HomeMy WebLinkAbout55B - RESO DEPT OF TAX AGMT MEASURE XREQUEST FOR
COUNCIL ACTION
CITY COUNCIL MEETING DATE:
JANUARY 15, 2019
TITLE:
APPROVE AN APPROPRIATION ADJUSTMENT
RELATED TO MEASURE X ADOPT
RESOLUTIONS TO AUTHORIZE EXECUTION
OF AGREEMENTS WITH THE CALIFORNIA
DEPARTMENT OF TAX AND FEE
ADMINISTRATION FOR IMPLEMENTATION OF
LOCAL VOTER APPROVED TRANSACTIONS
AND USE TAX AND AUTHORIZE SECOND
AMENDMENT TO AGREEMENT WITH
MUNISERVICES, LLC FOR TRANSACTIONS
AND USE TAX REPORTING, ANALYSIS AND
RECOVERY SERVICES
(STRATEGIC PLAN NO. 4,3A)
Y MANAGER
RECOMMENDED ACTION
CLERK OF COUNCIL USE ONLY:
APPROVED
❑ As Recommended
❑ As Amended
❑ Ordinance on 1s' Reading
❑ Ordinance on 2n1 Reading
❑ Implementing Resolution
❑ Set Public Hearing For
CONTINUED TO
FILE NUMBER
Approve an Appropriation Adjustment recognizing Sales Tax revenue related to the passage
of Measure X (Transactions and Use Tax) for fiscal year 2018-19 in the amount of
$15,000,000.00 and appropriating the same amount to General Non -Departmental expenditure
account(s)
2. Adopt a Resolution of the City Council of the City of Santa Ana authorizing the City Manager
to execute agreements with the California Department of Tax and Fee Administration
("CDTFA") for implementation of a local Transactions and Use Tax (Exhibit 1).
3. Authorize the City Manager and Clerk of the Council to execute an Agreement for Preparation
to Administer and Operate District's Transactions and Use Tax Ordinance (Local Charge
Agreement with the CDTFA), in an amount not to exceed $175,000, commencing February 1,
2019, subject to non -substantive changes approved by the City Manager and City Attorney
(Exhibit 2).
4. Authorize the City Manager and Clerk of the Council to execute an Agreement for State
Administration of District Transactions and Use Taxes with the CDTFA to perform functions
incidental to the administration and collection of local transactions and use taxes, subject to
non -substantive changes approved by the City Manager and City Attorney. The agreement to
commence April 1, 2019, and continue until December 31, 2039 (for six months following the
expiration date of the City Ordinance, March 31, 2039), and thereafter to renew automatically
from year-to-year until CDTFA completes all work necessary to the administration of the City
55B-1
Resolutions Authorizing Execution of Certain Documents Required by CDTFA for Implementation
of Voter Approved Transactions and Use Tax and Approval of Second Amendment to
MuniServices Agreement
January 15, 2019
Page 2
Ordinance and has received and disbursed to the City all payments due under that Ordinance
(Exhibit 3).
5. Adopt a Resolution of the City Council of the City of Santa Ana authorizing examination of
CDTFA transactions (sales) and use tax records by City employees (designed by position title),
and by the City's contracted tax reporting, analysis and recovery services consultant, effective
April 1, 2019 (Exhibit 4).
6. Authorize the City Manager and Clerk of the Council to execute a Second Amendment to
Agreement with MuniServices, LLC to expressly include Transactions and Use Tax reporting,
analysis and recovery services beginning April 1, 2019, and to extend the contract period one
and one-half years (1 '/2 ) effective January 1, 2021 through June 30, 2022 (Exhibit 5).
On November 6, 2018, City of Santa Ana voters approved Measure X: "Santa Ana Neighborhood
Safety, Homeless Prevention and Essential City Services Enhancement Measure" adding a one
and one half (1.5) cents increase in the City's local sales tax by the adoption of an add-on sales
tax also referred to as a transactions and use tax. The purpose of this measure is aimed to maintain
effective 9-1-1 response; retain firefighters and police officers; address homelessness; fix streets;
maintain parks, youth and senior services, and other unrestricted general revenue purposes. The
effective combined sales tax to be increased one and one half (1.5) cents until 2029 providing
approximately $60 million dollars annually, then reduced to one (1) cent providing approximately
$40 million dollars annually, until 2039, with requirements for annual audits and citizens oversight
committee.
On December 11, 2018, the City Council certified the November 6, 2018 election results including
the passage of Measure X (City Ordinance NS -2952). To effectuate the intent of the Santa Ana
voters' approval of Measure X, the City is required pursuant to state law to enter into contracts with
the California Department of Tax and Fee Administration (CDTFA) for implementation of its local
Transactions and Use Tax (Sales Tax).
Included among these resolutions and attendant agreements are:
(1) Resolution authorizing City Manager to execute agreements with the CDTFA for
implementation of a local Sales Tax (Exhibit 1).
a. Execution of the resolution will allow the City Manager to execute agreements with
CDTFA to begin implementation of the revised Sales Tax rate of 9.25% beginning on
April 1, 2019.
(2) Agreement for Preparation to Administer and Operate District's Transactions and Use Tax
Ordinance — CDTFA (Exhibit 2).
a. This Agreement authorizes CDTFA to take all preparatory administrative and
operational steps necessary to assume administration of the City's new transactions
and use taxes, beginning April 1, 2019.
(3) Agreement for State Administration of District Transactions and Use Taxes with the
CDTFA to perform functions incidental to the administration and collection of local
transactions and use taxes (Exhibit3).
55B-2
Resolutions Authorizing Execution of Certain Documents Required by CDTFA for Implementation
of Voter Approved Transactions and Use Tax and Approval of Second Amendment to
MuniServices Agreement
January 15, 2019
Page 3
a. Allows CDTFA to collect and remit the Sales Tax to the City effective April 1, 2019.
(4) Resolution authorizing the examination of transactions (sales) and use tax records by City
employees (designed by position title) and by the City's contracted tax reporting, analysis
and recovery services consultant (Exhibit 4).
a. This resolution authorizes access by designated City employees to confidential sales
and use tax information and/or transactions and use tax information for review of
accuracy of local tax allocation to the City and for other "specific governmental
functions"; i.e., (a) revenue tracking and economic development, (b) forecasting and
budget related functions, and (c) comparative audit of local jurisdiction taxes.)
Designations are made by position title and may be altered by formal written request
by the Executive Director of Finance and Management Services Agency. Likewise,
in concert with an expansion of additional "specific governmental functions",
additional employee positions may be formally requested. This resolution also
authorizes access by the City's contracted tax reporting, analysis and recovery
services consultant.)
The City currently contracts with MuniServices, LLC ("MuniServices") for sales and use tax
recovery, reporting, and analysis. As part of these services MuniServices provides both a web -
based software application (STARS) to help track and analyze sales and use taxes as well as a
web -based geographic revenue information application (GRIA) to aggregate for analysis a variety
of general fund revenues along with reported sales and use tax data, geographically.
Appropriation Adjustment
To maintain the efficacy of these services as they relate to the City's new Sales Tax authorized by
Measure X, a Second Amendment to MuniServices' contract is required to fully authorize those
services in connection with the new tax (Exhibit 5). Also, as the collection of November 6, 2018
voter approved transactions and use taxes cannot commence under state law sooner than April 1,
2019, the City will be in receipt of the increase Sales Tax revenues as follows:
Sales Tax Reporting Period Receipted by the Citv
• April 2019 Advance June 2019
• May 2019 Advance July 2019
• June 2019 True -Up August 2019
The City's Sales Tax Consultant, MuniServices has provided a preliminary estimate of Sales Tax
to be received for the period April 1, 2019 through June 30, 2019 (FY 2018-19, 4w Quarter)
estimated to be $15,000,000. The amount is based on various factors and is solely a "best guess
estimate" at this time. Staff will be monitoring the revenue source and will provide the Council an
update if any revisions are necessary.
Local jurisdictions failing to submit all requested resolutions and agreements to the CDTFA by
February 1, 2019, risk delay in the implementation of their newly enacted transactions and use
taxes which could result in CDFTA not imposing transaction and use taxes otherwise collectible
beginning April 1, 2019. Thus, delaying Cities would forfeit those expected quarterly revenues
resulting in no transactions and use tax monies accruable for the current fiscal year (FY 2018-19).
55B-3
Resolutions Authorizing Execution of Certain Documents Required by CDTFA for Implementation
of Voter Approved Transactions and Use Tax and Approval of Second Amendment to
MuniServices Agreement
January 15, 2019
Page 4
In addition, it is desirable that the term of MuniServices' agreement be extended to bring it into
better alignment with the full reporting and allocation cycle of the new transactions and use taxes.
Furthermore, to assure a timely implementation of the City's Sales Tax by the earliest possible
quarterly period permitted by law, April 1, 2019, CDTFA requires the City to execute and deliver to
CDTFA all requested resolutions and agreements, including any agreement between the City and
its contracted agent, on or before February 1, 2019.
STRATEGIC PLAN ALIGNMENT
Approval of this item allows the City to meet Goal No. 4 City Financial Stability, Objective No. 3
(Achieve a structurally balanced budget with appropriate reserve levels).
FISCAL IMPACT
Sales Tax — Appropriation Adjustment and CDTFA Preparatory Agreement are as follows:
Revenue
Account
Sales Tax — Measure X (01102002-50022)
Amount
$15,000,000
Expenditure
Gen. Non -Departmental Reserve for Appropriation (01105015-69000) $14,825,000
Gen. Non -Departmental Contract Services (01105015-62300) $ 175,000
Resolutions
No fiscal impact is associated with approval of items connected with State required resolutions or
with the Agreement for State Administration of District Transactions and Use Taxes resulting from
the passage of Measure X. (The City will be in receipt of its Sales Tax, net of administrative fees
assessed by the CDTFA).
MuniServices Agreement
Fees will not be increased forthe additional services that MuniServices renders under an approved
Second Amendment to Agreement. However, fees resulting from City's (1%) year extension of
said Agreement will be budgeted and available in the Management and Support Services account
(01110100-62300) as follows:
MuniServices, LLC - Additional Term
Fiscal Year Amount
2020-21 $ 12,500
2021-22 $ 6,500
APPROVED AS TO FUNDS AND ACCOUNTS:
IKI�ca� &pww�o
Kathryn Downs, CPA
Executive Director Sm
Finance and Management Services Agency
55B-4
Resolutions Authorizing Execution of Certain Documents Required by CDTFA for Implementation
of Voter Approved Transactions and Use Tax and Approval of Second Amendment to
MuniServices Agreement
January 15, 2019
Page 5
Exhibits: 1. Resolution for State Administration of District Transactions and Use Taxes
rM
2. Agreement for Preparation to Administer and Operate District's Transactions and Use
Tax Ordinance Local Charge Agreement with the CDTFA
3. Agreement for State Administration of District Transactions and Use Taxes with the
California Department of Tax and Fee Administration (CDTFA)
4. Resolution authorizing the examination of transactions (sales) and use tax records
5. Second Amendment to Agreement (MuniServices, LLC)
55B-5
55B-6
EXHIBIT 1
RESOLUTION NO.2019-xx
A RESOLUTION OF THE OF THE CITY COUNCIL OF THE CITY OF
SANTA ANA AUTHORIZING THE CITY MANAGER TO EXECUTE
AGREEMENTS WITH THE CALIFORNIA DEPARTMENT OF TAX AND
FEE ADMINISTRATION FOR IMPLEMENTATION OF A LOCAL
TRANSACTIONS AND USE TAX
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SANTA ANA, AS
FOLLOWS:
Section 1. The City Council of the City of Santa Ana conclusively finds, determines
and declares as follows:
WHEREAS, on December 11, 2018 the City Council approved Ordinance No. NS -
2952 amending the City Municipal Code and providing for a local transactions and use tax;
and
WHEREAS, the California Department of Tax and Fee Administration (Department)
administers and collects the transactions and use taxes for all applicable jurisdictions within
the state; and
WHEREAS, the Department will be responsible to administer and collect the
transactions and use tax for the City; and
WHEREAS, the Department requires that the City enter into a "Preparatory
Agreement" and an "Administration Agreement' prior to implementation of said taxes, and
WHEREAS, the Department requires that the City Council authorize both agreements.
NOW, THEREFORE, it is hereby ORDERED, RESOLVED and DETERMINED, as follows:
Section 2. The "Preparatory Agreement" attached hereto as Exhibit A and the
"Administrative Agreement" attached hereto as Exhibit B are both hereby approved and the
City Council hereby authorizes the City Manager, or his designee to execute each
agreement.
55B-7
Section 3. This Resolution shall take effect immediately upon its adoption by the
City Council, land the Clerk of the Council shall attest to and certify the vote adopting this
Resolution.
ADOPTED this day of
APPROVED AS TO FORM:
Sonia R. Carvalho
City Attorney
By:y" r . -
Lisa E. Storck
Assistant City Attorney
AYES: Councilmembers:
NOES: Councilmembers:
ABSTAIN: Councilmembers:
NOT PRESENT: Councilmembers:
2019.
Miguel A. Pulido
Mayor
CERTIFICATION OF ATTESTATION AND ORIGINALITY
I, MARIA D. HUIZAR, Clerk of Council, do hereby attest to and certify the attached
Resolution No. 2019- to be the original resolution adopted by the City Council of the
City of Santa Ana on 2019.
Date:
Clerk of Council
City of Santa Ana
55B-8
EXHIBIT 2
AGREEMENT FOR PREPARATION TO ADMINISTER AND OPERATE
CITY'S TRANSACTIONS AND USE TAX ORDINANCE
In order to prepare to administer a transactions and use tax ordinance adopted in accordance
with the provision of Part 1.6 (commencing with Section 7251) of Division 2 of the Revenue and
Taxation Code, the City of Santa Ana, hereinafter called City,' and the CALIFORNIA DEPARTMENT
OF TAX AND FEE ADMINISTRATION, hereinafter called Department, do agree as follows:
1. The Department agrees to enter into work to prepare to administer and operate a
transactions and use tax in conformity with Part 1.6 of Division 2 of the Revenue and Taxation Code
which has been approved by a majority of the electors of the City and whose ordinance has been
adopted by the City.
2. City agrees to pay to the Department at the rimes and in the amounts hereinafter specified
all of the Department's costs for preparatory work necessary to administer the City's transactions and
use tax ordinance. The Department's costs for preparatory work include costs of developing
procedures, programming for data processing, developing and adopting appropriate regulations,
designing and printing forms, developing instructions for the Department's staff and for taxpayers, and
other appropriate and necessary preparatory costs to administer a transactions and use tax ordinance.
These costs shall include both direct and indirect costs as specified in Section 11256 of the
Government Code.
3. Preparatory costs may be accounted for in a manner which conforms to the internal
accounting and personnel records currently maintained by the Department. The billings for costs may
be presented in summary form. Detailed records of preparatory costs will be retained for audit and
verification by the City.
4. Any dispute as to the amount of preparatory costs incurred by the Department shall be
referred to the State Director of Finance for resolution, and the Director's decision shall be final.
5. Preparatory costs incurred by the Department shall be billed by the Department
periodically, with the final billing within a reasonable time after the operative date of the ordinance.
City shall pay to the Department the amount of such costs on or before the last day of the next
succeeding month following the month when the billing is received.
6. The amount to be paid by City for the Department's preparatory costs shall not exceed one
hundred seventy-five thousand dollars ($1.75,000) (Revenue and Taxation Code Section 7272.)
I
55B-9
7. Communications and notices may be sent by first class United States mail.
Communications and notices to be sent to the Department shall be addressed to:
California Department of Tax and Fee Administration
P.O. Box 942879 MIC: 27
Sacramento, California 94279-0027
Attention: Supervisor
Local Revenue Branch
Communications and notices to be sent to City shall be addressed to:
Treasury & Customer Services Manager
City of Santa Ana M-15
P.O. Box 1964
Santa Ana, CA 92702-1964
8. The date of this agreement is the date on which it is approved by the Department of General
Services. This agreement shall continue in effect until the preparatory work necessary to administer
City's transactions and use tax ordinance has been completed and the Department has received all
payments due from City under the terms of this agreement.
CITY OF SANTA ANA
M
(Signature)
Raul Godeniz H
(Typed Name)
City Manager
(Title)
(Rev. 11/17)
CALIFORNIA STATE DEPARTMENT OF
TAX AND FEE ADMINISTRATION
IM
2
55B-10
Administrator
EXHIBIT 3
AGREEMENT FOR STATE ADMINISTRATION
OF CITY TRANSACTIONS AND USE TAXES
The City Council of the City of Santa Ana has adopted, and the voters of the City of Santa Ana
(hereafter called "City" or "District") have approved by the required majority vote, the City of Santa
I
Ana Transactions and Use Tax Ordinance (hereafter called "Ordinance"), a copy of which is attache
hereto. To carry out the provisions of Part 1.6 of Division 2 of the Revenue and Taxation Code and the
Ordinance, the Califomia State Department of Tax and Fee Administration, (hereinafter called the
"Department") and the City do agree as follows:
ARTICLE I
DEFINITIONS
Unless the context requires otherwise, wherever the following terms appear in the Agreement,
they shall be interpreted to mean the following:
1. "District taxes" shall mean the transactions and use taxes, penalties, and interest imposed
under an ordinance specifically authorized by Revenue and Taxation code Section 7270, and in
compliance with Part 1.6, Division 2 of the Revenue and Taxation Code.
2. "City Ordinance" shall mean the City's Transactions and Use Tax Ordinance referred to
above and attached hereto, Ordinance No. NS -2952, as amended from time to time, or as deemed to be
amended from time to time pursuant to Revenue and Taxation Code Section 7262.2.
ARTICLE II
ADMINISTRATION AND COLLECTION
OF CITY TAXES
A. Administration. The Department and City agree that the Department shall perform
exclusively all functions incident to the administration and operation of the City Ordinance.
55B-11
B. Other Applicable Laws. City agrees that all provisions of law applicable to the
administration and operation of the Department Sales and Use Tax Law which are not inconsistent
with Part 1.6 of Division 2 of the Revenue and Taxation Code shall be applicable to the administration
and operation of the City Ordinance. City agrees that money collected pursuant to the City Ordinance
may be deposited into the State Treasury to the credit of the Retail Sales Tax Fund and may be drawn
from that Fund for any authorized purpose, including making refunds, compensating and reimbursing
the Department pursuant to Article IV of this Agreement, and transmitting to City the amount to which
City is entitled.
C. Transmittal of Money.
For the period during which the tax is in effect, and except as otherwise provided herein, all
district taxes collected under the provisions of the City Ordinance shall be transmitted to City
periodically as promptly as feasible, but not less often than twice in each calendar quarter.
2. For periods subsequent to the expiration date of the tax whether by City's self-imposed
limits or by final judgment of any court of the State of California holding that City's ordinance is
invalid or void, all district taxes collected under the provisions of the City Ordinance shall be
transmitted to City not less than once in each calendar quarter.
3. Transmittals may be made by mail or electronic funds transfer to an account of the City
designated and authorized by the City. A statement shall be fumished at least quarterly indicating the
amounts withheld pursuant to Article IV of this Agreement.
D. Rules. The Department shall prescribe and adopt such rules and regulations as in its
judgment are necessary or desirable for the administration and operation of the City Ordinance and the
distribution of the district taxes collected thereunder.
E. Preference. Unless the payor instructs otherwise, and except as otherwise provided in this
Agreement, the Department shall give no preference in applying money received for state sales and use
taxes, state -administered local sales and use taxes, and district transactions and use taxes owed by a
taxpayer, but shall apply moneys collected to the satisfaction of the claims of the State, cities, counties,
cities and counties, redevelopment agencies, other districts, and City as their interests appear.
(Rev. 10/17) 2
55B-12
F. Security. The Department agrees that any security which it hereafter requires to be
fiunished by taxpayers under the State Sales and Use Tax Law will be upon such terms that it also will
be available for the payment of the claims of City for district taxes owing to it as its interest appears
The Department shall not be required to change the terms of any security now held by it, and City shall
not participate in any security now held by the Department.
i
G. Records of the Department.
When requested by resolution of the legislative body of the City under section 7056 of the
Revenue and Taxation Code, the Department agrees to permit authorized personnel of the City to
examine the records of the Department, including the name, address, and account number of each
seller holding a seller's permit with a registered business location in the City, pertaining to the
ascertainment of transactions and use taxes collected for the City. Information obtained by the City
from examination of the Department's records shall be used by the City only for purposes related to the
collection of transactions and use taxes by the Department pursuant to this Agreement.
H. Annexation. City agrees that the Department shall not be required to give effect to an
annexation, for the purpose of collecting, allocating, and distributing District transactions and use
taxes, earlier than the first day of the calendar quarter which commences not less than two months after
notice to the Department. The notice shall include the name of the county or counties annexed to the
extended City boundary. In the event the City shall annex an area, the boundaries of which are not
coterminous with a county or counties, the notice shall include a description of the area annexed and
two maps of the City showing the area annexed and the location address of the property nearest to the
extended City boundary on each side of every street or road crossing the boundary.
ARTICLE IH
ALLOCATION OF TAX
A. Allocation. In the administration of the Department's contracts with all districts that
impose transactions and use taxes imposed under ordinances, which comply with Part 1.6 of Division 2
of the Revenue and Taxation Code:
1. Any payment not identified as being in payment of liability owing to a designated
district or districts may be apportioned among the districts as their interest appear, or, in the discretion
(Rev. 10/17) 3
55B-13
of the Department, to all districts with which the Department has contracted using ratios reflected by
the distribution of district taxes collected from all taxpayers.
2. All district taxes collected as a result of determinations or billings made by the
Department, and all amounts refunded or credited may be distributed or charged to the respective
districts in the same ratio as the taxpayer's self -declared district taxes for the period for which the
determination, billing, refund or credit applies.
B. Vehicles, Vessels, and Aircraft. For the purpose of allocating use tax with respect to
vehicles, vessels, or aircraft, the address of the registered owner appearing on the application for
registration or on the certificate of ownership may be used by the Department in determining the place
of use.
ARTICLE IV
COMPENSATION
The City agrees to pay to the Department as the State's cost of administering the City
Ordinance such amount as is provided for by law. Such amounts shall be deducted from the taxes
collected by the Department for the City.
ARTICLE V
MISCELLANEOUS PROVISIONS
A. Communications. Communications and notices may be sent by first class United States
mail to the addresses listed below, or to such other addresses as the parties may from time to time
designate. A notification is complete when deposited in the mail.
(Rev. 10/17) 4
55B-14
Communications and notices to be sent to the Department shall be addressed to:
California State Department of Tax and Fee Administration
P.O. Box 942879
Sacramento, California 94279-0027
Attention: Administrator
Local Revenue Branch
Communications and notices to be sent to the City shall be addressed to:
Treasury & Customer Services Manager
City of Santa Ana M-15
P.O. Box 1964
Santa Ana, CA 92702-1964
Unless otherwise directed, transmittals of payment of District transactions and use taxes
will be sent to the address above.
B. Term. The date of this Agreement is the. date on which it is approved by the Department of
General Services. The Agreement shall take effect on April 1, 2019. This Agreement shall continue
until December 31 next following the expiration date of the City Ordinance, and shall thereafter be
renewed automatically from year to year until the Department completes all work necessary to the
administration of the City Ordinance and has received and disbursed all payments due under that
Ordinance.
C. Notice of Repeal of Ordinance. City shall give the Department written notice of the
repeal of the City Ordinance not less than 110 days prior to the operative date of the repeal.
(Rev. 10/17) 5
55B-15
ARTICLE VI
ADMINISTRATION OF TAXES IF THE
ORDINANCE IS CHALLENGED AS BEING INVALID
A. Impoundment of funds.
I
1. When a legal action is begun challenging the validity of the imposition of the tax, the
City shall deposit in an interest-bearing escrow account, any proceeds transmitted to it under Article II.
C., until a court of competent jurisdiction renders a final and non -appealable judgment that the tax is
valid.
2. If the tax is determined to be unconstitutional or otherwise invalid, the City shall
transmit to the Department the moneys retained in escrow, including any accumulated interest, within
ten days of the judgment of the trial court in the litigation awarding costs and fees becoming final and
non -appealable.
B. Costs of administration. Should a final judgment be entered in any court of the State of
California, holding that City's Ordinance is invalid or void, and requiring a rebate or refund to
taxpayers of any taxes collected under the terms of this Agreement, the parties mutually agree that:
1. Department may retain all payments made by City to Department to prepare to
administer the City Ordinance.
2. City will pay to Department and allow Department to retain Department's cost of
administering the City Ordinance in the amounts set forth in Article IV of this Agreement.
3. City will pay to Department or to the State of California the amount of any taxes plus
interest and penalties, if any, that Department or the State of California may be required to rebate or
refund to taxpayers.
4. City will pay to Department its costs for rebating or refunding such taxes, interest, or
penalties. Department's costs shall include its additional cost for developing procedures for processing
the rebates or refunds, its costs of actually making these refunds, designing and printing forms, and
(Rev. 10/17) 6
55B-16
developing instructions for Department's staff for use in making these rebates or refunds and any other
costs incurred by Department which are reasonably appropriate or necessary to make those rebates or
refunds. These costs shall include Department's direct and indirect costs as specified by Section 11256
of the Government Code.
5. Costs may be accounted for in a manner, which conforms to the internal accounting,
and personnel records currently maintained by the Department. The billings for such costs may be
presented in summary form. Detailed records will be retained for audit and verification by City.
6. Any dispute as to the amount of costs incurred by Department in refunding taxes shall
be referred to the State Director of Finance for resolution and the Director's decision shall be final.
7. Costs incurred by Department in connection with such refunds shall be billed by
Department on or before the 25th day of the second month following the month in which the judgment
of a court of the State of California holding City's Ordinance invalid or void becomes final. Thereafter
Department shall bill City on or before the 25th of each month for all costs incurred by Department for
the preceding calendar month. City shall pay to Department the amount of such costs on or before the
last day of the succeeding month and shall pay to Department the total amount of taxes, interest, and
penalties refunded or paid to taxpayers,: together with Department costs incurred in making those
refunds.
CITY OF SANTA ANA
(Signature)
Raul Godeniz U
(Typed Name)
City Manager
(Title)
CALIFORNIA STATE DEPARTMENT OF
TAX AND FEE ADMINISTRATION
(Rev. 10/17) 7
55B-17
Administrator
55B-18
EXHIBIT 4
LS 1.15.19
RESOLUTION NO.2019-xx
A RESOLUTION OF THE OF THE CITY COUNCIL OF THE CITY OF
SANTA ANA AUTHORIZING THE EXAMINATION OF SALES AND
TRANSACTIONS AND USE TAX RECORDS
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SANTA ANA, AS
FOLLOWS:
Section 1. The City Council of the City of Santa Ana conclusively finds, determines
and declares as follows:
WHEREAS, pursuant to Ordinance No. NS -2952, the City of Santa Ana entered into a
contract with the California Department of Tax and Fee Administration (CDTFA) to perform all
functions incident to the administration and collection of the Transactions and Use Tax
Ordinances and the local sales and use taxes; and
WHEREAS, City of Santa Ana deems it necessary for authorized representatives of
MuniServices, LLC to examine confidential sales and transactions and use tax records of the
CDTFA, pertaining to sales and transactions and use taxes collected by the CDTFA for City
of Santa Ana; and
WHEREAS, Section 7056 of the California Revenue and Taxation Code sets forth
certain requirements and conditions for the disclosure of CDTFA records and establishes
criminal penalties for the unlawful disclosure of information contained in, or derived from
sales or transactions and use tax records of the CDTFA; and
WHEREAS, Section 7056 of the California Revenue and Taxation Code requires that
any person designated by City of Santa Ana shall have an existing contract to examine City
of Santa Ana's sales and transactions and use tax records.
NOW, THEREFORE, it is hereby ORDERED, RESOLVED and DETERMINED, as follows:
Section 2. The Executive Director of Finance and Management Services, Assistant
Director of Finance, Treasury and Customer Services Manager, Budget Supervisor, Revenue
Supervisor or other officer or employee of the District designated in writing by the Executive
Director of Finance and Management Services to the CDTFA is hereby appointed to
represent the District with authority to examine transactions and use tax records of the
California Department of Tax and Fee Administration (CDTFA) pertaining to transactions and
use taxes collected for the District by the CDTFA, pursuant to the contract between the
District and the CDTFA. The information obtained by examination of CDTFA records shall be
used only for purposes related to the collection of the District's transactions and use taxes by
the CDTFA pursuant to the contract, including for purposes of detection of misallocations and
deficiencies. The officers and employees of the District listed above or other officers or
employees of the District subsequently designated in writing by the Executive Director of
Finance and Management Services pursuant to Section 3 below are authorized to receive
55B-19
confidential CDTFA information from the District's contracted consultant designated in
Section 4 below.
Section 3. The Assistant Director of Finance, Treasury and Customer Services
Manager, Budget Supervisor, Revenue Supervisor or other officer or employee of the District
designated in writing by the Executive Director of Finance and Management Services to the
CDTFA is hereby appointed to represent the District with authority to examine those sales
and transactions and use tax records of the CDTFA for purposes related to the following
governmental functions of the District:
a) revenue tracking and economic development
b) forecasting and budget related functions
C) comparative audit of local Jurisdiction taxes
The information obtained by examination of CDTFA records shall be used only for those
governmental functions of the District listed above.
Section 4. MuniServices, LLC is hereby designated and authorized to examine all of
the sales and transactions and use tax records of the CDTFA pertaining to all sales and use
taxes collected for the District and all transactions and use taxes collected for the District
under the following Transactions and Use Tax Ordinance and any future Transactions and
Use Tax Ordinances that may be enacted in the District.
Transactions and Use Tax Ordinance NS -2952: Adopted by City of Santa Ana
Voters November 6, 2018, Certified by City of Santa Ana City Council December
11, 2018, Effective December 21, 2018
The person or entity designated by this section meets all of the.following conditions:
a) has an existing contract with the District to examine those transactions and use tax
records;
b) is required by that contract to disclose information contained in, or derived from those
sales and transactions and use tax records only to the officer or employee authorized
under Section 2 or Section 3 of this resolution to examine the information;
c) is prohibited by that contract from performing consulting services for a retailer during
the term of that contract;
d) is prohibited by that contract from retaining the information contained in, or derived
from those sales and transactions and use tax records after that contract has expired.
Section 5. The information obtained by examination of CDTFA records shall be
used only for purposes related to the collection of the City of Santa Ana's sales and
transactions and use taxes by the CDTFA pursuant to the contracts between the City and the
California Department of Tax and Fee Administration as set forth in Section 2 above and for
purposes relating to the governmental functions of the City of Santa Ana listed in Section 3 of
this resolution.
-2-
55B-20
Section 6. This resolution supersedes all prior sales and transactions and use tax
resolutions of the City of Santa Ana adopted pursuant to subdivision (b) of Revenue and
Taxation Code Section 7056.
Section 7. This resolution shall take effect immediately upon its adoption by the City
Council, and the Clerk of the Council shall attest to and certify the vote adopting this
Resolution.
ADOPTED this day of
APPROVED AS TO FORM:
Sonia R. Carvalho
City Attorney
Lisa Storck
Assistant City Attorney
AYES:
NOES:
ABSTAIN:
NOT PRESENT:
Councilmembers:
Councilmembers:
Councilmembers:
Councilmembers:
2019.
Miguel A. Pu►ido
Mayor
CERTIFICATION OF ATTESTATION AND ORIGINALITY
I, MARIA D. HUIZAR, Clerk of Council, do hereby attest to and certify the attached
Resolution No. 2019- to be the original resolution adopted by the City Council of the
City of Santa Ana on 2019.
Date:
Clerk of Council
City of Santa Ana
-3-
55B-21
55B-22
EXHIBIT 5
SECOND AMENDMENT TO CONSULTANT SERVICES AGREEMENT
THIS SECOND AMENDMENT TO CONSULTANT SERVICES AGREEMENT, made and
entered into this 15"' day of January, 2019, by and between the City of Santa Ana, a charter
city and municipal corporation duly organized and existing under the Constitution and laws of
the State of California ("CITY"), and MuniServices, LLC, a Delaware limited liability company
("CONSULTANT"), or, collectively "the Parties".
RECITALS
A. On October 4, 2016, the CITY and CONSULTANT pursuant to a Request for Proposals
process entered Into that certain agreement entitled "Consultant Services Agreement"
(Agreement #A-2016-290) hereinafter referred to as "said Agreement', for Sales and Use
Tax Recovery, Reporting, Analysis, and Legislative/State Agency Liaison and
Implementation Monitoring Services.
B., On June 19, 2018, the CITY and CONSULTANT agreed to a First Amendment to said
Agreement (#A-2018-161) to add provisions relating to Change Orders, and to identify
additional consulting services to include, but not be limited to: potential transaction and use
taxes, potential business license taxes and/or potential medical marijuana and/or cannabis
taxes or operating agreement fees (as applicable), and to set forth the renewal Term of said
Agreement for a period of two and one-half (2 ''Y2) years, effective July 1, 2018 through
December 31, 2020.
C. The Parties hereto now desire to amend said Agreement to increase the Scope of Services
to expressly include Transactions and Use Tax Recovery, Reporting, and Analysis.
D. The Parties hereto now also desire to amend said Agreement to conform Compensation to
the expanded Scope of Services.
E. In addition, the Parties hereto now desire to extend the Term of said Agreement for an
additional period of one and one-half (1 '/) years, effective January 1, 2021 through June
30, 2022.
WHEREFORE, in consideration of the mutual and respective covenants and promises
hereinafter contained and made, and subject to all of the terms and conditions of said
Agreement as hereby amended, the Parties hereto do hereby agree as follows:
1. Section 1. — Scope of Services is amended to read as follows:
a. CONSULTANT, or CONSULTANT'S subcontractor(s), will provide CITY with the
consulting services described in EXHIBIT A and C which are attached hereto and
incorporated by reference. CONSULTANT, or CONSULTANT'S subcontractor(s), shall
provide said services at the time, place, and in the manner specified in EXHIBITS A and
C.
b. CONSULTANT, or CONSULTANT'S subcontractor(s), shall furnish at its own expense
all labor, materials, equipment and other items necessary to carry out the terms of this
Agreement.
55B-23
2. Section 2. — Compensation is amended to read as follows:
Upon execution of this Second Amendment, CITY will pay CONSULTANT as outlined in
EXHIBITS B and D, incorporated and included herein. In addition, a contract
contingency amount shall continue be available over the two and one-half (2 'Y:) year
Term of the First Amendment to this Agreement to cover payment of additional
consultant services as set forth therein under Section 1. — Scope of Services of said
First Amendment to Agreement.
Contingency monies will be available as follows: a contingency of $60,000 shall be
available for the first year of the First Amendment to Agreement's two and one half (2 Ys)
year term (FY 2018-19) with a further contingency of $25,000 available for the second
year (FY 2019-20), and a final contingency of $15,000 available for the final six months
of such term (July 1, 2020 to December 31, 2020).
b. Fees paid for recovered sales tax and/or other associated recovered revenues shall not
exceed fifteen percent (15%) of the amount recovered. Such fees are not chargeable
against contingency monies but are revenues directly payable from recovered sales tax.
Payments made to CONSULTANT for recovered revenues will be recognized when the
fees related to CONSULTANT'S auditing and reporting activities are incurred.
c. CITY will pay CONSULTANT as outlined in any Change Orders) mutually agreed to by
and between the Parties pursuant to Section 3, subsection 3-22., of said First
Amendment to Agreement. Payments related to Change Orders affecting fees paid for
recovered sales & use taxes and transactions & use taxes and/or other associated
revenues shall be directly payable from recovered sales & use tax and transactions &
use tax or other associated recovered revenues. Stated fees for Sales & Use and
Transactions & Use Tax - Analysis & Reporting Service (STARS) which includes the
Geographic Revenue Information Application system (GRIA) together with CPI
adjustments to said stated fees as set forth in Exhibit D shall be directly payable from
recovered sales & use tax and transactions & use tax monies.
d. Payment by CITY shall be made within forty-five (45) days following receipt of proper
invoice evidencing work performed, subject to City accounting procedures and proof of
insurance as set forth in section 3- 9. Payment need not be made for work which fails to
meet the standards of performance set forth in the Recitals which may reasonably be
expected by CITY.
3. Section 3. - General Provisions., subsection 3-1., Term of the Agreement is amended to
read as follows:
3-1. - Term of the Agreement: The renewal term for the provision of consultant services
under said Agreement shall be for a period beginning effective July 1, 2018 through
June 30, 2022, if neither party has terminated said Agreement in accordance with
section 3- 2.
4. The effective date for the application of amendments to said Agreement relating to "Scope
of Services", "Compensation", and "Term" shall be December 21, 2018.
55B-24
5. Where applicable, in accordance with state law, relevant references to the State Board of
Equalization (BOE) within said Agreement including all exhibits attached thereto and
,incorporated by reference shall now refer to the California Department of Tax and Fee
Administration (CDTFA).
6. Except as hereinabove modified, the terms and conditions of said Agreement remain
unchanged and in full effect.
N
lii
{Signatures on following page)
3
55B-25
IN WITNESS WHEREOF, the Parties hereto have executed 'this Second Amendment to
Agreement the date and year first above written.
ATTEST:
Maria D. Huizar
Clerk of the Council
APPROVED AS TO FORM:
CITY ATTORNEY
Sonia R. Carvalho
4�1 ` �--
Lisa E. Storck
Assistant City Attorney
RECOMMENDED FOR APPROVAL:
Kathryn Downs, Executive Director
Finance and Management Services Agency
55B-26
CITY OF SANTA ANA
Raul Godinez, II
City Manager
CONSULTANT
Doug Jensen
SVP Client Services
MuniServices, LLC
IWI3
EXHIBIT A
SCOPE OF WORK
Sales & Use Tax and Transactions & Use Tax - Audit Services (SUTA) Services
In performing the sales, transactions and use tax audit program MuniServices shall:
1. Identify and correct the sales & use tax and transactions and use tax reporting errors of businesses
that, based on the nexus of their activities, are not properly registered with the City.
2. Identify and correct the reporting of businesses that are improperly reporting taxes to state and county
pools (i.e. classifying sales tax and/or transactions tax as use tax) and thereby depriving the City of
sales tax and/or transactions tax revenue.
3. Detect, document and correct sales & use tax and transactions & use tax reporting errors/omissions
and thereby generate new, previously unrealized revenue for the City.
4. Ensure through comprehensive audit measures that the revenue information used for ongoing
economic analysis includes all sales & use tax and transactions & use tax generators.
5. Assist the City with strategies to preserve and even enhance sales & use tax and transactions & use
tax revenue generated by existing businesses within the City.
MuniServices' proposed sales & use tax and transactions & use tax allocation audit services for the City
includes five distinct types of audits:
o Taxable Nexus Field audits
o Permitization audits
o Deficiency assessment audits
o Accounts payable audits
o Quarterly Distribution Report audits
Taxable Nexus Field Audits
MuniServices' initial and periodic taxable nexus field audits include a physical canvassing and evaluation of
sales & use tax and transactions & use tax generating businesses located in the City. In the absence of this
undertaking, significant misallocations will remain undetected. MuniServices' field audits focus on those
businesses located in the City from which the City has not been receiving sales & use tax and transactions &
use tax revenue.
Permitization Audits
Wholesalers, contractors, processors, manufacturers and other non -retail businesses will frequently not have a
sales tax permit properly registered to the City in which they are located because their business operations do
not include a point-of-sale qualifying activity. However, these companies will often generate local sales & use
tax and transactions & use tax from the State Board of Equalization (BOE) audit deficiency assessments,
occasional sales (i.e., mergers and acquisitions), and self -accrual of use tax on purchases. MuniServices' field
audits facilitate the identification and correction of improperly registered permits for companies having point-of-
sale operations in the City.
Deficiency Assessment Audits
When the California BOE audits taxpayers for sales & use tax and transactions & use tax compliance, it is not
uncommon for the taxpayer to receive a substantial deficiency assessment due to underpayments and/or
under -collections. In many cases, the local allocation portion of the deficiency assessment is distributed in
error to the State pool, county pools, or other Jurisdictions. Accordingly, MuniServices has developed
proprietary criteria and techniques to detect and correct BOE deficiency assessment misallocations and thus
expand the benefits produced by MuniServices' allocation audit service.
55B-27
Accounts Payable Audits
When California taxpayers purchase tangible personal property for which title passes out-of-state, the
transactions are subject to use tax (rather than sales tax or transaction tax) which is collected by the vendor
who in turn remits it to the BOE, with the local allocation typically distributed statewide or countywide through
the pools.
Under certain conditions, the seller may allocate the local tax by situs or the City may elect to self -accrue the
use tax and remit it directly to the BOE, in which case the local portion will come back to the City in the same
manner as sales tax.
MuniServices' accounts payable audit will include a review of the City's purchases to identify opportunities for
the City to capture the local allocation on purchases subject to use tax and the local district tax where
applicable. In this regard, MuniServices will prepare the documentation to facilitate the election, including
assistance in preparing and filing the tax returns.
Quarterly Distribution Report Audits
Every three months, the City and MuniServices receive a Quarterly Distribution Report (QDR) from the BOE
with the local allocation amount reflected by permit number.
MuniServices' QDR audits detect and correct taxpayer -reporting errors and thereby generate new, previously
unrealized sales & use tax and transactions & use tax revenue for the City. MuniServices' QDR audits focus
on those accounts where MuniServices observes a substantial decline in the sales & use and transactions &
use tax revenue allocation for a particular business entity in a given quarter. In most cases, accounts showing
zero balances have either relocated or simply reported late, in which case the payments will not be reflected
until the next quarter's QDR. Therefore, six months must lapse before the QDRs indicate whether a zero
balance account can be attributed to a late payment or a misallocation.
Cities and counties may only recover misallocated Bradley -Burns sales tax or transactions tax revenue for
three quarters prior to the BOE being notified of the reporting error and misallocated District tax revenues for
between three quarters and three years. Therefore QDR audits must be conducted in a timely manner in order
to preserve the opportunity for the City to recover misallocated revenue. MuniServices shall conduct the QDR
audit each and every quarter to minimize the potential of lost revenue to the City.
Confidentiality Provisions
MuniServices is authorized by this Agreement to examine sales & use tax and transactions and use tax
records of the BOE provided to City pursuant to contract under the Bradley -Burns Uniform Sales and Use Tax
Law and California Revenue & Taxation Code applicable to transactions and use taxes. With reference to the
City's adoption of a transactions and use tax the Parties intend for the work under this Agreement to include
that tax (or taxes).
MuniServices is required to disclose information contained in, or derived from, those sales & use and
transactions & use tax records only to an officer or employee of the City who is authorized by resolution to
examine the information.
MuniServices is prohibited from performing consulting services for a retailer during the term of this Agreement.
MuniServices is prohibited from retaining the information contained in, or derived from, those sales & use and
transaction and use tax records, after this Agreement has expired.
This Agreement, and MuniServices' and City's obligations with respect to confidentiality of taxpayer data
pursuant to the Bradley Burns Revenue and Taxation Code, shall continue until final payment for all services
rendered hereunder.
55B-28
Deliverables
SUTA Detection and Documentation
MuniServices shall represent the City for purposes of examining BOE records pertaining to sales & use tax and
transaction & use tax to identify errors and omissions. MuniServices' procedures for detecting and
documenting misallocations are as follows:
1. Review applicable provisions of the City's municipal code and ordinance adopted by the City to
determine applicability.
2. Procure a computer tape of sales & use and transactions & use tax permit records from the BOE.
3. Analyze sales tax and transactions tax distribution reports provided by the BOE for five or more of the
most recent consecutive quarters.
4. Clean-up, standardize and computerize data from City's quarterly sales tax/transactions tax distribution
reports provided by BOE for previous quarters (as applicable), current quarter (as applicable) and each
future quarter service is provided.
5. Prepare an aggregated list of business entities on electronic media; this list is derived from multiple
private and public sources (hard copy and electronic), including specialized business listings and
directories, the City's sales & use tax and transactions & use payment files, and an electronic copy of
the City's Business License Tax registry, updated no less than twice per year.
6. Clean, standardize and integrate, in address -order, each entity's business name, address and payment
file information, to eliminate redundancies, using MuniServices' proprietary software.
7. Physically canvas commercial/industrial area within the City's borders.
8. Develop a target list of potential point of sale/use reporting errors/omissions based on:
a. An electronic comparison of MuniServices' comprehensive inventory against the BOE's quarterly
distributions for the City, and
b. An analysis of each potentially misallocated account based on proprietary guidelines established
by MuniServices.
9. Meet with designated City official(s) to review service objectives and scope, MuniServices workplan
schedule, public relations and logistical matters.
10. Contact personnel in sales, operations and/or tax accounting at each target business to determine
whether a point-of-sale/use reporting error exists. (Note: this is accomplished with the highest regard to
discretion and professional conduct. MuniServices' allocation audits are predicated on a non-
controversial, constructive public relations approach which emphasizes the importance of each
business to the City and the mutual benefits of correcting reporting errors.)
11. Provide to the City and BOE reports addressing each taxpayer reporting error individually, including the
business name, address, telephone number, California sales tax permit number, individuals contacted,
date(s) of contact, nature of business, reason(s) for error, recommended corrective procedure and, if
available, estimated sales & use tax and transactions and use tax revenue which should be forthcoming
to the City.
12. MuniServices may also provide suggested language for letters to be sent to the taxpayers and/or BOE
from the City (or from MuniServices on behalf of the City) urging cooperation in promptly correcting the
distribution error.
13. Respond to negative findings by BOE with timely reconfirmation documentation in order to preserve the
City's original dates of knowledge.
14. Receive and process registration control record information monthly.
15. Receive and process sales tax distribution reports quarterly.
16. Coordinate with the taxpayer and BOE to make the necessary corrections and collect eligible back
quarter's amounts.
17. Monitor and analyze the quarterly distribution reports with an audit focus on the following:
a. Accounts with previously reported point-of-sale/use distribution errors to ensure that the
corrections are made for current quarters and all eligible back quarters.
b. Major accounts comprising 90% or more of the City's total sales tax and transactions tax
revenue to identify any irregularities or unusual deviations from the normal pattern (e.g. negative
55B-29
fund transfers, significant decreases, unusual increases, etc.) and ensure that the City is not
receiving less revenue than it is entitled to.
c. Those accounts receiving deficiency assessments to ensure that the City receives its local
allocation
18. Identify opportunities for the City to recover local allocation on purchase transactions subject to use tax.
Prepare the necessary documentation to facilitate recovery, including assistance in preparing and filing
the returns.
SUTA Detection Timing Considerations
For each misallocated account detected, MuniServices will coordinate with the business and BOE to make the
necessary correction's plus retroactive adjustments for eligible amounts of sales & use tax and transactions &
use tax improperly distributed in prior quarters. MuniServices coordinates and communicates between typically
four parties; sales/operations personnel at the taxpayer's local operation, tax personnel at the company's
corporate headquarters, and BOE personnel and the in-state/out-of-state district offices. Correction of the
account Is considered to have been made once the payments on identified taxpayer accounts are being
properly allocated by the taxpayer to the City in the period in which the payment was made.
As needed, MuniServices will 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.
55B-30
EXHIBIT B
COMPENSATION
Sales & Use and Transactions and Use Tax - Audit Services (SUTA) Services
What the City will pay MuniServices
During the term of this Agreement and any optional extension thereof or any amendment thereto MuniServices'
compensation for the Sales & Use Tax and Transactions & Use Tax Audit Service shall be a 15% contingency
fee. This fee applies to revenue received for six quarters beginning with the quarter in which the Date of
Correction falls and all eligible prior quarters back to and including the three quarters prior to the Date of
Knowledge!quarter for Bradley -Burns sales tax revenues and all eligible prior quarters back to and including all
corrected quarters prior to the Date of Knowledge quarter for district tax revenues. As used herein, the Date of
Knowledge is the quarter during which MuniServices notifies the BOE of the existence of a misallocation. As
used herein, the Date of Correction refers to the quarter in which the taxpayer has correctly reported the local
tax and the BOE distributes the local tax properly to City based on the taxpayer's reporting. For QDR
Misallocations detected and corrected, MuniServices' compensation shall only include the quarters for which
the misallocation actually occurred.
For clarification and to encourage communication and collaboration between MuniServices and the City,
MuniServices shall be entitled to full payment of all compensation as provided herein even if any one or more
of City, its personnel, agents, or representatives, or any third party or parties provides) information to
MuniServices that assists or is used by MuniServices in the identification, detection, and correction of point-of-
sale distribution errors or the reporting and/or misallocation of revenue.
In the event that the City identifies, documents, and notifies the BOE of a point-of-sale distribution error,
reporting error or misallocation as those terms are used herein, the City will notify MuniServices of the City's
discovery no later than ten days after the Date of Knowledge as defined in Title 18 of the California Code of
Regulations, Regulation 1807 ("Date of Knowledge"). The City also agrees to notify MuniServices promptly if it
is working on a local tax misallocation issue independently of MuniServices and to maintain and promptly make
available to MuniServices on request contemporaneous documentation of such work and its timing so we do
not duplicate work.
Invoicing/Billing
MuniServices will invoice City quarterly based on past and/or prospective compliance secured on behalf of
City. Invoices are due and payable within forty-five (45) days upon receipt.
All expenses incurred by MuniServices in providing the Sales Tax service are the sole and exclusive
responsibility of MuniServices, except those expenses that receive prior written approval by City.
Additional Consulting Services
City may request via the Change Order process that MuniServices, and/or MuniServices' subcontractor(s),
provide additional optional consulting services within the scope of the Agreement any time during the term of
the Agreement including any renewal term. If MuniServices and City agree on the scope of the additional
consulting services requested, then MuniServices, or MuniServices' subcontractor(s), shall provide the
additional consulting services on a Time and Materials basis.
Standard Hourly Rates: Depending on the personnel assigned to perform the work, MuniServices' standard
hourly rates range from $75 per hour to $200 per hour.
The following are sample hourly rates based on the job classification:
• Principal: $200 per hour
• Client Services: $175 per hour
55B-31
Information Technology (IT) support: $150 per hour
Operational Support:
o Director or Manager: $175 per hour
o Senior Analyst: $125 per hour
o Analyst: $100 per hour
o Administrative: $75 per hour
These additional consulting services will be invoiced at least monthly based on actual time and expenses
incurred. All reimbursable expenses shall receive prior approval from the City and shall be reimbursed at cost
to MuniServices.
Completion of Services
Notwithstanding any other provision of this Agreement, because Consultant's services performed hereunder
result in corrections of misallocations and other revenue after cessation of services by Consultant for City, City
agrees that with regards to misallocations identified to the BOE whose Date of Knowledge occurred during
Consultant's performance of services for City or for other revenue resulting from Consultant's actions taken
during the term of this Agreement, that City's obligation to pay Consultant in accordance with the
compensation language of this Agreement shall survive expiration or termination of this Agreement for any
reason. Additionally, notwithstanding any other provision of this Agreement, if this Agreement is terminated or
expires, Consultant shall continue to pursue corrections of accounts identified during the term of this
Agreement that have not been corrected by the BOE as of the effective date of termination or expiration. The
period after termination during which Consultant is pursuing correction of accounts identified before termination
is referred to as the "completion period." City shall compensate Consultant in accordance with the
compensation language of this Agreement for corrected misallocations that result from Consultant's efforts
during the completion period. City will also take all necessary steps to allow Consultant to continue to receive
the required Information from the BOE during this completion period.
55B-32
EXHIBIT C
SCOPE OF WORK
SALES & USE TAX AND TRANSACTIONS & USE TAX - ANALYSIS & REPORTING SERVICE (STARS)
1. 1 Stars Reports. Within thirty (30) days of receipt of monthly and/or quarterly sales taxitransactions tax
data from the applicable governmental authorities, Consultant shall provide City with electronic access
to updated STARS Reports.
1.1 General Reporting Contents. The STARS Reports are dependent on availability of data received
I from applicable governmental authorities. The online STARS Reports allow City's staff to interact
with sales tax/transaction tax data from the permit level to citywide level; on a cash or economic
basis; by quarter or year; and by classification grouping include economic category and segment.
The STARS Reports provide City with access to sales & use tax and transactions & use data online
and via mobile devices. In addition, reports can be exported to Microsoft Excel or Adobe PDF
formats. The reports available may include:
• A Cash Dashboard.
• An Economic Dashboard.
• An Economic Change Report.
• A business look -up report.
• A Taxpayer Ranking Report.
• Geo -Areas.
1.2 Sales Tax/Transactions Tax Forecast. Consultant also provides a Sales Tax Forecast that
identifies historical sales tax and projected sales tax for pessimistic, most likely and optimistic
scenarios including Transactions and Use Taxes (as applicable).
1.3 GRIA Application. Consultant will include the Geographic Revenue Information Application
(GRIA), as part of the STARS and forecasting service and at the same Cost. The GRIA will provide
and separately present combined geographically based (GEO/GIS) revenue information to include:
• Sales and Use Tax
• Transaction and Use Tax (as applicable)
• Secured and Unsecured Property Tax
• Hotel Visitors' Tax
• Documentary Stamp Tax (Property Transfer Tax)
• Business License Tax (including Business Improvement District Assessments/Charges)
• Medical Marijuana Tax
• Adult -Use Cannabis Retail Operating Agreement Fees; and
• Commercial Cannabis Operating Agreement Fees (to include, but not limited to: Cultivation,
Manufacture, Distribution, and Testing)
Consultant and City agree that the GRIA data will not be fully available until January 1, 2020 and is
subject to MuniServices receiving certain City data matching:
a. City Hotel Visitors' Tax data to City Business License Tax accounts; and
b. City Business License Tax account data to State Board of Equalization Sales and Use Tax
Permits.
c. City Adult -Use Cannabis Retail Business Operating Agreement account data.
d. City Commercial Cannabis Operating Agreement account data (to include, but not limited to:
Cultivation, Manufacture, Distribution, and Testing).
I
55B-33
To be included in the GRIA, City data must be received in a mutually agreeable format at least thirty
(30) calendar days prior. MuniServices and City shall update (GEO/GIS) revenue information data
on a quarterly basis (or more often as may be mutually agreeable).
1.4 Accuracy. The STARS Reports rely on information provided by applicable governmental authorities
and third -parties. Consultant will endeavor to verify, remove redundancies, or otherwise clean or
standardize the information provided by governmental authorities or any third parties.
1.5 Timing. Consultant's{ obligation to provide the STARS Reports is conditioned,'on City's delivery of
required, signed documentation to Consultant to access the proper data from the applicable
govemmental authorities.
1.6 Paper reports. Some of the reports may be delivered In paper-based or excel formats while our
online report platform continues to be expanded. For example, 'Geo Area reports are currently still
being provided in paper format. As we expand the online portal, additional reports will become
available on your home page.
City Assistance
1. Confidentiality. The information provided to the City in the STARS Reports is confidential. It is not open to
public inspection. A City may use the information only for lawfully permitted purposes. City shall not
distribute the STARS Reports to any person unless that person is legally entitled to access the information
in the STARS Reports, or except as may otherwise be required bylaw or court order. .
Consultant is authorized by this Agreement to examine sales & use tax and transactions & use tax records
of the State Board of Equalization (BOE). Consultant is required to disclose information contained in, or
derived from, those sales & use tax and transactions & use tax records only to an officer or employee of
the City who is authorized by resolution to examine the information. Consultant is prohibited from
performing consulting services for a retailer during the term of this Agreement. Consultant is prohibited
from retaining the information contained in, or derived from, those transaction, sales, and use tax records,
after this Agreement has expired.
2. Data. In order for Consultant to provide the STARS Reports, the City will need to deliver to Consultant the
signed documents/authorizations required to access the proper data from the applicable governmental
authorities as may be required by law.
3. Additional Terms.
a. License. Consultant grants to City a license for each of City's designated users to access the New
STARS reports service for so long as this Agreement is in effect. Each of City's designated users must
be submitted in writing to Consultant. Consultant will provide the user with the necessary log -in
information. Any passwords issued for this service may only be used by the person to whom the
password is issued; sharing of passwords is STRICTLY PROHIBITED. City has the obligation to
protect those passwords.
b. Limitations of Liability. Consultant is not responsible for any breach of data resulting from City's
failure to protect passwords or systems used to access the Service. Consultant does not warrant that
the service is error free. CONSULTANT DISCLAIMS ALL OTHER WARRANTIES WITH RESPECT TO
THE SOFTWARE, EITHER EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO IMPLIED
WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND NON -
INFRINGEMENT OF THIRD PARTY RIGHTS. Some jurisdictions do not allow the exclusion of implied
warranties or limitations of how long an implied warranty may last, or the exclusion of limitation of
incidental damages, so the above limitations or exclusions may not apply to City. In no event shall
55B-34
Consultant or its licensors, suppliers, or licensees be liable to City for any consequential, special,
incidental, or indirect damages of any kind arising out of the performance or use of the service, even if
Consultant has been advised of the possibility of such damages.
c. Non -disclosure. City's use of the New STARS services is conditioned on City's agreement not to
make the service or any of output of the system available to Consultant's competitors. Nothing in this
provision prohibits the City from exporting data and formatting it for its own use or from making
documents marked as 'public' known to the public.
55B-35
EXHIBIT D
COMPENSATION
Sales & Use Tax and Transactions & Use - Analysis & Reporting Service (STARS)
I i
Base Package Annual fee. During the term of this Agreement and any optional extension thereof or any
amendment thereto City shall pay Consultant an annual fee of $10,000 ("annual fee") payable in four equal
quarterly payments as shown below, proratable on a quarterly basis for any contractual period less than
twelve months. This includes a mutually agreeable number of Geo Areas. Consultant will invoice the City
on'a quarterly basis. Invoices are due and payable within fohy-five (45) days of receipt. If this Agreement
is terminated ahead of its agreed to term for any reason, the City remains obligated to pay Consultant the
quarterly payments of the annual fee for the quarters before the effective date of termination.
2. Adjustments. The Annual Fee shall be adjusted at the beginning of each calendar year by the percentage
change in the Consumer Price Index — Los Angeles -Long Beach -Anaheim, CA (formerly Los Angeles -
Riverside -Orange County) (CPI -U) as reported by the Bureau of Labor Statistics. The initial Consumer
Price Index used for the first CPI adjustment will be the Consumer Price Index — Los Angeles -Long Beach -
Anaheim, CA (formerly Los Angeles -Riverside -Orange County) (CPI -U) for the month in which the
agreement is fully signed with the first adjustment to occur at the beginning of the Calendar year following
the first full calendar year of service. For instance, if the agreement is signed in April, year 1, the
adjustment would not occur until January of year 3. The adjustments thereafter will be based on the CPI -U
from December of the prior calendar year. Each Annual Fee adjustment shall not be less than two percent
(2%) or greater than four percent (4%).
3. Additional Paper Copies. Consultant shall provide City additional paper, bound copies of the STARS
Reports upon City's request at the rate of $200 annually per additional copy, payable by City in quarterly
installments of $50 per additional copy.
4. Additional Consulting. City may request via the Change Order process that MuniServices, and/or
MuniServices' subcontractor(s), provide additional optional consulting services within the scope of the
Agreement any time during the term of the Agreement including any renewal term: If MuniServices and
City agree on the scope of the additional consulting services requested, then MuniServices, or
MuniServices' subcontractor(s), shall provide the additional consulting services on a Time and Materials
basis.
Standard Hourly Rates: Depending on the personnel assigned to perform the work, Consultant's standard
hourly rates range from $75 per hour to $200 per hour.
The following are sample hourly rates based on the job classification:
• Principal: $200 per hour
• Client Services: $175 per hour
• Information Technology (IT) support: $150 per hour
• Operational Support:
o Director or Manager: $175 per hour
o Senior Analyst: $125 per hour
o Analyst: $100 per hour
o Administrative: $75 per hour
These additional consulting services will be invoiced at least monthly based on actual time and expenses
incurred.
55B-36