HomeMy WebLinkAbout2024-019 - HDL Audit ServicesMASTER SERVICES AGREEMENTTHIS MASTER SERVICES AGREEMENT (this "Agreement") is entered into as of'T'^Cember 1(, 2024 (the "Agreement Date'") by and HINDERLITER DE LLAMAS ANDASSOCIATES DBA HDL COMPANIES ("Consultant"), and CITY OF ATASCADERO("Chent"), which is located within the state of California (the "State").WITNESSETH:WHEREAS, Consultant is engaged in the business of providing consulting, software andother services that help public agencies understand and maximize their collection of sales, use andtransactions taxes, business license taxes, property and lodging taxes, and other revenues, as well astheir delivery of public services (collectively, "Consultant's Business"); andWHEREAS, Client desires to contract with Consultant to obtain one or more of the servicesincluded within Consultant's Business (as provided for in Section 1) upon the terms and conditionscontained in this Agreement;WHEREAS, Consultant desires to contract with Client to render such services upon theterms and conditions contained in this Agreement.NOW THEREFORE, in consideration of the covenants and promises contained herein,Client and Consultant mutually agree as follows:1.Services.1.1 Consultant will perform those services included within Consultant's Businessthat are described in any and all schedule(s) referencing this Agreement and signed by Client andConsultant as of the Agreement Date or hereafter (individually and collectively, the "Schedule(s)"),upon the terms and conditions contained in this Agreement (including the Schedules) (such servicesare, collectively, the "Services"). In performing the Services, Consultant is acting as an independentcontractor (and not as an agent or employee of Client).1.2 Client acknowledges and agrees that any other public agency (including, withoutlimitation, any participating government agency) located within or outside of the State (e.g., city,municipality, county, district, public authority or other political subdivision) may procure servicesfor fees and other terms and conditions that are substantially similar to any of the Services, Fees andother terms and conditions set forth in this Agreement, provided that such other public agencyexecutes a separate agreement with Consultant wherein the services rendered to such other publicagency, the fees payable by such other public agency, and the other terms and conditions of suchseparate agreement are the responsibility of Consultant and such other public agency and not Client.1.3 This Agreement does not limit the right of Consultant to enter into additionalcontracts with Client or to contract with third parties to provide them with merchandise or servicesof any kind whatsoever, including, but not limited to, services similar to the Services. During theTerm of this Agreement, Client will not, directly or indirectly (except through Consultant), engageany third party to provide the Services or any services similar to the Services.1234663.6Page 1 of 13Docusign Envelope ID: 3CBB6839-D644-4964-A9E2-768487411B42
2. Fees. As compensation for performing the Services, Client will pay Consultant thefees, costs and expenses as described in the Schedules (individually and collectively these fees andcosts are, the "Fees"). Consultant may perform the Services using professionals from its staff orConsultant's affiliated entities, and such Services will be invoiced to Client under the same termsapplicable to Consultant's staff. Consultant may increase the Fees from time to time (including,without limitation, as may be described in any of the Schedules). Other than a Fee increase asdescribed in the Schedules, Client may notify Consultant of a request that such Fee increase bemodified or revoked and, if Consultant fails to do so to Client's satisfaction within thirty (30) daysafter the receipt of such request, Client may terminate this Agreement without cause pursuant toSection 7.3.3.Invoices; Payment.3.1 Consultant will invoice Client for the Fees earned and/or incurred by Consultantpursuant to this Agreement.3.2 Invoices are due and payable upon receipt. Interest will begin to accrue on thethirty-first (31 st) day following the invoice date on all unpaid balances at a rate of one and one-halfpercent (ll/z%) per month, or the maximum rate permitted by law, whichever is less. Payments willfirst be credited to interest and then to principal. In the event that Client disputes an invoice, onlythat portion so disputed in good faith will be withheld from payment, and the undisputed portionmust be timely paid. Interest will accme on any disputed portion of the invoice not timely paid andwill be payable immediately if the disputed invoice is resolved in favor of Consultant.3.3 If Client fails to fully pay an invoice within 30 days after the invoice date,Consultant may, after giving five (5) days' prior written notice to Client, suspend the rendering ofServices under this Agreement until said invoice is paid in full, together with all interest that hasaccrued thereon. In the event of such a suspension of Services, Consultant will have no liability toClient for any delays or damages arising therefrom.4. Insurance. Throughout the term of this Agreement, Consultant will maintain thefollowing insurance in not less than the referenced amounts: (a) workers compensation andemployers liability insurance as may be required by the State; (b) property damage liability of$1,000,000 per incident; (c) bodily injury liability of $1,000,000 per incident; and (d) professionalliability for any errors or omissions of $1,000,000.5.Client Support.5.1 Client will promptly provide in writing to Consultant all data and otherinformation relating to or which may be necessary for Consultant's performance of the Services.Without limiting the foregoing. Client will keep Consultant informed on a timely basis in writing asto the existence and amendments of the laws, ordinances and/or regulations under which Consultantis performing the Services (including any adopted by Client). Consultant will be permitted to relyon the accuracy, timeliness and completeness of the information provided by Client, and in no eventwill Consultant be liable to Client or others as a result of such reliance.1234663.6Page 2 of 13Docusign Envelope ID: 3CBB6839-D644-4964-A9E2-768487411B42
5.2 Client will examine all of Consultant's reports, specifications, notices, proposalsand other documents. In the event that Consultant asks for a decision from Client in order forConsultant to perform the Services, Client will render such decision in writing in a timely manner.5.3 Promptly following any request from Consultant, Client will adopt and maintainin full force and effect resolutions in forms acceptable to Client and in accordance with applicablelaw authorizing Consultant to examine the confidential sales tax and other relevant records of Clientthroughout the Term and, for so long as any Fees are still accruing pursuant to this Agreement, afterthe Term.5.4 Client will assist Consultant in obtaining such licenses, permits and approvals asmay be required by law for performing the Services, and Client will pay all fees, assessments andtaxes related to the application, issuance and maintenance thereof.5.5 The Services do not include services to support, prepare, document, bring,respond to subpoenas, act as a witness, defend or otherwise assist in litigation undertaken ordefended by Client, which Consultant may be required by legal process or otherwise or requestedby Client to provide (collectively, "Litigation Services"). In this regard, if Consultant agrees withClient or is otherwise required to perform Litigation Services, Client will promptly pay or reimburseConsultant for all of Consultant's costs and expenses related to Litigation Services (including,without limitation. Consultant's attorneys' fees and costs) at Consultant's actual cost, plus tenpercent (10%) thereof (all of which are deemed to be additional Fees).6.Confidentiality; Software Use and Warranty; Records.6.1 Consultant will comply with the requirements of the applicable laws, ordinancesand/or regulations of which it has been informed by Client pursuant to Section 5.1 concerning theconfidentiality of tax records. Consultant may publicly state that it performs Services for Client.6.2 As used herein, the term "proprietary information" means all information,techniques, processes, services or material that has or could have commercial value or other utilityfor Consultant or in Consultant's Business, including without limitation, (i) software, computer ordata processing programs; (ii) data processing applications, routines, subroutines, techniques orsystems; (iii) desktop or web-based software; (iv) audit, tax or fee collection/administration orbusiness processes, methods or routines; (v) marketing plans, analyses and strategies; (vi) materials,techniques and intellectual property used; and (vii) the Software and the Software's documentation.Except as otherwise required by law, Client must hold in confidence and may not use (except asexpressly authorized by this Agreement) or disclose to any other party any proprietary informationprovided, learned of or obtained by Client in connection with this Agreement. The terms of thisSection 6.2 do not apply to information that is public information; provided, however, thatproprietary information will not qualify as public information if it became public due to Client's (orits employees' or agents') disclosure.6.3 If access to any software which Consultant owns is provided to Client as part ofthe Services under this Agreement (including, without limitation, if Client chooses to subscribe tosuch software and/or related reports as part of the Ser/ices pursuant to a Schedule to thisAgreement) (such Consultant-owned software is, collectively, the "Software"), Consultant herebyprovides a limited, non-exclusive, non-transferable license to Client (including such of Client's staff1234663.6Page 3 of 13Docusign Envelope ID: 3CBB6839-D644-4964-A9E2-768487411B42
as may be designated from time to time by Client and approved by Consultant in writing) to use theSoftware pursuant to and during the Term of this Agreement.6.4 The Software must only be used by such authorized Client staff, and Client mustnot sublicense, sublet, duplicate, modify, decompile, reverse engineer, disassemble, or attempt toderive the source code of the Software. The license granted hereunder does not imply ownership byClient or any of Client's staff of the Software nor any rights of Client or any of Client's staff tosublicense, transfer or sell the Software, or rights to use the Software for the benefit of others.Client may not create (or allow the creation of) any derivative work or product based on or derivedfrom the Software or the Software's documentation, nor modify (or allow the modification of) theSoftware or the Software's documentation without the prior written consent of Consultant. In theevent of a breach of this provision (and without limiting Consultant's remedies), such modification,derivative work or product based on the Software or the Software's documentation is herebydeemed assigned to Consultant. Upon termination of this Agreement or this Software license, thisSoftware license will be deemed to have expired and Client must immediately deactivate, ceaseusing and remove, delete and destroy all the Software (including, without limitation, from Client'scomputers and network). Consultant warrants that the Software will perform in accordancewith the Software's documentation.6.5 Notwithstanding anything to the contrary in this Agreement (including anySchedule hereto), if access to any software which Consultant does not own is provided to Client aspart of the Services pursuant to this Agreement (including pursuant to any Schedule hereto), Clienthereby agrees (i) to comply with all of the terms and conditions imposed on Client's access to suchsoftware (including, without limitation, by Consultant, such software's owner, and pursuant toapplicable law), and (ii) Consultant has no obligation during the Term of this Agreement orthereafter to provide Client with access to such software.6.6 All documents, preliminary drafts, communications and any and all other workproduct related to the Services and provided by Consultant to Client either in hard copy orelectronically are the joint property of Client and Consultant. This does not include the Software orany other software, any programs, any methodologies or any systems used in the creation of suchwork product, nor does it include any drafts, notes or internal communications prepared byConsultant in the course of performing the Services that were not otherwise provided to Client ineither hardcopy or electronic form, all of which may be protected by Consultant or third partycopyrights or other intellectual property and remain Consultant's or such third parties' exclusiveproperty (as the case may be). It is possible that any documents, drafts, communications or otherwork product provided to Client may be alleged to be public records under applicable law and/ormay be discoverable through litigation. Well in advance of when Client may disclose suchinformation in response to any request for public records, Client must notify Consultant in writingabout the request and, if Consultant requests it. Client must apply for any potential exemption fromdisclosure that may exist under applicable law.6.7 Subject to applicable law, Consultant is responsible for retaining all finaldocuments and other final work product related to the Services for a period of not less than three (3)years from the date provided to Client. Retention of any other documents, preliminary drafts,communications and any and all other work product provided to Client by Consultant is theresponsibility of Client. Consultant has no responsibility to retain any drafts, notes,communications, emails or other writings created or received by Client in the course of performing1234663.6 Page 4 of 13Docusign Envelope ID: 3CBB6839-D644-4964-A9E2-768487411B42
the Services (other than the final documents and other final work product related to the Services andprovided to Client for the term of years referenced above).7.Term and Termination.7.1 The initial term of this Agreement commences as of the Agreement Date and,unless terminated earlier pursuant to any of this Agreement's express provisions, will continue ineffect until twelve (12) months from such date (the "Initial Term"). This Agreement willautomatically renew for successive twelve (12) month tenns unless earlier terminated as set forth inSection 7.2 or 7.3 or either party gives the other party written notice of non-renewal at least onehundred twenty (120) days prior to the expiration of the then-cun-ent term (each a "Renewal Term"and, collectively, together with the Initial Term, the "Term").7.2 This Agreement may be terminated by either party for cause upon not less thanforty-five (45) days' prior written notice given to and received by the other party, if the other partyhas materially breached this Agreement through no fault of the notifying party and fails to (i)commence correction of such material breach within thirty (30) days of receipt of the above-referenced written notice and (ii) diligently complete the correction thereafter.7.3 In addition, either party may terminate this Agreement without cause upon notless than one hundred twenty (120) days' prior written notice to the other party.7.4 On termination. Client will pay Consultant for all Fees and other compensation(including for Litigation Services) earned and/or incurred through the termination date and willthereafter timely pay Consultant for all other Fees and compensation to which Consultant may beentitled pursuant to this Agreement (including the Schedules hereto).8.Indemnification.8.1 Client agrees to fully and promptly protect, indemnify, reimburse and holdharmless Consultant, its directors, officers, employees, agents, direct and indirect equity holders,and affiliates (collectively, "Consultant Group") from and against any and all liabilities, losses,claims, damages, expenses, and costs (including, without limitation, for attorneys' fees and costs)(each, a "Liability", and collectively, "Liabilities") which are (a) the direct or indirect result of anybreach of any representation, warranty or covenant made by or given on behalf of Client under thisAgreement, or (b) related to any action or failure to act on the part of any one or more of ConsultantGroup where such action or failure to act was reasonably and in good faith believed by any ofConsultant Group at the time to be in conformity with this Agreement, or (c) otherwise related to orarising out of any act or omission of Client or its directors, officers, employees, agents, direct orindirect equity holders, or affiliates (collectively, "Client Group"). In this regard, Client herebyacknowledges that it is responsible for instructing Consultant regarding Consultant's performanceof Services under this Agreement, as well as the interpretation and meaning of the ordinancesand/or regulations under which Consultant is performing Services under this Agreement.8.2 Promptly after Consultant receives notice of the commencement of anyproceeding for which it intends to make a claim for indemnification under this Agreement, it shouldnotify Client, but the failure to so notify will not result in the loss of any rights of any of ConsultantGroup to indenmification hereunder except to the extent that Client does not otherwise become aware1234663.6Page 5 of 13Docusign Envelope ID: 3CBB6839-D644-4964-A9E2-768487411B42
of such proceeding and is actually adversely affected thereby to a material extent. Client will assumethe defense of Consultant Group (including the employment of legal counsel reasonably satisfactoryto Consultant) and payment of such counsel's fees and disbursements (including retainers). ShouldConsultant reasonably determine that separate counsel is necessary (whether due to the existence ofdifferent defenses, potential conflicts of interest or otherwise), or if Client has not assumed thedefense, then any of Consultant Group may employ separate legal counsel, and Client will pay suchcounsel's reasonable fees and disbursements as incurred (including retainers). The obligations ofdefense and indemnification under this Agreement apply, without limitation, to those situations wheresomeone brings a cross claim for indemnity or contribution against any one or more of ConsultantGroup.8.3 Client will not, without Consultant's prior written consent, settle, compromise orconsent to the entry of any judgment in any pending or threatened claim, action, or proceeding orinvestigation in respect of which indemnification could be sought hereunder (whether or not any ofConsultant Group is an actual or potential party to such claim, action or proceeding orinvestigation), unless such settlement, compromise or consent includes an unconditional release ofeach of Consultant Group from all liability arising out of such claim, action, proceeding orinvestigation and includes an explicit disclaimer of responsibility of any kind on the part ofConsultant Group.9.Liability Limitations; Governing Law; Dispute Resolution.9.1 To the maximum extent permitted by law and notwithstanding anything to thecontrary in this Agreement:9.1.1 Except for Consultant's gross negligence or willful misconduct in coimectionwith the performance of its obligations under this Agreement, Client's sole and exclusive remediesfor any breaches of Consultant's obligations under this Agreement (including, without limitation,for any breaches relating to the Services or the Software, including any breaches of warranty,express or implied) (i) are limited to making reasonable and necessary repairs, replacements orcorrections without additional cost to the Client, and (ii) will not exceed, under any circumstances,the amount of the Fees paid by Client to Consultant for the twelve-month period prior to the allegedbreaches, calculated without reference to any payments constituting the payment of costs or expenses.All amounts paid to Consultant hereunder are deemed first to be for the reimbursement of costs orexpenses and then any excess will be regarded as payments for other portions of the Fees under thisAgreement. Any references to breaches of this Agreement will include any supplements, additionsor amendments to this Agreement.9.1.2 Except as may otherwise be expressly set forth in this Agreement, Consultantmakes no warranty of any kind with respect to the Services or the Software, express or implied.Consultant hereby disclaims all other warranties, express or implied, including the impliedwarranties of merchantability, fitness for a particular purpose, title and non infringement.Consultant disclaims all warranties and responsibility for third party software.9.1.3 In no event will any of Consultant Group be liable for any lost revenues orlost profits, or any special, incidental, or consequential damages of any nature whatsoever, even ifsuch restrictions deprive one or more remedies of their essential purpose. This damage exclusion isindependent of any remedies provided for herein.1234663.6Page 6 of 13Docusign Envelope ID: 3CBB6839-D644-4964-A9E2-768487411B42
9.1.4 None of Consultant Group will have any Liability (whether direct or indirect,in contract or tort or otherwise) related to, arising out of, or in connection with this Agreement or toany of Client Group acting on any advice given or opinion rendered by any of Consultant Group,except to the extent that such Liability is found by a court of competent jurisdiction in a judgmentwhich has become final and that it is no longer subject to appeal or review to have resulted solelyfrom such Consultant Group's willful misconduct or gross negligence.9.1.5 No claim may be brought by Client against any one or more of ConsultantGroup arising out of this Agreement (including, without limitation, in connection with the Services orthe Software) more than one year after the date on which such claim arose (regardless of the datewhen Client may have discovered a basis for the claim).9.1.6 Client acknowledges that this Agreement is with Consultant in its capacity as acorporation or a limited liability company, and Client agrees that in no event will it seek to hold anyof the Consultant Group (other than Consultant) responsible for any Liabilities.9.2 The law of the State will govern the validity of this Agreement, its interpretationand performance, and any other claims related to it, without regard to the State's conflict of lawsrules. Venue for any legal action arising out of this Agreement will be proper only in the Statecourts or the federal courts located within the State. The parties hereby submit to the exclusivejurisdiction of such courts and waive any other venue to which either party might be entitled bydomicile or otherwise.9.3 If either party is required to bring legal action to enforce its rights under thisAgreement or as the result of a breach of this Agreement, the costs and expenses of the prevailingparty, including reasonable attorneys' fees, will be paid by the non-prevailing party.9.4 A breach of this Agreement by either party may cause the other party heretoirreparable harm, the amount of which may be difficult to ascertain, and therefore such other partywill have the right to apply to a court of competent jurisdiction for specific performance and/or anorder restraining and enjoining any further breach and for such other relief as such other party maydeem appropriate. Such right is in addition to the remedies otherwise available to such other partyat law or in equity. The parties hereto expressly waive the defense that a remedy in damages will beadequate and any requirement in an action for specific performance or injunction hereunder for theposting of a bond.10.General Legal Provisions.10.1 Authorization to Proceed. Each Schedule must be signed by both Client andConsultant before such Schedule will be binding on the parties hereto.10.2 Force Majeure. Consultant is not responsible for damages or delay inperformance caused by acts of God, strikes, lockouts, accidents, epidemics, pandemics or otherhealth emergencies, or other events beyond the control of Consultant.10.3 Amendment; Waiver. Any provisions of this Agreement (including, withoutlimitation, any Schedules or provisions within any Schedules) may be amended or terminated if inwriting and signed by both Client and Consultant. No waiver by any party of any default,1234663.6Page 7 of 13Docusign Envelope ID: 3CBB6839-D644-4964-A9E2-768487411B42
misrepresentation or breach of warranty or covenant hereunder, whether intentional or not, will bedeemed to be valid unless acknowledged by such party in writing, and such waiver will not extendto any prior or subsequent default, misrepresentation or breach of warranty or covenant hereunderor affect in any way any rights arising by virtue of any prior or subsequent such occurrence.10.4 Severability and Survival. If any provision in this Agreement is held illegal,invalid or unenforceable, the enforceability of the remaining provisions will not be impairedthereby. Notwithstanding any other provisions of this Agreement (including, without limitation,Section 7), Sections 3, 5.5, 6, 7, 8, 9 and 10 will survive the termination of this Agreement.10.5 No Third-Party Beneficiaries; Services Limited to Agreement. Except as setforth in Section 8, this Agreement gives no rights or benefits to anyone other than Client andConsultant and has no third-party beneficiaries. The Services to be performed for Client byConsultant are defined solely by this Agreement (including the Schedules), and not by any othercontract or agreement that may be associated with performing the Services.10.6 Assignment. This is a bilateral personal services agreement. Neither party willhave the power to or will assign any of the duties or rights or any claim arising out of or related tothis Agreement, whether arising in tort, contract or otherwise, without the written consent of theother party. Any unauthorized assignment is void and unenforceable. This Agreement is bindingon the successors and assigns of the parties hereto. Notwithstanding anything to the contrary,Consultant may, from time to time, utilize one or more third parties to provide certain of theServices (including, but not limited to, as may be set forth in one or more of the Schedules).Notices. All notices under this Agreement must be in writing and will be deemed to have beengiven when such notice is received (i) from United States Postal Service First Class Certified Mail,Return Receipt Requested, (ii) by coiirier service, or (iii) by email; provided, however, that noticesreceived on a weekend or holiday or on a business day after 4:00 p.m. local time will be deemed tohave been received on the next business day. Notices will, unless another address is specified inwriting, be sent to the addresses indicated below (each of which must include a street address andan email address): Consultant: HdL Companies Attn: Maria Soto-Sanchez, Email:contracts@hdlcompanies.com and Client: City of Atascadero, Attn: Jeri Rangel Email:j rangel @atascadero. org.10.8 Entire Agreement; Conflict. This Agreement (which includes any Schedules oramendments dated as of the Agreement Date or hereafter, including without limitation, amendmentsof the main body of this Agreement or the Schedules that may add to, subtract from, modify orclarify the Term, the scope of Services and/or the amount of Fees) constitutes the entire agreementbetween the parties and supersedes any prior understandings, agreements, or representations by orbetween the parties, written or oral, to the extent they relate in any way to the subject matter hereof.Should there ever be a conflict between the terms and conditions of any Schedules and theremainder of this Agreement as set forth in the main body of this Agreement, the terms andconditions of the remainder of this Agreement as set forth in the main body of this Agreement willprevail and be controlling; provided, however, that should there ever be a conflict between the termsand conditions of this Agreement (including any Schedules) and (i) any amendments hereof, theterms and conditions of the amendments hereof will prevail and be controlling, and (ii) the termsand conditions of any Schedule that expressly provides for them to supersede any terms andconditions of the main body of this Agreement, such terms and conditions of such Schedule willprevail and be controlling.1234663.6 Page 8 of 13Docusign Envelope ID: 3CBB6839-D644-4964-A9E2-768487411B42
10.9 Counterparts; Electronic Signatures; Authority. This Agreement may be signedin any number of counterparts, each of which will constitute an original and all of which, whentaken together, will constitute one agreement. Any signed signature pages of this Agreementtransmitted by email or other electronic means in a portable document format (PDF) or other clearand visible electronic format will have the same legal effect as an original. Each of the personssigning on behalf of a party hereto represents that he or she has the authority to sign this Agreementon such party's behalf.10.10 No Adverse Construction. Both parties acknowledge having had theopportunity to participate in the drafting of this Agreement. This Agreement will not be construedagainst either party based upon authorship. The section headings contained in this Agreement areinserted for convenience only and will not affect in any way the meaning or interpretation of thisAgreement.[Signatures are on the next page]1234663.6Page 9 of 13Docusign Envelope ID: 3CBB6839-D644-4964-A9E2-768487411B42
IN WITNESS WHEREOF, the parties hereto have entered into this Agreement throughtheir duly authorized representatives as of the Agreement Date.CONSULTANT:Hinderliter de Llamas and AssociatesCLIENT:City ofAtascaderoBy:_By:en1^,Rangel,;ctor of Administrative Services[Any Schedule or Schedules may (but is/are not required to) be attached hereto])1234663.6Page 10 of 13Docusign Envelope ID: 3CBB6839-D644-4964-A9E2-768487411B42COO
EXHIBIT ASERVICES1. Transactions Tax and Economic Analysis/Forecasting Services/Reports1.1. Consultant shall establish a database containing all applicable Department of Tax and FeeAdministration (CDTFA) registration data for each business within the Measure "L" Districtboundaries holding a seller's permit account. Said database shall also identify the quarterlytransactions and use tax allocations under each account for the most current and previous quarterswhere available.1.2 Consultant shall provide updated reports each quarter identifying changes in allocation totals byindividual businesses, business groups and by categories. Quarterly aberrations due to State audits,fund transfers, and receivables, along with late or double payments, will also be identified.Quarterly reconciliation worksheets to assist finance officer with budget forecasting will beincluded.1.3. Consultant shall advise and work with CITY Staff on planning and economic questions related tomaximizing revenues, preparation of revenue projections and general information on transactionsand use tax questions.1.4. Consultant shall make available to CITY the HdL proprietary software program and Measure "L"database containing all applicable registration and quarterly allocation information for CITYbusiness outlets registered with the Department of Tax and Fee Administration. The database willbe updated quarterly.2. Deficiency/AIlocation Reviews and Recovery2.1. Consultant shall conduct on-going reviews to identify and correct unreported transactions and taxpayments and distribution errors thereby generating previously unrealized revenue for the City.Reviews shall include:2.1.(a) Comparison of county-wide local tax allocations to transactions tax for brick and mortarstores and other cash register-based businesses, where clearly all transactions are conductedon-site within the Measure "L" City boundaries, and therefore subject to transactions tax.2.1 .(b) Review of any significant one-time use tax allocations to ensure that there is correspondingtransaction tax payments for taxpayers with nexus within the City boundaries.2.1.(c) Review ofstate-wide transactions tax allocations and patterns to identify any obvious errorsand omissions.2.1.(d) Identification and follow-up with any potentially large purchasers of supplies and equipment(e.g. hospitals, universities, manufacturing plants, agricultural operations, refineries) toensure that their major vendors are properly reporting corresponding transactions taxpayments to the Measure "L" Transactions Tax District.2.2. Consultant will initiate, where the probability of an error exists, contacts with the appropriatetaxpayer management and accounting officials to verify whether current tax receipts accuratelyreflect the local sales activity. Such contacts will be conducted in a professional and courteousmanner so as to enhance CITY'S relations with the business community.2.2. Consultant shall prepare and submit to the Department of Tax and Fee Administration allinformation necessary to correct any allocation errors and deficiencies that are identified and shallfollow-up with the individual businesses and the California Department of Tax and FeeAdministration to ensure that all back quarter payments due the CITY are recovered.3. Consulting and Other Optional ServicesConsultant may from time to time in its sole discretion, consult with City's staff, including withoutlimitation, regarding (i) technical questions and other issues related to sales, use and transactions tax, (ii)utilization of reports to enhance business license collection efforts, (iii) sales tax projections for proposed1234663.6 Page 11 of 13Docusign Envelope ID: 3CBB6839-D644-4964-A9E2-768487411B42
annexations, economic development projects and budget planning, (iv) negotiating/review of tax sharingagreements, (v) establishing purchasing corporations, (vi) meeting with taxpayers to encourage self-assessment of tax obligations, and (vii) other sales, use or transactions tax revenue-related matters.FEES4. Transactions Tax and Economic AnaIysis/Forecasting Services/Reports4.1. Fees shall be paid $300 monthly billed quarterly for the transaction district tax reports that weinclude with the quarterly sales tax analyses. The monthly fee shall be invoiced quarterly in arrearsand shall be paid by City no later than 30 days after the invoice date.4.2. Consultant will increase the non-hourly Fees established above once a year with reference to the 12-month percent change in the most recently published annual Consumer Price Index for All UrbanConsumers (CPI-U), as reported by the U.S. Bureau of Labor Statistics (the "CPI Change").5. Allocation and Audit Recovery Services5.1. Fees shall be paid 25% of the initial amount of new transactions or use tax revenue received by theCity because of audit and recovery work performed by Consultant, (hereafter referred to as "auditfees"). New revenue shall not include any amounts determined and verified by City or Consultantto be increment attributable to causes other than Consultant's work pursuant to this agreement. Inthe event, Consultant is responsible for an increase in the tax reported by businesses alreadyproperly making tax payments to the City, it shall be Consultant's responsibility to separate andsupport the incremental amount attributable to its efforts prior to the application of the audit fee.Said audit fees will apply to state fund transfers received for those specific quarters identified asbeing missing and/or deficient following completion of the audit by Consultant and confirmation ofcon-ections by the California Department of Tax and Fee Administration but shall not applyprospectively to any future quarter. Consultant shall provide City with an itemized quarterlyinvoice showing all formula calculations and amounts due for audit fees.6. Consulting and Other Optional Services6.1. Fees for performing the consulting and other optional Services described above shall be based onthe following initial hourly rates: (i) Principal - $325; (ii) Programmer - $295; (iii) Senior Analyst -$245; and (iv) Analyst - $195.6.2. Consultant may change the rates for its hourly Fees from time to time. A 30 days' prior writtennotice to City will be given.7. General Provisions Relating to Fees7.1. Fees for travel and lodging expenses will be invoiced at cost and applied to all meetings (includingimplementation, training, operations, and support). Travel expenses only apply to out-of-scopetravel and must therefore be pre-approved by City.7.2. Fees will be invoiced monthly to City for Services performed during the prior month. To the extentthat Consultant has commercially reasonable means to do so, Fees will be netted out of City'smonthly revenue disbursement.8. Confidentiality InformationSection 7056 of the State of California Revenue and Taxation Code ("R&T Code") specifically limits thedisclosure of confidential taxpayer information contained in the records of the CDTFA. Section 7056specifies the conditions under which a city, county or district may authorize persons other than such city,county or district's officers and employees to examine state sales and use tax records. The followingconditions specified in Section 7056-(b)(l) of the State of California R&T Code are hereby made part ofthis Agreement:8.1. Consultant is authorized by this Agreement to examine sales, use or transactions and use tax recordsof the CDTFA provided to City pursuant to contract under the Bradley-Burns Uniform Local Salesand Use Tax Law R&T Code Section 7200 et.seq.1234663.6Page 12 of 13Docusign Envelope ID: 3CBB6839-D644-4964-A9E2-768487411B42
8.2. Consultant is required to disclose information contained in, or derived from, those sales ortransactions and use tax records only to an officer or employee of City who is authorized by Cityresolution provided to the CDTFA to examine the information.8.3. Consultant is prohibited from performing consulting services for a retailer (as defined in R&T CodeSection 6015), during the term of this agreement.8.4. Consultant is prohibited from retaining the information contained in or derived from those sales, useor transactions and use tax records after this agreement has expired. Information obtained byexamination of the CDTFA records shall be used only for purposes related to collection of localsales and use tax or for other governmental functions of the City as set forth by resolution adoptedpursuant to Section 7056 (b) of the Revenue and Taxation Code. The resolution shall designate theConsultant as a person authorized to examine sales and use tax records and certify that thisagreement meets the requirements set forth above and in Section 7056 (b), (1) of the Revenue andTaxation Code.9. Software Use and Proprietary InformationSoftware Use. Consultant hereby provides authorization to City to access Consultant's Sales Tax websiteif City chooses to subscribe to the software and reports option. The website shall only be used byauthorized City staff. No access will be granted to any third party without explicit written authorizationby Consultant. City shall not sublet, duplicate, modify, decompile, reverse engineer, disassemble, orattempt to derive the source code of said software. The software use granted hereunder shall not implyownership by City of said software, or any right of City to sell said software or the use of same, or anyright to use said software for the benefit of others. This software use authorization is not transferable.Upon termination or expiration of this Agreement, the software use authorization shall expire, and all Citystaff website logins shall be de-activated.Proprietary Information. As used herein, the term "proprietary information" means all infonnation ormaterial that has or could have commercial value or other utility in Consultant's business, includingwithout limitation: Consultant's (i) computer or data processing programs; (ii) data processingapplications, routines, subroutines, techniques or systems; desktop or web-based software; (iii) businessprocesses; (iv) marketing plans, analysis and strategies; and (v) materials and techniques used; as well asthe terms and conditions of this Agreement. Except as otherwise required by law. City shall hold inconfidence and shall not use (except as expressly authorized by this Agreement) or disclose to any otherparty any proprietary information provided, learned of or obtained by City in connection with thisAgreement. The obligations imposed by this Section shall survive any expiration or termination of thisAgreement or otherwise. The terms of this Section shall not apply to any information that is publicinformation.1234663.6Page 13 of 13Docusign Envelope ID: 3CBB6839-D644-4964-A9E2-768487411B42