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HomeMy WebLinkAbout23- Adminstrator's Office CITY OF SAN BERNARDINO - REQUEST FOR COUNCIL ACTION From: Fred Wilson, City Administrator Subject: Authorization to execute subpoenas for production of business records Dept: Administrator's Offi-- relative to an audit of utility [P LI users taxes. O Date: January 5, 1999 O Synopsis of Previous Council 3/20/95 Mayor and Common Council authorized execution of subpoenas for the utility company business records of Southern California Gas, Southern California Edison,Pacific Bell and General Telephone for the purpose of conducting an audit of Service Users Taxes (utility users taxes). Recommended Motion: That the Mayor be authorized to execute the attached subpoenas for the production of business records at Southern California Edison Company and AT&T for the purpose of conducting an audit of utility users taxes. Cy_ Signature Contact person: Fred Wilson Phone 5122 Supporting data attached: Yes Ward: FUNDING REQUIREMENTS: Amount: Source:(Acct. No.) (Acct Description) Finance: Council Notes: Agenda Item No. CITY OF SAN BERNARDINO REQUEST FOR COUNCIL ACTION STAFF REPORT SUBJECT: Authorization to execute a subpoena for production of business records by the Southern California Edison Company and AT&T in order for the City of San Bernardino to perform an audit of the City' s utility user tax revenue received from Southern California Edison Company and. AT&T. BACKGROUND: Over the last several months, the City of San Bernardino has experienced a significant decline in its electric utility user tax revenues . The main factors identified as the cause of this decline are the 10% mandated reduction in electric bills, the City' s . 5%s rate reduction of the utility user tax, the introduction of new electric marketers known as ESP' s (Energy Service Providers) , and milder temperatures . Based on the factors above, an approximate $940, 000 decline in the utility user tax revenue was included in the FY 1998-99 adopted budget . However, the actual utility user tax revenue collected during the months of July - November has been less than what was anticipated in the budget . Due to the complexity of collecting the utility user tax and the factors discussed above that have significantly impacted the City' s utility user tax revenue, staff has determined that the best course of action is to begin to audit the electric ESP' s. Since Edison is still the largest ESP, the City is going to begin the audit process with them and then move on to all the other ESP' s. In order to gain access to the needed records at Edison, Edison requires the City to issue a subpoena. This arrangement has already been agreed to by Edison and this is the same process that was followed approximately 4 years ago when the City first audited Edison. In addition, a subpoena is also being requested for AT&T so the City can perform an audit of their utility user tax process. Although the City has not experienced any utility user tax revenue short fall from AT&T, we have never audited AT&T. Staff recommends auditing AT&T as part of the City' s on-going monitoring of the utility user tax revenue. AT&T has agreed to the audit and like Edison, they also require a subpoena before releasing any records to the City. ANALYSIS: The City of San Bernardino has an on going agreement with Municipal Resource Consultants (MRC) to help monitor and audit the City' s major revenue sources (sales tax and utility user tax) . The agreement between the City and MRC was originally authorized in 1987 and has been amended and updated several times since the inception. Under the terms of the current agreement, MRC will perform the audits on Edison and AT&T. MRC will be compensated 259S for 12 quarters for errors detected on Edison' s and AT&T' s part that are corrected and result in additional revenue to the City. Due to the complexity of the utility user tax audits, the amount of staff time .needed to perform the audits, and the location of the vendor' s records, it is not feasible to perform these audits with in-house staff . It is for this reason that we contract this work out to MRC. Staff has negotiated a reduced rate range with MRC of 15%-25t for 12 quarters to audit other ESP' s when the Edison audit is completed. The reduced rate would be applied and paid to MRC on the ESP' s that the City has made compliance and audit efforts with. Only if MRC has to perform an on-site audit of those ESP' s, will MRC be paid the full 25 96 for 12 quarters . Starting in February 1998, (prior to when the electric deregulation 1 began) , staff sent out approximately 260 letters to all new ESP' s registered with the PUC (Public Utilities Commission) . This letter introduced the City of San Bernardino to the new ESP' s and informed them of the City' s utility user tax rate (a copy of the City' s utility user tax ordinance was included with the letter) . Staff also obtained a list from Edison of all customers that had moved to other ESP' s . Based on this list, staff sent out letters to some of the larger businesses requesting their assistance in confirming that their new ESP was charging the City' s utility user tax correctly (see Attachment I) . Very helpful information was obtained from businesses that cooperated. Staff also sent out additional letters to ESP' s when their utility user tax revenues sent to the City did not appear to be correct based on known customers that had moved to their company (see Attachment II) . In addition to the above letters, staff also made some follow up phone calls. Again very helpful information was obtained from some of the ESP' s that cooperated. Because the staff work discussed above and the information that was obtained will be helpful to MRC, a reduced audit rate was able to be negotiated with MRC for the ESP audits . As MRC continues with the audits of the various ESP' s, the City may have to issue additional subpoenas . FINANCIAL IMPACT• The FY 1998-99 adopted budget includes funds to pay MRC their contract fees and anticipated revenues they will find. As the above audits progress, if there are any amendments to the budget that are required under the City' s budget amendment policy, staff will bring them back to the Mayor and Council for approval . RECOMMENDATION: That the Mayor be authorized to execute the subpoenas to Southern California Edison Company and AT&T. C I T Y O F 5an Bernardino rDED t� � O F F I C R OF T H R C I T Y A D M I N I S T R A T O R F R E D A W I L S O N C I T Y A 0 Y I N 1 ! r R A T O R October 20, 1998 San Bernardino, CA 92408 Attn: Manager Dear Sir or Madam: As you are aware, the electrical industry has begun the process of deregulation. With deregulation comes the ability for businesses like yours to make a choice as to who will provide your energy needs. Southern California Edison has provided the City of San Bernardino with a listing of all accounts that have moved from Edison to other energy service providers(ESP). According to Edison, your business is one that has transferred to another ESP. I am writing to ask your assistance in confirming that your ESP is charging the City's Utility User Tax (Uli 1-) on your monthly electric bill. In February 1998, the City's Finance Director sent out a letter to all energy service providers advising them of the City of San Bernardino's local requirements relative to collecting a Utility User Tax. With your assistance, the City can verify that ESP's are complying with the City's policies and verify that all businesses are being treated equally. The UUT is a critical revenue to our City and is used to cover the costs of many basic services including Police, Fire, Parks, and Street Maintenance. I would appreciate your business providing the City with a copy of your latest electric bill so we can verify that the ESP is charging UUT in accordance with City codes. Please be assured this information will be kept confidential and the City's only interest in the electric bill is the City's UUT. If you have any questions, you can call Barbara Pachon at (909) 384-5242 or me at(909) 3845122. Your invoice can also be sent directly to Barbara Pachon at City Hall, 300 N. "D" Street, San Bernardino, CA 92418. i would like to sincerely thank you for all your time and effort in helping us. Together we can make the city of San Bernardino a better place! Sincerely, `Fred Wilson City Administrator ] 0 0 N O R T N 0 T N R I 1 T A N R 1 R N A R 0 1 N O - C A L I F 9 ] • 1 R - 0 0 0 1 ( 0 0 * 1 ] 0 4. f 1 2 ] • F A I ( 9 0 9 1 11 R 4- 5 0 9 1 FRSARI), - C I T Y O F 5an Pernardino E�DfD i`rA O F F I C E O F T N S C I T Y A 0 N I N I O T R A T O R F R E D A . W I L S O N C I T Y A 0 Y 1 N 1 ! T R A T O R October 13, :998 Dear In February 1998, the City of San Bernardino sent you a letter to advise you of the City's local requirements regarding our Utility Users Tax(UUT)in the event that you conduct business within the city. Southern California Edison has provided the City of San Bernardino with a listing of all accounts (residential and commercial)that have moved to other energy service providers(ESP). According to Edison, there arc a number of accounts that have transferred to your company. In reviewing our Utility Users Tax revenue,it appears to us that the City of San Bernardino is not receiving the proper amount of revenue from your company. Please review all accounts you have in the city of San Bernardino and verify that your company is charging,collecting and remitting the proper UUT amount to the City of San Bernardino. I would like to reques±that you send a listing of all accounts your company currently has in the city of San Bernardino and the effective date of their service with you so it can be verified with our records. If this information is not provided to us,the City will consider performing an audit of your records to determine compliance with the UUT ordinance which is authorized under Section 3.44.120 of the City's Municipal Code. This information should be submitted to my office no later than November 2, 1998. For easy reference, I have attached another copy of the City's UUT ordinance and an administrative interpretation of the term"electricity." If you have any questions regarding the City's UUT,please contact Ms. Barbara Pachon, Finance Director,at(909)384-5242. S' y N O City Administrator FAW/md Cc: Barbara Pachon.Finance Director 0 0 0 N O R T H . 0 S T R E E T S A N a E R N A R 0 1 N 0 . C A L I F 9 2 4 1 • . 0 0 0 1 It 0 0) 1 A 1 . S 1 1 0 • PA a ( 0 0 9) S O A• 0 0 0 T I ' MUNICIPAL RESOURCE CONSULTANTS DATA ELEMENT SPECIFICATIONS DISKETTE RECORDS: Diskettes can be either 5 1/4" or 3 1/2" in size DBF files are preferred,however any DOS compatible file format is acceptable MAGNETIC TAPE RECORDS: RECORDING MODE: 1/2' 9 track(6262 BPI or 1600 BPI)tape or IBM 3480/3490 cartridge, recorded in EBCDIC or ASCII(ASCII is preferred) DENSITY:Either 6250 BPI or 1600 BPI is acceptable(6250 BPI is preferred) INTERNAL LABELS: Labels are optional;however,unlabeled tapes are preferred. If labels are provided,we don not require any specific information placed in the label records TAPE MARKS: There must always be at least one tape mark following the last data block.If internal labels are provided,a tape mark must be placed between the last header block and the first data block. If internal label records are not provided,a tape mark must not precede the first data block RECORD LENGTH: Written fixed length,NOT variable length FIELD SPECIFICATIONS: All fields should be fixed length;unpacked,and unsigned(when possible) BLOCKING FACTOR: No more than 9000 characters per block is preferred. Block size must be an even increment of the record size utilized.Example(Record size 300)x(10 records)=Block size of 3000 SUPPORTIVE DOCUMENTATION A list of any codes and their associated description is requested for all files supplied.If these codes are maintained electronically,please supply them as part of entire package(i.e.,send them as separate files using the same media A file layout is requested for all file format types other than DBF. Layout to include the field name,field length, and field type(i.e.,character,numeric,date,etc.) Include file name,record count,block size and record length on an external tape label MUNICIPAL RESOURCE CONSULTANTS DATA ELEMENT SPECIFICATIONS DISKETTE RECORDS: Diskettes-cart be either 5 1/4" or 3 1/2" in size DBF files are preferred,however any DOS compatible file format is acceptable MAGNETIC TAPE RECORDS: RECORDING MODE: 1/2'9 track(6262 BPI or 1600 BPI)tape or IBM 3480/3490 cartridge, recorded in EBCDIC or ASCII(ASCII is preferred) DENSITY:Either 6250 BPI or 1600 BPI is acceptable(6250 BPI is preferred) INTERNAL LABELS: Labels are optional;however,unlabeled tapes are preferred. If labels are provided,we don not require any specific information placed in the label records TAPE MARKS: There must always be at least one tape mark following the last data block.If internal labels are provided,a tape mark must be placed between the last header block and the first data block. If internal label records are not provided,a tape mark must not precede the first data block RECORD LENGTH: Written fixed length,NOT variable length FIELD SPECIFICATIONS: All fields should be fixed length;unpacked,and unsigned(when possible) BLOCKING FACTOR: No more than 9000 characters per block is preferred. Block size must be an even increment of the record size utilized.Example(Record size 300)x(10 records)=Block size of 3000 SUPPORTIVE DOCUMENTATION A list of any codes and their associated description is requested for all files supplied.If these codes are maintained electronically,please supply them as part of entire package(i.e.,send them as separate files using the same media A file layout is requested for all file format types other than DBF. Layout to include the field name, field length, and field type(i.e.,character,numeric,date,etc.) Include file name,record count,block size and record length on an external tape label Meeting Date: 01/11/1999 - - Item #23 LAW OFFICE No Resolution Number DONALD H. MAYNOR P PROF2951OCA ORWE�T�ON ATHERTON,CA 94027 (650)327-2894 FACSIMILE 771 ' r A (650)327-264 4 E-MAIL:tlhmaynor�wrCnet .at.net O P February 9, 1999 Mr. Fr @d Wilson' Asst. City Administrator CITY OF SAN BERNARDINO 300 North D Street San Bernardino CA 92418 RE: Nondisclosure and Protective Agreement s Dear Mr. Wilson: Enclosed is a copy of the fully executed above-referenced document for your records. Sincerely, _ G Z/,` Lisa M. Montelius Assistant to Donald H. Maynor enclosure tbm:LMM Q O 1 LJ NoeResoluution Number/1999 NONDISCLOSURE AND PROTECTIVE AGREEMENT THIS NONDISCLOSURE AND PROTECTIVE AGREEMENT ("Agreement"), effective when executed by the parties, is made by and among AT&T ("AT&T"), with an address for purposes of this Agreement of 412 Mt. Kemble Avenue, Morristown, NJ 07960, the City of San Bernardino ("City"), with an address for the purposes of this Agreement of 300 North "D" Street, San Bernardino, CA 92418, and Municipal Resource Consultants ("MRC"), a partnership, with an address for the purposes of this Agreement of 32107 West Lindero Canyon Road, Suite 233, Westlake Village, CA 91361, and its technical advisers, Donald H. Maynor of 235 Catalpa Drive, Atherton, CA 94027, and Lome Bernstein of Moss Adams, LLP, 1899 March Lane, Suite F, Stockton CA, 95207-6422 (collectively, 'Recipients") to protect the confidential or proprietary nature of information to be disclosed by AT&T to Recipients, or either of them, pursuant to that certain SUBPENA For Production of Business Records (Govt. Code § 37104 et seq.) issued by the City to AT&T on , 1998 ("Subpena"), and any supplemental subpoenas issued thereafter but within twenty-four(24) months of said date. ACCORDINGLY, the parties hereto and their counsel agree that the following terms and conditions shall govern the use of Confidential Information provided to Recipients, or either of them, in accordance with any Request: 1. "Confidential Information" as used herein means any information described in Revenue and Tax Code § 7284.6 and 7284.7, including any information that is in written, oral or other tangible or intangible form. Such information may include but is not limited to, ideas, concepts, know-how, models, diagrams, Flowcharts, data, computer programs, marketing plans, business plans, customer names, customer account numbers, customer billing information, customer demographic information and other technical, financial, customer or business information, which is designated as "confidential' or "proprietary" by Company in the belief that it contains a trade secret or other confidential research, development, customer, commercial or financial information. Documents containing Confidential Information and all copies thereof shall remain the property of Company, and all copies thereof shall be returned to counsel for Company as set forth hereinbelow. 2. This Agreement governs all Confidential Information whether produced, revealed or disclosed to Recipients by Company. 3. Recipients, and each of them, acknowledge, covenant and agree: a. All Confidential Information shall be and shall remain the exclusive property of the source; b. Confidential Information shall not be revealed or disclosed without the express advance consent of Company and except as provided for in this Agreement; C. To receive in confidence any Confidential Information; to limit access to such Confidential Information to authorized agents and/or employees who have a need to know the Confidential Information; and not to disclose such Confidential Information to others or authorize anyone else to disclose such Confidential Information to others without the prior written approval of Company; 0 uINAL NONDISCLOSURE AND PROTECTIVE AGREEMENT PAGE d. To inform the receiving party, in advance of any disclosure of Confidential Information, in non-confidential and non-proprietary terms, of the nature of the proposed disclosure, and to afford the receiving party the option of declining to receive the Confidential Information. e. To identify in writing as confidential or proprietary, or to mark as confidential or proprietary, all Confidential Information; f. Alf persons receiving access to Confidential Information shall treat it as confidential and shall not disclose it nor afford access to it to any other person not authorized by Company and this Agreement to obtain said Confidential Information; g. No copies shall be made of any Confidential Information, whether by photostatic, electronic, mechanical, database or other means, without the prior consent of Company; h. To return promptly to Company, or, at Company's option, to destroy any and all copies of Confidential Information in written, graphic or other tangible form; i. The obligations with respect to Confidential Information shall extend for a period of not less than five (5) years following the date of initial disclosure of specific portion of Confidential Information, and such obligations shall extend beyond completion of the term of this Agreement; j. Neither disclosure of Confidential Information nor this Agreement shall be construed as a license to make, use or sell the Confidential Information or any products derived therefrom; and k. Neither the Confidential Information nor the act of disclosure shall constitute a grant of any license under any trademark, patent or copyright for the same, nor shall they constitute any representation, warranty, assurance or guarantee by Company with respect to the infringement of any trademark, patent, copyright or any right of privacy, or of any third persons. 4. Except as provided in this paragraph 4, persons receiving Confidential Information shall not disclose or divulge such information to any other person. With the prior approval of Company, Recipient(s) may disclose Confidential Information to an expert, agent, consultant or employee of Recipient(s) as necessary to assist Recipient(s) with regard to the existing MRC compliance review. Prior to the disclosure of such Confidential Information to any such expert, agent, consultant or employee, Recipient(s) shall: (a)give Company's counsel prior notice of the identity and affiliation of any such person; (b) require any such person to read and sign an agreement in the form of Appendix A which is attached hereto agreeing to abide by the terms of this Agreement; and (c) cause to be delivered to Company's counsel a copy of such agreement. All persons NONDISCLOSURE AND PROTECTIVE AGREEMENT PAGE receiving access to Confidential Information shall treat it as confidential and shall not disclose it nor afford access to it to any other person not authorized by this Agreement to obtain said information nor shall such information be used in any other manner as for any other purpose than provided in this Agreement. No copies shall be made of any Confidential Information or any part thereof without the prior written consent of Company. 5. These obligations do not apply to Confidential Information which is, as shown by clear and conviricing tangible proof: a. Was in Recipient's possession prior to receipt thereof from Company; or b. Was received by Recipient in good faith from a third party not subject to a confidential obligation to Company; or C. Now is or later becomes publicly known through no breach of confidential obligation by Recipients, or either of them, or their agents or employees, or any third party; or d. Was developed by Recipient(s) without the developing person(s) having access to Confidential Information received from Company or is developed independently by Recipient(s)without any portion of the development having been based on the Confidential Information. 6. If Recipients, or either of them, wish to divulge or disclose any such Confidential Information in testimony, examination, exhibits or briefs in any legal or administrative proceeding, Recipients shall contact counsel for Company at least three (3) business days prior to such use to determine the appropriate protections to be imposed in order to ensure the confidential and proprietary nature of the information against disclosure to any persons not bound by this Agreement. For the purposes of this Agreement, "Counsel for Company" shall be: C. Stephen Rosander, Esq. Room 5247 412 Mt. Kemble Avenue Morristown, NJ 07960 Phone: (973)644-8465 Fax: (973) 644-8548 7. This Agreement does not preclude Company from opposing the production of any Confidential Information or documents for lack of relevance or from objecting on any grounds to the use of such Confidential Information in any legal or administrative proceeding. 8. It is agreed that a violation of any of the provisions of this Agreement by Recipients, or NONDISCLOSURE AND PROTECTIVE AGREEMENT PAGE either of them, will cause irreparable harm and injury to Company and that Company shall be entitled, in addition to any other rights it may have at law or in equity, to an injunction enjoining and restraining the violating party from doing or continuing to do any such act and any other violations or threatened violation of this Agreement. 9. Recipients, and each of them, agree to indemnify and hold harmless Company from and against any and all claims, losses, actions, damages, fines, expenses, attorneys'fee and all other liabilities and costs arising out of or resulting from the negligent performance, failure to perform, or willful misconduct of Recipients, or either of them, of any provision of this Agreement and for the negligent acts or omissions or wrongful or willful misconduct of their agents, servants, officers or employees. 10. Neither this Agreement nor provision of Confidential Information pursuant to it shall be construed as an agreement, commitment, promise or representation by Company to do business with Recipients, or either of them, or to do anything except as set out specifically in this Agreement. 11. This Agreement shall be construed in accordance with the laws of the State of California. 12. This Agreement is the entire agreement between the parties with respect to nondisclosure of Confidential Information and supersedes all prior agreements and understandings with respect to this subject. This Agreement may be amended only by written agreement executed by the parties. This Agreement shall not be assigned or transferred by Recipients, or either of them, without the prior written consent of Company. This Agreement shall be binding on agents, successors and permitted assigns of the parties. 13. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. FOR "Company" By 0-5 k1p . �Ixwdv7 Name •g Title ` u uo2 Accoiur ,4 Date 7-1-31.gg NONDISCLOSURE AND PROTECTIVE AGREEMENT PAGE 5 Title Date FOR R ip T "City of San Bernardino" B `f'✓ �C Name Fred Wilson Title City Administrator Date / — /2 - 99 FOR RECIPIENT "Municipal Resource Consultants" By Name John Austin Title Date FOR RECIPIENT "Donald H. Maynor" By Name Donald H. Maynor Title Donald H. Maynor. A Professional Law Corporation Date NONDISCLOSURE AND PROTECTIVE AGREEMENT PAGE FOR RECIPIENT "City of San Bernardino" By Name Fred Wilson Title City Administrator Date FOR R C1 IE, NT "Mun' p�Resource Consultants" B Y N me Title Date FOR RECIPIENT "Donald H. Maynor" By Name Donald H Maynor Title Donald H Maynor. A Professional Law Corporation Date NONDISCLOSURE AND PROTECTIVE AGREEMENT PAGE FOR RECIPIENT "City of San Bernardino" BY Name Fred Wilson Title .City Administrator Date FOR RECIPIENT"Municipal Resource Consultants" By Name John Austin Title Date FOR RECIPIENT "Donald H. Maynor" By Name Donald H. Maynor Title Donald H. Maynor. A Professional Law Corporation Date NONDISCLOSURE AND PROTECTIVE AGREEMENT PAGE FOR RECIPIENT "Lorne Bemstein, Moss Adams, LLP" By eftU„&lIA&k Name Lorrie Bemstein Moss Adams LLP Title Accountant for Moss Adams LLP Date APPENDIX A AGREEMENT FOR ACCESS TO Company'S PROPRIETARY AND CONFIDENTIAL INFORMATION I, , (Name) (Title) hereby acknowledge that I have received and read a copy of the Nondisclosure and Protective Agreement ("Agreement") by and among ("Company"), the City of San Bernardino, Donald H. Maynor, Lorne Bernstein, and Municipal Resource Consultants ('Recipients") regarding the production of Confidential Information as defined therein. I understand and agree to be bound by all the terms of said Agreement. I further state that neither I nor any firm with which I am affiliated will use any Confidential Information to which I obtain access pursuant to said Agree- ment in connection with the development of any marketing strategies or plans of any firm, person or entity and that I will use said Confidential Information exclusively for the purpose of the MRC Audit. DATED: , 199_ Signature Public Agency or Company Business Address Business Telephone In re: Compliance Review of ) SUBPOENA Telecommunications Utility User ) For Production of Taxes. ) Business Records [Govt. Code §37104 et. seq, 18 U.S.C.A. § 2703 (c)(1)(C)l TO: CUSTODIAN OF RECORDS OF AT&T FROM: CITY OF SAN BERNARDINO 1. YOU ARE ORDERED TO PRODUCE BUSINESS RECORDS described in Item 3 as follows: a. By delivery of a true, legible, and durable copy of the business records described in item 3 to: Steve Gibson, Municipal Resource Consultants, 32107 West Lindero Canyon Road, #233, Westlake Village, CA CA 91361. �.. 2. The records identified in Section 3a are to be produced by no later than 30 days after the issuance of the subpoena, or 25 days after service, whichever is later. The records identified in Section 3b and 3c are to be produced by no later than 120 days after the issuance of the subpoena, or 115 days after service, whichever is later. The records identified in Section 3d through 3h are to be produced following a court order directing AT&T to disclose such information to City, subject to any protective conditions imposed by the court. Reasonable costs of copying and postage are recoverable from the City. The records shall be accompanied by an affidavit of the custodian or other qualified witness stating in substance each of the following: a. the affiant is the duly authorized custodian of records or other qualified witness and has authority to certify the records; b. the copy is a true copy of all the records described in the subpoena; and, C. if AT&T has none of the records described, or only part thereof, �... 1 the custodian or other qualified witness shall so state in the affidavit, and deliver the affidavit and such records as are available. 3. The records to be produced are as follows:- a. The account numbers, both billing and service addresses (if different), and jurisdictional geocode designator for all current nonresidential AT&T customers with Postal ZIP Codes of 92346, 92376, 92324, 92354, 92374, 92401, 92404, 92405, 92407, 92408, 92410, and 92411. [See attached memorandum dated October 28, 1997 from Scott Eckman to Karen Nations further describing such records]. b. AT&T's tax matrix (for end users) used to apply the federal excise tax and WT to the various telecommunication services provided to retail customers within the City, including any changes made to the tax matrix after January 1, 1997. C. The names and addresses of all AT&T resale customers (e.g., CLECs, competitive access providers, telemanagement customers) that provide retail telecommunication services within the City using AT&T's facilities, including a copy of any declarations or statements executed by such customers promising to apply and collect local taxes on their retail telecommunications services. d. The account numbers and addresses of all nonresidential customers within the City,which, according to AT&T's records, are designated as exempt from the City's utility users tax, and a copy of their FET exemption application. e. The names, service addresses, and billing addresses of AT&T customers, within the City, that take Special Access Services (including "private line services or channels") with Voice Grade Channels or Voice Grade Services, whether or not the customer actually uses such voice services [e.g., Switched Digital Services, Switched Voice and Data Services (ACCUNET and DATAPHONE), 2 Packet Switched Service, Switched Digital Integrated Service, Dedicated Transmission Service, ACCUNET Local Channel and ACCUNET Spectrum of Digital Services, Digital Channel Service; High Capacity Service (TI or DS1); Frame Relay Service (FRS), ISDN (business and residential); Packet Network Services; Switched Data Services; and any other Digital Data Service with Voice Grade (VG) or High Capacity Channels with Voice Grade (VG)], which are capable of connection to the public switched network (whether or not used for that purpose). f. Copies of contracts with customers within the City covering AT&T services at rates or under terms and conditions differing from filed AT&T tariff schedules. [Names and addresses of customers can be redacted]. g. A copy of the surcharge exemption certificates or reporting statements of AT&T customers, within the City, taking special access service from AT&T (see enclosed sample), including any additional information that the customer provides to AT&T in support of its claim of exemption. h. For each customer within the City that is billed on a master or aggregate billing, a copy of the master billing verifying that AT&T's telecommunication services to such customer are properly taxed under the City's UUT. Date: MAYOR 3 NONDISCLOSURE AND PROTECTIVE AGREEMENT THIS NONDISCLOSURE AND PROTECTIVE AGREEMENT ("Agreement"), effective when executed by the parties, is made by and among AT&T ("AT&T"), with an address for purposes of this Agreement of 412 Mt. Kemble Avenue, Morristown, NJ 07960, the City of San Bernardino ("City"), with an address for the purposes of this Agreement of 300 North "D" Street, San Bernardino, CA 92418, and Municipal Resource Consultants ("MRC"), a partnership, with an address for the purposes of this Agreement of 32107 West Lindero Canyon Road, Suite 233, Westlake Village, CA 91361, and its technical advisers, Donald H. Maynor of 235 Catalpa Drive, Atherton, CA 94027, and Lome Bemstein of Moss Adams, LLP, 1899 March Lane, Suite F, Stockton CA, 95207-6422 (collectively, "Recipients")to protect the confidential or proprietary nature of information to be disclosed by AT&T to Recipients, or either of them, pursuant to that certain SUBPENA For Production of Business Records (Govt. Code § 37104 at seq.) issued by the City to AT&T on , 1998 ("Subpena"), and any supplemental subpoenas issued thereafter but within twenty-four (24) months of said date. ACCORDINGLY, the parties hereto and their counsel agree that the following terms and conditions shall govern the use of Confidential Information provided to Recipients, or either of them, in accordance with any Request: 1. "Confidential Information" as used herein means any information described in Revenue and Tax Code § 7284.6 and 7284.7, including any information that is in written, oral or other tangible or intangible form. Such information may include but is not limited to, ideas, concepts, know-how, models, diagrams, flowcharts, data, computer programs, marketing plans, business plans, customer names, customer account numbers, customer billing information, customer demographic information and other technical, financial, customer or business information, which is designated as "confidential" or "proprietary" by Company in the belief that it contains a trade secret or other confidential research, development, customer, commercial or financial information. Documents containing Confidential Information and all copies thereof shall remain the property of Company, and all copies thereof shall be returned to counsel for Company as set forth hereinbelow. 2. This Agreement governs all Confidential Information whether produced, revealed or disclosed to Recipients by Company. 3. Recipients, and each of them, acknowledge, covenant and agree: a. All Confidential Information shall be and shall remain the exclusive property of the source; b. Confidential Information shall not be revealed or disclosed without the express advance consent of Company and except as provided for in this Agreement; C. To receive in confidence any Confidential Information; to limit access to such Confidential Information to authorized agents and/or employees who have a need to know the Confidential Information; and not to disclose such Confidential Information to others or authorize anyone else to disclose such Confidential Information to others without the prior written approval of Company; NONDISCLOSURE AND PROTECTIVE AGREEMENT PAGE d. To inform the receiving party, in advance of any disclosure of Confidential Information, in non-confidential and non-proprietary terms, of the nature of the proposed disclosure, and to afford the receiving party the option of declining to receive the Confidential Information. e. To identify in writing as confidential or proprietary, or to mark as confidential or proprietary, all Confidential Information; f. All persons receiving access to Confidential Information shall treat it as confidential and shall not disclose it nor afford access to it to any other person not authorized by Company and this Agreement to obtain said Confidential Information; g. No copies shall be made of any Confidential Information, whether by photostatic, electronic, mechanical, database or other means, without the prior consent of Company; h. To return promptly to Company, or, at Company's option, to destroy any and all copies of Confidential Information in written, graphic or other tangible form; i. The obligations with respect to Confidential Information shall extend for a period of not less than five (5) years following the date of initial disclosure of specific portion of Confidential Information, and such obligations shall extend beyond completion of the term of this Agreement; j. Neither disclosure of Confidential Information nor this Agreement shall be construed as a license to make, use or sell the Confidential Information or any products derived therefrom; and k. Neither the Confidential Information nor the act of disclosure shall constitute a grant of any license under any trademark, patent or copyright for the same, nor shall they constitute any representation, warranty, assurance or guarantee by Company with respect to the infringement of any trademark, patent, copyright or any right of privacy, or of any third persons. 4. Except as provided in this paragraph 4, persons receiving Confidential Information shall not disclose or divulge such information to any other person. With the prior approval of Company, Recipient(s) may disclose Confidential Information to an expert, agent, consultant or employee of Recipient(s) as necessary to assist Recipient(s)with regard to the existing MRC compliance review. Prior to the disclosure of such Confidential Information to any such expert, agent, consultant or employee, Recipient(s)shall: (a) give Company's counsel prior notice of the identity and affiliation of any such person; (b) require any such person to read and sign an agreement in the form of Appendix A which is attached hereto agreeing to abide by the terms of this Agreement; and (c) cause to be delivered to Company's counsel a copy of such agreement. All persons NONDISCLOSURE AND PROTECTIVE AGREEMENT PAGE receiving access to Confidential Information shall treat it as confidential and shall not disclose it nor afford access to it to any other person not authorized by this Agreement to obtain said information nor shall such information be used in any other manner as for any other purpose than provided in this Agreement. No copies shall be made of any Confidential Information or any part thereof without the prior written consent of Company. 5. These obligations do not apply to Confidential Information which is, as shown by clear and convincing tangible proof: a. Was in Recipient's possession prior to receipt thereof from Company; or b. Was received by Recipient in good faith from a third party not subject to a confidential obligation to Company; or C. Now is or later becomes publicly known through no breach of confidential obligation by Recipients, or either of them, or their agents or employees, or any third party; or d. Was developed by Recipient(s)without the developing person(s) having access to Confidential Information received from Company or is developed " independently by Recipient(s)without any portion of the development having been based on the Confidential Information. 6. If Recipients, or either of them, wish to divulge or disclose any such Confidential Information in testimony, examination, exhibits or briefs in any legal or administrative proceeding, Recipients shall contact counsel for Company at least three (3) business days prior to such use to determine the appropriate protections to be imposed in order to ensure the confidential and proprietary nature of the information against disclosure to any persons not bound by this Agreement. For the purposes of this Agreement, "Counsel for Company" shall be: C. Stephen Rosander, Esq. Room S247 412 Mt. Kemble Avenue Morristown, NJ 07960 Phone: (973) 644-8465 Fax: (973) 644-8548 7. This Agreement does not preclude Company from opposing the production of any Confidential Information or documents for lack of relevance or from objecting on any grounds to the use of such Confidential Information in any legal or administrative proceeding. 8. It is agreed that a violation of any of the provisions of this Agreement by Recipients, or NONDISCLOSURE AND PROTECTIVE AGREEMENT PAGE either of them, will cause irreparable harm and injury to Company and that Company shall be entitled, in addition to any other rights it may have at law or in equity, to an injunction enjoining and restraining the violating party from doing or continuing to do any such act and any other violations or threatened violation of this Agreement. 9. Recipients, and each of them, agree to indemnify and hold harmless Company from and against any and all claims, losses, actions, damages, fines, expenses, attorneys'fee and all other liabilities and costs arising out of or resulting from the negligent performance, failure to perform, or willful misconduct of Recipients, or either of them, of any provision of this Agreement and for the negligent acts or omissions or wrongful or willful misconduct of their agents, servants, officers or employees. 10. Neither this Agreement nor provision of Confidential Information pursuant to it shall be construed as an agreement, commitment, promise or representation by Company to do business with Recipients, or either of them, or to do anything except as set out specifically in this Agreement. 11. This Agreement shall be construed in accordance with the laws of the State of California. 12. This Agreement is the entire agreement between the parties with respect to nondisclosure of Confidential Information and supersedes all prior agreements and understandings with respect to this subject. This Agreement may be amended only by written agreement executed by the parties. This Agreement shall not be assigned or transferred by Recipients, or either of them, without the prior written consent of Company. This Agreement shall be binding on agents, successors and permitted assigns of the parties. 13. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. FOR "Company" By Name Title Date NONDISCLOSURE AND PROTECTIVE AGREEMENT PAGE FOR RECIPIENT "City of San Bernardino" By Name Fred Wilson Title City Administrator Date FOR RECIPIENT "Municipal Resource Consultants" By Name John Austin Title Date FOR RECIPIENT "Donald H. Maynor" By Name Donald H Maynor Title Donald H Maynor A Professional Law Corporation Date NONDISCLOSURE AND PROTECTIVE AGREEMENT PAGE 6 FOR RECIPIENT "Lome Bemstein, Moss Adams, LLP" By Name Lorrie Bemstein Moss Adams. LLP Title Accountant for Moss Adams LLP Date APPENDIX A AGREEMENT FOR ACCESS TO Company'S PROPRIETARY AND CONFIDENTIAL INFORMATION I, (Name) (Title) hereby acknowledge that I have received and read a copy of the Nondisclosure and Protective Agreement ("Agreement") by and among ("Company"), the City of San Bernardino, Donald H. Maynor, Lomie Bernstein, and Municipal Resource Consultants ("Recipients") regarding the production of Confidential Information as defined therein. I understand and agree to be bound by all the terms of said Agreement. I further state that neither I nor any firm with which I am affiliated will use any Confidential Information to which I obtain access pursuant to said Agree- ment in connection with the development of any marketing strategies or plans of any firm, person or entity and that I will use said Confidential Information exclusively for the purpose of the MRC Audit. DATED: ' 199 Signature Public Agency or Company Business Address Business Telephone In re: Audit of Electric Utility ) SUBPOENA Users Taxes ) For Production of and Franchise Fees. ) Business Records (Govt Code §37104 et seq.) et. seq, 18 U.S.C.A. § 2703 (c)(1)(C)] TO: CUSTODIAN OF RECORDS OF SOUTHERN CALIFORNIA EDISON COMPANY FROM: CITY OF SAN BERNARDINO C 1. YOU ARE ORDERED TO PRODUCE BUSINESS RECORDS described in Item 3 as follows: a. By delivery of a true, legible, and durable electronic copy of the business records described in Item 3 to: MUNICIPAL RESOURCE CONSULTANTS, c/o Mr. Stephen L. Gibson, 32107 W. Lindero Canyon Road, Suite 233, Westlake Village, CA 91361. 2. The records are to be produced by no later than 20 days after the issuance of the subpoena, or 15 days after service, whichever is later. Reasonable costs of copying and postage are recoverable from the City. The records shall be accompanied by an affidavit of the custodian or other qualified witness stating in substance each of the following: a. the affiant is the duly authorized custodian of records or other qualified witness and has authority to certify the records; b. the copy is a true copy of all the records described in the subpoena; and, -1- C. if Edison has none of the records described, or only part thereof, the custodian or other qualified witness shall so state in the affidavit, and deliver the affidavit and such records as are available. d. The records required by the subpoena will be for the months of June, July, August, September, October, and November, 1997 (separate data for each month) and June, July, August, September, October, and November, 1998 (separate data for each month). The electronic format, specified by the subpoena, shall be the same as the format agreed and applied to the City of San Bernardino reports previously completed in years past by Southern California Edison (data format attached). This will allow Southern California Edison Company's compliance with providing the necessary information to be as efficient as possible. 3. The records to be produced are as follows: a. The names and addresses of all nonresidential customers within the City that are deemed exempt from the City's utility users tax. b. The names, addresses and account numbers of all current Edison customers, by revenue class, within the City. The gross revenue amount billed to each of those accounts and the amount of City utility users tax collected for each account during the audit period. C. The addresses and account numbers of all accounts in adjacent or shared postal zip codes contiguous to the City's boundaries. d. A complete list of all customers who have chosen to utilize an ESP for their electric service including their names, service address, billing address, monthly usage in kwh and their ESP provider. The City and its contractor (Municipal Resource Consultants) will maintain all such requested records and documents as confidential pursuant to Revenue and Tax Code Section 7284.7 Dated Issued: Mayor CITY OF SAN BERNARDINO -2- MUNICIPAL RESOURCE CONSULTANTS DATA ELEMENT SPECIFICATIONS - DISKETTE RECORDS: Diskettes can be either 5 1/4" or 3 1/2" in size DBF files are preferred,however any DOS compatible file format is acceptable MAGNETIC TAPE RECORDS: RECORDING MODE: 1/2' 9 track(6262 BPI or 1600 BPI)tape or IBM 3480/3490 cartridge, recorded in EBCDIC or ASCII(ASCII is preferred) DENSITY: Either 6250 BPI or 1600 BPI is acceptable(6250 BPI is preferred) INTERNAL LABELS: Labels are optional;however,unlabeled tapes are preferred. If labels are provided,we don not require any specific information placed in the label records TAPE MARKS: There must always be at least one tape mark following the last data block.If internal labels are provided,a tape mark must be placed between the last header block and the first data block. If internal label records are not provided a tape mark must not precede the first data block RECORD LENGTH: Written fixed length,NOT variable length FIELD SPECIFICATIONS: All fields should be fixed length;unpacked,and unsigned(when possible) BLOCKING FACTOR: No more than 9000 characters per block is preferred. Block size must be an even increment of the record size utilized.Example(Record size 300)x(10 records)=Block size of 3000 SUPPORTIVE DOCUMENTATION A list of any codes and their associated description is requested for all files supplied.If these codes are maintained electronically,please supply them as part of entire package(i.e.,send them as separate files using the same media A file layout is requested for all file format types other than DBF. Layout to include the field name,field length, and field type(i.e.,character,numeric,date,etc.) Include file name,record count,block size and record length on an external tape label 9F'RNARD� Sp C I T Y O F 0 RAN D U M G'YDED 1N Date : PST From: R A C H E L C L A R K Dept ; C I T Y C L E R K Tel No: Subject : Miss Rachel, Fred asked me to mention that once the subpoenas for SCE and AT&T records have been signed and dated by the Mayor (and Fred has signed off on the non-disclosure agreement) , the documents are to be returned to Don Maynor, A Professional Law Corporation, 3220 Alpine Road, Suite A, Portola Valley, CA 94028 . Thanks, Jan P . O. B 0 2 1 0 1 8 , B A N B B R N A R D I N O , CA 9 2 4 0 2 3 0 0 N O R T H 0 S T R E E T S A N B E R N A R 0 1 N O . C A L I F O R N I A 9 2 4 1 5 . 0 0 0 1 ( 0 0 2 ( 2 2 4 - 5 0 0 2 ( 9 0 0 ( 2 0 4 - 5 1 0 2 FA Y -(0 0 0 ) 0 0 4 .0 1 O B T D D I T T Y -(0 0 0 ) 0 5 4 .5 5 4 0 I N T E R O F F I C E M E M O R A N D U M Date: 12-Jan-1999 12 :26pm PST From: Jan Wages WAGES JA Dept : Administration Tel No: TO: Melanie Miller ( MILLER ME ) CC: Sandra Medina ( MEDINA_SA ) Subject : Subpoenas - Item 23 The subpoenas were delivered to Sandy at approximately 12 : 10 this afternoon. Forwarding e-mail sent to Rachel yesterday relative to processing of same. i Any questions, please call . Thanks, i Jan i I N T E R O F F I C E M E M O R A N D U M Date: 12-Jan-1999 11 :44am PST From: Sandra Medina MEDINA SA Dept : CITY CLERK Tel No: TO: Melanie Miller ( MILLER_ME ) CC: Jan Wages ( WAGES JA ) CC: Rachel Clark ( CLARK RA ) Subject : RE : Item #23 - 01/11/1999 Yes, there is a disclosure agreement that needs to be executed. As far as the subpoenas, I would check with City Attorney to see if they are going to execute those documents. Also, you need to call Jan Wages before executing as there was something being changed in some of the documents . Sandra _ r I N T E R O F F I C E M E M O R A N D U M Date: 12-Jan-1999 11 :16am PST From: Melanie Miller MILLER ME Dept : CITY CLERK Tel No: TO: Rachel Clark ( CLARK RA ) TO: Sandra Medina ( MEDINA_SA ) CC: Jan Wages ( WAGES—JA ) Subject : Item #23 - 01/11/1999 As item #23 subpoena of utility billing records - AT&T and Edison. Is there something I have to execute? I would assume a subpoena would be executed by the City Attorney' s Office. I N T E R O F F I C E M E M O R A N D U M Date: 11-Jan-1999 04 :36pm PST From: Rachel Clark CLARK RA Y Dept : CITY CLERK Tel No: TO: Sandra Medina ( MEDINA SA ) TO: Melanie Miller ( MILLER_ME ) CC: Jan Wages ( WAGES—JA ) Subject : AT&T audit - item 23 on today' s agenda Please hold up execution of any documents related to item #23 on today' s agenda. Jan Wages has advised me that there will be a change in Section 1A of the subpoena and Mr. Maynor' s office will be sending revised documents for execution. Jan checked with Mr. Penman' s office to see if docs would have to be brought back before Council on 1/25 (due to technical changes) ; however, Mr. Penman advises that it won' t be necessary. Docs can be executed once they are returned. If my message is not clear to you, please let me know.