HomeMy Public PortalAboutAgreement_2018-03-08_Hinderliter, De Llamas and Associates (HDL)_Sales and Use TaxAGREEMENT FOR SALES, USE AND TRANSACTIONS TAX AUDIT AND
INFORMATION SERVICES
This Agreement is made and entered into as of the 8th day of March, 2018 (the "Effective Date") by
and between the CITY OF TEMPLE CITY, a municipal corporation hereinafter called ("CITY'), and
HINDERLITER, de LLAMAS AND ASSOCIATES a California Corporation, hereinafter called
("CONTRACTOR").
I. RECITALS
WHEREAS, sales, use and transactions tax (sometimes collectively referred to herein as "sales
and use tax") revenues can be increased through a system of continuous monitoring,
identification and correction of allocation errors, and
WHEREAS, an effective program of sales and use tax management will improve identification
of economic opportunities; provide for more accurate sales and use tax forecasting; and assist
in related revenue collections; and
WHEREAS, CITY desires the combination of data entry, report preparation and analysis
necessary to effectively manage its sales and use tax base; the recovery of revenues erroneously
allocated to other jurisdictions and allocation pools; and to maximize its financial and economic
planning; and
WHEREAS, CONTRACTOR has the programs, equipment and personnel required to deliver
the sales and use tax related services referenced herein;
THEREFORE, CITY and CONTRACTOR, for the consideration hereinafter described,
mutually agree as follows:
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II. SERVICES
The CONTRACTOR shall perform the following services (collectively, the "Services"):
A. SALES TAX AND ECONOMIC ANALYSIS SERVICES
1. CONTRACTOR shall establish a special database that identifies the name, address
and quarterly allocations of all sales tax producers within the CITY for the most
current and all quarters back to fiscal year 1989-1990 or earlier, if the CITY has prior
historical sales tax data available on computer readable magnetic media. This database
will be utilized to generate special reports to the CITY on, major sales tax producers
by rank and category, sales tax activity by categories, or business districts,
identification of reporting aberrations, and per capita and outlet comparisons with
regional and statewide sales.
2. CONTRACTOR shall provide updated reports following each calendar quarter
identifying changes in sales by individual businesses, business groups and categories
and by geographic area. These reports may include, without limitation, quarterly
aberrations due to State audits, fund transfers, and receivables along with late or
double payments, and quarterly reconciliation worksheets to assist with budget
forecasting. CONTRACTOR shall meet quarterly with CITY.
3. CONTRACTOR shall additionally provide following each calendar quarter a
summary analysis for the CITY to share with Council Members Chambers of
Commerce, other economic development interest groups and the public that analyze
CITY'S sales tax trends by major groups, and geographic areas without disclosing
confidential information.
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4. CONTRACTOR shall make available to CITY staff CONTRACTOR's web -based
sales tax computer software program containing sellers permit and quarterly allocation
information for all in -city business outlets registered with the Board of Equalization
and updated quarterly. This software shall allow CITY staff to search businesses by
street address, account number, business name, business type and keyword, arrange
data by geographic area, and print out a variety of reports.
B. ALLOCATION AUDIT AND RECOVERY SERVICES
1. CONTRACTOR shall conduct initial and on-going sales, use and transactions tax
audits to identify and correct distribution and allocation errors, and to proactively
affect favorable registration, reporting or formula changes thereby generating
previously unrealized sales, use and transactions tax income for the CITY and/or
recovering misallocated tax from previously properly registered taxpayers. Common
errors that will be monitored and corrected include, but are not limited to:
transposition errors resulting in misallocations; erroneous consolidation of multiple
outlets; formula errors, misreporting of "point of sale" to the wrong location; delays
in reporting new outlets; misallocating use tax payments to the allocation pools or
wrong jurisdiction; and erroneous fund transfers and adjustments.
2. CONTRACTOR shall initiate contacts with state agencies, and sales management and
accounting officials in companies that have businesses where a probability of error
exists to verify whether current tax receipts accurately reflect the local sales activity.
Such contacts will be conducted in a professional and courteous manner.
3. CONTRACTOR shall (i) prepare and submit to the Board of Equalization information
for the purpose of correcting allocation errors that are identified and (ii) follow-up with
individual businesses and the State Board of Equalization to promote recovery by the
CITY of back or prospective quarterly payments that may be owing.
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4. If during the course of its audit, CONTRACTOR finds businesses located in the CITY
that are properly reporting sales and use tax but have the potential for modifying their
operation to provide an even greater share to the CITY, CONTRACTOR may so
advise CITY and work with those businesses and the CITY to encourage such changes.
C. CONSULTING AND OTHER OPTIONAL SERVICES
CONTRACTOR may, from time to time in its sole discretion, consult with CITY staff,
including without limitation, regarding (i) technical questions and other issues related to
sales, use and transactions tax; (ii) utilization of reports to enhance business license
collection efforts; and (iii) sales tax projections for proposed annexations, economic
development projects and budget planning. In addition to the foregoing optional consulting
services, CONTRACTOR may, from time to time in its sole discretion, perform other
optional Services, including without limitation, negotiating/review of tax sharing
agreements, establishing purchasing corporations, and meeting with taxpayers to
encourage self-assessment of use tax.
M. CONSIDERATION
A. CONTRACTOR shall provide the sales tax and economic analysis Services described in
Section II -A above for a fee of $350 per month, commencing with the month of the
Effective Date (hereafter referred to as "monthly fee"). The monthly fee shall be invoiced
quarterly in arrears, and shall be paid by CITY no later than 30 days after the invoice date.
The monthly fee shall increase annually following the month of the Effective Date by the
percentage increase in the "CPP' for the preceding twelve month period. In no event shall
the monthly fee be reduced by this calculation. For purposes of this Agreement, the "CPP'
shall mean the Consumer Price Index - All Urban Consumers for the surrounding statistical
metropolitan area nearest CITY, All Items (1982-84 = 100), as published by the U.S.
Department of Labor, Bureau of Labor Statistics, or, if such index should cease to be
published, any reasonably comparable index selected by CONTRACTOR.
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B. 1. CONTRACTOR shall be further paid 15% of all new and recovered sales, use and
transactions tax revenue received by the CITY as a result, in whole or in part, of the
allocation audit and recovery services described in Section II -B above (hereafter
referred to as "audit fee"), including without limitation, any reimbursement or other
payment from any state fund and any point of sale misallocation.
2. The audit fee shall be paid even if CITY assists, works in parallel with, and/or incurs
attorneys' fees or other costs or expenses in connection with any of the relevant
Services, Among other things, the audit fee applies to state fund transfers received for
back quarter reallocations and monies received in the first eight consecutive reporting
quarters following completion of the allocation audit by CONTRACTOR and
confirmation of corrections by the State Board of Equalization. CITY shall pay audit
fees upon CONTRACTOR'S submittal of evidence of CONTRACTOR'S work in
support of recovery of subject revenue, including, without limitation, copies of BOE
549-S petition forms of any other correspondence between CONTRACTOR and the
Board of Equalization or the taxpayer.
3. For any increase in the tax reported by businesses already properly making tax
payments to CITY, it shall be CONTRACTOR's responsibility to support in its
invoices the audit fee attributable, in whole or in part, to CONTRACTOR's Services.
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IV
C. CONTRACTOR shall invoice CITY for any consulting and other optional Services rendered
to CITY in accordance with Section II -C above based on the following hourly rates on a
monthly or a quarterly basis, at CONTRACTOR's option. All such invoices shall be
payable by CITY no later than 30 days following the invoice date. CITY shall not be
invoiced for any consulting Services totaling less than an hour in any month. The hourly
rates in effect as of the Effective Date are as follows:
Principal
Programmer
Senior Analyst
Analyst
$295 per hour
$250 per hour
$195 per hour
$100 per hour
CONTRACTOR may change such hourly rates from time to time upon not less than 30
days' prior written notice to CITY.
D. Any invoices not paid in accordance with the Thirty (30) day payment terms, shall accrue
monthly interest at a rate equivalent to ten percent (10%) per annum until paid.
E. CONTRACTOR unilaterally retains the right to divide any recovery bills in excess of
$25,000 over a one (1) year period (Four (4) quarterly billings).
F. CONTRACTOR shall provide CITY with an itemized quarterly invoice showing all formula
calculations and amounts due for the audit fee (including, without limitation, a detailed
listing of any corrected misallocations), which shall be paid by CITY no later than 30 days
following the invoice date.
CONFIDENTIALITY; OWNERSHIP/USE OF INFORMATION
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A. Section 7056 of the State of California Revenue and Taxation Code specifically limits the
disclosure of confidential taxpayer information contained in the records of the State Board
of Equalization. Section 7056 specifies the conditions under which a CITY may authorize
persons other than CITY officers and employees to examine State Sales and Use Tax
records.
B, The following conditions specified in Section 7056-(b), (1) of the State of California
Revenue and Taxation Code are hereby made part of this Agreement:
1. CONTRACTOR is authorized by this Agreement to examine sales, use or transactions
and use tax records of the Board of Equalization provided to CITY pursuant to contract
under the Bradley -Burns Uniform Sales and Use Tax Law Revenue and Taxation Code
section 7200 et.seq.
2. CONTRACTOR is required to disclose information contained in, or derived from,
those sales, use or transactions and use tax records only to an officer or employee of
the CITY who is authorized by resolution to examine the information.
3. CONTRACTOR is prohibited from performing consulting services for a retailer, as
defined in California Revenue & Taxation Code Section 6015, during the term of this
Agreement.
4. CONTRACTOR is prohibited from retaining the information contained in, or derived
from those sales, use or transactions and use tax records, after this Agreement has
expired. Information obtained by examination of Board of Equalization records shall
be used only for purposes related to collection of local sales and use tax or for other
governmental functions of the CITY as set forth by resolution adopted pursuant to
Section 7056 (b) of the Revenue and Taxation Code. The resolution shall designate
the CONTRACTOR as a person authorized to examine sales and use tax records and
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certify that this Agreement meets the requirements set forth above and in Section 7056
(b), (1) of the Revenue and Taxation Code.
C. Software Use. CONTRACTOR hereby provides authorization to CITY to access
CONTRACTOR'S Sales Tax website if CITY chooses to subscribe to the software and
reports option. The website shall only be used by authorized CITY staff. No access will
be granted to any third party without explicit written authorization by CONTRACTOR.
CITY shall not sublet, duplicate, modify, decompile, reverse engineer, disassemble, or
attempt to derive the source code of said software, The software use granted hereunder
shall not imply ownership by CITY of said software, or any right of CITY to sell said
software or the use of same, or any right to use said software for the benefit of others. This
software use authorization is not transferable. Upon termination or expiration of this
Agreement, the software use authorization shall expire, and all CITY staff website logins
shall be de -activated.
D. Proprietary Information. As used herein, the term "proprietary information" means all
information or material that has or could have commercial value or other utility in
CONTRACTOR's business, including without limitation: CONTRACTOR'S (i)
computer or data processing programs; (ii) data processing applications, routines,
subroutines, techniques or systems; desktop or web -based software; (iii) business
processes; (iv) marketing plans, analysis and strategies; and (v) materials and techniques
used; as well as the terms and conditions of this Agreement. Except as otherwise required
by law, CITY shall hold in confidence and shall not use (except as expressly authorized by
this Agreement) or disclose to any other party any proprietary information provided,
learned of or obtained by CITY in connection with this Agreement. The obligations
imposed by this Section IV -D shall survive any expiration or termination of this Agreement
or otherwise. The terms of this Section IV -D shall not apply to any information that is
public information.
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V. CITY MATERIALS AND SUPPORT
CITY shall adopt a resolution in a form acceptable to the State Board of Equalization and in
compliance with Section 7056 of the Revenue and Taxation Code, authorizing CONTRACTOR
to examine the confidential sales tax records of CITY. CITY further agrees to provide any
information or assistance that may readily be available such as business license records within
the CITY and to provide CONTRACTOR with proper identification for contacting businesses.
CITY further agrees to continue CONTRACTOR's authorization to examine the confidential
sales tax records of the CITY by maintaining CONTRACTOR's name on the CITY resolution
or by providing copies of future allocation reports on computer readable magnetic media until
such time as all audit adjustments have been completed by the State Board of Equalization and
any audit fee owing to CONTRACTOR has been paid.
VI. LICENSE, PERMITS, FEES AND ASSESSMENTS
CONTRACTOR shall obtain such licenses, permits and approvals (collectively the "Permits")
as may be required by law for the performance of the Services. CITY shall assist
CONTRACTOR in obtaining such Permits, and CITY shall absorb all fees, assessments and
taxes which are necessary for any Permits required to be issued by CITY.
This Agreement may be terminated for convenience by either party by giving 30 days written
notice to the other of such termination and specifying the effective date thereof. Upon the
presentation of such notice, CONTRACTOR may continue to perform Services through the
date of termination. Following termination of this Agreement, CITY shall continue to timely
pay CONTRACTOR's invoices for Services performed and not paid for prior to termination.
Anything to the contrary herein notwithstanding (and without limitation on the foregoing
sentence), CITY shall continue to pay to CONTRACTOR the audit fee for tax payments
received by CITY after termination of this Agreement from (i) state fund transfers for back
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quarter reallocations and the first eight consecutive calendar quarters following completion of
the allocation audit by CONTRACTOR and confirmation of corrections by the State Board of
Equalization; and (ii) businesses identified by CONTRACTOR pursuant to Section III -B-3
above, to the extent such businesses commence or continue to make increased tax payments
during the first 24 months following termination of this Agreement.
VIII. INDEPENDENT CONTRACTOR
CONTRACTOR shall perform the services hereunder as an independent contractor and shall
furnish such services in its own manner and method, and under no circumstances or conditions
shall any agent, servant, or employee of CONTRACTOR be considered as an employee of
CITY.
IX. NON -ASSIGNMENT
This Agreement is not assignable either in whole or in part by CONTRACTOR without the
written consent of CITY.
X. INSURANCE
CONTRACTOR shall maintain the policies set out below, and in amounts of coverage not less
than those indicated herein. Additionally, where required by CITY, CONTRACTOR shall
name the CITY as an additional insured on CONTRACTOR'S comprehensive general liability
policy and provide a Certificate of Insurance.
1. Worker's Compensation and Employer's Liability. In accordance with applicable law.
2. Comprehensive General Liability. Bodily injury liability in the amount of $1,000,000 for
each person in any one accident, and $1,000,000 for injuries sustained by two or more
persons in any one accident. Property damage liability in the amount of $1,000,000 for
each accident, and $2,000,000 aggregate for each year of the policy period.
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3. Comprehensive Automobile Liability. Bodily injury liability coverage of $1,000,000 for
each accident.
4. Errors and Omissions. In addition to any other insurance required by this Agreement,
CONTRACTOR shall provide and maintain, during the term of this Agreement,
professional liability insurance in the amount of $1,000,000 as evidenced by a Certificate
of Insurance.
XI. INDEMNIFICATION
CONTRACTOR hereby agrees to, and shall hold CITY, its elective and appointive boards,
officers, agents and employees, harmless from any liability for damage or claims for damage
for personal injury, including death, as well as from claims for breach of confidentiality or
property damage which may arise from CONTRACTOR'S willful or negligent acts, errors or
omissions or those of its employees or agents. CONTRACTOR agrees to and shall defend
CITY and its elective and appointive boards, officers, agents and employees from any suits or
actions at law or in equity for damages caused, or alleged to have been caused, by reason of any
of the aforesaid willful or negligent acts, errors or omissions.
CITY hereby agrees to, and shall hold CONTRACTOR, its officers, agents and employees,
harmless from any liability for damage or claims for damage for personal injury, including
death, as well as from claims for breach of confidentiality or property damage which may arise
from CITY'S negligent acts, errors or omissions including misuse or improper disclosure of
confidential information contained in reports submitted by contractor under this Agreement.
CITY agrees to and shall defend CONTRACTOR and its officers, agents and employees from
any suits or actions at law or in equity for damage caused, or alleged to have been caused, by
reason of any of the aforesaid negligent acts, errors or omissions and/or misuse or improper
disclosure of confidential information,
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XII. IRREPARABLE HARM
CONTRACTOR and CITY each understands and agrees that any breach of this Agreement by
either of them may cause the other party hereto irreparable harm, the amount of which may be
difficult to ascertain, and therefore agrees that such other party shall have the right to apply to
a court of competent jurisdiction for specific performance and/or an order restraining and
enjoining any further breach and for such other relief as such other party shall deem appropriate.
Such right is to be in addition to the remedies otherwise available to such other party at law or
in equity. The parties hereto expressly waive the defense that a remedy in damages will be
adequate and any requirement in an action for specific performance or injunction hereunder for
the posting of a bond.
XIII. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with the laws of the State of
California (without regard to its choice of law provisions). If any legal action is necessary to
enforce or interpret this Agreement, the parties agree that such action shall be brought in the
Superior Court for the State of California, County of Los Angeles, or the U.S. District Court
for the Central District of California, Western Division. The parties hereby submit to the
exclusive jurisdiction of such courts and waive any other venue to which either party might be
entitled by domicile or otherwise.
XIV. ATTORNEYS' FEES
If any party hereto brings an action or proceeding under this Agreement or to declare rights
hereunder, the Prevailing Party in any such proceeding, action, or appeal thereon shall be
entitled to recover all reasonable fees, costs and expenses, including reasonable attorneys' fees.
Such fees, costs and expenses may be awarded in the same suit or recovered in a separate suit,
whether or not such action or proceeding is pursued to decision or judgment. The attorneys'
fees award shall not be computed in accordance with any court fee schedule, but shall be such
940431.4.6 Page 12 of 15
as to fully reimburse all attorneys' fees reasonably incurred. "Prevailing Party" shall mean and
include, without limitation, a party who substantially obtains or defeats the relief sought, as the
case may be, whether by compromise, settlement, judgment, or the abandonment by the other
party of its claim or defense.
XV. SEVERABILITY; NO WAIVER
The invalidity or unenforceability of any provision of this Agreement shall not affect the
validity or enforceability of the other provisions of this Agreement, which shall remain in full
force and effect. If any of the provisions of this Agreement shall be deemed to be unenforceable
by reason of its extent, duration, scope or otherwise, then the parties contemplate that the court
making such determination shall enforce the remaining provisions of this Agreement, and shall
reduce such extent, duration, scope, or other provision and shall enforce them in their reduced
form for al] purposes contemplated by this Agreement. No failure or delay by either party in
exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise thereof preclude any other or further exercise thereof or the
exercise of any right, power or privilege hereunder.
XVI. NOTICES
All notices sent by a party under this Agreement shall be in writing and shall be deemed
properly delivered to the other party as of the date of receipt, if received on a business day prior
to 3:00 PM local time, or otherwise on the next business day after receipt, provided delivery
occurs personally, by courier service, or by U.S. mail to the other party at its address set forth
below, or to such other address as either party may, by written notice, designate to the other
party. Notices to CONTRACTOR shall be sent to HINDERLITER, de LLAMAS and
ASSOCIATES, 1340 Valley Vista Drive, Suite 200, Diamond Bar, CA 91765; and notices to
CITY shall be sent to CITY OF TEMPLE CITY, 9701 E Las Tunas Drive, Temple City, CA
91780.
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XVII. ENTIRE AGREEMENT; ETC.
This Agreement expresses the full and complete understanding of the parties with respect to the
subject matter hereof and supersedes all prior or contemporaneous proposals, agreements,
representations and understandings, whether written or oral, with respect to the subject matter.
This Agreement may not be amended or modified except in writing signed by each of the parties
hereto. This Agreement shall be construed as to its fair meaning and not strictly for or against
either party. The headings hereof are descriptive only and not to be construed in interpreting
the provisions hereof.
XVIII. COUNTERPARTS; AUTHORITY TO SIGN
This Agreement may be executed in any number of counterparts, each of which will constitute
an original and all of which, when taken together, will constitute one agreement. Any signature
pages of this Agreement transmitted by facsimile or sent by email in portable document format
(PDF) will have the same legal effect as an original executed signature page. Each of the
persons signing on behalf of a party hereto represents that he or she has the right and power to
execute this Agreement on such party's behalf.
940431.4-6 Page 14 of 15
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed on the date
first above written by their respective officers duly authorized in their behalf.
CITY:
CITY OF TEMPLE CITY
Bryan Cook, City Manager
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CONTRACTOR:
HINDERLITER, DE LLAMAS & ASSOCIATES
A California Corporation
By �� 1
Andrew Nickerson, President
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