HomeMy WebLinkAbout04 - Award of PSA for Sales Tax and Business License Revenue Services and Authorizing Access to Sales or Transaction and Use Tax Records and DocumentsQ �EwPpRT
CITY OF
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z NEWPORT BEACH
<,FORN'P City Council Staff Report
January 26, 2021
Agenda Item No. 4
TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: Carol Jacobs, Interim Finance Director - 949-644-3313,
cjacobs@newportbeachca.gov
PREPARED BY: Theresa Schweitzer, Senior Accountant,
tschweitzer@newportbeachca.gov
PHONE: 949-644-3140
TITLE: Resolution No. 2021-6: Approval and Award of Professional Services
Agreement with Hinderliter, DeLlamas & Associates for Sales Tax
and Business License Revenue Services and Authorizing Access to
Sales or Transaction and Use Tax Records and Documents Pursuant
to California Revenue & Taxation Code Section 7056(b)
ABSTRACT:
In order to ensure the correct allocation of sales and use taxes to the City of Newport
Beach ("City"), access to sales and use tax collection data and analytics, insight into
revenue trends and projections, and provide leads for business license discovery, staff
requests City Council's approval to enter into a five-year agreement with Hinderliter,
DeLlamas & Associates (HdL).
RECOMMENDATION:
a) Determine this action is exempt from the California Environmental Quality Act (CEQA)
pursuant to Sections 15060(c)(2) and 15060(c)(3) of the CEQA Guidelines because
this action will not result in a physical change to the environment, directly or indirectly;
b) Authorize the Mayor and City Clerk to execute a five-year Professional Services
Agreement with HdL for sales and use tax auditing and analysis, for a total not -to -
exceed amount of $651,000;
c) Authorize the Mayor and City Clerk to execute a Contract Governing Access to
Confidential Taxpayer Data with HdL describing the legal requirements within
California Revenue & Taxation Code ("RTC") 7056; and
d) Adopt Resolution No. 2021-6, A Resolution of the City Council of the City of Newport
Beach, California, Authorizing HdL Access to Sales or Transaction Use Tax Records
and Documents Pursuant to California Revenue & Taxation Code Section 7056(b).
4-1
Resolution No. 2021-6: Approval and Award of Professional Services Agreement with
Hinderliter, DeLlamas & Associates for Sales Tax and Business License Revenue
Services and Authorizing Access to Sales or Transaction and Use Tax Records and
Documents Pursuanal Services Agreement
January 26, 2021
Page 2
FUNDING REQUIREMENTS:
The sales tax consulting and business license discovery portions of the contract will be
expensed to the Professional Services account in the Finance Department, Revenue
Division (Account No. 0103031-811008). Payments made pursuant to the audit recovery
portion of the Agreement will be paid from the Sales Tax Recovery account (01003-
412010). There is sufficient funding to cover this cost in the current Fiscal Year budget.
Additional funding will be requested for next fiscal year.
DISCUSSION:
Over the last three years, sales and use tax averaged $37.2 million per year,
approximately 16% of the City's General Fund. In order to forecast revenues for financial
planning and budget purposes, and to ensure the accurate remittance of sales and use
taxes, the City contracts with a third -party consultant.
The City had previously contracted with HdL for almost seven years. In 2019, staff
conducted a Request for Qualifications ("RFQ") solicitation for Sales and Use Tax
Auditing and Analysis Services. The RFQ yielded two responsive submittals - from
Avenu/MuniServices ("Avenu") and HdL. Following proposal reviews and interviews with
an evaluation panel, both Avenu and HdL scores were very close. However, Avenu
scored slightly higher than HdL in the technical portion of the RFQ, which accounts for
experience, qualifications, personnel and project approach. Avenu also offered a lower
base and contingency fee than HdL.
At the August 13, 2019 meeting, the City Council approved an agreement with Avenu.
Avenu's primary services were to identify and correct sales and use tax reporting errors,
provide detailed sales tax reports and analysis; and provide sales tax permit data which
would help identify unlicensed businesses in Newport Beach. Over the past year, Avenu
has provided most of the required data; however, HdL's reports and analysis are more
robust and useful for the City sales tax forecasting. In addition, Avenu could not provide
sales tax permit data in an effective manner that would help identify unlicensed
businesses in Newport Beach. HdL's software system allows for a more efficient review
of business license data, which has historically resulted in generating approximately
$50,000 per year for the City.
Since the COVID-19 pandemic began, HdL has been a leader in hosting informational
webinars and maintained a COVID-19 resource website to help cities better understand
the fiscal impacts of the pandemic.
4-2
Annual
CPllncrease
% of Audit
Recovery
Max
Quarters
Avenu
$6,000
Yes
8%
10
HdL
$10,200
No
15%
10
At the August 13, 2019 meeting, the City Council approved an agreement with Avenu.
Avenu's primary services were to identify and correct sales and use tax reporting errors,
provide detailed sales tax reports and analysis; and provide sales tax permit data which
would help identify unlicensed businesses in Newport Beach. Over the past year, Avenu
has provided most of the required data; however, HdL's reports and analysis are more
robust and useful for the City sales tax forecasting. In addition, Avenu could not provide
sales tax permit data in an effective manner that would help identify unlicensed
businesses in Newport Beach. HdL's software system allows for a more efficient review
of business license data, which has historically resulted in generating approximately
$50,000 per year for the City.
Since the COVID-19 pandemic began, HdL has been a leader in hosting informational
webinars and maintained a COVID-19 resource website to help cities better understand
the fiscal impacts of the pandemic.
4-2
Resolution No. 2021-6: Approval and Award of Professional Services Agreement with
Hinderliter, DeLlamas & Associates for Sales Tax and Business License Revenue
Services and Authorizing Access to Sales or Transaction and Use Tax Records and
Documents Pursuanal Services Agreement
January 26, 2021
Page 3
Due to the additional needs of the City, the agreement with Avenu was mutually
renegotiated and revised to terminate five months early, on January 31, 2021, instead of
June 30, 2021.
In adherence to the City's Purchasing procedures, the results of the RFQ were revisited.
HdL's strong performance from the RFQ process and an overall lack of qualified
consultants able to perform these services (other than HdL and Avenu) convinced staff
that revisiting the results from the RFQ represented a more efficient and feasible
procurement solution, rather than conducting a new RFQ solicitation.
Over five years, the HdL agreement would cost approximately $120,000 more than the
Avenu agreement, primarily due to the additional cost of the business license leads, which
is $20,000 each year. Because effective business license discovery generates
approximately $50,000 per year in additional revenue, the revenues should exceed that
cost in a few years. For comparison purposes, staff equalized the cost of audit findings at
$100,000 each year because it was too difficult to project the number of potential audit
findings by either company.
If Council approves this agreement, over the 5 -year term with HdL, staff expects
approximately $1.2M in revenues due to identified misallocations and approximately
$250,000 in additional business license tax revenue.
HdL is a well-respected company that was founded almost 40 years ago. HdL currently
serves over 400 public agencies, many in California, including the City of Beverly Hills,
City of Huntington Beach, City of Irvine, and City of Santa Monica. Because HdL serves
so many agencies, it has compiled an extensive database, enabling HdL to be more
efficient in recovering misallocated revenue.
HdL shall provide the City with sales and use tax consulting services, including economic
trend reports which analyze key economic drivers, geographic area reports, and
benchmark reports of the City in comparison to other jurisdictions. In addition, HdL shall
meet with staff on a quarterly basis to provide sales and use tax projections based on the
City's mix of businesses, the City's top sales tax producers, an update of sales and use
tax trends on a national level, and legislative analysis and recommendations.
HdL shall also recover sales and use tax revenues for the City that had been misallocated
to other jurisdictions through coding errors or miscalculations from individual businesses.
If a misallocation is identified, HdL shall prepare the required documentation to the
California Department of Tax and Fee Administration ("CDTFA") to recover those
revenues.
4-3
Business
Total
Sales Tax
License
5 -Year
Consulting
Audit
Leads
Cost
Avenu
$31,000
$500,000
N/A
$531,000
HdL
$51,000
$500,000
$100,000
$651,000
If Council approves this agreement, over the 5 -year term with HdL, staff expects
approximately $1.2M in revenues due to identified misallocations and approximately
$250,000 in additional business license tax revenue.
HdL is a well-respected company that was founded almost 40 years ago. HdL currently
serves over 400 public agencies, many in California, including the City of Beverly Hills,
City of Huntington Beach, City of Irvine, and City of Santa Monica. Because HdL serves
so many agencies, it has compiled an extensive database, enabling HdL to be more
efficient in recovering misallocated revenue.
HdL shall provide the City with sales and use tax consulting services, including economic
trend reports which analyze key economic drivers, geographic area reports, and
benchmark reports of the City in comparison to other jurisdictions. In addition, HdL shall
meet with staff on a quarterly basis to provide sales and use tax projections based on the
City's mix of businesses, the City's top sales tax producers, an update of sales and use
tax trends on a national level, and legislative analysis and recommendations.
HdL shall also recover sales and use tax revenues for the City that had been misallocated
to other jurisdictions through coding errors or miscalculations from individual businesses.
If a misallocation is identified, HdL shall prepare the required documentation to the
California Department of Tax and Fee Administration ("CDTFA") to recover those
revenues.
4-3
Resolution No. 2021-6: Approval and Award of Professional Services Agreement with
Hinderliter, DeLlamas & Associates for Sales Tax and Business License Revenue
Services and Authorizing Access to Sales or Transaction and Use Tax Records and
Documents Pursuanal Services Agreement
January 26, 2021
Page 4
Because sales tax information is confidential, the State provides that only designated City
staff or specifically authorized persons can obtain sales tax information. In order to
authorize HdL to access sales tax data on the City's behalf, the City must enter into a
contract with HdL and adopt a resolution authorizing designated persons to access such
records.
In addition, HdL shall provide City staff with access to its sales tax database, which shall
include sales tax and business registration data, electronic data matching and leads
services for business license discovery, as well as a two-year subscription providing
analytics data on targeted business areas within the City.
ENVIRONMENTAL REVIEW:
Staff recommends the City Council find this action is not subject to the California
Environmental Quality Act (CEQA) pursuant to Sections 15060(c)(2) (the activity will not
result in a direct or reasonably foreseeable indirect physical change in the environment)
and 15060(c)(3) (the activity is not a project as defined in Section 15378) of the CEQA
Guidelines, California Code of Regulations, Title 14, Chapter 3, because it has no
potential for resulting in physical change to the environment, directly or indirectly.
NOTICING:
The agenda item has been noticed according to the Brown Act (72 hours in advance of
the meeting at which the City Council considers the item).
ATTACHMENTS:
Attachment A — Professional Services Agreement with HdL
Attachment B — Contract Governing Access to Confidential Taxpayer Data with HdL
Attachment C — Resolution No. 2021-6
I
ATTACHMENT A
Professional Services Agreement with HdL
GID
PROFESSIONAL SERVICES AGREEMENT
WITH HINDERLITER, DE LLAMAS & ASSOCIATES FOR
SALES AND USE TAX CONSULTING SERVICES
THIS PROFESSIONAL SERVICES AGREEMENT ("Agreement') is made and
entered into as of this 1st day of February, 2021 ("Effective Date"), by and between the
CITY OF NEWPORT BEACH, a California municipal corporation and charter city ("City"),
and HINDERLITER, DE LLAMAS & ASSOCIATES, a California corporation
("Consultant"), whose address is 120 S State College Blvd, Suite 200, Brea, CA 92821,
and is made with reference to the following:
RECITALS
A. City is a municipal corporation duly organized and validly existing under the laws
of the State of California with the power to carry on its business as it is now being
conducted under the statutes of the State of California and the Charter of City.
B. City desires to engage Consultant to provide Sales and Use Tax Consulting
Services ("Project').
C. Consultant possesses the skill, experience, ability, background, certification and
knowledge to provide the professional services described in this Agreement.
D. City has solicited and received a proposal from Consultant, has reviewed the
previous experience and evaluated the expertise of Consultant, and desires to
retain Consultant to render professional services under the terms and conditions
set forth in this Agreement.
NOW, THEREFORE, it is mutually agreed by and between the undersigned parties
as follows:
1. TERM
The term of this Agreement shall commence on the Effective Date, and shall
terminate on December 31, 2025, unless terminated earlier as set forth herein.
2. SERVICES TO BE PERFORMED
Consultant shall diligently perform
Services attached hereto as Exhibit A and
or "Work"). City may elect to delete certain
sole discretion.
3. TIME OF PERFORMANCE
all the services described in the Scope of
incorporated herein by reference ("Services"
Services within the Scope of Services at its
3.1 Time is of the essence in the performance of Services under this Agreement
and Consultant shall perform the Services in accordance with the schedule included in
Exhibit A. In the absence of a specific schedule, the Services shall be performed to
an
completion in a diligent and timely manner. The failure by Consultant to strictly adhere to
the schedule set forth in Exhibit A, if any, or perform the Services in a diligent and timely
manner may result in termination of this Agreement by City.
3.2 Notwithstanding the foregoing, Consultant shall not be responsible for
delays due to causes beyond Consultant's reasonable control. However, in the case of
any such delay in the Services to be provided for the Project, each party hereby agrees
to provide notice within two (2) calendar days of the occurrence causing the delay to the
other party so that all delays can be addressed.
3.3 Consultant shall submit all requests for extensions of time for performance
in writing to the Project Administrator as defined herein not later than ten (10) calendar
days after the start of the condition that purportedly causes a delay. The Project
Administrator shall review all such requests and may grant reasonable time extensions
for unforeseeable delays that are beyond Consultant's control.
3.4 For all time periods not specifically set forth herein, Consultant shall
respond in the most expedient and appropriate manner under the circumstances, by
hand -delivery or mail.
4. COMPENSATION TO CONSULTANT
4.1 City shall pay Consultant for the Services on a time and expense not -to -
exceed basis in accordance with the provisions of this Section and the Schedule of Billing
Rates attached hereto as Exhibit B and incorporated herein by reference. Consultant's
compensation for all Work performed in accordance with this Agreement, including all
reimbursable items and subconsultant fees, shall not exceed Six Hundred Fifty One
Thousand Dollars and 00/100 ($651,000.00), without prior written authorization from
City. No billing rate changes shall be made during the term of this Agreement without the
prior written approval of City.
4.2 Consultant shall submit quarterly invoices to City describing the Work
performed the preceding month. Consultant's bills shall include the name of the person
who performed the Work, a brief description of the Services performed and/or the specific
task in the Scope of Services to which it relates, the date the Services were performed,
the number of hours spent on all Work billed on an hourly basis, and a description of any
reimbursable expenditures. City shall pay Consultant no later than thirty (30) calendar
days after approval of the invoice by City staff.
4.3 City shall reimburse Consultant only for those costs or expenses specifically
identified in Exhibit B to this Agreement or specifically approved in writing in advance by
City.
4.4 Consultant shall not receive any compensation for Extra Work performed
without the prior written authorization of City. As used herein, "Extra Work" means any
Work that is determined by City to be necessary for the proper completion of the Project,
but which is not included within the Scope of Services and which the parties did not
reasonably anticipate would be necessary at the execution of this Agreement.
Hinderliter, De Llamas & Associates Page 2
4-7
Compensation for any authorized Extra Work shall be paid in accordance with the
Schedule of Billing Rates as set forth in Exhibit B.
5. PROJECT MANAGER
5.1 Consultant shall designate a Project Manager, who shall coordinate all
phases of the Project. This Project Manager shall be available to City at all reasonable
times during the Agreement term. Consultant has designated Andrew Nickerson to be its
Project Manager. Consultant shall not remove or reassign the Project Manager or any
personnel listed in Exhibit A or assign any new or replacement personnel to the Project
without the prior written consent of City. City's approval shall not be unreasonably
withheld with respect to the removal or assignment of non -key personnel.
5.2 Consultant, at the sole discretion of City, shall remove from the Project any
of its personnel assigned to the performance of Services upon written request of City.
Consultant warrants that it will continuously furnish the necessary personnel to complete
the Project on a timely basis as contemplated by this Agreement.
5.3 If Consultant is performing inspection services for City, the Project Manager
and any other assigned staff shall be equipped with a cellular phone to communicate with
City staff. The Project Manager's cellular phone number shall be provided to City.
6. ADMINISTRATION
This Agreement will be administered by the Finance Department. City's Revenue
Manager or designee shall be the Project Administrator and shall have the authority to
act for City under this Agreement. The Project Administrator shall represent City in all
matters pertaining to the Services to be rendered pursuant to this Agreement.
7. CITY'S RESPONSIBILITIES
To assist Consultant in the execution of its responsibilities under this Agreement,
City agrees to provide access to and upon request of Consultant, one copy of all existing
relevant information on file at City. City will provide all such materials in a timely manner
so as not to cause delays in Consultant's Work schedule.
8. STANDARD OF CARE
8.1 All of the Services shall be performed by Consultant or under Consultant's
supervision. Consultant represents that it possesses the professional and technical
personnel required to perform the Services required by this Agreement, and that it will
perform all Services in a manner commensurate with community professional standards
and with the ordinary degree of skill and care that would be used by other reasonably
competent practitioners of the same discipline under similar circumstances. All Services
shall be performed by qualified and experienced personnel who are not employed by City.
By delivery of completed Work, Consultant certifies that the Work conforms to the
requirements of this Agreement, all applicable federal, state and local laws, and legally
recognized professional standards.
Hinderliter, De Llamas & Associates Page 3
8.2 Consultant represents and warrants to City that it has, shall obtain, and shall
keep in full force and effect during the term hereof, at its sole cost and expense, all
licenses, permits, qualifications, insurance and approvals of whatsoever nature that is
legally required of Consultant to practice its profession. Consultant shall maintain a City
of Newport Beach business license during the term of this Agreement.
8.3 Consultant shall not be responsible for delay, nor shall Consultant be
responsible for damages or be in default or deemed to be in default by reason of strikes,
lockouts, accidents, acts of God, or the failure of City to furnish timely information or to
approve or disapprove Consultant's Work promptly, or delay or faulty performance by
City, contractors, or governmental agencies.
9. HOLD HARMLESS
9.1 To the fullest extent permitted by law, Consultant shall indemnify, defend
and hold harmless City, its City Council, boards and commissions, officers, agents,
volunteers, employees and any person or entity owning or otherwise in legal control of
the property upon which Consultant performs the Project and/or Services contemplated
by this Agreement (collectively, the "Indemnified Parties") from and against any and all
claims (including, without limitation, claims for bodily injury, death or damage to property),
demands, obligations, damages, actions, causes of action, suits, losses, judgments,
fines, penalties, liabilities, costs and expenses (including, without limitation, attorneys'
fees, disbursements and court costs) of every kind and nature whatsoever (individually,
a Claim; collectively, "Claims"), which may arise from or in any manner relate (directly or
indirectly) to any breach of the terms and conditions of this Agreement, any Work
performed or Services provided under this Agreement including, without limitation,
defects in workmanship or materials or Consultant's presence or activities conducted on
the Project (including the negligent, reckless, and/or willful acts, errors and/or omissions
of Consultant, its principals, officers, agents, employees, vendors, suppliers, consultants,
subcontractors, anyone employed directly or indirectly by any of them or for whose acts
they may be liable, or any or all of them).
9.2 Notwithstanding the foregoing, nothing herein shall be construed to require
Consultant to indemnify the Indemnified Parties from any Claim arising from the sole
negligence or willful misconduct of the Indemnified Parties. Nothing in this indemnity shall
be construed as authorizing any award of attorneys' fees in any action on or to enforce
the terms of this Agreement. This indemnity shall apply to all claims and liability
regardless of whether any insurance policies are applicable. The policy limits do not act
as a limitation upon the amount of indemnification to be provided by Consultant.
10. INDEPENDENT CONTRACTOR
It is understood that City retains Consultant on an independent contractor basis
and Consultant is not an agent or employee of City. The manner and means of
conducting the Work are under the control of Consultant, except to the extent they are
limited by statute, rule or regulation and the expressed terms of this Agreement. No civil
service status or other right of employment shall accrue to Consultant or its employees.
Hinderliter, De Llamas & Associates Page 4
Nothing in this Agreement shall be deemed to constitute approval for Consultant or any
of Consultant's employees or agents, to be the agents or employees of City. Consultant
shall have the responsibility for and control over the means of performing the Work,
provided that Consultant is in compliance with the terms of this Agreement. Anything in
this Agreement that may appear to give City the right to direct Consultant as to the details
of the performance of the Work or to exercise a measure of control over Consultant shall
mean only that Consultant shall follow the desires of City with respect to the results of the
Services.
11. COOPERATION
Consultant agrees to work closely and cooperate fully with City's designated
Project Administrator and any other agencies that may have jurisdiction or interest in the
Work to be performed. City agrees to cooperate with the Consultant on the Project.
12. CITY POLICY
Consultant shall discuss and review all matters relating to policy and Project
direction with City's Project Administrator in advance of all critical decision points in order
to ensure the Project proceeds in a manner consistent with City goals and policies.
13. PROGRESS
Consultant is responsible for keeping the Project Administrator informed on a
regular basis regarding the status and progress of the Project, activities performed and
planned, and any meetings that have been scheduled or are desired.
14. INSURANCE
Without limiting Consultant's indemnification of City, and prior to commencement
of Work, Consultant shall obtain, provide and maintain at its own expense during the term
of this Agreement or for other periods as specified in this Agreement, policies of insurance
of the type, amounts, terms and conditions described in the Insurance Requirements
attached hereto as Exhibit C, and incorporated herein by reference.
15. PROHIBITION AGAINST ASSIGNMENTS AND TRANSFERS
Except as specifically authorized under this Agreement, the Services to be
provided under this Agreement shall not be assigned, transferred contracted or
subcontracted out without the prior written approval of City. Any of the following shall be
construed as an assignment: The sale, assignment, transfer or other disposition of any
of the issued and outstanding capital stock of Consultant, or of the interest of any general
partner or joint venturer or syndicate member or cotenant if Consultant is a partnership or
joint -venture or syndicate or co -tenancy, which shall result in changing the control of
Consultant. Control means fifty percent (50%) or more of the voting power or twenty-five
percent (25%) or more of the assets of the corporation, partnership or joint -venture.
Hinderliter, De Llamas & Associates Page 5
4-10
16. SUBCONTRACTING
The subcontractors authorized by City, if any, to perform Work on this Project are
identified in Exhibit A. Consultant shall be fully responsible to City for all acts and
omissions of any subcontractor. Nothing in this Agreement shall create any contractual
relationship between City and any subcontractor nor shall it create any obligation on the
part of City to pay or to see to the payment of any monies due to any such subcontractor
other than as otherwise required by law. City is an intended beneficiary of any Work
performed by the subcontractor for purposes of establishing a duty of care between the
subcontractor and City. Except as specifically authorized herein, the Services to be
provided under this Agreement shall not be otherwise assigned, transferred, contracted
or subcontracted out without the prior written approval of City.
17. OWNERSHIP OF DOCUMENTS
17.1 Each and every report, draft, map, record, plan, document and other writing
produced, including but not limited to, websites, blogs, social media accounts and
applications (hereinafter "Documents"), prepared or caused to be prepared by Consultant,
its officers, employees, agents and subcontractors, in the course of implementing this
Agreement, shall become the exclusive property of City, and City shall have the sole right
to use such materials in its discretion without further compensation to Consultant or any
other party. Additionally, all material posted in cyberspace by Consultant, its officers,
employees, agents and subcontractors, in the course of implementing this Agreement,
shall become the exclusive property of City, and City shall have the sole right to use such
materials in its discretion without further compensation to Consultant or any other party.
Consultant shall, at Consultant's expense, provide such Documents, including all logins
and password information to City upon prior written request.
17.2 Documents, including drawings and specifications, prepared by Consultant
pursuant to this Agreement are not intended or represented to be suitable for reuse by
City or others on any other project. Any use of completed Documents for other projects
and any use of incomplete Documents without specific written authorization from
Consultant will be at City's sole risk and without liability to Consultant. Further, any and
all liability arising out of changes made to Consultant's deliverables under this Agreement
by City or persons other than Consultant is waived against Consultant, and City assumes
full responsibility for such changes unless City has given Consultant prior notice and has
received from Consultant written consent for such changes.
17.3 All written documents shall be transmitted to City in formats compatible with
Microsoft Office and/or viewable with Adobe Acrobat.
18. CONFIDENTIALITY
All Documents, including drafts, preliminary drawings or plans, notes and
communications that result from the Services in this Agreement, shall be kept confidential
unless City expressly authorizes in writing the release of information.
Hinderliter, De Llamas & Associates Page 6
4-11
19. INTELLECTUAL PROPERTY INDEMNITY
Consultant shall defend and indemnify City, its agents, officers, representatives
and employees against any and all liability, including costs, for infringement or alleged
infringement of any United States' letters patent, trademark, or copyright, including costs,
contained in Consultant's Documents provided under this Agreement.
20. RECORDS
Consultant shall keep records and invoices in connection with the Services to be
performed under this Agreement. Consultant shall maintain complete and accurate
records with respect to the costs incurred under this Agreement and any Services,
expenditures and disbursements charged to City, for a minimum period of three (3) years,
or for any longer period required by law, from the date of final payment to Consultant
under this Agreement. All such records and invoices shall be clearly identifiable.
Consultant shall allow a representative of City to examine, audit and make transcripts or
copies of such records and invoices during regular business hours. Consultant shall allow
inspection of all Work, data, Documents, proceedings and activities related to the
Agreement for a period of three (3) years from the date of final payment to Consultant
under this Agreement.
21. WITHHOLDINGS
City may withhold payment to Consultant of any disputed sums until satisfaction of
the dispute with respect to such payment. Such withholding shall not be deemed to
constitute a failure to pay according to the terms of this Agreement. Consultant shall not
discontinue Work as a result of such withholding. Consultant shall have an immediate
right to appeal to the City Manager or designee with respect to such disputed sums.
Consultant shall be entitled to receive interest on any withheld sums at the rate of return
that City earned on its investments during the time period, from the date of withholding of
any amounts found to have been improperly withheld.
22. ERRORS AND OMISSIONS
In the event of errors or omissions that are due to the negligence or professional
inexperience of Consultant which result in expense to City greater than what would have
resulted if there were not errors or omissions in the Work accomplished by Consultant,
the additional design, construction and/or restoration expense shall be borne by
Consultant. Nothing in this Section is intended to limit City's rights under the law or any
other sections of this Agreement.
23. CITY'S RIGHT TO EMPLOY OTHER CONSULTANTS
City reserves the right to employ other Consultants in connection with the Project.
Hinderliter, De Llamas & Associates Page 7
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24. CONFLICTS OF INTEREST
24.1 Consultant or its employees may be subject to the provisions of the
California Political Reform Act of 1974 (the "Act") and/or Government Code §§ 1090 et
seq., which (1) require such persons to disclose any financial interest that may
foreseeably be materially affected by the Work performed under this Agreement, and (2)
prohibit such persons from making, or participating in making, decisions that will
foreseeably financially affect such interest.
24.2 If subject to the Act and/or Government Code §§ 1090 et seg., Consultant
shall conform to all requirements therein. Failure to do so constitutes a material breach
and is grounds for immediate termination of this Agreement by City. Consultant shall
indemnify and hold harmless City for any and all claims for damages resulting from
Consultant's violation of this Section.
25. NOTICES
25.1 All notices, demands, requests or approvals, including any change in
mailing address, to be given under the terms of this Agreement shall be given in writing,
and conclusively shall be deemed served when delivered personally, or on the third
business day after the deposit thereof in the United States mail, postage prepaid, first-
class mail, addressed as hereinafter provided.
25.2 All notices, demands, requests or approvals from Consultant to City shall
be addressed to City at:
Attn: Revenue Manager
Revenue Division
City of Newport Beach
100 Civic Center Drive
PO Box 1768
Newport Beach, CA 92658
25.3 All notices, demands, requests or approvals from City to Consultant shall
be addressed to Consultant at:
Attn: Andrew Nickerson
Hinderliter, DeLlamas & Associates
120 S State College Blvd, Suite 200
Brea, CA 92821
26. CLAIMS
Unless a shorter time is specified elsewhere in this Agreement, before making its
final request for payment under this Agreement, Consultant shall submit to City, in writing,
all claims for compensation under or arising out of this Agreement. Consultant's
acceptance of the final payment shall constitute a waiver of all claims for compensation
under or arising out of this Agreement except those previously made in writing and
Hinderliter, De Llamas & Associates Page 8
4-13
identified by Consultant in writing as unsettled at the time of its final request for payment.
Consultant and City expressly agree that in addition to any claims filing requirements set
forth in the Agreement, Consultant shall be required to file any claim Consultant may have
against City in strict conformance with the Government Claims Act (Government Code
sections 900 et seq.).
27. TERMINATION
27.1 In the event that either party fails or refuses to perform any of the provisions
of this Agreement at the time and in the manner required, that party shall be deemed in
default in the performance of this Agreement. If such default is not cured within a period
of two (2) calendar days, or if more than two (2) calendar days are reasonably required
to cure the default and the defaulting party fails to give adequate assurance of due
performance within two (2) calendar days after receipt of written notice of default,
specifying the nature of such default and the steps necessary to cure such default, and
thereafter diligently take steps to cure the default, the non -defaulting party may terminate
the Agreement forthwith by giving to the defaulting party written notice thereof.
27.2 Notwithstanding the above provisions, City shall have the right, at its sole
and absolute discretion and without cause, of terminating this Agreement at any time by
giving no less than seven (7) calendar days' prior written notice to Consultant. In the
event of termination under this Section, City shall pay Consultant for Services
satisfactorily performed and costs incurred up to the effective date of termination for which
Consultant has not been previously paid. On the effective date of termination, Consultant
shall deliver to City all reports, Documents and other information developed or
accumulated in the performance of this Agreement, whether in draft or final form.
28. STANDARD PROVISIONS
28.1 Recitals. City and Consultant acknowledge that the above Recitals are true
and correct and are hereby incorporated by reference into this Agreement.
28.2 Compliance with all Laws. Consultant shall, at its own cost and expense,
comply with all statutes, ordinances, regulations and requirements of all governmental
entities, including federal, state, county or municipal, whether now in force or hereinafter
enacted. In addition, all Work prepared by Consultant shall conform to applicable City,
county, state and federal laws, rules, regulations and permit requirements and be subject
to approval of the Project Administrator and City.
28.3 Waiver. A waiver by either party of any breach, of any term, covenant or
condition contained herein shall not be deemed to be a waiver of any subsequent breach
of the same or any other term, covenant or condition contained herein, whether of the
same or a different character.
28.4 Integrated Contract. This Agreement represents the full and complete
understanding of every kind or nature whatsoever between the parties hereto, and all
preliminary negotiations and agreements of whatsoever kind or nature are merged herein.
No verbal agreement or implied covenant shall be held to vary the provisions herein.
Hinderliter, De Llamas & Associates Page 9
4-14
28.5 Conflicts or Inconsistencies. In the event there are any conflicts or
inconsistencies between this Agreement and the Scope of Services or any other
attachments attached hereto, the terms of this Agreement shall govern.
28.6 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 the Agreement or any other rule of
construction which might otherwise apply.
28.7 Amendments. This Agreement may be modified or amended only by a
written document executed by both Consultant and City and approved as to form by the
City Attorney.
28.8 Severability. If any term or portion of this Agreement is held to be invalid,
illegal, or otherwise unenforceable by a court of competent jurisdiction, the remaining
provisions of this Agreement shall continue in full force and effect.
28.9 Controlling Law and Venue. The laws of the State of California shall govern
this Agreement and all matters relating to it and any action brought relating to this
Agreement shall be adjudicated in a court of competent jurisdiction in the County of
Orange, State of California.
28.10 Equal Opportunity Employment. Consultant represents that it is an equal
opportunity employer and it shall not discriminate against any subcontractor, employee
or applicant for employment because race, religious creed, color, national origin,
ancestry, physical handicap, medical condition, marital status, sex, sexual orientation,
age or any other impermissible basis under law.
28.11 No Attorneys' Fees. In the event of any dispute or legal action arising under
this Agreement, the prevailing party shall not be entitled to attorneys' fees.
28.12 Counterparts. This Agreement may be executed in two (2) or more
counterparts, each of which shall be deemed an original and all of which together shall
constitute one (1) and the same instrument.
[SIGNATURES ON NEXT PAGE]
Hinderliter, De Llamas & Associates Page 10
4-15
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
on the dates written below.
APPROVED AS TO FORM: CITY OF NEWPORT BEACH,
CITY ATTORNEY'S OFFICE a California municipal corporation
Date: 1 l Date:
By. �''_
y. By.
a n C. Harp Brad Avery
City Attorney
ATTEST:
Date:
in
Leilani I. Brown
City Clerk
Mayor
CONSULTANT: HINDERLITER DE
LLAMAS & ASSOCIATES, a California
corporation
Date:
By:
Robert Andrew Nickerson
Chief Executive Officer/Secretary
[END OF SIGNATURES]
Attachments: Exhibit A — Scope of Services
Exhibit B — Schedule of Billing Rates
Exhibit C — Insurance Requirements
Exhibit D — Contract Governing Access to
Confidential Taxpayer Data
Hinderiiter, De Llamas & Associates page 11
4-16
EXHIBIT
SCOPE OF SERVICES
Hinderliter, De Llamas & Associates Page A-1 4-17
EXHIBIT A
SCOPE OF SERVICES
As directed by the City, Consultant shall provide the City with Consulting services related to Sales
and Use Tax. In particular, Consultant shall perform the following services:
Sales and Use Tax
Review the applicable provisions of the City's Municipal Code and ordinances as
appropriate;
2. Evaluate the revenue generating elements of the City's economic base, such as land
parcels, major buildings and various users as it relates to sales and use tax;
3. Verify California Department of Tax and Fee Administration (CDTFA) quarterly sales and
use tax allocations to the City, and identify errors and/or omissions resulting in deficit
payments to the City;
4. Perform periodic and targeted physical field canvassing in areas recommended by
Consultant, to identify and evaluate sales and use tax generating businesses located in
the City to detect misallocations. Field audits shall focus on those businesses located in
the City from which the City has not been receiving sales and use tax revenue or appear
to be under -reporting revenues;
5. Facilitate the identification and correction of improperly registered permits for companies
including, but not limited to, wholesalers, contractors, processors, manufacturers, and
other non -retail businesses having potential point-of-sale use tax operations in the City;
6. Provide to City a list of identified errors and/or omissions prior to invoicing for recovery;
7. Prepare and submit any required forms and information to CDTFA (or its successor
agency) in order to correct misallocations, errors, incorrect fund transfers, and ensure
revenue recovery to the City; e-mail a copy of such form to City staff on a quarterly basis,
at a minimum, with underlying supporting documentation. For each error/omission
identified and confirmed, Consultant shall substantiate and facilitate recovery of revenue
due from prior periods (plus applicable interest and penalties) and prevent deficiencies in
current and future years;
8. Monitor City's business and sales tax programs and revenues and identify opportunities
to maximize revenues;
9. As requested periodically by the City, Consultant shall review specific City purchases to
identify opportunities for the City to capture the current local allocation on purchases
subject to use tax and the local district tax where applicable. In this regard, Consultant
shall prepare the documentation to facilitate the City's election of such taxes, including
related guidance in preparing and filing the City tax returns;
10. Track and report misallocations that
Consultant's efforts; provide a detailed
Consultant. Information shall include:
a. Company Name
b. Account Number
c. Case Number
were corrected and remitted to City due to
listing of all errors/omissions detected by the
sm
EXHIBIT A
SCOPE OF SERVICES
d. Work Authorization Number
e. Error Type
f. Correction Status
g. Total number of billable quarters to the City for the account
h. Current number of quarters billed to the City
i. Payment amount received by the City
j. Invoiced amount by the Consultant
k. Total invoice amount
I. The reporting period for which the payment is related
m. Any additional information deemed necessary by the Consultant or City
11. Provide an aging report with the quarterly invoice, or upon City's request, which shall
include all active and non-active accounts for which the Consultant has received payment;
12. Provide on-going communication to the City concerning revenue recovery work in
progress. This requirement will include, but is not limited to:
a. Providing a quarterly report of all inquiries filed on behalf of the City and the status
of outstanding past inquiries filed with the CDTFA;
b. Providing copies of decision letters from CDTFA upon request; and
c. Providing a copy of written communication with the CDTFA (e.g. correspondence
and email) regarding the City;
13. Provide current and historical sales tax data on sales tax remittances including, but not
limited to, the following data types: fiscal year and calendar quarter of remittance, fiscal
year and calendar quarter of revenue earned, high level economic sector and more
detailed subsector identifiers, top sales generators and the revenue generated by each,
analysis of sales tax by business category, including comparisons to statewide and other
comparable averages, major business analysis, including analysis of reporting and
accounting aberrations that could distort revenue patterns, address, geocoding or other
neighborhood designation, geographic performance and trends for areas specified by the
City, and name of owner or permit holder;
14. Prepare analysis of sales tax revenues, projections and adjustments on the City's sales
and use tax trends in relation to the surrounding market region, by individual business type
and geographic areas specified by the City, on a quarterly scheduled basis, and as
requested by City. Consultant shall provide sales and use tax revenue forecasting;
15. Provide sales and use tax analysis reports benchmarked to previous years. Analysis
should include information on the top revenue producers, indication of revenue changes
by business and economic category, identification of major businesses that influence
change in the City's tax revenue, and analysis of key businesses that grew or declined
during the reporting period;
16. Provide local sales and use tax revenue and cash flow forecasting reports, including
reports by geographical area (for example by shopping centers or areas and business
districts), in a format requested by City;
17. Provide City with specialized charts and data tables, presentation data and presenters for
public meetings and events, if requested, and provide the City with business specific
revenue estimates and economic development consulting. Consultant shall provide a
4-19
EXHIBIT A
SCOPE OF SERVICES
quarterly summary of economic news that is one quarter more current than the most
current sales tax data available for the City's use in making projections;
18. Upon City's request, provide a subscription to INSIGHT Market Analytics, a service
providing analytics data for up to 5 targeted trade areas within the City, including a semi-
annual update;
19. Meet with designated City staff as necessary to support the City in recovering and
preventing tax misallocations;
20. Provide support, including negotiations, for the development of a point -of sale attraction
and retention strategy, provided however, that if such support exceeds 10 hours each
quarter from Senior Associate level or above, Consultant shall bill City on an hourly basis
pursuant to the rates in Exhibit B;
21. Coordinate corrective action with taxpayers and the CDTFA. Represent the City before
State officials, boards, commissions and committees for the purpose of correcting local
sales tax distribution errors. This includes representing the City before the CDTFA related
to incorrect allocations of tax;
22. Attend quarterly meetings to discuss analytical reports for local sales and use. Provide
charts and graphs to illustrate the data. Assign a staff member approved by City such that
the City has a consistent point of contact in these discussions;
23. Provide on-going analysis, reports, legislative support and access to Consultant's team
members for sales and use tax related questions, as well as training and support for City
staff;
24. Conduct technical research and analysis to support the City in securing adoption of
clarifying administrative rules, resolutions, ordinance revisions, regulatory amendments,
and legislation to facilitate correction and prevention of these errors and/or omissions;
25. Assist in defining specific geographic areas for which the City would have an interest in
knowing the Sales and Use Tax produced;
26. Starting from March of each year, track bills and pending legislation that may impact City
sales tax revenues; provide City staff with a summary and status of such bills on a bi-
monthly basis, or more frequently if warranted; provide City with an impact analysis of
pending legislation;
27. Provide policy, regulatory, and legislative technical support services to the City in
conjunction with the Sales and Use Tax program with the intent of preventing and/or
correcting misallocations and/or deficiencies;
28. Provide data of all Newport Beach local sales and use tax permits in a format compatible
with the City's computer operating system. The City shall have access to local tax and
pool data. The database shall include the names, addresses, seller's permit numbers,
social security numbers or federal employer identification numbers where available, the
period and tax allocation for each business, start and closeout dates;
O
EXHIBIT A
SCOPE OF SERVICES
29. Provide the data in a proprietary software system maintained by the Consultant or through
a non-proprietary system. Perform monthly updates of sales tax permit registration
information. In either case, the data shall be provided in a format allowing the City to
export data into an Excel compatible format, allowing for integration of various databases;
30. Provide City staff with training on the use of the Consultant's proprietary software system.
Update the data in the system each calendar quarter within 72 hours following receipt from
the CDTFA. Consultant shall provide geographical data mapping capability in its
proprietary system or provide City staff with address data in a format which would allow
staff to export and map data;
31. Provide the City's business license staff with access to Consultant's software system,
which shall provide registration information, permit number, business name, ownership,
mailing and business addresses, date return was received from CDTFA, permit open date,
permit closed date, the preceding 40 quarters of quarterly tax return amounts, and any
other information deemed necessary by City staff. This information should be exportable
to Excel; and
32. Provide the City, on a quarterly basis and as requested by the City, a business license
discovery leads list which shall provide identification support for use in City's internal
compliance processes.
a. City shall provide Consultant with City's business license tax data and any leads
data already discovered by City;
b. City shall provide Consultant with up to five (5) business data sources, which may
include alarm billing accounts, property tax data, etc.;
c. Consultant shall provide additional business data from Consultant's Enriched Data
Portfolio (EDP) which shall contain any data regarding businesses representing in
Newport Beach from additional sources not otherwise provided by the City;
d. Consultant shall compare the City's business license tax data and discovered
leads data with City's business data sources and Consultant's EDP data to remove
any licensed businesses;
e. Consultant shall create a master discovery leads list of potential unlicensed
businesses, which shall be prioritized in order of frequency found in the leads data
sources; and
f. Consultant shall provide the final master discovery leads list to the City in an
electronic format designated by the City.
33. Agree to and sign the "Contract Governing Access to Confidential Taxpayer Data"
attached hereto as Exhibit D.
4-21
EXHIBIT B
SCHEDULE OF BILLING RATES
Hinderliter, De Llamas & Associates Page B-1 4.22
EXHIBIT B
SCHEDULE OF BILLING RATES
1. Sales and Use Tax Audit Services (Contingency Fee Percentage for Audit Recoveries
The City shall compensate Consultant for sales and use tax auditing services through a fee
of 15% of all new sales and use tax revenue received by the City resulting from audit and
recovery work performed by Consultant. There shall be a ten (10) quarter cap on all
petitions for reallocation. Such cap shall include applicable back quarters, time between
Date of Knowledge and Date of Correction, and quarters post correction. For example:
• If the retroactive fund transfer includes 3 quarterly payments, then billing will
include an additional 7 quarters from the Date of Knowledge.
• If a retroactive fund transfer includes 7 quarterly payments, then billing will
include an additional 3 quarters from the Date of Knowledge.
• If a retroactive fund transfer contains 12 quarterly payments, then we will bill
on the oldest 10 quarterly payments only.
• If there is no retroactive fund transfer, the prospective audit fee applies to
monies received in the first eight consecutive reporting quarters beginning
with the Date of Knowledge quarter.
For a petition that includes prospective recovery and billing, if another error occurs within
the active billing cycle Consultant shall initiate further follow-up with the taxpayer and
California Department of Tax and Fee Administration ("CDTFA") to correct the error,
however this will not reset the incremental count of the number of quarters being invoiced
on the original petition. A petition for a onetime correction of a misallocation will be clearly
indicated on the invoice detail report, the specific quarterly period will also be referenced.
If, subsequent to the initial correction another error occurs impacting a quarter different
than the one previously corrected, another petition will be generated, and the city will be
invoiced for the subsequent onetime correction only.
Audit fees are billed only after completion of the audit, submittal of corrections to the
CDTFA and receipt of revenues by City. 100% of all new revenue generated by
Consultant flows to the City after the completion of the billable quarters. The fee
constitutes the full reimbursement to Consultant and covers all direct and indirect costs
incurred by Consultant under this contract. This includes all salaries of Consultant's
employees, travel expenses and service contracting costs as well as the software to be
delivered to the City of Newport Beach.
Invoices are submitted only for recoveries previously approved by the City. Consultant
does not bill for audit revenues until the City has received said monies. Further, if during
the billing cycle, a taxpayer receives a refund for overpayment of taxes generated during
that cycle, Consultant credits back any proportionate share of the fee that may have been
levied.
Invoices are submitted quarterly after the City has received the revenue from the
audit correction. The invoice includes a printout showing the name, address, and
sales tax registration number of each company, and the specific amount of revenue
allocated by the CDTFA to the City for those businesses.
If a misallocation correction involves additional revenue from a company that had already
been partially allocating revenues to the City, the City and Consultant will agree in a
Work Authorization, prior to billing, the methodology for identifying the incremental
revenue attributable to Consultant's work.
4-23
EXHIBIT B
SCHEDULE OF BILLING RATES
Should the City identify, document, and notify the CDTFA in writing of a point-of-sale
distribution error, reporting error, or misallocation the City agrees to notify Consultant of
the City's discovery no later than ten (10) days after the Date of Knowledge.
2. Sales, Use Tax Management Services (Quarterly Delivery Meetings)
This service includes access to the City's sales tax database through our web -based
software and quarterly meetings with one of our principals. In preparation for each
meeting, a principal of the firm analyzes the City's data in detail and meets with
appropriate City officials to review trends, point out businesses that should be contacted
as part of the City's business retention program and discuss and make
recommendations regarding the economic and budget implications of the quarter's
data. Also included is a non -confidential newsletter that can be shared with your council
and the public. The price for this is $850 per month.
3. Economic Development Services
Phase 1: Economic Development Services (Hourly Rates):
Economic Development Consulting Services
Staff Hourly Rate
Managing Director $240
Senior Associate $170
Analyst $100
Phase 2: Additional Services:
INSIGHT Market Analytics — two-year subscription at no cost to City, and thereafter, a
Fixed Fee of $4,000
An Optional Community Profile - Fixed Fee of $6,000
An Optional Retail Assessment & Marketing Strategy — Fixed Fee of $8,000
Economic Development Action Plan - Fixed Fee of $15,000
4. Business License Discovery Services
Electronic Data Matching and Leads:
Consultant shall charge a fee of $20,000 per year for electronic data matching and leads.
Leads would be generated by Consultant's service team and discovery systems but would
not be manually reviewed and qualified by Consultant. City team would need to review
and qualify leads prior to contacting or accept a higher error rate. Data is matched into a
single entity view and sent to the City with detailed information.
Unless and agreed upon by City and Consultant by and through a written amendment
to this Agreement, an additional option for the City is $36,000 per year for the same
service as above, plus review and qualification of each lead by Consultant prior to
sending to City. This includes Consultant's review of every electronic lead to validate and
score each lead.
4-24
EXHIBIT C
INSURANCE REQUIREMENTS — PROFESSIONAL SERVICES
1. Provision of Insurance. Without limiting Consultant's indemnification of City, and
prior to commencement of Work, Consultant shall obtain, provide and maintain at
its own expense during the term of this Agreement, policies of insurance of the
type and amounts described below and in a form satisfactory to City. Consultant
agrees to provide insurance in accordance with requirements set forth here. If
Consultant uses existing coverage to comply and that coverage does not meet
these requirements, Consultant agrees to amend, supplement or endorse the
existing coverage.
2. Acceptable Insurers. All insurance policies shall be issued by an insurance
company currently authorized by the Insurance Commissioner to transact
business of insurance in the State of California, with an assigned policyholders'
Rating of A- (or higher) and Financial Size Category Class VII (or larger) in
accordance with the latest edition of Best's Key Rating Guide, unless otherwise
approved by the City's Risk Manager.
3. Coverage Requirements.
A. Workers' Compensation Insurance. Consultant shall maintain Workers'
Compensation Insurance, statutory limits, and Employer's Liability
Insurance with limits of at least one million dollars ($1,000,000) each
accident for bodily injury by accident and each employee for bodily injury by
disease in accordance with the laws of the State of California, Section 3700
of the Labor Code.
Consultant shall submit to City, along with the certificate of insurance, a
Waiver of Subrogation endorsement in favor of City, its City Council, boards
and commissions, officers, agents, volunteers, employees and any person
or entity owning or otherwise in legal control of the property upon which
Consultant performs the Project and/or Services contemplated by this
Agreement.
B. General Liability Insurance. Consultant shall maintain commercial general
liability insurance, and if necessary umbrella liability insurance, with
coverage at least as broad as provided by Insurance Services Office form
CG 00 01, in an amount not less than one million dollars ($1,000,000) per
occurrence, two million dollars ($2,000,000) general aggregate. The policy
shall cover liability arising from premises, operations, personal and
advertising injury, and liability assumed under an insured contract (including
the tort liability of another assumed in a business contract).
C. Automobile Liability Insurance. Consultant shall maintain automobile
insurance at least as broad as Insurance Services Office form CA 00 01
covering bodily injury and property damage for all activities of Consultant
arising out of or in connection with Work to be performed under this
Hinderliter, De Llamas & Associates Page C-1 4-25
Agreement, including coverage for any owned, hired, non -owned or rented
vehicles, in an amount not less than one million dollars ($1,000,000)
combined single limit each accident.
D. Professional Liability (Errors & Omissions) Insurance. Consultant shall
maintain professional liability insurance that covers the Services to be
performed in connection with this Agreement, in the minimum amount of
one million dollars ($1,000,000) per claim and two million dollars
($2,000,000) in the aggregate. Any policy inception date, continuity date,
or retroactive date must be before the Effective Date of this Agreement and
Consultant agrees to maintain continuous coverage through a period no
less than three years after completion of the Services required by this
Agreement.
4. Other Insurance Requirements. The policies are to contain, or be endorsed to
contain, the following provisions:
A. Waiver of Subrogation. All insurance coverage maintained or procured
pursuant to this Agreement shall be endorsed to waive subrogation against
City, its City Council, boards and commissions, officers, agents, volunteers,
employees and any person or entity owning or otherwise in legal control of
the property upon which Consultant performs the Project and/or Services
contemplated by this Agreement or shall specifically allow Consultant or
others providing insurance evidence in compliance with these requirements
to waive their right of recovery prior to a loss. Consultant hereby waives its
own right of recovery against City, and shall require similar written express
waivers from each of its subconsultants.
B. Additional Insured Status. All liability policies including general liability,
excess liability, pollution liability, and automobile liability, if required, but not
including professional liability, shall provide or be endorsed to provide that
City, its City Council, boards and commissions, officers, agents, volunteers,
employees and any person or entity owning or otherwise in legal control of
the property upon which Consultant performs the Project and/or Services
contemplated by this Agreement shall be included as insureds under such
policies.
C. Primary and Non Contributory. All liability coverage shall apply on a primary
basis and shall not require contribution from any insurance or self-insurance
maintained by City.
D. Notice of Cancellation. All policies shall provide City with thirty (30)
calendar days' notice of cancellation (except for nonpayment for which ten
(10) calendar days' notice is required) or nonrenewal of coverage for each
required coverage.
5. Additional Agreements Between the Parties. The parties hereby agree to the
following:
Hinderliter, De Llamas & Associates Page C-2 4-26
A. Evidence of Insurance. Consultant shall provide certificates of insurance to
City as evidence of the insurance coverage required herein, along with a
waiver of subrogation endorsement for workers' compensation and other
endorsements as specified herein for each coverage. Insurance certificates
and endorsement must be approved by City's Risk Manager prior to
commencement of performance. Current certification of insurance shall be
kept on file with City at all times during the term of this Agreement. The
certificates and endorsements for each insurance policy shall be signed by
a person authorized by that insurer to bind coverage on its behalf. At least
fifteen (15) days prior to the expiration of any such policy, evidence of
insurance showing that such insurance coverage has been renewed or
extended shall be filed with the City. If such coverage is cancelled or
reduced, Consultant shall, within ten (10) days after receipt of written notice
of such cancellation or reduction of coverage, file with the City evidence of
insurance showing that the required insurance has been reinstated or has
been provided through another insurance company or companies. City
reserves the right to require complete, certified copies of all required
insurance policies, at any time.
B. City's Right to Revise Requirements. City reserves the right at any time
during the term of the Agreement to change the amounts and types of
insurance required by giving Consultant sixty (60) calendar days' advance
written notice of such change. If such change results in substantial
additional cost to Consultant, City and Consultant may renegotiate
Consultant's compensation.
C. Enforcement of Agreement Provisions. Consultant acknowledges and
agrees that any actual or alleged failure on the part of City to inform
Consultant of non-compliance with any requirement imposes no additional
obligations on City nor does it waive any rights hereunder.
D. Requirements not Limiting. Requirements of specific coverage features or
limits contained in this Section are not intended as a limitation on coverage,
limits or other requirements, or a waiver of any coverage normally provided
by any insurance. Specific reference to a given coverage feature is for
purposes of clarification only as it pertains to a given issue and is not
intended by any party or insured to be all inclusive, or to the exclusion of
other coverage, or a waiver of any type. If the Consultant maintains higher
limits than the minimums shown above, the City requires and shall be
entitled to coverage for higher limits maintained by the Consultant. Any
available insurance proceeds in excess of the specified minimum limits of
insurance and coverage shall be available to the City.
E. Self-insured Retentions. Any self-insured retentions must be declared to
and approved by City. City reserves the right to require that self-insured
retentions be eliminated, lowered, or replaced by a deductible. Self-
insurance will not be considered to comply with these requirements unless
approved by City.
Hinderliter, De Llamas & Associates Page C-3 4-27
F. City Remedies for Non -Compliance. If Consultant or any subconsultant fails
to provide and maintain insurance as required herein, then City shall have
the right but not the obligation, to purchase such insurance, to terminate this
Agreement, or to suspend Consultant's right to proceed until proper
evidence of insurance is provided. Any amounts paid by City shall, at City's
sole option, be deducted from amounts payable to Consultant or reimbursed
by Consultant upon demand.
G. Timely Notice of Claims. Consultant shall give City prompt and timely notice
of claims made or suits instituted that arise out of or result from Consultant's
performance under this Agreement, and that involve or may involve
coverage under any of the required liability policies. City assumes no
obligation or liability by such notice, but has the right (but not the duty) to
monitor the handling of any such claim or claims if they are likely to involve
City.
H. Consultant's Insurance. Consultant shall also procure and maintain, at its
own cost and expense, any additional kinds of insurance, which in its own
judgment may be necessary for its proper protection and prosecution of the
Work.
Hinderliter, De Llamas & Associates Page C-4 4-28
EXHIBIT D
CONTRACT GOVERNING ACCESS TO
CONFIDENTIAL TAXPAYER DATA
Hinderliter, De Llamas & Associates Page D-1 4-29
CONTRACT GOVERNING ACCESS TO CONFIDENTIAL TAXPAYER DATA
The City of Newport Beach ("City") has retained Hinderliter, DeLlamas & Associates
("HdL") to provide sales and use tax analysis, identify errors and omissions which may
have resulted in deficient payments to the City, detect misallocations and prepare
documentation to the California Department of Tax and Fee Administration ("CDTFA") to
recover revenue.
In order to provide such services, it is necessary for HdL staff to have access to
confidential sales and use tax records of the CDTFA pertaining to its administration and
collection of sales and use taxes.
Section 7056(b) of the California Revenue & Taxation Code ("RTC") provides that access
to such confidential data by any person other than an employee or officer of a city is
conditioned upon there being an existing Resolution by the City designating the person
to examine the records, data and other information and certifying that the individual meets
the conditions specified in RTC Section 7056(b)(1), including the requirement of RTC
Section 7056(b)(1)(A), that there be an existing contract with the City to examine the sales
and use tax records that meets all requirements of RTC Section 7056(b)(1), subdivisions
(A) through (D).
The City and HdL wish to enter into a Contract complying with the legal requirements
described in RTC Section 7056.
Therefore, HdL and the City do hereby further agree as follows:
In connection with the sales and use tax analysis and other functions described
above, HdL (acting through its partners, associates and employees, whose
identities shall be set out in a list maintained by the Finance Department) is hereby
authorized to examine all confidential records and data of the CDTFA, pertaining
to the ascertainment of the sales and use taxes collected or to be collected by the
CDTFA.
2. HdL, and its partners, associates and employees, will disclose any information
contained in, or derived from, those sales and use tax records only to officers or
employees of the City who are authorized by resolution to examine the information.
3. HdL will ensure that each of its partners, associates and employees who will have
access to confidential sales and use tax records has done each of the following
prior to, and as a condition of, access to such records:
a. Read this Contract;
b. Signed the list of HdL personnel who will be provided with access to
confidential sales and use tax records and information pursuant to this
Contract;
C. Acknowledged through such signature on the Finance Director's list that he
or she is bound by this Contract and by the legal requirements of RTC
4-30
Section 7056 with respect to the confidentiality of sales and use tax records;
and
d. Agreed through such signature not to provide consulting services to any
retailer during the term of this Contract.
4. HdL will return or (at the City's request) ensure the destruction of all sales and use
tax documents disclosed pursuant to this Contract, as well as all other documents
containing information derived from those sales and use tax documents, prior to
the termination of this Contract.
5. This Contract shall terminate ninety (90) days after the termination of the HdL
services to the City. HdL and its personnel who have been provided with
confidential sales and use tax records and information pursuant to this Contract
shall not retain in their files or in any other document the confidential state sales
and use tax information to which they have received access after this Contract.
In witness whereof, HdL have executed this Contract as of this day of 2021.
APPROVED AS TO FORM:
CITY ATTO NEY'S OFFICE
Date: j ( (f / ? a Z f
Aarbn C. Harp
City Attorney
ATTEST:
Date:
CITY OF NEWPORT BEACH,
A California municipal corporation
Date:
Bv:
Brad Avery
Mayor
CONSULTANT: HINDERLITER, DE
LLAMAS & ASSOCIATES, a California
corporation
Date:
By: By:
Leilani 1. Brown Robert Andrew Nickerson
City Clerk Chief Executive Officer/Secretary
[END OF SIGNATURES]
4-31
ATTACHMENT B
Contract Governing Access to Confidential Taxpayer Data with HdL
4-32
CONTRACT GOVERNING ACCESS TO CONFIDENTIAL TAXPAYER DATA
The City of Newport Beach ("City") has retained Hinderliter, DeLlamas & Associates
("HdU) to provide sales and use tax analysis, identify errors and omissions which may
have resulted in deficient payments to the City, detect misallocations and prepare
documentation to the California Department of Tax and Fee Administration ("CDTFA") to
recover revenue.
In order to provide such services, it is necessary for HdL staff to have access to
confidential sales and use tax records of the CDTFA pertaining to its administration and
collection of sales and use taxes.
Section 7056(b) of the California Revenue & Taxation Code ("RTC") provides that access
to such confidential data by any person other than an employee or officer of a city is
conditioned upon there being an existing Resolution by the City designating the person
to examine the records, data and other information and certifying that the individual meets
the conditions specified in RTC Section 7056(b)(1), including the requirement of RTC
Section 7056(b)(1)(A), that there be an existing contract with the City to examine the sales
and use tax records that meets all requirements of RTC Section 7056(b)(1), subdivisions
(A) through (D).
The City and HdL wish to enter into a Contract complying with the legal requirements
described in RTC Section 7056.
Therefore, HdL and the City do hereby further agree as follows:
In connection with the sales and use tax analysis and other functions described
above, HdL (acting through its partners, associates and employees, whose
identities shall be set out in a list maintained by the Finance Department) is hereby
authorized to examine all confidential records and data of the CDTFA, pertaining
to the ascertainment of the sales and use taxes collected or to be collected by the
CDTFA.
2. HdL, and its partners, associates and employees, will disclose any information
contained in, or derived from, those sales and use tax records only to officers or
employees of the City who are authorized by resolution to examine the information.
3. HdL will ensure that each of its partners, associates and employees who will have
access to confidential sales and use tax records has done each of the following
prior to, and as a condition of, access to such records:
a. Read this Contract,
b. Signed the list of HdL personnel who will be provided with access to
confidential sales and use tax records and information pursuant to this
Contract;
C. Acknowledged through such signature on the Finance Director's list that he
or she is bound by this Contract and by the legal requirements of RTC
4-33
Section 7056 with respect to the confidentiality of sales and use tax records;
and
d. Agreed through such signature not to provide consulting services to any
retailer during the term of this Contract.
4. HdL will return or (at the City's request) ensure the destruction of all sales and use
tax documents disclosed pursuant to this Contract, as well as all other documents
containing information derived from those sales and use tax documents, prior to
the termination of this Contract.
5. This Contract shall terminate ninety (90) days after the termination of the HdL
services to the City. HdL and its personnel who have been provided with
confidential sales and use tax records and information pursuant to this Contract
shall not retain in their files or in any other document the confidential state sales
and use tax information to which they have received access after this Contract.
In witness whereof, HdL have executed this Contract as of this day of 2021.
APPROVED AS TO FORM:
CITY ATTO NEY'S OFFICE
Date: j ( (f / ? a Z f
Aarbn C. Harp
City Attorney
ATTEST:
Date:
CITY OF NEWPORT BEACH,
A California municipal corporation
Date:
Bv:
Brad Avery
Mayor
CONSULTANT: HINDERLITER, DE
LLAMAS & ASSOCIATES, a California
corporation
Date:
By: By:
Leilani 1. Brown Robert Andrew Nickerson
City Clerk Chief Executive Officer/Secretary
[END OF SIGNATURES]
4-34
ATTACHMENT C
Resolution No. 2021-6
4-35
RESOLUTION NO. 2021-6
A RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF NEWPORT BEACH, CALIFORNIA, AUTHORIZING
ACCESS TO SALES OR TRANSACTION AND USE TAX
RECORDS AND DOCUMENTS PURSUANT TO
CALIFORNIA REVENUE & TAXATION CODE SECTION
7056(b)
WHEREAS, the City has retained the firm of Hinderliter, De Llamas & Associates
("HdL Companies") to provide sales and use tax analysis, identify errors and omissions
which may have resulted in deficient payments to the City, detect misallocations and
prepare documentation to the California Department of Tax and Fee Administration
("CDTFA") to recover revenue;
WHEREAS, HdL Companies requires access to the City's sales tax data in order
to provide such analysis;
WHEREAS, Section 7056(b) of the Revenue and Taxation Code ("RTC") provides,
in pertinent part, that "When requested by resolution of the legislative body of any ... city
... the board [CDTFA] shall permit any duly authorized ... person designated by that
resolution, to examine all of the sales or transactions and use tax records of the board
pertaining to the ascertainment of those sales or transactions and use taxes to be
collected for the ... city ..."; and
WHEREAS, City wishes to provide access to all such tax records otherwise
confidential under RTC Section 7056 to certain staff at HdL Companies.
NOW, THEREFORE, the City Council of the City of Newport Beach resolves as
follows:
Section 1: Pursuant to RTC Section 7056(b), the City hereby provides and
requests the CDTFA to provide access to the staff working with HdL Companies on the
sales and use tax analysis to examine and use all confidential records and data of the
CDTFA pertaining to the ascertainment of the sales and use taxes collected or to be
collected by the CDTFA that are the subject of the sales and use tax analysis.
Section 2: To identify each person to whom access to records is to be provided
pursuant to RTC Section 7056(b), the Finance Director shall designate and maintain a list
of all staff members of HdL Companies who will be given such access pursuant to this
Resolution.
4-36
Resolution No. 2021 -
Page 2 of 3
Section 3: Pursuant to RTC Section 7056(b)(1), the City hereby certifies that:
A. The City has an existing contract with HdL Companies to examine the
aforementioned sales and use tax records to effectively advise the City;
B. The City's contract with HdL Companies requires that HdL Companies shall
disclose confidential taxpayer information contained in, or derived from, the
aforementioned sales or transaction and use tax records only to officers or
employees of the City who are authorized by resolution to examine the
information;
C. Under the City's contract with HdL Companies, all staff members of HdL
Companies are prohibited from providing consulting services to any retailer
during the term of the City's contract with HdL Companies; and
D. Under the City's contract with HdL Companies, HdL Companies is
prohibited from retaining the confidential taxpayer information contained in
or derived from the aforementioned sales and use tax records after that
contract has terminated.
Section 4: The records and information to be provided to HdL Companies shall
be used solely for the purpose of providing sales and use tax analysis, identifying errors
and omissions which may have resulted in deficient payments to the City, detecting
misallocations and preparing documentation to the CDTFA, and for no other purpose,
and shall be returned to the City after the contract has terminated.
Section 5: The recitals provided in this resolution are true and correct and are
incorporated into the operative part of this resolution.
Section 6: If any section, subsection, sentence, clause or phrase of this resolution
is, for any reason, held to be invalid or unconstitutional, such decision shall not affect the
validity or constitutionality of the remaining portions of this resolution. The City Council
hereby declares that it would have passed this resolution, and each section, subsection,
sentence, clause or phrase hereof, irrespective of the fact that any one or more sections,
subsections, sentences, clauses or phrases be declared invalid or unconstitutional.
4-37
Resolution No. 2021 -
Page 3 of 3
Section 7: The City Council finds the adoption of this resolution is not subject to
the California Environmental Quality Act ("CEQA") pursuant to Sections 15060(c)(2) (the
activity will not result in a direct or reasonably foreseeable indirect physical change in the
environment) and 15060(c)(3) (the activity is not a project as defined in Section 15378)
of the CEQA Guidelines, California Code of Regulations, Title 14, Division 6, Chapter 3,
because it has no potential for resulting in physical change to the environment, directly or
indirectly.
Section 8: This Resolution shall take effect immediately upon its adoption by the
City Council and the City Clerk shall certify the vote adopting the resolution.
ADOPTED this 26th day of January, 2021
Brad Avery
Mayor
ATTEST:
Leilani I. Brown
City Clerk
APPROVED AS TO FORM:
CITY ATTORNEY'S OFFICE
1"'i C_ �
Aaon C. Harp
City Attorney
4-38