DATE: 03/18/2026
TO: Honorable Mayor and City Council Members
FROM: Finance Department
2026-61
REQUEST FOR CITY COUNCIL ACTION
SUBJECT:
APPROVAL OF BUSINESS LICENSE FEE WAIVERS AND REIMBURSEMENTS
FROM MINOR HDL CALCULATION ERRORS
EXECUTIVE SUMMARY:
This staff report asks the City Council to approve business license fee waivers and reimbursements for 143 businesses who experienced license fee calculation errors made by the City’s contracted service provider, HdL, between 2021-2024.
RECOMMENDED ACTION:
That the City Council:
a. Waive all outstanding balances due for a total of 97 businesses impacted by a business license first-year renewal calculation error and affirm that no penalties or additional fees will be assessed.
b. Authorize refunds of overpayments for a total of 46 businesses impacted by a business license first-year renewal calculation error, which includes overpayments that exceed the one-year period addressed in the Corona Municipal Code.
BACKGROUND & HISTORY:
The City of Corona’s business license program is governed by the Corona Municipal Code, which establishes the framework for licensing, compliance, and revenue collection from businesses operating within the city. The primary intent of the program is to ensure that all businesses are properly registered, that business activity is conducted in accordance with local regulations, and that the City receives appropriate tax revenues to support municipal services and community needs.
In response to operational and budgetary challenges, as well as the need for specialized expertise, the City Council approved the outsourcing of business license administration in October 2016. This transition was designed to improve efficiency, reduce costs, and leverage external resources for compliance and enforcement. Hinderliter de Llamas and Associates (HdL) was selected for its extensive experience in municipal business licensing and its ability to provide a comprehensive suite of services, including new account processing, renewals, payment processing, customer support, and audit/discovery functions. In 2023, the City conducted a Request for Proposal (RFP) process to evaluate available options and confirm that contracted services continued to meet the City’s standards for the administration of the business license program. HdL was awarded the contract through the RFP process.
HdL’s role encompasses not only the day-to-day management of the business license program but also the implementation of compliance strategies, including the use of external sources to identify unlicensed businesses. Their efforts are intended to maximize compliance while minimizing administrative burden on City staff and ensuring a positive experience for the business community. HdL’s services also include regular reporting, support for dispute resolution, and adaptation to new legislative requirements, such as privacy protections and state-mandated fee collections. HdL processes approximately 10,000 business license applications and renewals per year.
For the majority of businesses that obtain a business license in Corona, their tax is based on gross receipts. The tax for the first year is based on estimated activity. At the firstyear renewal, a “true-up” calculation reconciles the estimate to the actuals. For all future years, the business pays based on the prior year's actual gross receipts.
In 2025, HdL contacted City staff to notify them of a calculation error in the business license system affecting only first-year renewals. The error affected a total of 143 businesses from 2021-2024, out of an estimated 40,000 business license items processed by HdL during the same period.
ANALYSIS:
Under the Corona Municipal Code Chapter (CMC) 5.02, all businesses operating within the City are required to obtain a business license and pay the associated tax. For the majority of businesses, the tax is determined by gross receipts (exceptions are noted in the CMC).
In February 2025, the City was contacted by HdL regarding a system calculation error that affected 143 businesses at their first-year renewal only. A system upgrade implemented in 2021 included a calculation error for businesses completing their first renewal. As it affected only businesses in their first year of renewal, it took some time to be discovered. Once identified, programming changes were implemented, and the calculation was corrected in November 2024. As a result of the calculation error over the four-year period, a total of 143 businesses were impacted. Ninety-seven (97) businesses were undercharged and have a balance due ranging from $6.60 - $2,2522.57, totaling $11,323.07. Forty-six (46) businesses were overcharged, with a credit due of ($7.22 - $709.76), totaling $2,980.12. A listing of impacted businesses is not provided for confidentiality reasons.
BALANCES
DUE
Amounts
Quantity
CREDITS DUE
Amounts Quantity
$0 - $49 58 ($0 – $49) 37
$50 - $99 21 ($50 - $99) 6
$100 - $499 13 ($100 - $499) 1
$500 - $999 3 ($500 - $999) 2
>$1,000 2 (>$1,000) 0
Total 97 Total 46
Total Value $11,323.07 Total Value ($2,980.12)
City staff met with HdL multiple times to discuss resolution options. After much discussion, the recommended resolution is for:
1) Council to waive the outstanding balance dues for the 97 businesses that were undercharged due to the calculation error. During the period of 2021-2024, businesses renewing for the first time reasonably relied on the accuracy of the information provided by the business license system. To uphold our commitment to transparency, accuracy, and equal treatment, the waiver ensures that no business is penalized for relying on information that should have been correct when originally provided. Waiving the balances results in a revenue loss of $11,323.07.
These businesses would not receive any notification from the City or HdL, as no action is needed from the business to resolve the item. 2) Council to approve issuing refunds for the 46 businesses that were overcharged due to the calculation error. CMC 5.02.350 provides for refunds for claims made within one year of the expiration date of the license period. However, staff is recommending that all impacted businesses receive the refund. The total cost of these refunds is $2,980.12. However, this is a cash flow item only, as the revenues from this group were received in prior years.
No action is needed on the business's part, HdL will submit notification and reimbursement on behalf of the City.
3) In the spirit of good faith and to support a constructive resolution, HdL will provide a credit of $12,000 for the City’s business license processing fees, which is more than the cost that would have been collected if the calculation error had not occurred.
By equitably addressing the calculation error, the City demonstrates its commitment to continuous improvement and to protecting both the municipal and business community's interests. The credit from HdL, the waiver of balances due, and the refund of overpayments, are consistent with best practices in municipal administration and support the City’s long-term objectives of maintaining a fair, efficient, and transparent business licensing environment.
FINANCIAL IMPACT:
Approval of the recommended actions will have a minimal impact on the General Fund.
The waiver of underpayments (balances due) will result in a revenue loss of $11,323.07.
However, HdL will provide a $12,000 credit to the City’s business license processing fees to offset the impacts.
The authorization of overpayment refunds (credits due) is a cash flow item, as these payments were received and recognized as revenue in prior years.
The collaborative approach between HdL and the City, ensures that corrective actions are fiscally neutral to the greatest extent possible, preserving the integrity of the General Fund and maintaining alignment with the City’s long-term financial strategy for business license administration.
ENVIRONMENTAL ANALYSIS:
This action is exempt pursuant to Section 15061(b)(3) of the Guidelines for the California Environmental Quality Act (CEQA), which states that a project is exempt from CEQA if the activity is covered by the common sense exemption that CEQA applies only to projects that have the potential for causing a significant effect on the environment. Where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment, the activity is not subject to CEQA. This action is to approve a contract amendment and other business license-related items, and there is no possibility that approval of the recommended actions will have a significant effect on the environment. Therefore, no environmental analysis is required.
PREPARED BY: BRUCE FOLTZ, FINANCE DIRECTOR
REVIEWED BY: JUSTIN TUCKER, ASSISTANT CITY MANAGER