01225.0001/863605.1
AMENDMENT NO. 5
TO AGREEMENT FOR SERVICES
THIS AMENDMENT TO THE AGREEMENT FOR SERVICES (“Amendment”) by and between the CITY OF CHINO, a California municipal corporation (“City”) and HINDERLITER DE LLAMAS & ASSOCIATES (“Consultant”) is effective as of the 2nd day of April, 2024.
RECITALS
A. City and Consultant entered into that certain Agreement for Contractual Services dated July 1st, 202 1 (“Agreement”) whereby Consultant agreed to provide Sales Tax Audit and Information Services.
B. On March 5, 2022, the City and Consultant entered into the first amendment to the Agreement to increase compensation by $15,000.00 to equal a total not -to-exceed amount of $75,000.00.
C. On July 1, 2022, the City and Consultant entered into a second amendment to the Agreement to renew for one additional year, increase compensation by $60,000 to equal a total not-to-exceed amount of $135,000 and include additional confidentiality language as required by the California Department of Tax and Fee Administration.
D. On July 1, 2023, the City and Consultant entered into a third amendment to the Agreement to renew for one additional year and increase compensation by $60,000 to equal a total not-to-exceed amount of $195,000.
E. On March 19, 2024, the City and Consultant entered into a fourth amendment to the Agreement to increase compensa tion by $40,000 to equal a total not -to-exceed amount of $235,000.
F. City and Consultant now desire to amend the Agreement to amend to the Scope of Services to add additional tasks to be performed by Consultant. All other terms and conditions remain unchanged.
TERMS
1. Contract Changes. The Agreement is amended as provided herein. (a). The Scope of Services, at Exhibit “A” shall be amended to add the additional tasks for Consultant to perform the following: Transactions Tax Audit, Economic Analysis/Forecasting and Related Services pertaining to the voter approved Measure V on March 5, 2024.
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(b). The following Exhibits attached hereto are being added to all previous versions:
1. EXHIBIT “A” – SCOPE OF SERVICES
2. EXHIBIT “C” – SCHEDULE OF COMPENSATION
2. Continuing Effect of Agreement. Except as amended by this Amendment, all provisions of the Agreement shall remain unchanged and in full force and effect. From and after the date of this Amendment, whenever the term “Agreement” appears in the Agreement, it shall mean the Agreement, as amended by this Amendment to the Agreement.
3. Affirmation of Agreement; Warranty R e Absence of Defaults. City and Consultant each ratify and reaffirm each and every on e of the respective rights and obligations arising under the Agreement. Each party represents and warrants to the other that there have been no written or oral modifications to the Agreement other than as provided herein. Each party represents and warrants to the other that the Agreement is currently an effective, valid, and binding obligation.
Consultant represents and warrants to City that, as of the date of this Amendment, City is not in default of any material term of the Agreement and that there have been no events that, with the passing of time or the giving of notice, or both, would constitute a mat erial default under the Agreement.
City represents and warrants to Consultant that, as of the date of this Amendment, Consultant is not in default of any material term of the Agreement and that there have been no events that, with the passing of time or the giving of notice, or both, would constitute a material default under the Agreement.
4. Adequate Consideration. The parties hereto irrevocably stipula te and agree that they have each received adequate and independent consideration for the performance of the obligations they have undertaken pursuant to this Amendment.
5. Authority. The persons executing this Amendment on behalf of the parties hereto warrant that (i) such party is duly organized and existing, (ii) they are duly authorized to execute and deliver this Amendment on behalf of said party, (iii) by so executing this Amendment, such party is formally bound to the provisions of this Amendment, and (iv) the entering into this Amendment does not violate any provision of any other agreement to which said party is bound.
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IN WITNESS WHEREOF, the parties hereto have executed this Amendment on the date and year first-above written.
CITY:
CITY OF CHINO, a municipal corporation
Linda Reich, City Manager
ATTEST:
Natalie Gonzaga, City Clerk
APPROVED AS TO FORM: APPROVED AS TO CONTENT:
ALESHIRE & WYNDER, LLP
_____________________________ _____________________________ Fred Galante, City Attorney Rob Burns, Department Director
CONSULTANT:
HINDERLITER, DE LLAMAS & ASSOCIATES
By:
Name: Andrew Nickerson
Title: President
By:
Name:
Title:
Address:120 S. State College Blvd. #200
Brea, CA 92821
Two corporate officer signatures required when Consultant is a corporation, with one signature required from each of the following groups: 1) Chairman of the Board, President or any Vice President; and 2) Secretary, any Assistant Secretary, Chief Financial Officer or any Assistant Treasurer.
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01225.0001/458446.1 A-1
EXHIBIT “A”
SCOPE OF SERVICES
I. Consultant will perform the Services described in Consultant’s Proposal, attached hereto as Exhibit A-1.
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SCHEDULE A
Transactions Tax Audit Services
Economic Analysis/Forecasting and Related Services
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SERVICES
1. Transactions Tax and Economic Analysis/Forecasting Services/Reports
1.1. Consultant shall establish a database containing all applicable Department of Tax and Fee Administration (CDTFA) registration data for each business within the Measure “V” District boundaries holding a seller’s permit account. Said database shall also identify the quarterly transactions and use tax allocations under each account for the most current and previous quarters where available.
1.2 Consultant shall provide updated reports each quarter identifying changes in allocation totals by individual 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 be included.
1.3. Consultant shall advise and work with CITY Staff on planning and economic questions related to maximizing revenues, preparation of revenue projections and general information on transactions and use tax questions.
1.4. Consultant shall make available to CITY the HdL proprietary software program and Measure “V” database containing all applicable registration and quarterly allocation information for CITY business outlets registered with the Department of Tax and Fee Administration. The database will be updated quarterly.
2. Deficiency/Allocation Reviews and Recovery
2.1. Consultant shall conduct on-going reviews to identify and correct unreported transactions and tax payments 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 mortar stores and other cash register-based businesses, where clearly all transactions are conducted on-site within the Measure “V” 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 corresponding transaction tax payments for taxpayers with nexus within the City boundaries.
2.1.(c) Review of state-wide transactions tax allocations and patterns to identify any obvious errors and 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) to ensure that their major vendors are properly reporting corresponding transactions tax payments to the Measure “V” Transactions Tax District.
2.2. Consultant will initiate, where the probability of an error exists, contacts with the appropriate taxpayer management and accounting officials to verify whether current tax receipts accurately reflect the local sales activity. Such contacts will be conducted in a professional and courteous manner so as to enhance CITY’s relations with the business community.
EXHIBIT A-1
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SCHEDULE A
Transactions Tax Audit Services
Economic Analysis/Forecasting and Related Services
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2.2. Consultant shall prepare and submit to the Department of Tax and Fee Administration all information necessary to correct any allocation errors and deficiencies that are identified and shall follow-up with the individual businesses and the California Department of Tax and Fee Administration to ensure that all back quarter payments due the CITY are recovered.
3. Consulting and Other Optional Services
Consultant may from time to time in its sole discretion, consult with City’s staff, including without limitation, regarding (i) technical questions and other issues related to sales, use and transactions tax, (ii) utilization of reports to enhance business license collection efforts, (iii) sales tax projections for proposed annexations, economic development projects and budget planning, (iv) negotiating/review of tax sharing agreements, (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.
FEES
4. Transactions Tax and Economic Analysis/Forecasting Services/Reports
4.1. Fees shall be paid $200 monthly billed quarterly for the transaction district tax reports that we include with the quarterly sales tax analyses. The monthly fee shall be invoiced quarterly in arrears and shall be paid by City no later than 30 days after the invoice date.
4.2. Consultant may change the non-hourly Fees established above once a year. Any such change must be with reference to the 12-month percent change in the most recently published annual Consumer Price Index for All Urban Consumers (CPI-U), as reported by the U.S. Bureau of Labor Statistics (the “CPI Change”).
5. Allocation and Audit Recovery Services
4.1 Fees shall be paid 25% of the initial amount of new transactions or use tax revenue received by the City because of audit and recovery work performed by Consultant, (hereafter referred to as "audit fees"). New revenue shall not include any amounts determined and verified by City or Consultant to be increment attributable to causes other than Consultant’s work pursuant to this agreement. In the event, Consultant is responsible for an increase in the tax reported by businesses already properly making tax payments to the City, it shall be Consultant’s responsibility to separate and support 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 as being missing and/or deficient following completion of the audit by Consultant and confirmation of corrections by the California Department of Tax and Fee Administration but shall not apply prospectively to any future quarter. Consultant shall provide City with an itemized quarterly invoice showing all formula calculations and amounts due for audit fees.
6. Consulting and Other Optional Services
6.1. Fees for performing the consulting and other optional Services described above shall be based on the 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 written notice to City will be given.
7. General Provisions Relating to Fees
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SCHEDULE A
Transactions Tax Audit Services
Economic Analysis/Forecasting and Related Services
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7.1. Fees for travel and lodging expenses will be invoiced at cost and applied to all meetings (including implementation, training, operations, and support). Travel expenses only apply to out-of-scope travel 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 extent that Consultant has commercially reasonable means to do so, Fees will be netted out of City’s monthly revenue disbursement.
7. Confidentiality Information
Section 7056 of the State of California Revenue and Taxation Code (“R&T Code”) specifically limits the disclosure of confidential taxpayer information contained in the records of the CDTFA. Section 7056 specifies 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 following conditions specified in Section 7056-(b)(1) of the State of California R&T Code are hereby made part of this Agreement:
7.1. Consultant is authorized by this Agreement to examine sales, use or transactions and use tax records of the CDTFA provided to City pursuant to contract under the Bradley-Burns Uniform Local Sales and Use Tax Law R&T Code Section 7200 et.seq.
7.2. Consultant is required to disclose information contained in, or derived from, those sales or transactions and use tax records only to an officer or employee of City who is authorized by City resolution provided to the CDTFA to examine the information.
7.3. Consultant is prohibited from performing consulting services for a retailer (as defined in R&T Code Section 6015), during the term of this agreement.
7.4. Consultant is prohibited from retaining the information contained in or derived from those sales, use or transactions and use tax records after this agreement has expired. Information obtained by examination of the CDTFA records shall be used only for purposes related to collection of local sales and use tax or for other governmental functions of the City as set forth by resolution adopted pursuant to Section 7056 (b) of the Revenue and Taxation Code. The resolution shall designate the Consultant as a person authorized to examine sales and use tax records and certify that this agreement meets the requirements set forth above and in Section 7056 (b), (1) of the Revenue and Taxation Code.
8. Software Use and Proprietary Information
Software Use. Consultant hereby provides authorization to City to access Consultant’s Sales Tax website if City chooses to subscribe to the software and reports option. The website shall only be used by authorized City staff. No access will be granted to any third party without explicit written authorization by Consultant. City shall not sublet, duplicate, modify, decompile, reverse engineer, disassemble, or attempt to derive the source code of said software. The software use granted hereunder shall not imply ownership by City of said software, or any right of City to sell said software or the use of same, or any right to use said software for the benefit of others. This software use authorization is not transferable. Upon termination or expiration of this Agreement, the software use authorization shall expire, and all City staff website logins shall be de-activated.
Proprietary Information. As used herein, the term “proprietary information” means all information or material that has or could have commercial value or other utility in Consultant’s business, including DocuSign Envelope ID: 0616ADC2-15D2-4311-83DD-E982C574A2FC
SCHEDULE A
Transactions Tax Audit Services
Economic Analysis/Forecasting and Related Services
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without limitation: Consultant’s (i) computer or data processing programs; (ii) data processing applications, routines, subroutines, techniques or systems; desktop or web-based software; (iii) business processes; (iv) marketing plans, analysis and strategies; and (v) materials and techniques used; as well as the terms and conditions of this Agreement. Except as otherwise required by law, City shall hold in confidence and shall not use (except as expressly authorized by this Agreement) or disclose to any other party any proprietary information provided, learned of or obtained by City in connection with this Agreement. The obligations imposed by this Section shall survive any expiration or termination of this Agreement or otherwise. The terms of this Section shall not apply to any information that is public information.
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EXHIBIT “C”
SCHEDULE OF COMPENSATION
I. Consultant shall be compensated for the services provided under this Agreement in accordance with the budget and rates provided in Exhibit “A-1”.
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