniServices has established a Date of Knowledge with the SBE
prior to notification to the Board by City, then MuniServices shall be entitled to compensation for
the affected account in accordance with this Addendum.
MuniServices,LLC Page 19 Local District Tax Audit Addendum
EXHIBIT 3
SALES/USE TAX ANALYSIS & REPORTING SERVICE (STARS) ADDENDUM
OBJECTIVES AND METHODS
MuniServices' STARS Digest provides a summary that features a general analysis
regarding statewide trends that may affect the City's sales tax plus a specific analysis of
the City's sales tax composition, changes and performance. Report graphically illustrates
the data and analysis presented in the Summary. Each MuniServices STARS Digest
includes the Quarterly 1\4anagement Summary. The MuniServices STARS Digest also
includes specialized reports that provide analysis of the City's sales tax economic base and
performance for the latest complete quarter and benchmark year.
TIMING & REPORTS
MuniServices shall:
❑ Provide the City with quarterly updated STARS Digests.
❑ Install the STARS Query System on a City designated PC
❑ Update quarterly the City's sales tax registration and allocation data
from the State Board of Equalization (SBE) from MuniServices'
proprietary STARS Query System on IBM compatible PCs with Microsoft
Access export capacity. (note. STARS is provided in encrypted formats)
❑ Train authorized City staff in the use of the STARS Query System.
QUARTERLY STARS DIGEST
MuniServices will provide the City with quarterly updated bound STARS Digests including
accounts from which the City receives sales tax revenue. The primary reports included in
the STARS Digest are:
❑ Allocation Summary - Reconciles SBE advances, cleanup payments and
pool allocations with budget projections to assist the City with revenue
forecasting and receipt monitoring.
❑ Cash Analysis - Quarterly aberrations due to SBE audits, fund transfers,
and other causes are also identified and analyzed for budget planning and
revenue forecasting purposes.
❑ Top 100 Five-Year - Historical performance of the top 100 accounts
comparing current benchmark year ranking and sales tax produced with
that of prior years.
❑ Top 100 Detail — Sales tax performance of' the City's top 100 sales tax
accounts is shown in order of sales tax produced with the results for the
most recent five quarters prominently displayed. The proportion of City
sales tax produced is also shown by each account.
Afuni5ervices, LLC Page 20 STARS addendum
❑ Economic Category Performance — An analysis of the changes that
loop occurred by economic category and segment with the specific businesses
responsible for the significant changes delineated.
❑ Significant Change Analysis — A report reflecting magnitude of change,
ndicating which key businesses grew or declined, measured in absolute
dollars and percentages.
❑ Business Code Classification - This report shows the various business
codes assigned by the SBE and the accounts assigned those codes in order
of sales tax produced. Five quarters of sales tax data are shown for each
significant account.
❑ Historical Economic Composition - Data are summarized by economic
category and segment by quarters and benchmark years. Percentage of
total sales tax generated by each category and segment is also sho%%ii to
indicate trends in sales tax composition as well as performance.
❑ Geo-Area Reports - Tracks sales tax performance within designated areas
of the City (e.g., key shopping centers, business parks, and downtown
/business districts,). Charts and printed reports are included for each geo-
area.
❑ Cross-Reference Reports - These reports allow the user to look up any
account shown in the STARS Digest by name, address or account number.
STARS QUERY SYSTEM
MuniServices shall install the STARS Query System (a software program) on a
City designated, IBM-compatible PC. Each quarter, MuniServices shall provide the City
with updated information from SBE on CD-ROM. The data shall be provided in an
encrypted format allowing the City to export sales tax information from the Query System
in an Access-compatible format.
❑ The Query System enables City staff to analyze the contribution of
sales/use tax revenue from each taxpayer in the City on an individual,
grouped or sorted-order basis by business name, business type, permit
number, size ranking, street address, development, shopping center or
oth,%r geographic area. Reports may be generated by any year (i.e.,
calendar, fiscal, benchmark) or for any particular quarter for all periods
stored in the historical database.
The initial STARS Digest and Sales Tax Query System shall be delivered and installed
within 45 working days following receipt of a fully executed contract, confidentiality
resolution and the SBE sales tax registration and payment data. Subsequent quarterly
Query System updates and STARS reports will be delivered to the City within 30 days
following receipt of tiie quarterly distribution reports from the SBE.
..r
MuniServices, LLC Page 21 STARS Addendum
COMPENSATION
The STARS Digest and Query System are available for an annual fixed fee of $9,000 per
year, paid '2 ,250 quarterly. The Annual Fee shall be adjusted at the beginning of each
calendar year by the percentage change in the Consumer Price Index — West Urban (CPI-
WU) as reported by the Bureau of Labor Statistics, with the first adjustment to occur at the
beginning of the Calendar year following the first full calendar year of service. The current
available CPI-'XU is 206.2 based on December 2006 index. The adjustments thereafter will
be based on the CPI-NN7U from the last month of the prior calendar year. Each Annual Fee
adjustment shall not be less than two percent (2%) or greater than ten percent (10%).
9. LICENSE AGREEMENT
The STARS Query System is licensed software provided by MuniServices. The terms and
conditions of the STARS Query System License Agreement are provided to City upon
installation. By installing and using the STARS Query System, City agrees to be bound by
the terms of the License Agreement.
MuniServices, LLC Page 22 STARS Addendum
EXHIBIT 4
End-user notice and license agreement from MuniServices Company
Notice to end-user: Carefully read the following legal agreement ("license"). Installation or
use of the enclosed STARS Query System software and associated Data (together
"Software") on a computer system constitutes your acceptance of these terms. If you do not
agree to the terms of this license, discontinue this installation and promptly delete the
Software from the computer system, destroy any copies you made of the Software or any
installation diskettes of the Software, and dispose of all written materials in your
possession regarding the Software. This License is effective until terminated. You may
terminate it at any time by destroying-the Software and all copies of it. It will also
terminate if you fail to comply with any term or condition of this License. You agree upon
termination to destroy the Software together with all copies of the Software.
License Grant: MuniServices Company grants to You a license to install and use one copy
of the Software on a single computer. Your license to use the Software is conditioned upon
Your compliance with the terms of this Agreement. A License is required for each
installation of the Software. You may make one (1) copy of the Software for archival
purposes only.
Copyright: The Software is protected by copyright laws and international treaty provisions.
You acknowledge that no title to the intellectual property in the Software is transferred to
You. You further acknowledge that title and full ownership rights to the Software will
remain the exclusive property of MuniServices Company, and You do not acquire any
rights to the Software except as expressly set forth in this license. The Software in source
code form remains a confidential trade secret of MuniServices Company and decompiling,
disassembling, or otherwise reverse engineering the Software in any way is prohibited as a
violation of those copyrights.
Prohibited Uses: You may not (a) use, copy, modify, alter, or transfer the Software or
documentation except as expressly provided in this License; (b) translate, lisassemble,
decompile, reverse program or otherwise reverse engineer the Software; (c) sublicense or
lease the Software or its documentation; or (d) use a single installation of the Software in a
multi-user or multiple computer environment or in a rental, time sharing or computer
service business. Without prejudice to any other rights, MuniServices Company may
terminate this License if You fail to comply with its terms and conditions. In such event,
You must destroy all copies of the Software.
Limited Warranty: MuniServices Company warrants that the Software will perform
substantially in accordance with the accompanying written materials for a period of thirty
(30) days from the date of purchase.
End-User Remedies: If the Software does not conform to the "Limited Warranty" section
above, MuniServices Company's entire liability and Your sole and exclusive remedy shall
be, at MuniServices Company's option, either to (a) correct the error, or (b) help you work
around the error. The Limited Warranty is void if failure of the Software has resulted from
accident, abuse, or misapplication. Any replacement software will be warranted for the
remainder of the original Limited Warranty period.
MuniServices, LLC Page 23 End-User Agreement
No other warranties: MuniServices Company does not warrant that the software is error
free, except for the express limited warranty in the "limited warranty" section.
MUNISERVICES COMPANY DISCLAIMS ALL OTHER WARRANTIES WITH RESPECT
TO THE SOFTWARE, EITHER EXPRESS OR IMPLIED, INCLUDING BUT NOT
LIMITED TO IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE AND NON-INFRINGEMENT OF THIRD PARTY RIGHTS.
Some jurisdictions do not allow the exclusion of implied warranties or limitations of how
long an implied warranty may last, or the exclusion of limitation of incidental damages, so
the above limitations or exclusions may not apply to you. This warranty gives you specific
legal rights and you may also have other rights which vary from jurisdiction to jurisdiction.
No Liability for Consequential Damages: in no event shall MuniServices Company, or its
licensors, suppliers or licensees be liable to you for any consequential, special, incidental, or
indirect damages of any kind arising out of the performance or use of the software, even if
MuniServices Company has been advised of the possibility of such damages.
Governing Law: This Agreement is governed by the laws of the State of California, U.S.A.
without regard to its conflict of laws principals.
U.S. Government Restricted Rights: Use, duplication or disclosure of the Software by any
agency, department or other entity of the U.S. Government is restricted in accordance with
FAR 12.212 for civilian agencies and DFARS 227.7202 for military agencies. The Software
is a commercial product.. Use of the Software by the U.S. Government is further restricted
by the terms of this License.
Acknowledgement: Your installation or use of this product for any period of time
constitutes your acceptance of this agreement and License and binds You to its terms,
contents and conditions.
MuniServices, LLC Page 24 End-User Agreement