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CITY OF
ms NE '�`JPORyT REACH
City Council Staff Report
Agenda Item No. 20
November 26, 2013
TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: Finance Department
Dan Matusiewicz, Finance Director
949 - 644 -3123, dmatusiewicz @newportbeachca.gov
PREPARED BY: Evelyn Tseng, Revenue Manager
APPROVED: :)�,, p, "
TITLE: Amendment to the Professional Services Agreement with
Hinderliter, De Llamas & Associates ( "HdL ") for Sales and Use Tax
Analysis and Appeals
ABSTRACT:
Staff requests the extension of the Professional Services Agreement with HdL to
September 30, 2018, and to increase the not -to- exceed compensation to HdL from
$120,000 to $472,000. The increase in the not -to- exceed amount simply reflects the
extension of the agreement - there are no billing rate changes.
RECOMMENDATION:
Staff recommends that City Council approve Amendment No. 2 to the Professional
Services Agreement (Exhibit "A ") with HdL which would:
1. Extend the term of the agreement to September 30, 2018; and
2. Increase the total compensation to HdL to $472,000.
FUNDING REQUIREMENTS:
There is sufficient funding in the Finance department budget for the payment to HdL.
Amendment to the Professional Services Agreement with Hinderliter, De Llamas &
Associates ( "HdL ") for Sales and Use Tax Analysis and Appeals
November 26, 2013
Page 2
DISCUSSION:
In January 2012, the City issued a Request for Proposals for Economic Consulting and
Tax Assessment Services ( "RFP "). The RFP requested proposals for three
components: (1) Property Taxes and Property Transfer Tax; (2) Sales and Use Tax; and
(3) Business License Tax. Proposers had the option of submitting a proposal for
services encompassing any or all of the three components.
The RFP included a proposed contract that envisioned a 5 -year term for the contract.
At the time, staff was interested in seeing what firm would agree to a 5 -year contract,
but also having the option to "test the waters" with a firm for a shorter term, such as a
single year, to ensure quality service. This is the path that staff eventually followed.
Four companies responded to the RFP and of those four, staff interviewed three
companies. Staff evaluated the proposers on the following criteria: experience,
technical qualifications, jurisdictional expertise, legislative expertise, responsiveness of
proposal and references. Based on that criteria, staff selected HdL for a one -year term
for its excellent references, experience and expertise for both the property component
and the sales and use tax component, but as two separate agreements.The RFP
provided that City reserved the right to accept or reject any and all proposals or any part
of any proposal, and to negotiate service contract terms with the successful proposer.
Prior to the RFP, the City had a long- standing (over 10 years) relationship with
Municipal Revenue Advisors. As noted, before committing the City to a lengthy
agreement with another company, the City wanted to ensure that the company would be
able to provide the services as promised in its proposal.
The City entered into a Professional Services Agreement with HdL for Sales and Use
Tax Analysis and Appeals on November 27, 2012, (Exhibit "B "), which was amended on
March 15, 2013, to add software management services to the scope and billing rate
schedule (Exhibit "C ") (collectively, the "Agreement "). This original Agreement was for
an 11 month term, with a not -to- exceed amount of $120,000. During this past year, HdL
provided valuable sales and use tax analysis which staff was able to use for the
Quarterly Finance Reports and for revenue projections. HdL also submitted appeals to
the Board of Equalization on the City's behalf.
Due to HdL's, excellent performance this past year, staff proposes to extend the
agreement for a full 5 -year term starting now, which in effect can be a six -year contract
for HdL Services — a year above what was envisioned in the contract with the RFP, but
we believe appropriate in this circumstance. We also propose increasing the not -to-
exceed amount to $472,000.
Amendment to the Professional Services Agreement with Hinderliter, De Llamas &
Associates ( "HdL ") for Sales and Use Tax Analysis and Appeals
November 26, 2013
Page 3
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).
Submitted by:
Finance
Attachments: A. Exhibit "A!�' Amendment No. Two to Professional Services Agreement
with Hinderliter, De Llamas & Associates for Sales and Use Tax Analysis
and Appeals
B. Exhibit "B" — Professional Services Agreement with Hinderliter, De Llamas
& Associates for Sales and Use Tax Analysis and Appeals, dated
November 27, 2012
C. Exhibit "C" — Amendment No. One to Professional Services Agreement
with Hinderliter, De Llamas & Associates for Sales and Use Tax Analysis
and Appeals
D. Exhibit "D" — Resolution No. 2012 -108 — A Resolution of the City Council
of the City of Newport Beach for Access to Tax Records and Documents
Pursuant to California Revenue & Taxation Code Section 7056(b)
E. Exhibit "E" — Contract Governing Access to Confidential Taxpayer Data
Exhibit "A" — Amendment No. Two to Professional Services
Agreement with Hinderliter, De Llamas & Associates
for Sales and Use Tax Analysis and Appeals
AMENDMENT NO. TWO TO
PROFESSIONAL SERVICES AGREEMENT
WITH HINDERLITER, DE LLAMAS & ASSOCIATES FOR
SALES AND USE TAX ANALYSIS AND APPEALS
THIS AMENDMENT NO. TWO TO PROFESSIONAL SERVICES AGREEMENT
( "Amendment No. Two ") is made and entered into as of this 27th day of November,
2013 ( "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 1240 Valley
Vista Dr., Suite 200, Diamond Bar, CA 91765, and is made with reference to the
following:
RECITALS
A. On November 27, 2012, City and Consultant entered into a Professional Services
Agreement ( "Agreement ") to engage the services of Consultant to analyze the
City's sales and use tax data and liaise with the State Board of Equalization
( "SBOE ") ( "Project ").
B. On March 15, 2013, City and Consultant entered into an amendment to the
Agreement ( "Amendment No. One ") to reflect additional services not included in
the Agreement.
C. City desires to enter into this Amendment No. Two to extend the term of the
Agreement to September 30, 2018, to increase the total compensation and
update the City's contact information.
D. City and Consultant mutually desire to amend the Agreement, as provided below.
NOW, THEREFORE, it is mutually agreed by and between the undersigned
parties as follows:
1. TERM
Section 1 of the Agreement is amended in its entirety and replaced with the
following: "The term of this Agreement shall commence on November 27, 2012, and
shall terminate on September 30, 2018, unless terminated earlier as set forth herein."
2. COMPENSATION TO CONSULTANT
Section 4.1 of the Agreement is amended in its entirety and replaced with the
following: "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 Four
Hundred Seventy Two Thousand Dollars and 001100 ($472,000.00), 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."
The total amended compensation reflects Consultant's additional compensation
for additional Services to be performed in accordance with this Amendment No. Two,
including all reimbursable items and subconsultant fees, in an amount not to exceed
Three Hundred Fifty Two Thousand Dollars and 00/100 ($352,000.00).
3. NOTICE
Section 26.1 shall be amended to reflect the change of address for the City of
Newport Beach to:
Attn: Evelyn Tseng, Revenue Manager
Revenue Division
City of Newport Beach
100 Civic Center Drive
PO Box 1768
Newport Beach, CA 92658
4. INTEGRATED CONTRACT
Except as expressly modified herein, all other provisions, terms, and covenants
set forth in the Agreement shall remain unchanged and shall be in full force and effect.
[SIGNATURES ON NEXT PAGE]
Hinderliter, De Llamas & Associates Page 2
IN WITNESS WHEREOF, the parties have caused this Amendment No. Two to
be executed on the dates written below.
APPROVED AS TO FORM:
CITY ATTORNEY'S OFFICE
Date: I I f 18/13
By: z4L
Aaron C. Harp City Attorney lk�
ATTEST:
By:
Leilani I. Brown
City Clerk
CITY OF NEWPORT BEACH,
a California municipal corporation
Date:
By:
Keith D. Curry
Mayor
CONSULTANT: Hinderliter, De Llamas &
Associates, a California corporation
Date:
By:
Andrew Nickerson
President
Date:
By:
Jeffrey Schmehr
Chief Financial Officer
[END OF SIGNATURES]
Hinderliter, De Llamas & Associates Page 3
Exhibit "B" — Professional Services Agreement with Hinderliter,
De Llamas & Associates for Sales and Use Tax
Analysis and Appeals, dated November 27, 2012
h
PROFESSIONAL SERVICES AGREEMENT
WITH KINDERLITER, DE LLAMAS & ASSOCIATES FOR
# SALES AND USE TAX ANALYSIS AND APPEALS
�.3
THIS AGREEMENT FOR PROFESSIONAL SERVICES ( "Agreement ") is made
and entered into as of this Mltday of November, 2012 ( "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 1340 Valley Vista Drive, Suite 120, Diamond Bar, CA
91765, 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 analyze City's sales and use tax data, and
liaise with the State Board of Equalization ( "SBOE ") on City's behalf ( "Project ").
C. Consultant possesses the skill, experience, ability, background, certification and
knowledge to provide the professional services described in this Agreement.
D. The principal member of Consultant for purposes of Project shall be Andrew
Nickerson.
E. 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:
TERM
The term of this Agreement shall commence on the Effective Date, and shall
terminate on October 18, 2013 unless terminated earlier as set forth herein.
2. SERVICES TO BE PERFORMED
City and Consultant acknowledge that the above Recitals are true and correct
and are hereby incorporated by reference into this Agreement. Consultant shall
diligently perform all the cervices described in the Scope of Services attached hereto as
Exhibit A and incorporated herein by reference ( "Services" or "Work "). The City may
elect to delete certain Services within the Scope of Services at its sole discretion.
3. TIME OF PERFORMANCE
31 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 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 Sewices to be provided for the Project, each party hereby agrees
to provide notice within two (2) 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 in Section 6 below) 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
fax, hand- delivery or mail.
4. COMPENSATION TO CONSULTANT
4.1 City shall pay Consultant for the Services on a contingency basis in
accordance with the provisions of this Section and the Schedule of Billing 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 subcorsultant fees, shall not exceed One Hundred Twenty Thousand
Dollars and 00/100 ($120,000.00) 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 calendar quarter. Consultant's bills shall include a brief
description of the Services performed and /or the specific task in the Scope of Services
to which it relates, the calendar quarter 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) days after approval of
the monthly 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
Hinderliter, de Llamas & Associates Page 2
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.
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
53 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 the City.
6. ADMINISTRATION
This Agreement will be administered by the Finance Department. Evelyn Tseng,
Revenue Manager or her designee, shall be the Project Administrator and shall have
the authority to act for City under this Agreement. The Project Administrator or her
designee 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.ail 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 the highest professional
standards. For purposes of this Agreement, the phrase "highest professional
standards" shall mean those standards of practice recognized by one (1) or more first-
class firms performing similar work under similar circumstances.
Hinderliter, de Llamas & Associates Page 3
8.2 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 the highest professional standard.
8.3 Consultant represents and warrants to City that it has, shalt 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.
8.4 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 and
employees (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, tosses, judgments,
fines, penalties, liabilities, costs and expenses (including, without limitation, attorney's
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 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 attorney's 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 the
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
Hinderiiter, de Llamas & Associates Page 4
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 Contractor or its
employees, 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 and/or his/her
duly authorized designee 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 cotenancy, which shall result in changing the
control of Consultant. Control means fifty percent (50 %) or more of the voting power, or
Hinderliter, de Llamas & Associates Page 5
twenty -five percent (25 %) or more of the assets of the corporation, partnership or joint -
venture.
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. The City is an intended
beneficiary of any Work performed by the subcontractor for purposes of establishing a
duty of care between the subcontractor and the 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 (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. Consultant shall, at Consultant's
expense, provide such Documents 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.
16. COMPUTER DELIVERABLES
All written documents shall be transmitted to City in formats compatible with
Microsoft Office and/or viewable with Adobe Acrobat.
19. 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
20. INTELLECTUAL PROPERTY INDEMNITY
The 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.
21. 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.
22. 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 his/her 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.
23. 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
bome by Consultant. Nothing in this Section is intended to limit City s rights under the
law or any other sections of this Agreement.
24. 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
25. CONFLICTS OF INTEREST
25.1 The Consultant or its employees may be subject to the provisions of the
California Political Reform Act of 1974 (the "Act "), which (1) requires such persons to
disclose any financial interest that may foreseeably be materially affected by the Work
performed under this Agreement, and (2) prohibits such persons from making, or
participating in making, decisions that will foreseeably financially affect such interest.
25.2 If subject to the Act, Consultant shall conform to all requirements of the
Act. 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.
26. NOTICES
26.1 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. All notices, demands, requests or
approvals from Consultant to City shall be addressed to City at:
Attn: Evelyn Tseng, Revenue Manager
Finance Department
City of Newport Beach
3300 Newport Boulevard
PO Box 1768
Newport Beach, CA 92658
Phone: 949 - 644 -3141
Fax: 949- 723 -3539
26.2 All notices, demands, requests or approvals from City to Consultant shall
be addressed to Consultant at:
Attn: Andrew Nickerson
Hinderliter, de Llamas & Associates
1240 Valley Vista Dr., Suite 200
Diamond Bar, CA 91765
Phone: 909 -861 -4335
Fax: 909 -861 -7726
27. 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 identified by Consultant in writing as unsettled at the time of its final request
Hinderliter, de Llamas & Associates Page 8
for payment. The Consultant and the City expressly agree that in addition to any claims
filing requirements set forth in the Agreement, the Consultant shall be required to file
any claim the Consultant may have against the City in strict conformance with the Tort
Claims Act (Government Code sections 900 et seq.).
28. TERMINATION
28.1 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.
28.2 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.
28.3 Within thirty (30) days of the termination of this Agreement, City shall pay
Consultant the amounts due for any unpaid invoices. City shall also pay Consultant any
audit fees for those tax revenues received by the City as a result of Consultant's work
during the term of the Agreement pursuant to the process described in Exhibit B,
Schedule of Billing Rates.
29. STANDARD PROVISIONS
29.1 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.
29.2 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.
29.3 Integrated Contract. This Agreement represents the full and complete
understanding of every kind or nature whatsoever between the parties hereto, and all
Hinderliter, de Llamas & Associates Page 9
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.
29.4 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.
29.5 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.
29.6 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.
29.7 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.
29.8 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.
29.9 Equal Opportunity EmplovmenY. Consultant represents that it Is an equal
opportunity employer and it shall not discriminate against any subcontractor, employee
or applicant for employment because of race, religion, color, national origin, handicap,
ancestry, sex, age or any other impermissible basis under law.
29.10 No Attorney's Fees. In the event of any dispute or legal action arising
under this Agreement, the prevailing party shall not be entitled to attorney's fees.
29.11 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
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed on the dates written below.
APPROVED AS TO FORM:
CITY ATTORNEY'S OFFICE
Date: I0131 /17-
E y
Aaron C. 'Harp
City Attorney
ATTEST:
Date: il2�i')2
CITY OF NEWPORT BEACH,
a California municipal corporation
Date: it
By. GL Lt
Da iff
City Manager
CONSULTANT: Hinderliter, de Llamas &
Associates, a California corporation
Date: tk-16-k-2-
B t� -
Andrew Nickerson
President
Date:
By: �%�% --_ -
Jl re hmehr
Chief Financial Officer
[END OF SIGNATURES]
Attachments: Exhibit A - Scope of Services
Exhibit B - Schedule of Billing Rates
Exhibit C -- Insurance Requirements
Hinderliter, de Llamas & Associates Page 11
EXHIBIT A
SCOPE OF SERVICES
SCOPE OF SERVICES: GENERAL SCOPE
1.1 Consultant shall assist City in recovering all revenue to which it is entitled
from the City's major sources of general fund revenue. This process includes:
a. Reviewing the applicable provisions of the City's municipal code
and ordinances;
b. Working with staff to enhance current revenues and to recover
revenues lost from possible errors or omissions;
C. Evaluating the revenue generating elements of the City's economic
base, such as land parcels, major buildings and various users;
d. Meeting with designated City officials as necessary to review and
discuss findings and recommendations.
2. SCOPE OF SERVICES: SALES AND USE TAX
2.1 Consultant shall represent the City for the purpose of examining records
pertaining to sales and use tax in order to identify and confirm errors or omissions that
may result or are already resulting in deficient payments to the City.
2.2 Consultant's initial and periodic taxable nexus field audits shall include a
physical canvassing and evaluation of sales and use tax generating businesses located
in the City to detect misatlocations. Consultant's field audit 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.
23 Consultant's field audits shall 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.
2.4 For each errorlomission identified and confirmed, Consultant shall prepare
documentation to the City and State Board of Equalization to substantiate and facilitate
recovery of revenue due from prior periods (plus applicable interest and penalties) and
prevent deficiencies in current and future years.
2.5 Consultant shall prepare and forward to the appropriate parties Petitions
for Re- allocation (Form BOE- 549 -L) and AB990 submittals and all other requests for
corrective action and revenue recovery.
2.6 Consultant shall monitor City's business and sales tax programs and
revenues.
Hinderliter, de Llamas & Associates Page A -1
2.7 Consultant shall identify opportunities to maximize business and sales tax
revenues.
2.8 Consultant shall review, 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 assistance in preparing and filing
the City tax returns.
2.9 Consultant shall review City's sales and use tax paid purchases to
determine which purchases are exempt from California sales and use taxes. Consultant
shall prepare refund claims for exempt purchases, including the legal basis for the
exemption and documentation that sales tax was paid on the purchases. Consultant
shall work with the vendor to process refund. Consultant shall prepare and provide
status reports each calendar quarter for refund claims and verify additional revenue
received by the City.
2.10 Consultant shall perform an annual vendor survey, utilizing City's chart of
accounts, in order to identify self accrual opportunities.
2.11 Consultant shall prepare all information necessary to correct any identified
allocation errors.
2.12 Each calendar quarter, Consultant shall prepare, at a minimum, analysis
of sales tax receipts, projections and adjustments on City's sales and use tax trends in
relationship to the surrounding market region, as well as by individual businesses,
business type and geographic areas specified by the City. Consultant shall provide
sales and use tax revenue forecasting and cash flow forecast accounting for the triple -
flip.
2.13 Consultant shall 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. Each calendar quarter, Consultant shall provide a summary of economic
news that is one quarter more current than the most current sales tax data availability
for the City's use in making projections.
2.14 Consultant shall provide current and historical sales tax data on sales tax
remittances at with the following data types:
Fiscal year and calendar quarter of remittance (to understand trends in cash
received);
Fiscal year and calendar quarter of revenue earned (to understand trends in
economic activity);
High level economic sector and more detailed subsector identifier and/or four -
digit NAICS code and SBOE category if possible to facilitate comparisons;
Hinderliter, de Llamas & Associates Page A -2
Top sales generators and the revenue generated by each, ranked in descending
order according to the amount of sales and use tax produced;
Analysis of sales tax by business category, including comparisons to statewide
and other comparable averages; ranked in descending order according to the amount of
sales and use tax produced;
Major business analysis, including analysis of reporting and accounting
aberrations that could distort revenue patterns;
Address, organized into geocode or other neighborhood designation
Geographic performance and trends for areas specified by the City;
Name of owner or permit holder.
Data may be provided in a proprietary software system maintained by the
Consultant or through a non - proprietary system. In either case, data shall be provided
in a format allowing the City to export data into an Excel compatible format, allowing for
integration of various databases. Contractor shall provide City staff with training on the
use system. Data in the system shall be updated each calendar quarter as soon as
possible following receipt from SBOE. Consultant shall provide geographical data
mapping capability in its proprietary system or else provide City staff with address data
in a format which would allow staff to export and map data.
2.15 Consultant shall 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, including:
a. Providing ongoing consultation services to the City regarding
interpretation of sales and use tax data, sales and use tax revenue estimation and other
requests related to sales and use tax;
b. Assisting in defining specific geographic areas for which the City
would have an interest in knowing the Sales and Use Tax produced (e.g., within
Redevelopment Agency or enterprise zone boundaries).
2.16 Consultant shall 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 misallocation and /or deficiencies.
2.17 Consultant shall provide both computer files and written reports to the City
as follows:
a. A database with all sales tax producers in Newport Beach in a
format compatible with the City's computer operating system. This database, at
minimum, will include names, addresses, social security numbers or federal employer
Ninderliter, de Llamas & Associates Page A -3
identification numbers where available, sellers permit numbers and sales tax allocations
for each business.
b. Updates to the database using the information obtained from the
SBOE. Perform updates of sales tax permit records and distribution reports each
calendar quarter. Perform monthly updates of registration control information,
2.18 Consultant shall provide City and SBOE with reports addressing each
taxpayer reporting error. Consultant shall respond to negative findings by SBOE with
timely reconfirmation documentation in order to preserve the City's original Dates of
Knowledge. Consultant shall also coordinate corrective action with taxpayers and
SBOE and represent the City before state officials, boards, commissions and
committees for the purpose of correcting sales tax distribution errors that have deprived
the .City of revenue to which it Is entitled. This includes representing the City at
hearings before the SBOE related to incorrect allocations of tax.
2.19 Consultant shall provide City employees with training and assistance
when requested by City on the fundamentals of sales and use tax and on programs to
maximize these revenues through the encouragement of taxpayer options to take out
direct payment permits, or self-accrue use tax to the City.
2.20 Consultant shall serve as the City's new resource and provide assistance,
resolution, and follow -up services on sales and use tax related questions including
budget projections, legislative and regulation issues and economic development.
2.21 Consultant shall provide, not less than on a quarterly basis, AB990 and
Form BOE -549 correction status and aging reports. Aging reports will include all active
and non- active accounts for which the Consultant has received payment.
2.22 Consultant shall prepare petition letters and any supporting information for
submittal, and include the tracking of petitions in the quarterly aging reports. Petitions
shall include appeals of negative and positive fund transfers as well as appeals of BOE-
549 -i_ allocations.
2.23 Consultant shall remain attentive to any future proposed changes to
regulatory language in SBOE regulations related to the situs -based allocation of sales
tax-revenues and the formal practicing rules, which govem how Consultant pursues the
collection of revenues; and take action, subject to City review and approval, on
measures that threaten or delay revenue cash flows to the City. This could include
attending legislative hearings and explaining to the City the potential effect of proposed
legislation on the City.
2.24 Consultant shall meet in person with City staff at least quarterly, upon
request by the City.
Hinderliter, de Llamas & Associates Page A -4
EXHIBIT B
SCHEDULE OF BILLING RATES
Definitions
Revenue: all new sales and new use tax revenue received by the City, including
reimbursement from the sales and use tax compensation fund outlined in Section 97.68
of the Revenue and Taxation Code, as a result of audit and recovery work performed by
the Consultant
Quarte r. calendar quarter, e.g., January 1 through March 31.
Date of Knowledge: the date Consultant notifies SBOE of a misallocation.
Date of Correction: the date the City receives the first regular quarterly payment from
SBOE for a correction on a misallocation identified by Consultant.
SBOE: State Board of Equalization
Fees Payable
1. City shall pay to Consultant a flat fee of 15% of Revenue, subject to the terms
and conditions in this Exhibit B.
2. The fee shall be paid for Revenue received for the Quarter in which the Date of
Correction falls and all applicable prior Quarters back to and including the three
Quarters prior to the Date of Knowledge Quarter.
3. The 15% fee shall be paid for Revenue received in the eight consecutive
Quarters beginning with the Quarter in which the Date of Correction falls.
4. Fees shall be invoiced only after completion of the audit, submittal of petitions to
the SBOE and receipt of Revenues by the City.
5. Cumulative fees for any single audit case submitted by Consultant and resolved
at the SBOE Allocation Group level shall not exceed $50,000. Audit cases that are
resolved at the SBOE Appeals Division or at the Board Hearing level will be charged the
15% contingency fee and will be not be subject to the $50,000 cap.
6. Commencing with the ninth Quarter following the Date of Correction Quarter,
100% of all Revenue shall be paid to and retained by the City and there shall be no
further fees payable to Consultant under the terms of this Agreement.
Hindertiter, de Llamas & Associates Page B -1
7. The fee constitutes the full reimbursement to Consultant and covers all direct and
indirect costs incurred by the Consultant under this Agreement. 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 under this Agreement.
Exclusions
The 15% fee does not apply to sales and use tax reallocations initiated and completed
by SBOE staff.
Hlnderliter, de Llamas & Associates Page B -2
EXHIBIT C
1. INSURANCE REQUIREMENTS — PROFESSIONAL SERVICES
1.1 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.
1.2 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.
1.3 Coverage Requirements.
1.3.1 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.
1.3.1.1 Consultant shall submit to City, along with the certificate
of insurance, a Waiver of Subrogation endorsement in favor of City, its officers, agents,
employees and volunteers.
1.3.2 General Llabi& 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, products - completed operations, personal and advertising injury, and liability
assumed under an insured contract (including the tort liability of another assumed in a
business contract) with no endorsement or modification limiting the scope of coverage
for liability assumed under a contract.
1.3.3 Automobile Liabilty 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 the Consultant arising out
of or in connection with Work to be performed under this 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.
I- linderliter, de Llamas & Associates Page C -1
1.3.4 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 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.
1.4 Other Insurance Requirements. The policies are to contain, or be
endorsed to contain, the following provisions:
1.4.1 Waiver of Subrogation. All insurance coverage maintained or
procured pursuant to this agreement shall be endorsed to waive subrogation against
City, its elected or appointed officers, agents, officials, employees and volunteers 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.
1.4.2 Additional Insured Status. All liability policies including general
liability, excess liability, pollution liability, and automobile liability, but not including
professional liability, shall provide or be endorsed to provide that City and Its officers,
officials, employees, and agents shall be included as insureds under such policies.
1.4.3 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.
1.4.4 Notice of Cancellation. All policies shall provide City with thirty (30)
days notice of cancellation (except for nonpayment for which ten (10) days notice is
required) or nonrenewal of coverage for each required coverage.
1.5 Additional Agreements Between the Parties. The parties hereby agree to
the following:
1.5.1 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. City reserves the right to require complete, certified copies of all required
insurance policies, at any time.
1.5.2 City's Right to Revise Requirements. The City reserves the right at
any time during the term of the Agreement to change the amounts and types of
insurance required by giving the Consultant sixty (60) days advance written notice of
Hindediter, de Llamas & Associates Page C -2
such change: If such change results in substantial additional cost to the Consultant, the
City and Consultant may renegotiate Consultant's compensation.
1.5.3 Enforcement of Agreement Provisions. Consultant acknowledges
and agrees that any actual or alleged failure on the part of the City to inform Consultant
of non - compliance with any requirement imposes no additional obligations on the City
nor does it waive any rights hereunder.
1.5.4 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.
1.5.5 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.
1.5.6 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.
1.5.7 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.
1.5.8 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 -3
Exhibit "C" — Amendment No. One to Professional Services
Agreement with Hinderliter, De Llamas & Associates
for Sales and Use Tax Analysis and Appeals
AMENDMENT NO. ONE TO
( PROFESSIONAL SERVICES AGREEMENT
WITH HINDERLITER, DE LLAMAS +& ASSOCIATES FOR
SALES AND USE TAX ANALYSIS AND APPEALS
THIS AMENDMENT NO. ONE TO AGREEMENT FOR PROFESSIONAL
SERVICES ( "Amendment No. One ") is made and entered into as of this __Pftll day of
fAAyy Waauary; 2013 ( "Effective Date ") by and between the CITY OF NEWPORT BEACH, a
California Municipal Corporation ( "City "), and HINDERLITER, DE LLAMAS &
ASSOCIATES, a California corporation ( "Consultant "), whose address is 1340 Valley
Vista Drive, Suite 120, Diamond Bar, CA 91765 and is made with reference to the
following:
RECITALS
A. On November 27, 2012, City and Consultant entered into a Professional Services
Agreement ( "Agreement") to analyze City's sales and use tax data and liaise with
the State Board of Equalization ( "SBOE') on City's behalf (`Project").
B. City desires to enter into this Amendment No. One to reflect additional services
not included in the Agreement.
C. City and Consultant mutually desire to amend the Agreement, as provided below.
NOW, THEREFORE, it is mutually agreed by and between the undersigned
parties as follows:
1. SERVICES TO BE PERFORMED
Exhibit A to the Agreement shall be supplemented to include the Scope of
Services, attached hereto as Exhibit A, and incorporated herein by reference ( "Services"
or "Work "). The City may elect to delete certain Services within the Scope of Services
at its sole discretion.
2. COMPENSATION TO CONSULTANT
Exhibit B to the Agreement shall be supplemented to include the Schedule of
Billing Rates attached hereto as Exhibit B, and incorporated herein by reference.
3. INTEGRATED CONTRACT
Except as expressly modified herein, all other provisions, terms, and covenants
set forth in the Agreement shall remain unchanged and shall be in full force and effect.
[SIGNATURES ON NEXT PAGE]
IN WITNESS WHEREOF, the parties have caused this Amendment No. One to
be executed on the dates written below.
APPROVED AS TO FORM:
CITY ATTORNEY'.S OFFICE
City Attorney
ATTEST: 3 ry ]3
Date:
By: 09UVVV6 ` MW"
Leilani I. Brown
City Clerk
CITY OF NEWPORT BEACH,
A California municipal corporation
Date:
DaV`6 -Kiff & �
< City Manager
CONSULTANT :, HINDERLITER, DE
LLAMAS & ASSOCIATES, a California
corporation
Date: —3 - 3 - t3
*_ffl�
yl '� ,
• • -
Aic arson
President
Date: �3 - s-- i?
By: _
J mehr
hief inancialOfficer
[END OF SIGNATURES]
Attachments: Exhibit A — Scope of Services
Exhibit B — Schedule of Billing Rates
HINDERLITER, DE LLAMAS & ASSOC. Page 2
EXHIBIT A
SCOPE OF SERVICES
Software Management Services
Consultant shall provide ongoing analysis, reports, legislative support and
unlimited access to Consultants team members for sales and use tax related questions,
as well as training and support for internal implementation of a program of Use Tax
Maximization and Economic Expansion.
HINDERLITER, DE LLAMAS & ASSOC. rage A -1
EXHIBIT B
SCHEDULE OF BILLING RATES
Software Management Services
$800 per month, billed quarterly
Additional Services
Principal $225 /hr
IT Specialist $195/hr
Senior Analyst $150 1hr
Analyst $ 75 /hr
Hourly rates are exclusive of expenses that are billed at 1.15 times actual incurred
costs.
Reasonable travel and lodging fees will be billed at actual cost.
HINDERLITER, DE LLAMAS & ASSOC. Page B -1
Exhibit "D" — Resolution No. 2012 -108 — A Resolution of the City
Council of the City of Newport Beach for Access to
Tax Records and Documents Pursuant to California
Revenue & Taxation Code Section 7056(b)
RESOLUTION NO. 2012 -108
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NEWPORT
BEACH FOR ACCESS TO 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 ") 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 State Board of Equalization ( "SBOE ") to recover revenue; and
WHEREAS, HdL requires access to the City's sales tax data in order to provide
such analysis; and
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 [SBOE] 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.
NOW, THEREFORE, the City Council of the City of Newport Beach resolves as
follows:
Pursuant to RTC Section 7056(b), the City hereby provides and requests the
SBOE to provide access to the staff working with HdL on the sales and use tax
analysis to examine and use all confidential records and data of the SBOE
pertaining to the ascertainment of the sales and use taxes collected or to be
collected by the SBOE that are the subject of the sales and use tax analysis.
2. To identify each person to whom access to records is to be provided pursuant to
RTC Section 7056(b), the Finance Director shall maintain a list of all staff
members of HdL who will be given such access pursuant to this Resolution;
3. Pursuant to RTC Section 7056(b)(1), the City hereby certifies that:
A. The City has an existing contract with HdL to examine the aforementioned
sales and use tax records to effectively advise the City;
B. The City's contract with HdL requires that HdL shall disclose confidential
taxpayer information contained in, or derived from, the aforementioned
sales or transaction and use tax records only to officers, employees or
other duly authorized representatives of the City.
C. Under the City's contract with HdL, all staff members of HdL are prohibited
from providing California state sales and use tax consulting services to
any retailer during the term of the City's contract with HdL.
D. Under the City's contract with HdL, HdL 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.
4. The records and information to be provided to HdL 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 SBOE, and for no other
purpose, and shall be returned to the City after the contract has terminated.
NOW, THEREFORE, the City Council of the City of Newport Beach resolves as follows:
Section 1: 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 27tt' day of November, 2412.
q��
Nancy Gar n
Mayor
A - j'P&*=
Leilani 1. Brown
City Clerk
STATE OF CALIFORNIA }
COUNTY OF ORANGE
CITY OF NEWPORT BEACH }
I, Leilani I. Brown, City Clerk of the City of Newport Beach, California, do hereby certify that the
whole number of members of the City Council is seven; that the foregoing resolution, being Resolution
No. 2012 -108 was duly and regularly introduced before and adopted by the City Council of said City at a
regular meeting of said Council, duly and regularly held on the 27t' day of November, 2012, and that the
same was so passed and adopted by the following vote, to wit:
Ayes: Hill, Curry, Selich, Henn, Daigle, Mayor Gardner
Absent: Rosansky
IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed the official seal of
said City this 2e day of November, 2012.
City Clerk
Newport Beach, California
(Seal)
Exhibit "E" — Contract Governing Access to Confidential Taxpayer
Data
CONTRACT GOVERNING ACCESS TO CONFIDENTIAL TAXPAYER DATA
The City of Newport Beach ( "City ") has retained Hinderliter, de Llamas & Associates
( "MU) 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 State Board of Equalization ( "SBOE" ) 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 SBOE 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:
1. 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 SBOE,
pertaining to the ascertainment of the sales and use taxes collected or to be
collected by the SBOE.
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
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 sates 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's
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, Hinderliter, de Llamas & Associates have executed this Contract as
Of this t2r*day ofjr-t .. 2012.
APPROVED AS TO FORM: CITY OF NEWPORT BEACH,
CITY ATTORNEY'S OFFICE A California municipal corporation
Date: Z. /ro Zt7, Date:
By: By:1 Zi
Aaron'C -- arp DaveKiffi \j
City Attorney City Manager
ATTEST:
Date:
By:
l hl�= —
Leilani 1. Brown
City Clerk aommtw,,
CONSULTANT: Hinderliter, de Llamas &
Associates, a California corporation
Date:
By:_
A drew Nickerson�-
President
Date: / z //.s /i'z.
By: --
J
Chief Financial Officer