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MUNISERVICES, LLC - #2016-290
INSURANCE ON FILE WORK MAY PROCEED A-2016-290 UNTIL INSURANCE EXPIRES .`a !1.4,12 -- --Consultant Services Agreement 'CCR—COUNCIL DATE: This Consultant Services Agreement (the "Agreement') is made as of the 4th day of October, 2016 by and between MuniServices, LLC, a Delaware limited liability company ("CONSULTANT') and the City of Santa Ana, a charter city and municipal corporation of the State of California ("CITY'). In consideration of the mutual promises herein contained and other good and valuable consideration, the adequacy and receipt of which is hereby acknowledged, the parties agree as follows: RECITALS A. The CITY desires to retain a consultant having special skill and knowledge in the field of professional services for Sales and Use Tax Recovery, Reporting, Analysis, and Legislative/State Agency Liaison and Implementation Monitoring Services as specified herein. B. In undertaking the performance of this Agreement, CONSULTANT represents that it possesses the necessary knowledge, qualifications, skills and personnel to provide such services. CONSULTANT warrants that any services performed by CONSULTANT under this Agreement will be performed in compliance with such standards as may reasonably be expected from a professional consulting firm in the field. NOW THEREFORE, in consideration of the mutual and respective promises, and subject to the terms and conditions hereinafter set forth, the parties agree as follows: CITY hereby retains CONSULTANT, and CONSULTANT hereby agrees to provide such services as are set forth hereinbelow, in accordance with the terms and conditions of this Agreement, and represents and warrants to CITY that CONSULTANT accepts such assignment to perform those services, subject to those terms and conditions. 1. Scope of Services a. CONSULTANT will provide CITY with the services described in EXHIBITS A and C which are attached hereto and incorporated by reference. CONSULTANT shall provide said services at the time, place, and in the manner specified in EXHIBITS A and C. b. CONSULTANT shall furnish at its own expense all labor, materials, equipment and other items necessary to carry out the terms of this Agreement. 2. Compensation Upon execution of this Agreement, CITY will pay CONSULTANT as outlined in EXHIBITS B and D, incorporated and included herein. 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. General Provisions 3-1. Term of the Agreement: The initial term for the provision of services for this Agreement shall be for a period of one (1) year beginning January 1, 2017, with one six-month option exercisable in the sole discretion of the CITY, in a writing executed by the City Manager and the City Attorney, if neither party has terminated said Agreement in accordance with section 3-2. 3-2. Termination. Either party shall have the right to terminate this Agreement in the event of a material breach by the other party. Any such termination may be made only by providing sixty (60) days written notice to the other party, specifically identifying the breach or breaches on which termination is based. Following receipt of such notice, the party in breach shall have thirty (30) days to cure such breach or breaches. In the event that such cure is not made, this Agreement shall terminate in accordance with the initial sixty (60) days' notice. Notwithstanding the foregoing, either party may terminate the Agreement at any time and for any reason by providing thirty -days (30) written notice to the other party pursuant to Section 2 of this Agreement; provided however, that if CONSULTANT has not breached the Agreement and has commenced services identified in EXHIBIT A prior to the date of termination, CONSULTANT shall be entitled to payment as described in EXHIBIT B; provided, however, that payment need not be made for work which fails to meet the standard of performance specified in the Recitals of this Agreement. 3-3. Effect of Termination: Notwithstanding non -renewal or termination of this Agreement, CITY shall be obligated to pay CONSULTANT for services performed through the effective date of termination for which CONSULTANT has not been previously paid, provided CONSULTANT has not breached the Agreement. In addition, because the services performed by CONSULTANT prior to termination or non -renewal of this Agreement may result in the CITY's receipt of revenue after termination which are subject to CONSULTANT' fee, the CITY shall remain obligated after termination or non -renewal to provide to CONSULTANT such information as is necessary for CONSULTANT to calculate compensation due as a result of the receipt of revenue by the CITY. 3-4. Independent Contractor: It is understood that CONSULTANT and its subcontractors, if any, in the performance of the work and services agreed to be performed, shall act as and be an independent contractor and shall not act as an agent or employee of the CITY. CITY understands that CONSULTANT may perform similar services for others during the term of this Agreement and agrees that CONSULTANT representation of other government sector clients is not a conflict of interest. CONSULTANT shall obtain no rights to retirement benefits or other benefits which accrue to CITY's employees, and CONSULTANT hereby expressly waives any claim it may have to any such rights. 3-5. Subcontractors: CONSULTANT shall have the right to hire subcontractors to provide the services described herein. CONSULTANT, in rendering performance under this Agreement shall be deemed an independent contractor and nothing contained herein shall constitute this arrangement to be employment, a joint venture, or a partnership. CONSULTANT shall be solely responsible for and shall hold CITY harmless from any and all claims for any employee related fees and costs including without limitation employee insurance, employment taxes, workman's compensation, withholding taxes or income taxes. 3-6. Notice: Any notice required to be given under this Agreement shall be in writing and either served personally, sent prepaid first class mail, or by express mail courier (i.e. FedEx, UPS, etc.). Any such notice shall be addressed to the other party at the address set forth below. All notices, including notices of address changes, provided under this Agreement are deemed received on the third day after mailing if sent by regular mail, or the next day if sent overnight delivery. IF TO CITY: City of Santa Ana Finance & Management Services Attn: Francisco Gutierrez Director of Finance 20 Civic Center Plaza (M-17) Santa Ana, CA 92701 Phone: (714) 647-6960 Facsimile: (714) (714) 647-5414 2 IF TO CONSULTANT: MuniServices, LLC Attn: Contract Department 7625 N. Palm Ave., Ste. 108 Fresno, CA 93711 Phone: (559) 271-6852 Facsimile: (559) 312-2852 Email: legaWDmuniservices.com Representative or designees: CONSULTANT Primary Representative/Project Manager shall be: Julia Erdkamp, Client Services Manager 7625 N. Palm Ave., Ste. 108, Fresno, CA 93711 Phone: (559) 246-2901 / Email: Julia.ErdkampaMuniServices.com For the convenience of the CITY, a short list of helpful contacts is attached and incorporated herein as EXHIBIT E. Representative or designees: City of Santa Ana's Primary Representative/Project Manager shall be: Willard Holt, Treasury and Customer Services Manager 20 Civic Center Plaza, Room 1105, Santa Ana, CA 92701 Phone: (714) 647-5456 / Email: wholt@santa-ana.orr 3-7. Indemnity: CONSULTANT shall indemnify, defend, and hold harmless the CITY, its officers, agents, and employees, from and against any and all claims, liabilities, and losses whatsoever (including damages to property and injuries to or death of persons, court costs, and reasonable attorneys' fees) to extent occurring or resulting from CONSULTANT'S negligent or unlawful performance of its obligations under or breach of the terms of this Agreement, unless such claims, liabilities, or losses arise out of, or are caused at least in part by the sole negligence or willful misconduct of the CITY. "CONSULTANT'S performance" includes CONSULTANT'S action or inaction and the action or inaction of CONSULTANT'S officers, employees, agents and subcontractors. 3-8. Limitation of Liability: In no event shall CONSULTANT, its employees, contractors, directors, affiliates and/or agents be liable for any special, incidental, or consequential damages, such as, but not limited to, delay, lost data, disruption, and loss of anticipated profits or revenue arising from or related to the services, whether liability is asserted in contract or tort, and whether or not CONSULTANT has been advised of the possibility of any such loss or damage. In addition, CONSULTANT'S total liability hereunder, including reasonable attorneys' fees and costs, shall in no event exceed an amount equal to the fees described in EXHIBIT B, except as otherwise provided for in Section 7 of this Agreement. The foregoing sets forth the CITY'S exclusive remedy for claims arising from or out of this Agreement. The provisions of this section allocate the risks between CONSULTANT and the CITY and CONSULTANT'S pricing reflects the allocation of risk and limitation of liability specified herein. 3-9. Insurance: CONSULTANT shall keep in full force and effect insurance coverage during the term of this Agreement, including without limitation statutory workers' compensation insurance; employer's liability and commercial general liability insurance (CGL); comprehensive automobile liability insurance; professional liability and fidelity insurance. The insurance certificate shall name the City, its agents, officers, servants and employees as additional insureds under the CGL policy with respect to the operations and work performed by the named insured as required by written contract. The General Liability policy is Primary & Non -Contributory. Waiver of Subrogation applies under the General Liability and Workers' Compensation policies. The CGL insurance minimum coverage shall be at least $1,000,000 per incident, claim or occurrence and $2,000,000 aggregate. The Automobile Liability insurance minimum coverage shall be at least $1,000,000 covering all owned, non -owned, and hired vehicles. The certificate shall provide that there will be no cancellation, termination, or non -renewal of the insurance coverage without a minimum 30 -day written notice to the CITY, except in the case of cancellation for non-payment of premium which shall be at least 10 -days written notice. CONSULTANT shall supply CITY with a fully executed additional insured endorsement in substantially the form attached hereto as Exhibit F upon execution of this Agreement and shall be approved in form by the CITY Attorney. 3-10. Equal Opportunity to Draft: The parties have participated and had an equal opportunity to participate in the drafting of this Agreement. No ambiguity shall be construed against any party upon a claim that that party drafted the ambiguous language. 3-11. Assignment: This Agreement shall be binding upon and inure to the benefit of the parties, their successors, representatives and assigns. CONSULTANT shall not assign this Agreement, or delegate its duties or obligations under this Agreement, without the prior written consent of CITY, which consent shall not be unreasonably withheld, delayed or conditioned. Notwithstanding the foregoing, CONSULTANT may assign this Agreement, in whole or in part, without the consent of CITY to any corporation or entity into which or with which CONSULTANT has merged or consolidated; any parent, subsidiary, successor or affiliated corporation of CONSULTANT; or any corporation or entity which acquires all or substantially all of the assets of CONSULTANT. Subject to the foregoing, this Agreement shall be binding upon and inure to the benefit of the parties and their successors or assigns. 3-12. Ownership of Documents: Except for CONSULTANT preexisting proprietary information and processes, any and all documents, including draft documents where completed documents are unavailable, or materials prepared or caused to be prepared by CONSULTANT pursuant to this agreement shall be the property of the CITY at the moment of their completed preparation. 3-13. Intellectual Property Rights: The entire right, title and interest in and to CONSULTANT'S database and all copyrights, patents, trade secrets, trademarks, trade names, and all other intellectual property rights associated with any and all ideas, concepts, techniques, inventions, processes, or works of authorship including, but not limited to, all materials in written or other tangible form developed or created in the course of this Agreement (collectively, the "Work Product") shall vest exclusively in CONSULTANT or its subcontractors. The foregoing notwithstanding, in no event shall any CITY -owned data provided to CONSULTANT be deemed included within the Work Product. 3-14. Discrimination: CONSULTANT shall not discriminate because of race, color, creed, religion, sex, marital status, sexual orientation, age, national origin, ancestry, or disability, as defined and prohibited by applicable law, in the recruitment, selection, training, utilization, promotion, termination or other employment related activities. CONSULTANT affirms that it is an equal opportunity employer and shall comply with all applicable federal, state and local laws and regulations. 3-15. Jurisdiction — Venue: This Agreement has been executed and delivered in the State of California and the validity, interpretation, performance, and enforcement of any of the clauses of this Agreement shall be determined and governed by the laws of the State of California. Both parties further agree that Orange County, California, shall be the venue for any action or proceeding that may be brought or arise out of, in connection with or by reason of this Agreement. 3-16. Professional Licenses: CONSULTANT shall, throughout the term of this Agreement, maintain all necessary licenses, permits, approvals, waivers, and exemptions necessary for the provision of the services hereunder and required by the laws and regulations of the United States, the State of California, the CITY of Santa Ana and all other governmental agencies. CONSULTANT shall notify the CITY immediately and in writing of its inability to obtain or maintain such permits, licenses, approvals, waivers, and exemptions. Said inability shall be cause for termination of this Agreement. 3-17. Public Release and Statements: Neither party or its representatives or agents shall disseminate any oral or written advertisement, endorsement or other marketing material relating to each other's activities under this Agreement without the prior written approval of the other party. Neither party shall make any public release or statement concerning the subject matter of this Agreement without the express written consent and approval of the other party. No party or its agent will use the name, mark or logo of the other party in any advertisement or printed solicitation without first having prior written approval of the other party. The parties shall take reasonable efforts to ensure that its subcontractors shall not disseminate any oral or written advertisement, endorsement or other marketing materials 4 referencing or relating to the other party without that party's prior written approval. In addition, the parties agree that their contracts with all subcontractors will include appropriate provisions to ensure compliance with the restrictions of this Section. 3-18. CONFIDENTIALITY. If Consultant receives from the City information which due to the nature of such information is reasonably understood to be confidential and/or proprietary, Consultant agrees that it shall not use or disclose such information except in the performance of this Agreement, and further agrees to exercise the same degree of care it uses to protect its own information of like importance, but in no event less than reasonable care. "Confidential Information" shall include all nonpublic information. Confidential information includes not only written information, but also information transferred orally, visually, electronically, or by other means. Confidential information disclosed to either party by any subsidiary and/or agent of the other party is covered by this Agreement. The foregoing obligations of non-use and nondisclosure shall not apply to any information that (a) has been disclosed in publicly available sources; (b) is, through no fault of the Consultant disclosed in a publicly available source; (c) is in rightful possession of the Consultant without an obligation of confidentiality; (d) is required to be disclosed by operation of law; or (e) is independently developed by the Consultant without reference to information disclosed by the City. 3-19. Force Maieure: CONSULTANT shall not be in default of its obligations hereunder to the extent that its performance is delayed or prevented by causes beyond its control, including but not limited to acts of God, government, weather, fire, power or telecommunications failures, inability to obtain supplies, breakdown of equipment or interruption in vendor services or communications. 3-20. Litigation Fees. If litigation arises out of this Agreement for the performance thereof, then the court shall award costs and expenses, including reasonable attorney's fees, to the prevailing party. In awarding attorney's fees, the court shall not be bound by any court fee schedule but shall award the full amount of costs, expenses and attorney's fees paid or incurred in good faith. 3-21. Entire Agreement: This Agreement constitutes the entire agreement between the parties hereto and supersedes any prior understandings or written or oral agreements between the parties respecting the subject matter contained herein. Said Agreement shall not be amended, altered, or changed, except by a written amendment signed by both parties. 3-22. Change Order Contingency: From time -to -time, at CITY's option, CITY may request optional services of CONSULTANT at mutually agreed upon scope and fees. 3-23. Invalidity: If any one or more of the provisions contained in this Agreement shall for any reason be held to be invalid, illegal, or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other provision thereof, and this Agreement shall be construed as if such invalid, illegal, or unenforceable provision had never been contained herein. 3-24. Implementation: Implementation of services should begin as soon as possible from the effective date for the performance of services under the terms of this Agreement. 3-25. Counterpart Signature and Delivery: This Agreement may be signed in separate counterparts including facsimile copies. Each counterpart (including facsimile copies) is deemed an original and all counterparts are deemed on and the same instrument and legally binding on the parties. 3-26. Miscellaneous Provisions: a. CONSULTANT shall perform all services with the necessary knowledge and skills required to perform the tasks. CONSULTANT or personnel of CONSULTANT engaged in the performance of such services shall not represent themselves to be, nor shall they be deemed to be, employees of CITY for any purpose whatsoever. W1 b. CITY agrees that its employees will cooperate with and assist representatives of CONSULTANT in every reasonable way to enable CONSULTANT to secure all information and data required to perform the services herein provided for. CONSULTANT shall have no liability for defects in the services attributable to CONSULTANT's reliance upon or use of data, design criteria, drawings, specifications, or other information furnished by CITY or third parties retained by CITY. c. Each undersigned represents and warrants that its signature hereinbelow has the power, authority and right to bind their respective parties to each of the terms of this Agreement, and shall indemnify CITY fully, including reasonable costs and attorney's fees, for any injuries or damages to CITY in the event that such authority or power is not, in fact, held by the signatory or is withdrawn. d. CONSULTANT agrees any alterations, variations, modifications, or waivers of the provisions of the Agreement, shall be valid only when reduced to writing, executed and attached to the original Agreement and approved by the required persons. e. If any legal action is instituted to enforce any party's rights hereunder, each party shall bear its own costs and attorneys' fees, regardless of who is the prevailing party. f. All exhibits referenced herein and attached hereto shall be incorporated as if fully set forth in the body of this Agreement. g. In the event of any conflict between the provisions of this Agreement and those set forth in any Exhibit referenced and incorporated herein, the provisions of the Consultant Services Agreement shall prevail. (Signatures on following page) IN WITNESS WHEREOF, the parties nereto have executethis Agreement the rl':,ite and year hrst above written ATTEST: ivlARIA D HUIZAR Clerk of the Council APPROVED AS TO FORM. SONIA R. CARVALHO CITY Attorney BY' Lisa Storck Assistant City Attorney RECOMMENDED FOR APPROVAL: Francisco Gutierrez, Executive Director Finance & Management Services Agency CITY OF SANTA ANA DAVE—C Vh 01 City Manager CONSULTANT DougJ s n SVP Clie-- Services MuniServices, LLC Tax ID# 75-3078675 EXHIBIT A SCOPE OF WORE( Sales, Transactions And Use Tax Audit Services (SUTA) Services In performing the sales, transactions and use tax audit program MuniServices shall: 1. Identify and correct the sales/transactions/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 tax to state and county pools (i.e. classifying sales tax as use tax) and thereby depriving the City of sales tax revenue. 3. Detect, document and correct sales/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/transactions/use tax generators. 5. Assist the City with strategies to preserve and even enhance sales and use tax revenue generated by existing businesses within the City. MuniServices' proposed sales/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/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/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/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/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. 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) 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 1% 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/transactions/use tax revenue for the City. MuniServices' QDR audits focus on those accounts where MuniServices observes a substantial decline in the sales/ 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 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 transaction tax, sales tax, 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. If the City adopts a new transaction tax or taxes after the effective date of this Agreement 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, transaction, and 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, 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. Deliverables SUTA Detection and Documentation MuniServices shall represent the City for purposes of examining BOE records pertaining to sales and 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/transactions/use tax permit records from the BOE. 3. Analyze sales 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 distribution reports provided by BOE for previous quarters, current quarter 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 and use tax 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/transactions/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 revenue to identify any irregularities or unusual deviations from the normal pattern (e.g. negative fund transfers, significant decreases, unusual increases, etc.) and ensure that the City is not receiving less revenue than it is entitled to. 10 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 corrections plus retroactive adjustments for eligible amounts of sales/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. 11 EXHIBIT B COMPENSATION Sales, 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 and 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 CDR 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 provide(s) 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 City may request that MuniServices provide additional consulting services at any time during the term of the Agreement. If MuniServices and City agree on the scope of the additional consulting services requested, then MuniServices shall provide the additional consulting on a Time and Materials basis. 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 • Information Technology (IT) support: $150 per hour • Operational Support: o Director or Manager: $175 per hour o Senior Analyst: $125 per hour 12 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. 13 EXHIBIT C SCOPE OF WORK SALES/USE TAX ANALYSIS & REPORTING SERVICE (STARS) Stars Reports. Within thirty (30) days of receipt of monthly and/or quarterly sales 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 from applicable governmental authorities. The online STARS Reports allow City's staff to interact with sales 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 and use tax 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. • A business look -up report. • An Economic Dashboard. • A Taxpayer Ranking Report. • An Economic Change Report. • Geo -Areas. 1.2 Sales 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. 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 • Secured and Unsecured Property Tax • Hotel Visitors' Tax • Documentary Stamp Tax (Property Transfer Tax) • Business License Tax (including Business Improvement District Assessments/Charges); and • Medical Marijuana Tax Consultant and City agree that the GRIA data will not be available until April 1, 2017 and is subject to MuniServices receiving certain City data matching: a. City Hotel Visitors' Tax data to City Business License Tax aacounts; and b. City Business License Tax account data to State Board of Equalization Sales and Use Tax Permits. 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 governmental authorities. 14 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. 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 by law or court order. Consultant is authorized by this Agreement to examine transaction tax, sales tax, and use tax records of the State Board of Equalization (BOE), including, but not limited to, any transaction and use tax that may become effective and be collected for City. Consultant is required to disclose information contained in, or derived from, those transaction, sales, and 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 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. EXHIBIT D COMPENSATION Sales/Use Tax Analysis & Reporting Service (STARS) 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 forty-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 -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 -Riverside -Orange County 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-WU 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 that Consultant provide additional consulting services at any time during the term of the Agreement. If Consultant and City agree on the scope of the additional consulting services requested, then Consultant shall provide the additional consulting on a Time and Materials basis. Depending on the personnel assigned to perform the work, Consultant' 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. EXHIBIT E MuniServices Helpful Contacts Contact Project Role Phone Email Julia Erdkam , MPA Client Services Manager 559.246.2901 'ulia.erdkam muniservices.com Doug Jensen SVP Client Services 559.288.8943 dou .'ensen muniservices.com Janis Varney VP Misallocation - SUTA 916.296.8895 'anismarne muniservices.com Steve Quon Audit Manager 800.800.8181 x76517 steve.guon@muniservices.com Bret Harmon, MPA AVP Client Innovation 559.271.6876 bret.harmon muniservices.com Irene Reynolds Client Relations Manager 559.271.6867 irene.re nolds. muniservices.com Billing Department 757.321.2517 billin ortfoliorecove .com Francesco Mancia, MBA VP Government Relations 559.288.7296 fran.mancia mumservices.com Brenda Nara an Dir. Government Relations 916.261,5147 brenda.nara an muniservices.com Patricia A. Dunn, MSHR Contracts Manager 559.271.6852 atricia.dunn muniservices.com EXHIBIT F ADDITIONAL INSURED ENDORSEMENT FOR COMMERCIAL GENERAL LIABILITY POLICY Insurance Company This endorsement modifies such insurance as is afforded by the provisions of Policy # relating to the following: 1. The CITY of Santa Ana, 20 Civic Center Plaza, Santa Ana, California 92701; its officers, employees, agents, volunteers and representatives are named as additional insureds ("additional insureds") with regard to liability and defense of suits arising from the operations and uses performed by or on behalf of the named insured. 2. With respect to claims arising out of the operations and uses performed by or on behalf of the named insured, such insurance as is afforded by this policy is primary and is not additional to or contributing with any other insurance carried by or for the benefit of the additional insureds. 3. This insurance applies separately to each insured against whom claim is made or suit is brought except with respect to the company's limits of liability. The inclusion of any person or organization as an insured shall not affect any right which such person or organization would have as a claimant if not so included. 4. With respect to the additional insureds, this insurance shall not be cancelled, or materially reduced in coverage or limits except after thirty (30) days written notice has been given to the CITY of Santa Ana, 20 Civic Center Plaza, Santa Ana, California 92701. (Completion of the following, including countersignature, is required to make this endorsement effective.) Effective Policy # Issued to Named Insured Countersigned by Authorized Representative this endorsement form as a part of CERTIFICATE OF LIABILITY INSURANCE DATE (MWDD/YYYY) THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE HOLDER, THIS CERTIFICATE DOES NOT AFFIRMATIVELY OR NEGATIVELY AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW, THIS CERTIFICATE OF INSURANCE DOES NOT CONSTITUTE A CONTRACT BETWEEN THE ISSUING INSURER(S), AUTHORIZED REPRESENTATIVE OR PRODUCER, AND THE CERTIFICATE HOLDER. IMPORTANT: If the certificate holder is an ADDITIONAL INSURED, the policy(les) must be endorsed. If SUBROGATION IS WAIVED, subject to the terms and conditions of the policy, Certain policies may require an endorsement. A statement on this certificate does not confer rights to the Ierfoord A Marsh & McLennan Agency LLC Company Central Park Avenue 1340 nia Beach VA 23462 INSURED Ph# 559-271-6852 us, Suite 108 COVERAGES CFRTIFICATF NI IMRrm- 417421056 D5%1!Sl at PII IaaGOD. THIS IS TO CERTIFY THAT THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED. NOTWITHSTANDING ANY REQUIREMENT, TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT TO WHICH THIS CERTIFICATE MAY BE ISSUED OR MAY PERTAIN, THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS, EXCLUSIONS AND CONDITIONS OF SUCH POLICIES. LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS. INSR LTR TYp OFADDLISUBS INSD D POLICY NUMBER POLICY EFF MWDDIYYYY POLICY EXP DO LIMITS A X COMMERCIAL GENERAL LIABILITY _ CLAIMS -MADE OX OCCUREms Y Y CPOS82903806 10/31/2016 10/31/2017 EACH OCCURRENCE $1_000,000 RENTED^ PREMISES Ea occunence $1,000,000 MED EXP (Ary one persons $10,000 .—..._....-_...._ PERSONAL ADV INJURY $1,000,000 GEN'L AGGREGATE LIMIT APPLIES PER: R POLICY El PECTP LOC J _& GENERALAGGREGATE $2,000,000 PRODUCTS-COMP/OP AGG $2,000000 $ OTHER: A AUTOMOBILE LIABILITY BAP982902106 10/31/2016 10/3112017Fa a¢itlent $1,000,000 X ANY AUTO BODILY INJURY (Per person) $ X AUT8S ED qSUTOSULED NON INED HIREDAUTOS HX AUTOS BODILY INJURY(PeraccMem) $ PROPER D GE Peraxidsrl $ $ B C X X UMBRELLA UAB I X I EXCESS LIAR ...._ OCCUR CIAIM$-MADE AUC982907906 52280011369 1013112016 10131/2016 10/31/2017 1013112017--- EACH OCCURRENCE $10,000,000 AGGREGATE $10,000,000 OED RETENTION$ 10,000,000 $Excess D WORKERS COMPENSATION AND EMPLOYERS' LIABILITY Y/ N ANY PROPRIETOR/PARTNERIEXECUTIVE El OFFICER/MEMBER EXCLUDED? y WC982903906 10/31/2016 10/31/2017 PER OTH- X` STATIn',E ,-,T_ E.L. EACH ACCIDENT _ $1,008000 E.L_DISEASE -EA EMPLOYCd -- $1,000,000 (Mandatory In NH) If yee desalba under DESG�RIPTIONOFOPERATIONSbelow — E.L. DISEASE -POLICY LIMIT — $1,000,000 E F Professional Llab(E&O) Crime MPP9D3283601 BDR1035845 10/31/2016 10/31/2014 10/3112017 10131/2017 $5,000,GOOeach claim $5,000,00OAlKie $5,000,000 Limit $25,000 Ded DESCRIPTION OF OPERATIONS / LOCATIONS / VEHICLES (ACORD 101, Additional Receerss Schedule, may be attached If more space Is required) Per the cancellation wording listed on this form, the policy provisions include at least 30 days notice of cancellation except for non-payment of premium. The City of Santa Ana, its agents, officers, servants and employees are named as additional insureds under the General Liability policy with respect to the operations and work performed by the named insured as required by contract. City of Santa Ana Attn: Finance Director 20 Civic Center Plaza Santa Ana CA 92702-1988Ri APPROVE ACORD 25 (2014/01) rCa 1 f ry hy.' n SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE THE EXPIRATION DATE THEREOF, NOTICE WILL BE DELIVERED IN ACCORDANCE WITH THE POLICY PROVISIONS. y�r ©1 The ACORD name and logo are registered marks of ACORD riahts reserved. Named Insured: PRA Group, Inc, 10/31/2016 - 10/31/2017 POLICY NUMBER #CP0982903806 COMMERCIAL GENERAL LIA8ILITY CG 20 26 0413 THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY. This endorsement modifies Insurance provided under the following: COMMERCIAL GENERAL LIABILITY COVERAGE PART SCHEDULE Name Of Additional Insured Person(a) Or Organlzation(s) ANY PERSON OR ORGANIZATION FROM WHOM YOU ARE REQUIRED BY WRITTEN CONTRACT OR AGREEMENT TO BE ADDED AS AN ADDITIONAL INSURED ON YOUR POLICY, PROVIDED THE INJURY OR DAMAGE OCCURS SUBSEQUENT TO THE EXECUTION OF THE CONTRACT OR AGREEMENT. INSURANCE PROVIDED TO THIS ADDITIONAL INSURED IS ON A PRIMARY & NON-CONTRIBUTORY BASIS. A. Section 11 — Who Is An Insured Is amended to include as an additional insured the person(s) or organization(s) shown In the Schedule, but only with respect to liability for "bodily Injury", "property damage' or 'personal and advertising Injury" caused, In whole or in part, by your acts or omissions or the acts or omissions of thoseading on your behalf: 1. in the performance of your ongoing operations; or 2. In connection with your premises owned by or rented to you. However: 1, The Insurance afforded to such additional insured only applies to the extent permitted by law; and 2. If coverage provided to the additional Insured Is required by a contract or agreement, the Insurance afforded to such additional insured will not be broader than that which you are required by the contract or agreement to provide for such additional Insured. B. V41th respect to the Insurance afforded to these additional Insureds, the following is added to Section III—LimtssOf insurance: If coverage provided to the additional Insured Is required by a contract or agreement, the most we will pay on behalf of the additional insured Is the amount of insurance: 1. Required by the contract or agreement; or 2. Available under the applicable Limits of Insurance shown In the Declarations; whichever is less. This endorsement shall not Increase the applicable Umits of Insurance shown in the Declarations. 0020200413 © Insurance Services Office, Inc., 2012 I2/zcv"'ll & ,411 ) Po y z L Page 1 of 1