HomeMy WebLinkAbout10- Finance CITY OF SAN BERNARDINO - REQUEST FOR COUNCIL ONSI NA L
From: Barbara Pachon, Finance Subject: Resolution authorizing the
Director execution of an agreement with
Hinderliter, de llamas (HDL)
Dept: Finance Companies LLC to provide Sales Tax
Analysis for the transactions and
Date: September 22, 2010 use tax including the 25% add on
Measure Z District Tax collected by
the State Board of Equalization and
provide Property Tax Audit and
Analysis Services. Resolution
authorizing designated represent-
ative to receive transaction and use
tax records from the State Board of
Equalization.
Council Meeting: 10/18/10
Synopsis of Previous Council Action:
October 1, 2007 Resolution authorizing the execution of an agreement with Muni
Services, LLC to provide Sales Tax Analysis for the transactions
and use tax collected by the State Board of Equalization and
resolution authorizing designated representative to receive
transaction and use tax records from the State Board of
Equalization.
May 19, 2008 Resolution authorizing the execution of the first amendment to
the services agreement with MuniServices, LLC to add Property
Tax Services
Recommended motions:
Adopt Resolutions (2) Z C
Barbara Pach , Director of Finance
/", a Don Gee, Deputy Exec. Director EDA
Contact person: Barbara Pachon, Director of Finance Phone: 5242
Supporting data attached: Staff Report, Attachments Ward: All
FUNDING REQUIREMENTS: Amount: $15,300 General Fund;
$12,000 Economic Development Agency
Plus 20% of audit findings
Source: 001-090-5502-0000-0053
_ Finance:
Council Notes:
Agenda Item No.
lO-Ig-aolo
CITY OF SAN BERNARDINO -REQUEST FOR COUNCIL ACTION
STAFF REPORT
SUBJECT
Resolution of the Mayor and Council authorizing the execution of an agreement with The
Hinderliter, de Llamas (HDL) Companies, LLC to provide analysis and audit services for the
City of San Bernardino's transactions and use tax, including the City's 25% add on Measure Z
District Tax, collected by the State Board of Equalization and to also provide audit and analysis
services for the City's and Economic Development Agency's property tax/tax increment
revenues.
A resolution designating the City Manager, Director of Finance, Deputy Director of Finance and
the HDL Companies, 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
MuniServices, LLC, has been auditing the City's sales tax records since 1987 and have been
auditing the City's property tax revenues since 2008. The current contract for auditing services
for sales and property tax with Muni expires on October 15, 2010. As the need for these services
continues, staff solicited proposals from three firms that perform this type of work: Muni
Services, LLC of Fresno, California; The Hinderliter, de Llamas Companies, LLC. of Diamond
Bar, California; and Sales Tax Resource Group of Huntington Beach, California. Since this type
of audit and analysis is a specialized field, there are not very many companies that provide this
service.
As Sales Tax Resource Group does not provide property tax audit work and detail quarterly
analysis and reports, their proposal did not meet the specifications for these services. Staff found
the proposals submitted by MuniServices and HDL were very comparable in terms of scope of
work done and reports provided to the City. Both companies have been providing these services
to cities for over 25 years and most cities in California use one of these two companies for audit
and analysis services.
The price quotes from both companies are also comparable and are listed below.
Sales Tax
MuniServices-
0 $8,000 annually for quarterly reports and analysis
• 20%of all revenue recovered for six quarters from audits
HDL-
0 $7,800 annually for quarterly reports and analysis
• 15% of all revenue recovered for eight quarters from audits
Property Tax
MuniServices-
* $7,500 annually for quarterly reports and analysis
• 20% of all revenue recovered for current year and three prior years
HDL-
9 $7,500 annually for quarterly reports and analysis
• $12,000 annually for quarterly reports and analysis for Economic Development Agency
• 20% of all revenue recovered for current year and three prior years
The price quotes for the Sales Tax portion of the proposals are about equal; HDL charges a
smaller percent over a longer period of time compared to MuniServices who charges a larger
percent over a shorter period of time. The price quotes for the property tax portion are also about
equal for the City.
HDL did provide an additional proposal for a more detail analysis and audit of the Economic
Development Agency Tax Increment for a cost of$12,000. This proposal included such things
as tax increment revenue projections, calculation of low and moderate income housing set-aside
calculations, and reports on redevelopment areas for use in economic analysis and community
development planning. Upon review of this proposal by the City's Economic Development
Agency staff, it is also recommended that the Agency award a contract to HDL for
redevelopment related property tax analysis.
Based on this analysis, staff's recommendation is that a five year contract be awarded to HDL
for both sales tax and property tax analysis and audit services. While the contractual relationship
for the last 23 years with MuniServices has been very productive for the City, a rotation to a new
consultant would be in the best interest of the City at this time. Based on industry standards and
best recommended practices, the City should, on a regular basis, revisit contractual obligations to
ensure that the services being provided are current and relevant.
The second proposed resolution is to authorize the execution of an agreement with HDL to
provide analysis and audit services for the City of San Bernardino's transactions and use tax
collected by 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 (account no. 001-090-5502-0000-0053) for FY 2010-11 to pay
HDL for both sales tax and property tax audits and analysis.
Account: 001-090-5502-0000-0053 Budgeted Amount: $1,322,600
Balance as of 10/4/10: $529,794 Balance after approval of this item: $514,494.
Please note this balance does not indicate available funding. It does not include non-encumbered
reoccurring expenses or expenses incurred, but not yet processed.
The Economic Development Agency has budgeted $12,000 for their respective shared cost, in
the FY 2010-11 budget.
RECOMMENDATION
Adopt two Resolutions
RESOLUTION NO.
COPWU
1 RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE
CITY OF SAN BERNARDINO DESIGNATING HINDERLITER, DE LLAMAS
2 (HDL) AS THE AUTHORIZED CITY REPRESENTATIVE TO EXAMINE
3 TRANSACTIONS (SALES) AND USE TAX RECORDS, AND DESIGNATING THE
CITY MANAGER, THE DIRECTOR OF FINANCE AND THE DEPUTY
4 DIRECTOR OF FINANCE AS THE CITY OFFICERS AUTHORIZED TO
RECEIVE INFORMATION CONTAINED IN, OR DERIVED FROM, THE
5 TRANSACTIONS (SALES) AND USE TAX RECORDS, AND RESCINDING
6 RESOLUTION 2007-414.
7 WHEREAS, pursuant to Ordinance No. MC1229 of the City of San Bernardino
8 and Section 7270 of the Revenue and Taxation Code, the City of San Bernardino entered
9 into a contract with the State Board of Equalization to perform all functions incident to the
10
administration and operation of the Transactions and Use Tax Ordinance; and
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12 WHEREAS, the City of San Bernardino deems it desirable and necessary for
13 authorized representatives of the City of San Bernardino to examine confidential
14 transactions and use tax records of the State Board of Equalization pertaining to
15 transactions and use taxes collected by the Board of Equalization for the City of San
16 Bernardino pursuant to that contact; and
17
18 WHEREAS, Section 7056 of the Revenue and Taxation Code sets forth certain
19 requirements and conditions for the disclosure of State Board of Equalization records and
20 establishes criminal penalties for the unlawful disclosure of information contained in or
21 derived from, the transactions and use tax records of the Board of Equalization.
22 NOW, THEREFORE BE IT RESOLVED BY THE MAYOR AND
23
COMMON COUNCIL OF THE CITY OF SAN BERNARDINO AS FOLLOWS:
24
25 SECTION 1. The City of San Bernardino designates the City Manager, the
26 Director of Finance and the Deputy Director of Finance as the authorized officers to the
27 State Board of Equalization to represent the City of San Bernardino with authority to
28 examine transactions and use tax records of the State Board of Equalization pertaining to
RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE
CITY OF SAN BERNARDINO DESIGNATING HINDERLITER, DE LLAMAS,
1 COMPANIES, LLC AS THE AUTHORIZED CITY REPRESENTATIVE TO
EXAMINE TRANSACTIONS (SALES) AND USE TAX RECORDS, AND
2 DESIGNATING THE CITY MANAGER, THE DIRECTOR OF FINANCE AND
THE DEPUTY DIRECTOR OF FINANCE AS THE CITY OFFICERS
3 AUTHORIZED TO RECEIVE INFORMATION CONTAINED IN, OR DERIVED
4 FROM, THE TRANSACTIONS (SALES) AND USE TAX RECORDS, AND
RESCINDING RESOLUTION 2007-414.
5 transactions and use taxes collected for the City of San Bernardino by the State Board of
6 Equalization pursuant to the contract between the City of San Bernardino and the State
7 Board of Equalization. The information obtained by examination of State Board of
8
Equalization records shall be used only for purposes related to the collection of the City of
9
10 San Bernardino's transactions and use taxes by the State Board of Equalization pursuant to
11 the contract.
12 SECTION 2. The City of San Bernardino designates Hinderliter, de Llamas
13 Companies, LLC to examine the transactions and use tax records of the State Board of
AF
14 Equalization pertaining to transactions and use taxes collected for the City of San
15
Bernardino by the State Board of Equalization. Hinderliter, de Llamas Companies, LLC,
16
17 designated by this section,meets all the following conditions:
18 a. has an existing contract with the City of San Bernardino to examine
19 those transactions and use tax records;
20 b. is required by that contract to disclose information contained in, or
21
derived, from those transactions and use tax records only to the officers
22
23 authorized under Section 1 of this Resolution to examine information;
24 c. is prohibited by that contract from performing consulting services for a
25 retailer during the term of that contract;
26 d. is prohibited by that contract from retaining the information contained
R 27 in, or derived from, those transactions and use tax records after that
28
contract has expired.
2
RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE
CITY OF SAN BERNARDINO DESIGNATING HINDERLITER, DE LLAMAS,
1 COMPANIES, LLC AS THE AUTHORIZED CITY REPRESENTATIVE TO
EXAMINE TRANSACTIONS (SALES) AND USE TAX RECORDS, AND
2 DESIGNATING THE CITY MANAGER, THE DIRECTOR OF FINANCE AND
THE DEPUTY DIRECTOR OF FINANCE AS THE CITY OFFICERS
3 AUTHORIZED TO RECEIVE INFORMATION CONTAINED IN, OR DERIVED
4 FROM, THE TRANSACTIONS (SALES) AND USE TAX RECORDS, AND
RESCINDING RESOLUTION 2007-414.
5 SECTION 3. The City of San Bernardino Resolution 2007-4140 is hereby
6 rescinded and replaced by this resolution.
7 I HEREBY CERTIFY that the foregoing resolution was duly adopted by the Mayor
8
and Common Council of the City of San Bernardino at a meeting thereof,
9
10 held on the day of , 2010,by the following vote,to wit:
11 COUNCILMEMBERS AYES NAYS ABSTAIN ABSENT
12 MARQUEZ
13 DESJARDINS
14 BRE\K R
15 SHORETT
KELLEY
16 JOHNSON
17 McCAMMACK
18
19 Rachel Clark, City Clerk
20 The foregoing resolution is hereby approved this day of 2010.
21
Patrick J. Morris, Mayor
22 City of San Bernardino
23 Approved as to form:
24 JAMES F. PENMAN
City At mey
25
BY:
26
27
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RESOLUTION NO.
1 RESOLUTION OF THE CITY OF SAN BERNARDINO AUTHORIZING
THE EXECUTION OF AN AGREEMENT WITH HINDERLITER, DE LLAMAS,
2 COMPANIES, LLC TO PROVIDE ANALYSIS AND AUDIT SERVICES FOR THE
3 CITY OF SAN BERNARDINO'S TRANSACTIONS AND USE TAX COLLECTED
BY THE STATE BOARD OF EQUALIZATION AND PROPERTY TAX AUDIT
4 AND ANALYSIS SERVICES.
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 Hinderliter, De Llamas
1 9 Companies, LLC to provide analysis and audit services for the City of San Bernardino
10
transactions and use tax collected by the State Board of Equalization, a copy of which is
11
attached hereto, marked Exhibit "A" and incorporated herein by reference as fully as
12
13 though set forth at length.
14 SECTION 2: The City Manager of the City of San Bernardino is hereby authorized
15 and directed to execute on behalf of said City an Agreement with Hinderliter, De Llamas
16 Companies, LLC to provide Property Tax Audit and Analysis Services a copy of which is
17
attached hereto, marked Exhibit `B" and incorporated herein by reference as fully as
18
19 though set forth at length.
20 SECTION 3: The authorization to execute the above mentioned agreements is
21 rescinded if the parties to the agreement fail to sign it within sixty(60) days of the passage
22 of this resolution.
23
24
25
26
27
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RESOLUTION OF THE CITY OF SAN BERNARDINO AUTHORIZING
THE EXECUTION OF AN AGREEMENT WITH HINDERLITER, DE LLAMAS,
1 COMPANIES,LLC TO PROVIDE ANALYSIS AND AUDIT SERVICES FOR THE
CITY OF SAN BERNARDINO'S TRANSACTIONS AND USE TAX COLLECTED
2 BY THE STATE BOARD OF EQUALIZATION AND PROPERTY TAX AUDIT
AND ANALYSIS SERVICES.
3
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 ,2010,by the following vote, to wit:
8 COUNCILMEMBERS AYES NAYS ABSTAIN ABSENT
9 MARQUEZ
10 DESJARDINS
11 BRINKER
12
SHORETT
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 2010.
22 Patrick J. Morris,Mayor
23 City of San Bernardino
Approved as to form:
24
JAMES F. PENMAN,
25 City Attorney
26
27
BY:
28
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EXHIBIT A
AVON
AGREEMENT FOR SALES, USE AND TRANSACTIONS TAX AUDIT AND
INFORMATION SERVICES
This Agreement is made and entered into as of the day of , 2010 by and
between the CITY OF SAN BERNARDINO, a municipal corporation hereinafter called CITY,
and HINDERLITER, de LLAMAS AND ASSOCIATES a California Corporation, hereinafter
called CONTRACTOR.
I. RECITALS
WHEREAS, sales, use and transactions tax revenues can be increased through: a system
of continuous monitoring, identification and correction of allocation errors, and
WHEREAS, an effective program of sales and use tax management will improve
identification of economic opportunities; provide for more accurate sales and use tax
forecasting; assist in related revenue collections; and
WHEREAS, CITY desires the combination of data entry, report preparation, and data
analysis necessary to effectively manage its sales and use tax base and recover revenues
erroneously allocated to other jurisdictions and allocation pools; and
WHEREAS, CONTRACTOR has the programs, equipment and personnel required to
deliver the sales and use tax related services referenced herein;
THEREFORE, CITY and CONTRACTOR, for the consideration hereinafter described,
mutually agree as follows:
II. SERVICES
The CONTRACTOR shall perform the following services:
A. MANAGEMENT REPORTS AND ECONOMIC ANALYSIS
I. CONTRACTOR shall establish a special database that identifies the name,
address and quarterly allocations of all sales tax producers within the CITY for
the most current and previous back to 1990 or earlier, if the CITY has prior
historical sales tax data available on computer readable magnetic media and
update the information quarterly. This database will be utilized to generate
special reports to the CITY on: major sales tax producers by rank and category,
sales tax activity by categories, business districts or redevelopment areas,
identification of reporting aberrations, and per capita and outlet comparisons
with regional and statewide sales.
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2. CONTRACTOR shall provide up-dated report s each qu arter identifying changes
in sales by individual businesses, business groups and categories and by
geographic area. Quarterly aberrations due to State audits, fund transfers, and
receivables along with late or double payments will be identified. Quarterly
reconciliation worksheets to assist finance officer with budget forecasting will
be included along with separate reports to monitor and project the City's
Measure Z Transactions Tax that was adopted in 2006.
3. CONTRACTOR shall additionally provide a quarterly summary analysis for the
CITY or its Redevelopment Agency to share with Chambers of Commerce and
other economic development interest groups that analyze CITY'S sales tax
trends by major groups, and geographic areas without disclosing confidential
information.
4. CONTRACTOR shall make available and train the CITY Staff on the use of
HdL sales tax computer software program and database containing sellers permit
and quarterly allocation information for all in-city business outlets registered
with the Board of Equalization and keep the registration and allocation data
current with quarterly updates.
B. ALLOCATION AUDIT AND RECOVERY- SALES TAX
1. CONTRACTOR shall conduct an initial and on-going sales and use tax audit to
identify and correct "point-of-sale" distribution errors and thereby generate
previously unrealized sales tax income for the CITY. Common errors that will
be monitored and corrected include: transposition errors resulting in
misallocation; erroneous consolidation of multiple outlets; misreporting of
"point of sale" to the wrong location; failure to properly report out of state
purchases to in-state warehouses; improper reporting of capital purchases to
state or county allocation pools; misdirection of self-imposed use tax and
erroneous fund transfers and adjustments.
2. CONTRACTOR will initiate contacts with the appropriate sales management
and accounting officials in companies that have businesses where a probability
of error exists to verify whether current tax receipts accurately reflect the local
sales activity. Such contacts will be conducted in a professional and courteous
manner so as to enhance CITY'S relations with the business community.
3. CONTRACTOR shall prepare and submit to the Board of Equalization all
information necessary to correct any allocation errors that are identified and shall
follow-up with the individual businesses and the State Board of Equalization to
ensure that all back quarter payments due the CITY are recovered.
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1 4. If during the course of its audit, CONTRACTOR finds businesses or capital
i projects located in the CITY that have the potential for modifying their operation
to provide an even greater share of sales or use tax to the CITY,
CONTRACTOR shall so advise CITY and upon request, shall work with those
businesses, CONTRACTOR and the CITY to encourage such changes.
C. DEFICIENCY/ALLOCATION AUDITS—TRANSACTIONS TAX
1. CONTRACTOR shall conduct on-going reviews to identify and correct
unreported transactions and use tax payments and distribution errors
thereby generating previously unrealized revenue for the CITY. Said
reviews shall include:
(i) Comparison of county-wide local tax allocations to transactions tax
for brick and mortar stores and other cash register-based
-e businesses, where clearly all transactions are conducted on-site
within the Measure "Z" CITY boundaries, and therefore subject to
transactions tax.
(ii) Review of any significant one-time use tax allocations to ensure
that there is corresponding transaction tax payments for taxpayers
with nexus within the CITY boundaries.
(iii) Review of state-wide transactions tax allocations and patterns to
identify any obvious errors and omissions.
(iv) Identification and follow-up with any potentially large purchasers
of supplies and equipment (e.g. hospitals, universities,
manufacturing plants, agricultural operations, refineries) to ensure
that their major vendors are properly reporting corresponding
transactions tax payments to the Measure "Z" Transactions Tax
District.
2. CONTRACTOR will initiate, where the probability of an error exists,
contacts with the appropriate taxpayer management and accounting
officials to verify whether current tax receipts accurately reflect the local
sales activity. Such contacts will be conducted in a professional and
courteous manner so as to enhance CITY's relations with the business
community.
3. CONTRACTOR shall prepare and submit to the Board of Equalization all
information necessary to correct any allocation errors and deficiencies that
are identified, and shall follow-up with the individual businesses and the
State Board of Equalization to ensure that all back quarter payments due
the CITY are recovered.
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D. ON GOING CONSULTATION
Throughout the term of this agreement, CONTRACTOR shall provide sales tax
estimates for proposed annexations, economic development projects and budget
projections, monitor the CITY's sales tax sharing agreements and budgeted revenue
projections against actual receipts, evaluate sales and use tax related legislative and
regulatory proposals that potentially impact the CITY, assist in targeting business
retention and tax leveraging opportunities, provide training on sales, transactions
and use tax revenues when requested and generally serve as CITY staff on sales, use
and transactions tax issues.
III. CONFIDENTIALITY
Section 7056 of the State of California Revenue and Taxation code specifically limits the
disclosure of confidential taxpayer information contained in the records of the State
Board of Equalization. This section specifies the conditions under which a CITY may
authorize persons other than CITY officers and employees to examine State Sales and
Use Tax records.
The following conditions specified in Section 7056 (b), (1) of the State of California
Revenue and Taxation Code are hereby made part of this agreement.
A. CONTRACTOR is authorized by this Agreement to examine sales, use or
transactions and use tax records of the Board of Equalization provided to CITY
pursuant to contract under the Bradley-Burns Uniform Sales and Use Tax Law.
B. CONTRACTOR is required to disclose information contained in, or derived from,
those sales, use or transactions and use tax records only to an officer or employee of
the CITY who is authorized by resolution to examine the information.
C. CONTRACTOR is prohibited from performing consulting services for a retailer, as
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defined in California Revenue&Taxation Code Section 6015, during the term of this
Agreement.
D. CONTRACTOR is prohibited from retaining the information contained in, or
derived from those sales or transactions and use tax records, after this Agreement has
expired. Information obtained by examination of Board of Equalization records shall
be used only for purposes related to collection of local sales and use tax or for other
governmental functions of the CITY as set forth by resolution adopted pursuant to
Section 7056 (b) of the Revenue and Taxation Code. The resolution shall designate
the CONTRACTOR as a person, authorized to examine sales and use tax records and
certify that this Agreement meets the requirements set forth above and in Section
7056 (b), (1) of the Revenue and Taxation Code.
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IV. PROPRIETARY INFORMATION AND SOFTWARE
In performing its duties under this agreement, CONTRACTOR will provide a special
software system for CITY's use during the term of the contract that allows the CITY to
review and print reports on the Board of Equalization Sellers Permit registration and
allocation data for the CITY. This software has been developed by CONTRACTOR at
substantial expense and is therefore considered by Contractor to be proprietary.
CONTRACTOR desires to protect its Proprietary Software. Accordingly, City agrees
that neither it nor any of its employees, agents, independent contractors or other persons
or organizations over which it has control, will at any time during or after the term of the
Agreement, directly or indirectly use any of CONTRACTOR'S Proprietary Software for
any purpose not associated with this agreement. Further, City agrees that neither it nor
any of its employees, agents, independent contractors or other persons or organizations
over which it has control, will disseminate or disclose any of CONTRACTOR'S
' Proprietary Software to any person or organization not connected with CONTRACTOR
without the express written consent of CONTRACTOR. The City also agrees that it will
undertake all necessary and appropriate steps to maintain the proprietary nature of
CONTRACTOR'S Proprietary Software and will not attempt to duplicate, decompile,
disassemble, derive the source code or re-engineer the software without proper
reimbursement to the CONTRACTOR or without the CONTRACTOR's specific written
consent.
V. CONSIDERATION
1 A. CONTRACTOR shall establish the sales and transactions tax databases, shall
provide the ongoing reports and analysis and shall make available the computer
software program and databases referenced above for a fee of$650.00 per month,
invoiced quarterly(hereafter referred to as"monthly fee").
B. CONTRACTOR shall be further paid 15% of all new Bradley-Burns sales, or use tax
revenue received by the CITY as a result of audit and recovery work performed by
CONTRACTOR (hereafter referred to as "audit fees") including any reimbursement
from the Sales and Use Tax Compensation Fund as outlined in Section 97.68 of the
Revenue and Taxation Code. New sales, transactions and/or use tax revenue shall
not include any amounts determined by CITY or CONTRACTOR to be increment
attributable to causes other than CONTRACTOR'S work pursuant to this agreement.
In the event that CONTRACTOR is responsible for an increase in the tax reported by
businesses already properly making tax payments to the CITY, it shall be
CONTRACTOR'S responsibility to separate and support the incremental amount
attributable to its efforts prior to the application of the audit fee. Said audit fees will
apply to state fund transfers received for back quarter reallocations and monies
received in the first eight consecutive reporting quarters following completion of the
audit by CONTRACTOR and confirmation of corrections by the State Board of
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Equalization. CONTRACTOR shall provide CITY with an itemized quarterly
invoice showing all formula calculations and amounts due for audit fees.
For City's Measure "Z" Transactions Tax, CONTRACTOR shall be paid 25% of all
new transactions or use tax revenue received by the CITY as a result of audit and
recovery work performed by CONTRACTOR (hereafter referred to as "audit fees").
New revenue shall not include any amounts determined and verified by CITY or
CONTRACTOR to be increment attributable to causes other than CONTRACTOR'S
work pursuant to this agreement. In the event that CONTRACTOR is responsible
for an increase in the tax reported by businesses already properly making tax
payments to the CITY, it shall be CONTRACTOR'S responsibility to separate and
1 support the incremental amount attributable to its efforts prior to the application of
the audit fee. Said audit fees will apply to state fund transfers received for those
specific quarters identified as being missing and/or deficient following completion of
the audit by CONTRACTOR and confirmation of corrections by the State Board of
Equalization.
CONTRACTOR shall obtain CITY approval prior to beginning the work of
correcting tax reporting methodology or"point of sale" for specific businesses where
said payment of the percentage fee will be expected. Said approval shall be deemed
given when the City Manager or his designated representative, signs a Sales Tax
Audit Authorization form, a copy of which is attached as "Exhibit A." CITY shall
pay audit fees upon CONTRACTOR'S submittal of evidence of State Fund Transfers
and payments to CITY from businesses identified in the audit and approved by the
CITY.
C. Above sum shall constitute full reimbursement to CONTRACTOR for all direct and
indirect expenses incurred by CONTRACTOR in performing audits including the
salaries of CONTRACTOR'S employees, and travel expenses connected with
contacting local and out-of-state businesses and Board of Equalization
representatives.
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3 VI. CITY MATERIALS AND SUPPORT
CITY shall adopt a resolution in a form acceptable to the State Board of Equalization and
in compliance with Section 7056 of the Revenue and Taxation Code, authorizing
CONTRACTOR to examine the confidential sales, transactions and use tax records of
CITY. CITY further agrees to continue CONTRACTOR'S authorization to examine the
confidential sales, transactions and use tax records of the CITY by maintaining
CONTRACTOR'S name on the CITY Resolution or by providing copies of future
allocation reports on computer readable magnetic media until such time as all audit
adjustments have been completed by the State Board of Equalization and audit fees due
the CONTRACTOR have been paid.
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VII. LICENSES,PERMITS,FEES AND ASSESSENTS
CONTRACTOR shall obtain such licenses, permits and approvals (collectively the
"Permits") as may be required by law for the performance of the services required by this
Agreement. CITY shall assist CONTRACTOR in obtaining such Permits, and CITY
shall absorb all fees, assessments and taxes which are necessary for any Permits required
to be issued by CITY.
VIII. TERMINATION
This Agreement may be terminated for convenience by either party by giving 30 days
written notice to the other of such termination and specifying the effective date thereof.
Upon the presentation of such notice, CONTRACTOR may continue to work through the
date of termination. Upon termination as provided herein, CONTRACTOR shall be paid
the value of all tax analysis and reporting work performed less payments previously made
by CITY. In ascertaining the value of the work performed up to the date of termination,
consideration shall be given to amounts due for any unpaid invoices, and to businesses
identified by CONTRACTOR which make tax payments after termination of this
Agreement as a result of CONTRACTOR'S work. After CITY receives said tax
payments for such businesses, CONTRACTOR shall be paid the audit fees resulting from
tax payments made by the business for back quarter reallocations and the first eight
consecutive reporting quarters following completion of the audit by CONTRACTOR and
confirmation of corrections by the State Board of Equalization. Compensation for any
audit work previously authorized and satisfactorily performed shall be made at the times
provided in the preceding section entitled"Consideration."
All documents, data, surveys and reports prepared by CONTRACTOR pursuant to this
Agreement shall be considered the property of the CITY and upon payment for services
performed by CONTRACTOR, such documents and other identified materials shall be
delivered to CITY by CONTRACTOR.
IX. INDEPENDENT CONTRACTOR
Neither the CITY nor any of its employees shall have any control over the manner, mode
or means by which CONTRACTOR, its agents or employees, perform the services
required herein, except as otherwise set forth herein. CITY shall have no voice in the
selection, discharge, supervision or control of CONTRACTOR'S employees, servants,
representatives or agents, or in fixing their number, compensation or hours of service.
CONTRACTOR shall perform all services required herein as an independent contractor
of CITY and shall remain at all times as to CITY a wholly independent contractor with
only such obligations as are consistent with that role. CONTRACTOR shall not at any
time or in any manner represent that it or any of its agents or employees are agents or
employees of CITY. CITY shall not in any way or for any purpose become or be deemed
to be a partner of CONTRACTOR in its business or otherwise or a joint venturer or a
member of any joint enterprise with CONTRACTOR.
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X. NON-ASSIGNMENT
This Agreement is not assignable either in whole or in part by CONTRACTOR without
the written consent of CITY. XI. ATTORNEY'S FEES
In the event a legal action is commenced to enforce any of the provisions of this
Agreement, the prevailing party shall be entitled to recover its costs and reasonable
attorney's fees. The costs, salary and expenses of the City Attorney and members of his
office in enforcing this Agreement on behalf of the CITY shall be considered as
"attorneys' fees"for the purposes of this paragraph.
XII. GOVERNING LAW
The laws of the State of California shall govern the rights, obligations, duties and
liabilities of the parties to this Agreement and shall also govern the interpretation of this
agreement.
XIII. INDEMNIFICATION
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CONTRACTOR agrees to indemnify the CITY, its officers, agents and employees
against, and will hold and save them and each of them harmless from, any and all actions,
suits, claims, damages to persons or property, losses, costs, penalties, obligations, errors,
omissions or liabilities, (herein "claims or liabilities") that may be asserted or claimed by
any person, firm or entity arising out of or in connection with the negligent performance
of the work, operations or activities of CONTRACTOR, its agents, employees,
subcontractors, or invitees, provided for herein, or arising from the negligent acts or
omissions of CONTRACTOR hereunder, or arising from CONTRACTOR'S negligent
performance of or failure to perform any term, provision, covenant or condition of this
Agreement, whether or not there is concurrent passive or active negligence on the part of
the CITY, its officers, agents or employees but excluding such claims or liabilities arising
from the sole negligence or willful misconduct of the CITY, its officers, agents or
employees,who are directly responsible to the CITY.
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XIV. NOTICE
All notices required by this Agreement shall be given to CITY and CONTRACTOR in
writing,by personal delivery or first class mail postage prepaid, addressed as follows:
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CITY: BARBARA PACHON,DIRECTOR OF FINANCE
CITY OF SAN BERNARDINO
300 North"D" Street
San Bernardino, CA 92418
CONTRACTOR: HINDERLITER, DE LLAMAS,&ASSOCIATES
1340 Valley Vista Drive, Suite 200
Diamond Bar, CA 91765
IN WITNESS WHEREOF,the parties hereto have caused this Agreement to be executed on the
date first above written by their respective officers duly authorized in that behalf.
CITY:
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CITY OF SAN BERNARDINO
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City Manager
City Clerk
CONTRACTOR:
HINDERLITER,DE LLAMAS &ASSOCIATES
A California Corporation
APPROVED AS TO FORM:
James F.Penman, City Attorney
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SAMPLE SAMPLE
EXHIBIT A
Sales Tax Audit
Work Authorization No.
The following business or businesses, located in the City of San Bernardino,have been identified
as having the potential for generating additional sales tax revenue to the City of San Bernardino.
Contractor is hereby authorized to contact the given business(s) and the State Board of
Equalization to verify the accuracy of the current reporting methodology and obtain the necessary
documentation for the Board of Equalization, to modify allocation formulas, and to return
previous misallocated revenue that may be due to City.
Contractor's compensation shall be 15% of the new sales and/or use tax revenue received by the
City as a result of audit and recovery work performed by Contractor, as set forth in the
Agreement between Contractor and City.
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CITY OF SAN BERNARDINO
� By:
Date:
HINDERLITER, DE LLAMAS AND ASSOCIATES
By:
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EXHIBIT B
Transactions Tax Audit
Work Authorization No.
p The following business or businesses, located in the City of San Bernardino have been identified
as having the potential for generating additional tax revenues to the City of San Bernardino.
Contractor is hereby authorized to contact the given business(s) and the State Board of
Equalization to verify the accuracy of the current reporting methodology and obtain the necessary
documentation for the Board of Equalization, to bill for uncollected transactions and use tax
payments or modify misallocated payments and to return revenues that may be due to the
District.
gContractor's compensation shall be 25% of the new sales and/or use tax revenue received by the
District as a result of audit and recovery work performed by Contractor, as set forth in the
Agreement between Contractor and City.
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CITY OF SAN BERNARDINO
By:
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Date:
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HINDERLITER,DE LLAMAS AND ASSOCIATES
By:
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AGREEMENT FOR SALES,USE AND TRANSACTIONS TAX AUDIT AND
INFORMATION SERVICES
This Agreement is made and entered into as of the day of , 2010 by and
between the CITY OF SAN BERNARDINO, a municipal corporation hereinafter called CITY,
and HINDERLITER, de LLAMAS AND ASSOCIATES a California Corporation, hereinafter
called CONTRACTOR.
I. RECITALS
WHEREAS, sales, use and transactions tax revenues can be increased through: a system
of continuous monitoring, identification and correction of allocation errors, and
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WHEREAS, an effective program of sales and use tax management will improve
identification of economic opportunities; provide for more accurate sales and use tax
forecasting; assist in related revenue collections; and
WHEREAS, CITY desires the combination of data entry, report preparation, and data
analysis necessary to effectively manage its sales and use tax base and recover revenues
erroneously allocated to other jurisdictions and allocation pools; and
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WHEREAS, CONTRACTOR has the programs, equipment and personnel required to
deliver the sales and use tax related services referenced herein;
THEREFORE, CITY and CONTRACTOR, for the consideration hereinafter described,
mutually agree as follows:
IL SERVICES
The CONTRACTOR shall perform the following services:
1 A. MANAGEMENT REPORTS A ND ECONOMIC ANALYSIS
1. CONTRACTOR shall establish a special database that identifies the name,
address and quarterly allocations of all sales tax producers within the CITY for
the most current and previous back to 1990 or earlier, if the CITY has prior
historical sales tax data available on computer readable magnetic media and
update the information quarterly. This database will be utilized to generate
special reports to the CITY on: major sales tax producers by rank and category,
sales tax activity by categories, business districts or redevelopment areas,
identification of reporting aberrations, and per capita and outlet comparisons
with regional and statewide sales.
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EXHIBIT B
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CITY OF SAN BERNARDINO
AGREEMENT FOR PROPERTY TAX
CONSULTING/AUDIT SERVICES
This AGREEMENT (the "Agreement") is made and entered into as of the day of
2010 by and between the CITY OF SAN BERNARDINO, a municipal corporation
hereinafter called CITY, and HdL Coren & Cone, a California Corporation hereinafter called
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CONTRACTOR.
RECITALS
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WHEREAS, property tax revenues can be verified and potentially increased through a
system of continuous monitoring, identification and reconciliation to county records; and
WHEREAS, an effective program of property tax management will assist the CITY in
fiscal, economic and community development planning; and
WHEREAS, CITY desires the property tax data based reports and data analysis required
to effectively manage the CITY property tax base and identify and recover revenues misallocated
within the CITY, or to other jurisdictions; and
WHEREAS, CONTRACTOR is a state-wide expert in such data analysis with over 150
public agency clients for whom such services are performed and has the programs, equipment,
data and personnel required to deliver the property tax services referenced herein;
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WHEREAS, CITY prefers to pay for certain of such services through a contingency
arrangement where payment is made from monies recovered and CONTRACTOR is willing to
base its compensation on such a risk-based formula.
i NOW, THEREFORE, CITY and CONTRACTOR, for the consideration hereinafter
described,mutually agree as follows:
1.0 DEFINITIONS
For purposes of this Agreement,the following terms shall have the meaning stated below:
Audit Review: "Audit" or "Audit Review" shall mean the comparison of databases to
ensure that parcels are correctly coded with the appropriate tax rate area to return revenue
i to the client city or redevelopment agency. Audits include the secured and unsecured tax
rolls and where secured records are corrected; the corresponding unsecured records
related to those properties are also corrected. A review of the calculation methodologies
developed by auditor/controller offices in the administration of property tax revenues or
tax increment revenues is made to ensure compliance. New annexations and newly
created redevelopment project areas are audited the 1st or 2nd year after the area's
adoption due to the timing of LAFCO and the State Board of Equalization in assigning
new tax rate areas and county processing of those changes.
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County: "County"shall mean the County in which the CITY is located.
Data Base: "Data Base" shall mean a computerized listing of property tax parcels and
information compiled for CITY from information provided by the County.
Days: "Days"shall mean calendar days.
Property Tax Roll: "Property Tax Roll" shall mean the assessed values of parcels on
the secured and unsecured lien date rolls as reported by the County.
Proprietary Information: "Proprietary Information" shall be the reports, technical
information, compilations of data, methodologies, formula, software, programs,
technologies and other processes previously designed and developed by CONTRACTOR
and used in the performance of the services hereunder.
RDA: "RDA" means the community redevelopment agency of CITY established
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pursuant to Health and Safety Code Sections 33,000 et, seq. ("CRL").
Recovered/Reallocated Revenue: "Recovered or Reallocated Revenue" shall mean
additional revenue received as a result of an audit or review of properties submitted for
correction or for corrections due erroneous calculations or incorrect methods of
distributing revenue discovered by the CONTRACTOR and then made by county
agencies which result in a return of additional revenue to the city/agency. Reviews of
city administered pass throughs are performed to ensure the correctness of distributions
being made to participating agencies.
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Scope of Services: "Scope of Services" shall mean all of the Base Services specified in
Section 2.0, the Optional Services in Section 3.0, the Additional Services in Section 4.0,
or any other services rendered hereunder.
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'r. TRA: "Tax Rate Area" shall mean the area subject to the tax rate.
2.0 BASE SERVICES
The CONTRACTOR shall perform all of the following duties as part of the Base
Services provided hereunder, unless otherwise specified in writing by the Contract Officer:
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2.1 Analysis And Identification Of Misallocation Errors (Contingent
Fee
(a) In the first year of this Agreement, and as necessary thereafter
but not less than once every five (5) years, CONTRACTOR shall conduct an analysis to identify
and verify in the CITY parcels on the secured Property Tax Roll which are not properly
attributed to a CITY, and will provide the correct TRA designation to the proper County agency.
Typical errors include parcels assigned to incorrect TRAs within the CITY or an adjacent city,
and TRAs allocated to wrong taxing agencies.
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CONTRACTOR shall annually reconcile the annual auditor-
controller assessed valuations report to the assessor's lien date rolls and identify discrepancies.
(c) CONTRACTOR shall annually review parcels on the unsecured
Property Tax Roll to identify inconsistencies such as value variations, values being reported to a
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mailing address rather than the situs address, and errors involving TRAs (to the extent records
are available).
(d) In Counties with automated data, CONTRACTOR shall
quarterly audit documentary transfer tax remittance detail provided by County and identify
misallocations that may be recovered for CITY.
2.2 Annual Services (Fixed Fee)
Annually, after the Property Tax Roll is available:
(a) CONTRACTOR shall establish a Data Base for CITY for
installation on personal computers or a network.
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(b) Utilizing the Data Base, CONTRACTOR will provide:
(1) A listing of the major property owners in the CITY,
including the assessed value of their property.
j (2) A listing of the major property tax payers, including an
estimate of the ro erty taxes.
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(3) A listing of property tax transfers which occurred since
the prior lien date.
(4) A listing of parcels that have not changed ownership
since the enactment of Proposition XIIIA.
(5) A comparison of property within the CITY by county-use
code designation.
(6) A listing by parcel of new construction activity utilizing
city building department data, including building permits with assessor parcel
numbers and project completion dates, to identify non-residential parcels with
new construction activity and to provide reports for use in the CITY's preparation
of Gann(Propositions 4 and 111) State Appropriation Limit calculations.
(7) A listing of multiple owned parcels.
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(8) A listing of absentee owner parcels.
' (9) Calculate an estimate of property tax revenue anticipated
to be received for the fiscal year by the CITY. This estimate is based upon the
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initial information provided by the County and is subject to modification. This
estimate shall not be used to secure the indebtedness of the CITY.
(10) Development of historical trending reports involving
taxable assessed values for the CITY and RDA, median and average sales prices,
foreclosure activity and related economics trends.
(11) Upon written request, analyses based on geographic areas
designated by the CITY to include assessed valuations and square footage
computations for use in community development planning.
2.3 Quarterly Services (Fixed Fee)
The CONTRACTOR shall perform the following services quarterly:
(a) A listing of property tax appeals filed on properties in the CITY
(selected counties).
(b) A listing of property transfers that have occurred since the last
report.
(c) An update of computer program parcel transfer data.
2.4 On-Going Consultation (Fixed Fee)
During the term of this Agreement, CONTRACTOR will serve as the CITY's resource
staff on questions relating to property tax and assist in estimating current year property tax
revenues. On-going consultation would include, but not be limited to, inquiries resolved through
use of the CITY's data base.
3.0 OPTIONAL SERVICES
The following services are available on a time and materials basis:
3.1 Specified Data
Generation of specialized data-based reports which would require additional
programming, the purchase of additional data, costs for county staff research, or similar matters
not necessary to carry out services outlined in Section 2.0.
3.2 County Research
Any research with County agencies for which CONTRACTOR does not have a current
database.
3.3 Redevelopment Financial Services
Redevelopment Financial Services including but not limited to:
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(a) Tax increment projections
(b) Feasibility studies
(c) Agency or Project Area cash flows
(d) Low and moderate income housing set-aside calculations, findings
and consultations
(e) Fiscal impact studies
(0 Legislative analysis
(g) Redevelopment plan adoption and amendment financial feasibility
studies
3.4 Bond Services
Bond services are available for a fixed negotiated fee,including:
(a) Tax Allocation Bonds fiscal consultant reports
(b) Mello-Roos Special Tax studies
(c) Independent redevelopment and financial consultant reports, such
as escrow release reports and additional bond tests
4.0 ADDITIONAL SERVICES
CITY shall have the right at any time during the performance of the services, without
invalidating this Agreement, to order extra work beyond that specified in the Scope of Services
or make changes by altering, adding to or deducting from said work. No such extra work may be
undertaken unless a written order is first given by the Contract Officer to the Contractor,
incorporating therein any material adjustment in the contract and/or the time to perform this
Agreement, which said adjustments are subject to the written approval of the Contractor. Any
increase in compensation of up to $25,000, or in the time to perform of up to one hundred eighty
(180) days may be approved by the Contract Officer. Any greater increases, taken either
separately or cumulatively must be approved by the City Council. It is expressly understood by
Contractor that the provisions of this Section shall not apply to services specifically set forth in
the Scope of Services or reasonably contemplated therein.
5.0 OBLIGATIONS OF THE PARTIES WITH RESPECT TO SERVICES
5.1 City Materials and Support
CITY agrees to provide the following information:
1. Current CITY maps and zoning map;
1 2. A copy of reports received by the CITY annually from the Auditor-
Controller's office detailing assessed values (secured, unsecured and
utilities), as well as unitary values for reconciliation analysis;
3. Parcel listing and maps of CITY parcel annexations since the lien date
roll;
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4. A listing of completed new construction projects with Assessor's map
book, page and parcel numbers (APN) for proper identification and
tracking for two years prior to the date of this Agreement. If the data does
not include the APN information, CONTRACTOR will research this
information at an additional cost;
5. A listing of the CITY levies assessment districts and direct assessments.
6. RDA formation documents, debt service schedules, plan caps, DDA/OPA
agreements.
5.2 Compliance with Law
All services rendered hereunder shall be provided in accordance with all ordinances,
resolutions, statutes, rules, and regulations of the CITY and any Federal, State or local
governmental agency having jurisdiction in effect at the time service is rendered.
5.3 License,Permits,Fees and Assessments
CONTRACTOR shall obtain such licenses, permits and approvals (collectively the
"Permits") as may be required by law for the performance of the services required by this
Agreement. CITY shall assist CONTRACTOR in obtaining such Permits, and CITY shall
absorb all fees, assessments and taxes which are necessary for any Permits required to be issued
by CITY.
5.4 Further Responsibilities of Parties
Both parties agree to use reasonable care and diligence to perform their respective
obligations under this Agreement. Both parties agree to act in good faith to execute all
instruments, prepare all documents and take all actions as may be reasonably necessary to carry
out the purposes of this Agreement. Unless hereafter specified, neither party shall be responsible
for the service of the other.
6.0 CONSIDERATION
6.1 Base Fixed Fee Services
CONTRACTOR shall provide the Base Services described in Section 2.0 above, for a
fixed annual fee of$19,500.00(invoiced quarterly).
6.2 Base Contingent Fee Services
For Base Services pursuant to Section 2.1 which are payable on a contingent basis,
CONTRACTOR shall receive 20 percent of net general fund or tax increment property tax
revenue or other revenues attributable to CITY departments, districts, or funds recovered or
reallocated which are directly or indirectly the result of an audit, analysis or consultation
performed by CONTRACTOR (including but not limited to base year value audits;
administration of tax sharing agreements; tax increment allocation reviews; county allocation
reviews). CONTRACTOR shall separate and support said reallocation and provide CITY with
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an itemized invoice showing all amounts due as a result of revenue recovery or reallocation.
CITY shall pay audit fees after Contractor's submittal of evidence that corrections have been
made by the appropriate agency. Payment to CONTRACTOR shall be made within thirty (30)
days after CITY receives its first remittance advice during the fiscal year for which the
correction applies.
Optional Services
Fees for Optional Services as outlined in Services in Section 3.0 above (except Section
3.4) shall be billed at the following hourly rates:
Partner $195 per hour
Principal $175 per hour
Associate $135 per hour
Senior Analyst $100 per hour
Analyst $ 65 per hour
Administrative $ 45 per hour
Hourly rates are exclusive of expenses and are subject to adjustment by CONTRACTOR
annually. On July 1st of each year CONTRACTOR shall provide CITY with an updated
schedule of hourly rates. The rates will not be increased by more than five percent (5%) per
year. In addition, expenses for Optional Services shall be billed at 1.15 times actual incurred
costs.
6.3 Fees for Bond Services
Services under Section 3.5 above will be determined depending upon the complexity of
the bond issue and the time available for completion of the task and will be mutually agreed to be
the parties.
6.4 Indirect Expenses
Except as specified above, no other charges shall be made for direct or indirect expenses
incurred by CONTRACTOR in performing the services in the Scope of Services including for
administrative overhead, salaries of CONTRACTOR'S employees, travel expenses or similar
matters.
6.5 Due Date
All fees are due 30 days immediately following billing. All amounts that are not paid
when due shall accrue interest from the due date at the rate of one percent per month (12% per
annum).
7.0 TERM PERFORMANCE SCHEDULE
7.1 Time of Essence
Time is of the essence in the performance of this Agreement.
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7.2 Schedule of Performance
CONTRACTOR shall commence the services pursuant to this Agreement upon receipt of
a written notice to proceed and shall perform all services within the time period(s) established in
the "Schedule of Performance" attached hereto as Exhibit "A", and incorporated herein by this
reference. When requested by the CONTRACTOR, extensions to the time period(s) specified in
the Schedule of Performance may be approved in writing by the Contract Officer but not
exceeding one hundred eighty(18 0)days cumulatively.
7.3 Force Majeure
The time period(s) specified in the Schedule of Performance for performance of the
services rendered pursuant to this Agreement shall be extended because of any delays due to
unforeseeable causes beyond the control and without the fault or negligence of the
CONTRACTOR, including, but not restricted to, acts of God or of the public enemy, unusually
severe weather, fires, earthquakes, floods, epidemics, quarantine restrictions, riots, strikes,
freight embargoes, wars, litigation, and/or acts of any governmental agency, including the CITY,
if the CONTRACTOR shall within ten (10) days of the commencement of such delay notify the
Contract Officer in writing of the causes of the delay. The Contract Officer shall ascertain the
facts and the extent of delay, and extend the time for performing the services for the period of the
enforced delay when and if in the judgment of the Contract Officer such delay is justified.
7.4 Term
'6,— Un less earlier terminated in accordance with Section 11.6 of this Agreement, this
Agreement shall continue in full force and effect for five (5) years, and, unless a notice of
termination is given on the fourth anniversary date, shall be automatically extended from year to
year until and such notice shall be given.
COORDINATION OF WORK
7.5 Representative of Contractor
The following principals of CONTRACTOR are hereby designated as being the
principals and representatives of CONTRACTOR authorized to act in its behalf with respect to
the work specified herein and make all decisions in connection therewith:
Paula Cone
HdL COREN& CONE
1340 Valley Vista Drive, Suite 200
Diamond Bar, CA 91765
It is expressly understood that the experience, knowledge, capability and reputation of the
foregoing principals were a substantial inducement for CITY to enter into this Agreement.
Therefore, the foregoing principals shall be responsible during the term of this Agreement for
directing all activities of CONTRACTOR and devoting sufficient time to personally supervise
the services hereunder. For purposes of this Agreement, the foregoing principals may not be
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replaced nor may their responsibilities be substantially reduced by CONTRACTOR without the
express written approval of CITY.
7.6 Contract Officer
The Contract Officer shall be such person as may be designated by the City Manager of
CITY. It shall be the CONTRACTOR'S responsibility to assure that the Contract Officer is kept
informed of the progress of the performance of the services and the CONTRACTOR shall refer
any decisions which must be made by CITY to the Contract Officer. Unless otherwise specified
herein, any approval of CITY required hereunder shall mean the approval of the Contract
Officer. The Contract Officer shall have authority to sign all documents on behalf of the CITY
required hereunder to carry out the terms of this Agreement.
7.7 Prohibition Against Subcontracting or AssiLmment
The experience, knowledge, capability and reputation of CONTRACTOR, its principals
and employees were a substantial inducement for the CITY to enter into this Agreement.
Therefore, CONTRACTOR shall not contract with any other entity to perform in whole or in
part the services required hereunder without the express written approval of the CITY. In
addition, neither this Agreement nor any interest herein may be transferred, assigned, conveyed,
hypothecated or encumbered voluntarily or by operation of law, whether for the benefit of
creditors or otherwise, without the prior written approval of CITY. Transfers restricted
hereunder shall include the transfer to any person or group of persons acting in concert of more
than fifty percent (50%) of the present ownership and/or control of CONTRACTOR, taking all
transfers into account on a cumulative basis. In the event of any such unapproved transfer,
including any bankruptcy proceeding, this Agreement shall be void. No approved transfer shall
release the CONTRACTOR or any surety of CONTRACTOR of any liability hereunder without
the express consent of CITY.
7.8 Independent Contractor
Neither the CITY nor any of its employees shall have any control over the manner,mode
or means by which CONTRACTOR, its agents or employees, perform the services required
herein, except as otherwise set forth herein. CITY shall have no voice in the selection,
discharge, supervision or control of CONTRACTOR'S employees, servants, representatives or
agents, or in fixing their number, compensation or hours of service. CONTRACTOR shall
perform all services required herein as an independent contractor of CITY and shall remain at all
times as to CITY a wholly independent contractor with only such obligations as are consistent
with that role. CONTRACTOR shall not at any time or in any manner represent that it or any of
its agents or employees are agents or employees of CITY. CITY shall not in any way or for any
purpose become or be deemed to be a partner of CONTRACTOR in its business or otherwise or
a joint venturer or a member of any joint enterprise with CONTRACTOR.
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8.0 INSURANCE AND INDEMNIFICATION
8.1 Insurance
The CONTRACTOR shall procure and maintain, at its sole cost and expense, in a form
and content satisfactory to CITY, during the entire term of this Agreement including any
extension thereof,the following policies of insurance:
(a) CoInprehensive General Liability Insurance. The policy of insurance
shall be in an amount not less than either (i) a combined single limit.of$1,000,000 for bodily
injury, death and property damage or(ii)bodily injury limits of$500,000 per person, $1,000,000
per occurrence and $1,000,000 products and completed operations and property damage limits of
$500,000 per occurrence and$500,000 in the aggregate.
(b) Worker's Compensation Insurance. A policy of worker's compensation
insurance in such amount as will fully comply with the laws of the State of California and which
shall indemnify, insure and provide legal defense for both the CONTRACTOR and the CITY
against any loss, claim or damage arising from any injur'ies or occupational diseases occurring to
any worker employed by or any persons retained by the CONTRACTOR in the course of
carrying out the work or services contemplated in this Agreement.
(c) Automotive Insurance. A policy of comprehensive automobile liability
insurance written on a per occurrence basis in an amount not less than either (i) bodily injury
liability limits of $250,000 per person and,$500,000 per occurrence and property damage
liability limits of$100,000 per occurrence and $250,000 in the aggregate or(ii) combined single
limit liability of$500,000. Said policy shall include coverage for owned, non-owned, leased and
hired cars.
(d) Errors and Omissions (Professional Liability). A policy of professional
liability issuance written on a claims made basis in an amount not less than One Million Dollars
($1,000,000).
(e) General Requirements. All of the above policies of insurance shall be
primary insurance and shall name the CITY, its officers, employees and agents as additional
insureds. The insurer shall waive all rights of subrogation and contribution it may have against
the CITY, its officers, employees and agents and their respective insurers. All of said policies of
insurance shall provide that said insurance may not be amended or cancelled without providing
thirty (30) days prior written notice by registered mail to the CITY. In the event any of said
policies of insurance are cancelled, the CONTRACTOR shall, prior to the cancellation date,
submit new evidence of insurance in conformance with this Section 9.0 to the Contract Officer.
No work or services under this Agreement shall commence until the CONTRACTOR has
provided the CITY with Certificates of Insurance or appropriate insurance binders evidencing the
above insurance coverages and said Certificates of Insurance or binders are approved by the
CITY.
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8.2 Indemnification
CONTRACTOR agrees to indemnify the CITY, its officers, agents and employees
against, and will hold and save them and each of them harmless from, any and all actions, suits,
claims, damages to persons or property, losses, costs, penalties, obligations, errors, omissions or
liabilities, (herein "claims or liabilities") that may be asserted or claimed by any person, finn or
entity arising out of or in connection with the negligent performance of the work, operations or
activities of CONTRACTOR, its agents, employees, subcontractors, or invitees, provided for
herein, or arising from the negligent acts or omissions of CONTRACTOR hereunder, or arising
from CONTRACTOR'S negligent performance of or failure to perform any term, provision,
covenant or condition of this Agreement, whether or not there is concurrent passive or active
negligence on the part of the CITY, its officers, agents or employees but excluding such claims
or liabilities arising from the sole negligence or willful misconduct of the CITY, its officers,
agents or employees,who are directly responsible to the CITY.
8.3 Sufficiency of Insurer or Surety
Insurance or bonds required by this Agreement shall be satisfactory only if issued by
companies qualified to do business in California, rated "A" or better in the most recent edition of
Best Rating Guide, The Key Rating Guide or in the Federal Register, and only if they are of a
financial category Class VII or better, unless such requirements are waived by the Risk Manager
of the CITY due to unique circumstances. In the event the Risk Manager of CITY ("Risk
Manager") determines that the work or services to be performed under this Agreement creates an
increased or decreased risk of loss to the CITY, the CONTRACTOR agrees that the minimum
limits of the insurance policies and the performance bond required by this Section 9.0 may be
changed accordingly upon receipt of written notice from the Risk Manager; provided that the
CONTRACTOR shall have the right to appeal a determination of increased coverage by the Risk
Manager to the CITY Council of CITY within 10 days of receipt of notice from the Risk
Manager.
9.0 RECORDS AND REPORTS
9.1 Reports
CONTRACTOR shall periodically prepare and submit to the Contract Officer such
reports concerning the performance of the services required by this Agreement as the Contract
Officer shall require.
9.2 Records
CONTRACTOR shall keep, and require subcontractors to keep, such books and records
as shall be necessary to perform the services required by this Agreement and enable the Contract
Officer to evaluate the performance of such services. The Contract Officer shall have full and
free access to such books and records at all times during normal business hours of CITY,
including the right to inspect, copy, audit and make records and transcripts from such records.
Such records shall be maintained for a period of seven (7) years following completion of the
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services hereunder, and the CITY shall have access to such records in the event any audit is
required.
9.3 Non-Disclosure of Proprietary Information
In performing its duties under this Agreement, CONTRACTOR will produce reports,
technical information and other compilations of data to CITY. These reports, technical
information and compilations of data are derived by CONTRACTOR using methodologies,
formulae, programs,techniques and other processes designed and developed by CONTRACTOR
at a substantial expense. CONTRACTOR'S reports, technical information, compilations of data,
methodologies, formulae, software, programs, techniques and other processes designed and
developed by CONTRACTOR shall be referred to as Proprietary Information.
CONTRACTOR'S Proprietary Information is not generally known by the entities with which
CONTRACTOR competes.
CONTRACTOR desires to protect its Proprietary Information. Accordingly, subject to
the limitations of the Public Records Act, G.C. section 6250 et seq., CITY agrees that neither it
nor any of its employees, agents, independent contractors or other persons or organizations over
which it has control, will at any time during or after the term of this Agreement, directly or
indirectly use any of CONTRACTOR'S Proprietary Information for any purpose not associated
with CONTRACTOR'S activities, and further, CITY agrees that it nor any of its employees,
agents, independent contractors or other persons or organizations over which it has control, will
disseminate or disclose any of CONTRACTOR'S Proprietary Information to any person or
organization not connected with CONTRACTOR.
9.4 Release of Documents Pursuant to Public Records Act
Notwithstanding any other provision in this Agreement, all obligations relating to
disclosure of Proprietary Information remain subject to the Freedom of Information Act or
California Public Records Act, Cal. Gov't Code §§ 6250 et seq. (collectively, the "PRA"). The
Parties intend that if CITY is served with a request for disclosure under the PRA, or any similar
statute, the CITY in good faith will make the determination as to whether the material is subject
to inspection, or exempt under the statute. CITY shall advise CONTRACTOR in writing five(5)
days prior to the intended disclosure of any decision to disclose Proprietary Information, and the
reasons therefore, and if CONTRACTOR then timely advises CITY in writing with specific
supporting legal authority that it objects to the disclosure, CITY shall not disclose the
information. In such case, CONTRACTOR shall then be solely liable for defending the non-
disclosure and shall indemnify and hold CITY harmless for such nondisclosure.
10. ENFORCEMENT OF AGREEMENT
10.1 California Law
This Agreement shall be construed and interpreted both as to validity and to performance
of the parties in accordance with the laws of the State of California. Legal actions concerning
any dispute, claim or matter arising out of or in relation to this Agreement shall be instituted in
the Superior Court of the County of San Bernardino, State of California, or any other appropriate
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court in such county, and CONTRACTOR covenants and agrees to submit to the personal
jurisdiction of such court in the event of such action.
10.2 Disputes
In the event of any dispute arising under this Agreement, the injured party shall notify the
injuring party in writing of its contentions by submitting a claim therefor. The injured party shall
continue performing its obligations hereunder so long as the injuring party commences to cure
such default within ten (10) days of service of such notice and completes the cure of such default
within forty-five (45) days after service of the notice, or such longer period as may be permitted
by the injured party; provided that if the default is an immediate danger to the health, safety and
general welfare, such immediate action may be necessary. Compliance with the provisions of
this Section shall be a condition precedent to termination of this Agreement for cause and to any
legal action, and such compliance shall not be a waiver of any party's right to take legal action in
the event that the dispute is not cured, provided that nothing herein shall limit CITY'S or the
CONTRACTOR'S right to terminate this Agreement without cause pursuant to Section 11.6.
10.3 Waiver
No delay or omission in the exercise of any right or remedy by a nondefaulting party on
any default shall impair such right or remedy or be construed as a waiver. A party's consent to
or approval of any act by the other party requiring the party's consent or approval shall not be
deemed to waive or render unnecessary the other party's consent to or approval of any
subsequent act. Any waiver by either party of any default must be in writing and shall not be a
waiver of any other default concerning the same or any other provision of this Agreement.
10.4 Rights and Remedies are Cumulative
Except with respect to rights and remedies expressly declared to be exclusive in this
1 Agreement, the rights and remedies of the parties are cumulative and the exercise by either party
of one or more of such rights or remedies shall not preclude the exercise by it, at the same or
different times, of any other rights or remedies for the same default or any other default by the
other party.
10.5 Legal Action
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In addition to any other rights or remedies, either party may take legal action, in law or in
equity, to cure, correct or remedy any default, to recover damages for any default, to compel
specific performance of this Agreement, to obtain declaratory or injunctive relief, or to obtain
any other remedy consistent with the purposes of this Agreement.
10.6 Termination Prior to Expiration of Term
This Section shall govern any termination of this Agreement. The Parties reserve the
right to terminate this Agreement at any time, with or without cause, upon forty-five (45) days'
written notice to the non-terminating party, except that where termination is for cause, the Parties
will comply with the dispute resolution process in Section 11.2. Upon issuance of any notice of
termination, CONTRACTOR shall immediately cease all services hereunder except such as may
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be specifically approved by the Contract Officer. The CONTRACTOR shall be entitled to
compensation for all services rendered prior to the effective date of the notice of termination and
for any services authorized by the Contract Officer thereafter. In the event of termination
without cause pursuant to this Section, the terminating party need not provide the non-
terminating party with the opportunity to cure pursuant to Section 11.2.
10.7 Attorneys' Fees
If either party to this Agreement is required to initiate or defend or made a party to any
action or proceeding in any way connected with this Agreement, the prevailing party in such
action or proceeding, in addition to any other relief which may be granted, whether legal or
equitable, shall be entitled to reasonable attorney's fees. Attorney's fees shall include attorney's
fees on any appeal, and in addition a party entitled to attorney's fees shall be entitled to all other
reasonable costs for investigating such action, taking depositions and discovery and all other
necessary costs the court allows which are incurred in such litigation. All such fees shall be
deemed to have accrued on commencement of such action and shall be enforceable whether or
not such action is prosecuted to judgment. The costs, salary and expenses of the City Attorney
and members of his office in enforcing this Agreement on behalf of the CITY shall be considered
as "attorneys' fees"for the purposes of this paragraph.
11.0 MISCELLANEOUS PROVISIONS
11.1 Notice
Any notice, demand, request, document, consent, approval, or communication either
party desires or is required to give to the other party or any other person shall be in writing and
either served personally or sent by prepaid, first-class mail addressed as follows:
CITY Barbara Pachon,Director of Finance
City of San Bernardino
300 North"D" Street
San Bernardino, CA 92418
CONTRACTOR: HdL COREN&CONE
1340 Valley Vista Drive, Suite 200
Diamond Bar, California 91765
Either party may change its address by notifying the other party of the change of address
in writing. Notice shall be deemed communicated at the time personally delivered or in seventy-
two (72)hours from the time of mailing if mailed as provided in this Section.
11.2 Interpretation
The terms of this Agreement shall be construed in accordance with the meaning of the
language used and shall not be construed for or against either party by reason of the authorship
of this Agreement or any other rule of construction which might otherwise apply.
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11.3 Integration; Amendment
It is understood that there are no oral agreements between the parties hereto affecting this
Agreement and this Agreement supersedes and cancels any and all previous negotiations,
arrangements, agreements and understandings, if any, between the parties, and none shall be
used to interpret this Agreement. This Agreement may be amended at any time by the mutual
consent of the parties by an instrument in writing.
11.4 Severability
In the event that any one or more of the phrases, sentences, clauses, paragraphs, or
sections contained in this Agreement shall be declared invalid or unenforceable by a valid
judgment or decree of a court of competent jurisdiction, such invalidity or unenforceability shall
not affect any of the remaining phrases, sentences, clauses, paragraphs, or sections of this
Agreement which are hereby declared as severable and shall be interpreted to carry out the intent
of the parties hereunder unless the invalid provision is so material that its invalidity deprives
either party of the basic benefit of their bargain or renders this Agreement meaningless.
11.5 Corporate Authority
The persons executing this Agreement on behalf of the parties hereto warrant that(i) such
party is duly organized and existing, (ii) they are duly authorized to execute and deliver this
'? Agreement on behalf of said party, (iii) by so executing this Agreement, such party is formally
bound to the provisions of this Agreement, and (iv) the entering into this Agreement does not
violate any provision of any other Agreement to which said party is bound.
IN WITNESS WHEREOF, the parties have executed and entered into this Agreement as
of the date first written above.
CONTRACTOR:
CITY OF SAN BERNARDINO
HdL COREN&CONE
A California Corporation
By: By:
City Manager
APPROVED AS TO FORM:
James F. Penman, City Attorney
By:
{
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EXHIBIT "A"
SCHEDULE OF PERFORMANCE
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TIMELINE FOR DELIVERABLES
July/August Data available for purchase from counties
September 30 Dataset and software available for installation on city computers
September-October Unsecured audits performed and forwarded to county assessor
October-February Delivery of preliminary property tax reports
December Quarterly data updates—Database/software
Appeals quarterly updates emailed in counties where the data is available
March Quarterly data updates—Database/software
Appeals quarterly updates emailed in counties where the data is available
March/April General Fund Budget Projections
April/May Final Books—Addendums emailed to clients
June Quarterly data updates—Database/software
Appeals quarterly updates emailed in counties where the data is available
Ongoing Secured Audits—City and Redevelopment Project Areas
Malakai Audits (Base year reviews for public purchased property after
project formation)
1 Property sales reports
Redevelopment Project Area base year parcel assembly
City and RDA mid-year budget reviews and budget projections
Analytical work at the request of clients
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