Goleta City Council
July 18, 2023

Agenda Item B.9

CONSENT CALENDAR
Meeting Date: July 18, 2023
TO: Mayor and Councilmembers
FROM: Luke Rioux, Finance Director
SUBJECT: Resolutions Authorizing Examination of Transactions and Use Tax Records and Agreements with the California Department of Tax and Fee Administration, and Approving the Transactions and Use Tax Audit & Information Services Agreement with Hinderliter, de Llamas and Associates RECOMMENDATION:

A. Adopt Resolution No. 23-__, entitled, “A Resolution of the City Council of the City of Goleta, California, Authorizing the City Manager to Execute Agreements with the California Department of Tax and Fee Administration for the Implementation of a Local Transactions and Use Tax”;
B. Adopt Resolution No. 23-__, entitled “A Resolution of the City Council of the City of Goleta, California, Authorizing Examination of Sales or Transactions and Use Tax Records”;
C. Authorize the City Manager to execute a Professional Services Agreement between the City of Goleta and Hinderliter, de Llamas and Associates for Transactions and Use Tax Audit & Information Services; and
D. Authorize the City Manager to take all further necess ary or incidental actions to implement the local transaction and use tax.

BACKGROUND:

At the City Council meeting on June 21, 2022, the City Council approved Resolution No. 22- 30 to place a one percent (1%) transactions and use tax (“sales tax”) measure with an operative date of January 1, 2024, on the November 8, 2022, ballot. On November 8, 2022,

64.39 percent of City of Goleta voters passed the City’s Measure B2022 (the City of Goleta Transactions and Use Tax Ordinance No. 22-17). The transaction and use tax will become operative on January 1, 2024, and will remain in effect until it is repealed by voters. The passage of Measure B added Chapter 3.10 to Title 3 of the City’s Municipal Code.

The City has an existing sales and use tax consulting agreement with Hinderliter, de Llamas and Associates (HdL) for assisting the City with tracking and collecting sales and use tax (Bradley-Burns Tax). Because the local transactions and use tax approved via Measure 1 Meeting Date: July 18, 2023

B2022 is separate from the Bradley-Burns Tax, a new separate agreement for the services is required. In addition, the State requires that the City, by resolution, authorize certain staff and consultants to receive confidential sales or transactions and use tax records.

DISCUSSION:

Pursuant to Revenue and Taxation Code Section 7265 and passage of Measure B, the new tax is scheduled to become operative on January 1, 2024 , and will be administered by the California Department of Tax and Fee Administration (CDTFA). The CDTFA requires that the City approve various resolutions to execute agreements with the CDTFA to perform all functions incident to the administration and operation of the transactions and use tax ordinance. Once the resolutions are approved by the City Council and agreements executed, the CDTFA will be able to implement the sales tax on behalf of the City. Additionally, as the transactions and use tax is separate and distinct from the sales and use tax, a separate resolution authorizing access to examine confidential tax data is required.

The following is a list of items that must be approved by the City Council for implementation including:

1. A resolution authorizing the City Manager to execute a preparatory agreement and administrative agreement with CDTFA to implement the local transactions and use tax on behalf of the City (Attachment 1).

Exhibit A: A preparatory agreement with the CDTFA that describes the work needed to prepare to administer and operate the transaction and use tax, and associated costs. The CDTFA's costs for preparatory work include costs of developing procedures, programming for data processing, developing, and adopting appropriate regulations, designing, and printing forms, developing instructions for CDTFA’s staff and for taxpayers, and other appropriate and necessary preparatory costs to administer the transactions and use tax ordinance, including direct and indirect preparatory costs specified by Government Code Section 11256. The preparatory costs cannot exceed $175,000 pursuant to Revenue and Taxation Code Section 7272 (Attachment 1, Exhibit A).

Exhibit B: The administrative agreement with the CDTFA to implement the local transactions and use tax. The administrative agreement authorizes CDTFA to exclusively perform all functions incident to the administration and operation of the City’s transactions and use tax ordinance in accordance with applicable laws and regulations. CDTFA will collect and transmit the sales tax to the City on a periodic basis, but at least twice per quarter while the tax is in effect. The City will pay CDTFA the costs to administer the transactions and use tax, which CDTFA will deduct from collected tax revenues (Attachment 1, Exhibit B).

2. A resolution authorizing specific City staff (specifically, City Manager, Assistant City Manager, Finance Director, other staff as designated by the City Manager or Finance Director, and the City’s consultant, H inderliter, de Llamas and Associates (HdL) , to examine the confidential sales or transactions and use tax records of the CDTFA 2 Meeting Date: July 18, 2023

pertaining to the tax collected for the City pursuant to Revenue and Taxation Code Section 7056. It should be noted that the individuals provided with the authority to examine the City’s detailed tax records must adhere to the confidentiality requirements. In summary, those who are allowed access to confidential records must use such information only for the governmental purposes set forth in the resolution, and those records are not subject to release in public meetings or other such forums.

Confidential records may not be shared with other local officials who have not been authorized by resolution to receive them (Attachment 2).

3. A Professional Services Agreement for Transactions and Use Tax Audit & Information Services with HdL. In order for the CDTFA to permit the City or its consultant access to confidential transaction s and use tax records, the City must enter into a contract with the consultant to perform auditing services and authorize that company to access the confidential tax records. As such, the City also needs to enter into an agreement with HdL to perform auditing services for the new transactions and use tax. Under the agreement, HdL will be paid $200 monthly for transaction tax reports and 25% of the initial amount of new transactions and use tax revenue received by the City as a result of audit and recovery work performed by HdL . The agreement with HdL may provide increased transactions and use tax revenues through a system of continuous analysis to identify allocation errors and reporting deficiencies (Attachment 3).

FISCAL IMPACTS:

Execution of the contracts with the CDTFA will ensure the timely collection and allocation of the tax. The costs of the preparatory activities will be based on the actual costs of the CDTFA, to be billed to and paid directly by the City within a reasonable time after the operative date of the tax.

In the first year, the City is required to pay the CDTFA a preparatory cost in an amount not-to-exceed $175,000 in accordance with Revenue and Taxation Code Section 7272 and costs to administer the transaction and use tax. Actual one-time costs are anticipated to be in the range of $20,000 to $50,000 and known information will be shared with the City Council as part of a future Quarterly Financial Review.

Ongoing administrative fees will be deducted from the taxes collected by the CDTFA for the City. These deductions are not anticipated to exceed $80,000 annually.

The base cost for transactions and use tax related services with HdL is $200 per month ($2,400 annually). Additionally, HdL will provide audit services for 25% of the initial amount of new transactions or use tax revenue received by City as a result of audit and recovery worked performed.

ALTERNATIVES:

The City Council could direct staff to amend resolutions and adopt resolutions as amended by changing the titles or provide staff with alternate direction. 3 Meeting Date: July 18, 2023

Reviewed By: Legal Review By: Approved By:

___________________ ___________________ _________________ Kristine Schmidt Megan Garibaldi Robert Nisbet
Assistant City Manager City Attorney City Manager

ATTACHMENTS:

1. Resolution No. 23-__ entitled “A Resolution of the City Council of the City of Goleta, California, Authorizing the City Manager to Execute Agreements with the California Department of Tax and Fee Adminis tration for the Implementation of a Local Transactions and Use Tax.”
Exhibit A: Preparatory Agreement with the California Department of Tax and Fee Administration to Administer and Operate the City’s Transactions and Use Tax Ordinance
Exhibit B: Administrative Agreement with the California Department of Tax and Fee Administration to Administer the City’s Transactions and Use Taxes

2. Resolution No. 23-__entitled “A Resolution of the City Council of the City of Goleta, California, Authorizing Examination of Sales or Transactions and Use Tax Records.”

3. Professional Services Agreement with Hinderliter, de Llamas & Associates for Transactions and Use Tax Audit & Information Services.
4 ATTACHMENT 1:

Resolution No. 23-__, entitled, “A Resolution of the City Council of the City of Goleta, California, Authorizing the City Manager to Execute Agreements with the California Department of Tax and Fee Administration for the Implementation of a Local Transactions and Use Tax.”
5 RESOLUTION NO. 23-__

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF

GOLETA, CALIFORNIA, AUTHORIZING THE CITY MANAGER TO

EXECUTE AGREEMENTS WITH THE CALIFORNIA

DEPARTMENT OF TAX AND FEE ADMINISTRATION FOR

IMPLEMENTATION OF A LOCAL TRANSA CTIONS AND USE
TAX.

WHEREAS, on November 8, 2022 the voters approved Ordinance No. 22- 17, amending the City Municipal Code and providing for a local transaction and use tax; and

WHEREAS, the Californ ia Department of Tax and Fee Administration (Department) administration collects the transactions and use taxes for all applicable jurisdiction within the state; and

WHEREAS, the Department will be responsible for administering and collecting the transactions and use tax for the City; and

WHEREAS, the Department requires that the City enter into a “Preparatory Agreement” and an “Administration Agreement” prior to implementation of said taxes, and

WHEREAS, the Department requires that the City Council authorize the agreements.

NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF GOLETA, AS FOLLOWS:

SECTION 1. The City Council of the City of Goleta hereby approves the “Preparatory Agreement” attached as Exhibit A and the “Administrative Agreement” attached as Exhibit B and the City Manager is hereby authorized to execute each agreement.

6 Resolution No. 23-__ Agreement Resolution CDTFA

SECTION 2. The City Clerk shall certify the passage and adoption of this resolution and enter it into the book of original resolutions.

PASSED, APPROVED AND ADOPTED this 18th day of July, 2023.

__________________________

PAULA PEROTTE, MAYOR

ATTEST: APPROVED AS TO FORM:

_________________________ __________________________
DEBORAH S. LOPEZ MEGAN GARIBALDI

CITY CLERK CITY ATTORNEY

7 Resolution No. 23-__ Agreement Resolution CDTFA

STATE OF CALIFORNIA )
COUNTY OF SANTA BARBARA ) ss.

CITY OF GOLETA )
I, DEBORAH S. LOPEZ, City Clerk of the City of Goleta, California, DO HEREBY CERTIFY that the foregoing Resolution No. 23-__ was duly adopted by the City Council of the City of Goleta a t a regular meeting held on the 18th day of July, 2023 by the following vote of the Council:

AYES:

NOES:

ABSENT:
(SEAL)
_________________________
DEBORAH S. LOPEZ

CITY CLERK
8 Exhibit A
1 AGREEMENT FOR PREPARATION TO ADMINISTER AND OPERATE

CITY'S TRANSACTIONS AND USE TAX ORDINANCE

In order to prepare to administer a transactions and use tax ordinance adopted in accordance with the provision of Part 1.6 (commencing with Section 7251) of Division 2 of the Revenue and Taxation Code, the City of Goleta, hereinafter called City, and the CALIFORNIA DEPARTMENT OF TAX AND FEE ADMINISTRATION, hereinafter called Department, do agree as follows:

1. The Department agrees to enter into work to prepare to administer and operate a transactions and use tax in conformity with Part 1.6 of Division 2 of the Revenue and Taxation Code which has been approved by a majority of the electors of the City and whose ordinance has been adopted by the City.

2. City agrees to pay to the Department at the times and in the amounts hereinafter specified all of the Department's costs for preparatory work necessa ry to administer the City's transactions and use tax ordinance. The Department's costs for preparatory work include costs of developing procedures, programming for data processing, developing and adopting appropriate regulations, designing and printing forms, developing instructions for the Department's staff and for taxpayers, and other appropriate and necessary preparatory costs to administer a transactions and use tax ordinance.

These costs shall include both direct and indirect costs as specified in S ection 11256 of the Government Code.

3. Preparatory costs may be accounted for in a manner which conforms to the internal accounting and personnel records currently maintained by the Department. The billings for costs may be presented in summary form. Detailed records of preparatory costs will be retained for audit and verification by the City.

4. Any dispute as to the amount of preparatory costs incurred by the Department shall be referred to the State Director of Finance for resolution, and the Director's decision shall be final.

5. Preparatory costs incurred by the Department shall be billed by the Department periodically, with the final billing within a reasonable time after the operative date of the ordinance. City shall pay to the Department the amount of such costs on or before the last day of the next succeeding month following the month when the billing is received.

6. The amount to be paid by City for the Department's preparatory costs shall not exceed one hundred seventy-five thousand dollars ($175,000) (Revenue and Taxation Code Section 7272.) 9 Exhibit A
2 7. Communications and notices may be sent by first class United States mail.

Communications and notices to be sent to the Department shall be addressed to:

California Department of Tax and Fee Administration
P.O. Box 942879 MIC: 27
Sacramento, California 94279-0027

Attention: Administrator
Local Revenue Branch

Communications and notices to be sent to City shall be addressed to:

City of Goleta
Attention: Finance Department
130 Cremona, Suite B
Goleta, CA 93117

8. The date of this agreement is the date on which it is approved by the Department of General Services. This agreement shall continue in effect until the preparatory work necessary t o administer City's transactions and use tax ordinance has been completed and the Department has received all payments due from City under the terms of this agreement.

CITY OF GOLETA CALIFORNIA DEPARTMENT OF TAX

AND FEE ADMINISTRATION

By By
(Signature) Administrator
Local Revenue Branch
Robert Nisbet
(Typed Name)

City Manager
(Title)

(Rev. 11/17)
10 Exhibit B

AGREEMENT FOR STATE ADMINISTRATION

OF CITY TRANSACTIONS AND USE TAXES

The City Council of the City of Goleta has adopted, and the voters of the City of Goleta (hereafter called “City” or “District”) have approved by the required majority vote, the City of Goleta Transactions and Use Tax Ordinance (hereafter called “Ordinance”), a copy of which is attached hereto. To carry out the provisions of Part 1.6 of Division 2 of the Revenue and Taxation Code and the Ordinance, the California State Department of Tax and Fee Administration , (hereinafter called the “Department”) and the City do agree as follows:

ARTICLE I

DEFINITIONS

Unless the context requires otherwise , wherever the following terms appear in the Agreement, they shall be interpreted to mean the following:

1. "District taxes" shall mean the transactions and use taxes, penalties, and interest imposed under an ordinance specifically authorized by Revenue and Taxation code Section 7285.9, and in compliance with Part 1.6, Division 2 of the Revenue and Taxation Code.

2. "City Ordinance" shall mean the City's Transactions and Use Tax Ordinance referred to above and attached hereto, Ordinance No. 22-17, as amended from time to time, or as deemed to be amended from time to time pursuant to Revenue and Taxation Code Section 7262.2.

ARTICLE II

ADMINISTRATION AND COLLECTION

OF CITY TAXES

A. Administration. The Department and City agree that the Department shall perform exclusively all functions incident to the administration and operation of the City Ordinance. 11 (Rev. 10/17) 2

B. Other Applicable Laws. City agrees that all provisions of law applicable to the administration and operation of the Department Sales and Use Tax Law which are not inconsistent with Part 1.6 of Division 2 of the Revenue and Taxation Code shall be applicable to the administration and operation of the City Ordinance. City agrees that money collected pursuant to the City Ordinance may be deposited into the State Treasury to the credit of the Retail Sales Tax Fund and may be drawn from that Fund for any authori zed purpose, including making refunds, compensating and reimbursing the Department pursuant to Article IV of this Agreement, and transmitting to City the amount to which City is entitled.

C. Transmittal of money.

1. For the period during which the tax is in effect, and except as otherwise provided herein, all district taxes collected under the provisions of the City Ordinance shall be transmitted to City periodically as promptly as feasible, but not less often than twice in each calendar quarter.

2. For periods subsequent to the expiration date of the tax whether by City’s self -imposed limits or by final judgment of any court of the State of California holding that City’s ordinance is invalid or void, all district taxes collected under the provisio ns of the City Ordinance shall be transmitted to City not less than once in each calendar quarter.

3. Transmittals may be made by mail or electronic funds transfer to an account of the City designated and authorized by the City. A statement shall be f urnished at least quarterly indicating the amounts withheld pursuant to Article IV of this Agreement.

D. Rules. The Department shall prescribe and adopt such rules and regulations as in its judgment are necessary or desirable for the administration and operation of the City Ordinance and the distribution of the district taxes collected thereunder.

E. Preference. Unless the payor instructs otherwise, and except as otherwise provided in this Agreement, the Department shall give no preference in applying money received for state sales and use taxes, state-administered local sales and use taxes, and district transactions and use taxes owed by a taxpayer, but shall apply moneys collected to the satisfaction of the claims of the State, cities, counties, cities and counties, redevelopment agencies, other districts, and City as their interests appear. 12 (Rev. 10/17) 3

F. Security. The Department agrees that any security which it hereafter requires to be furnished by taxpayers under the State Sales and Use Tax Law will be upon such terms that it also will be available for the payment of the claims of City for district taxes owing to it as its inte rest appears.

The Department shall not be required to change the terms of any security now held by it, and City shall not participate in any security now held by the Department.

G. Records of the Department.

When requested by resolution of the legislative body of the City under section 7056 of the Revenue and Taxation Code, the Department agrees to permit authorized personnel of the City to examine the records of the Department, including the name, address, and account number of each seller holding a seller’s permit with a registered business location in the City, pertaining to the ascertainment of transactions and use taxes collected for the City. Information obtained by the City from examination of the Department's records shall be used by the City only for purposes related to the collection of transactions and use taxes by the Department pursuant to this Agreement.

H. Annexation. City agrees that the Department shall not be required to give effect to an annexation, for the purpose of collecting, allocating, and distributing District transactions and use taxes, earlier than the first day of the calendar quarter which commences not less than two months after notice to the Department. The notice shall includ e the name of the county or counties annexed to the extended City boundary. In the event the City shall annex an area, the boundaries of which are not coterminous with a county or counties, the notice shall include a description of the area annexed and two maps of the City showing the area annexed and the location address of the property nearest to the extended City boundary on each side of every street or road crossing the boundary.

ARTICLE III

ALLOCATION OF TAX

A. Allocation. In the administration of the Department's contracts with all districts that impose transactions and use taxes imposed under ordinances, which comply with Part 1.6 of Division 2 of the Revenue and Taxation Code:

13 (Rev. 10/17) 4

1. Any payment not identified as being in payment of liability owi ng to a designated district or districts may be apportioned among the districts as their interest appear, or, in the discretion of the Department, to all districts with which the Department has contracted using ratios reflected by the distribution of district taxes collected from all taxpayers.

2. All district taxes collected as a result of determinations or billings made by the Department, and all amounts refunded or credited may be distributed or charged to the respective districts in the same ratio as the taxpayer's self -declared district taxes for the period for which the determination, billing, refund or credit applies.

B. Vehicles, Vessels, and Aircraft. For the purpose of allocating use tax with respect to vehicles, vessels, or aircraft, the add ress of the registered owner appearing on the application for registration or on the certificate of ownership may be used by the Department in determining the place of use.

ARTICLE IV

COMPENSATION

The City agrees to pay to the Department as the State's cost of administering the City Ordinance such amount as is provided for by law. Such amounts shall be deducted from the taxes collected by the Department for the City.

ARTICLE V

MISCELLANEOUS PROVISIONS

A. Communications. Communications and notices may be sent by first class United States mail to the addresses listed below, or to such other addresses as the parties may from time to time designate. A notification is complete when deposited in the mail. 14 (Rev. 10/17) 5

Communications and notices to be sent to the Department shall be addressed to:

California State Department of Tax and Fee Administration P.O. Box 942879
Sacramento, California 94279-0027

Attention: Administrator
Local Revenue Branch

Communications and notices to be sent to the City shall be addressed to:

City of Goleta
Attention: Finance Department
130 Cremona, Suite B
Goleta, CA 93117

Unless otherwise directed, transmittals of payment of District transactions and use taxes will be sent to the address above.

B. Term. The date of this Agreement is the date on which it is approved by the Department of General Services. The Agreement shall take effect on January 1, 2024. This Agreement shall continue until December 31 next following the expiration date of the City Ordinance, and shall thereafter be renewed automatically from year to year until the Department completes all work necessary to the administration of the City Ordinance and has received and disbursed all payments due under that Ordinance.

C. Notice of Repeal of Ordinance. City shall give the Department written notice of the repeal of the City Ordinance not less than 110 days prior to the operative date of the repeal. 15 (Rev. 10/17) 6

ARTICLE VI

ADMINISTRATION OF TAXES IF THE

ORDINANCE IS CHALLENGED AS BEING INVALID

A. Impoundment of funds.

1. When a legal action is begun challenging the validity of the imposition of the tax, the City shall deposit in an interest-bearing escrow account, any proceeds transmitted to it under Article II. C., until a court of competent jurisdiction renders a final and non -appealable judgment that the tax is valid.

2. If the tax is determined to be unconstitutional or otherwise invalid, the City shall transmit to the Department the moneys retained in escrow, including any acc umulated interest, within ten days of the judgment of the trial court in the litigation awarding costs and fees becoming final and non-appealable.

B. Costs of administration. Should a final judgment be entered in any court of the State of California, ho lding that City's Ordinance is invalid or void, and requiring a rebate or refund to taxpayers of any taxes collected under the terms of this Agreement, the parties mutually agree that:

1. Department may retain all payments made by City to Department to prepare to administer the City Ordinance.

2. City will pay to Department and allow Department to retain Department's cost of administering the City Ordinance in the amounts set forth in Article IV of this Agreement.

3. City will pay to Department or to the State of California the amount of any taxes plus interest and penalties, if any, that Department or the State of California may be required to rebate or refund to taxpayers.

16 (Rev. 10/17) 7

4. City will pay to Department its costs for rebating or refunding such taxes, interest, or penalties. Department's costs shall include its additional cost for developing procedures for processing the rebates or refunds, its costs of actually making these refunds, designing and printing forms, and developing instructions for Department's staff for use in making these rebates or refunds and any other costs incurred by Department which are reasonably appropriate or necessary to make those rebates or refunds. These costs shall include Department's direct and indirect costs as specified by Section 11256 of the Government Code.

5. Costs may be accounted for in a manner, which conforms to the internal accounting, and personnel records currently maintained by the Department. The billings for such costs may be presented in summary form. Detailed records will be retained for audit and verification by City.

6. Any dispute as to the amount of costs incurred by Department in refunding taxes shall be referred to the State Director of Finance for resolution and the Director's decision shall be final.

7. Costs incurred by Department in connection with such refunds shall be billed by Department on or before the 25th day of the second month following the month in which the judgment of a court of the State of California holding City's Ordinance invalid or void becomes final. Thereafter Department shall bill City on or before the 25th of each month for all costs incurred by Department for the preceding calendar month. City shall pay to Department the amount of such costs on or before the last day of the succeeding month and shall pay to Department the total amount of taxes, interest, and penalties refunded or paid to taxpayers, together with Department costs incurred in making those refunds.

CITY OF GOLETA CALIFORNIA STATE DEPARTMENT OF

TAX AND FEE ADMINISTRATION

By By
(Signature) Administrator
Local Revenue Branch
Robert Nisbet
(Typed Name)

City Manager
(Title)
17 ORDI
NANCE NO. 22-17

AN ORDI

NANCE OF THE PEOPLE OF THE CITY OF GOLETA ,
CALIFORNIA, ADDING CH APTER 3.10 TO TITLE 3 OF THE
GOLETA MUNICIPAL CODE TO ENACT A ONE -CENT ( 1¢)

GENERAL TRANSACTIONS AND USE TAX (SALES TAX) TO BE

ADMINISTERED BY THE CALIFORNIA DEPARTMENT OF TAX AND

FEE ADMINISTRATION
WHE
REAS, pursuant to California Revenue and Taxation C ode section 7285.9 the City of Goleta (“City”) is a uthorized to levy a Transactions and Use Tax for general purposes, subject to majority voter approval; and
WHE
REAS, the P eople of the City desire to levy a Transactions and Use Tax for general purposes until repealed to fund important general City services, at a rate of one cent (1¢); and
WHE
REAS, if approved by the City Council and Goleta voters, the Transactions and Use Tax O rdinance wi ll be incorporated into Chapter 3.10 of Title 3 of the Goleta Municipal Code.

NOW
, THEREFORE, THE PEOPLE OF THE CITY OF GOLETA DO HEREBY ORDAIN AS FOLLOWS:

Section 1. Title and Text. This Ordinance shall be known as the Goleta Transactions and Use Tax Ordinance, the full text of which is set forth in Attachment “1”, attached hereto and incorporated herein by reference.

Section 2. Approval by the City Council. Pursuant to California Government Code section 53724 and Revenue and Taxation Code section 7285.9, this Ordinance was duly approved for placement on the ballot by a minimum two-thirds (2/3) supermajority of all members of the City Council on June 21, 2022.

Section 3. Approval by the Voters. Pursuant to California Elections Code section 9217, this Ordinance shall be deemed adopted and take eff ect only if approved by a majority of the eligible voters of the City of Goleta voting at the General Municipal Election of November 8, 2022 . It s hall be deemed adopted w hen the City Council has certified the results of that election by resolution and shal l t ake effect ten (10) days thereafter.

Section 4. Operative Date. “Operative Date” for the Transactions and Use Tax means the first day of the first calendar quarter commencing more than 110 days after the date this Ordinance is adopted, as set forth i n Section 3 above, but no earlier than January 1, 2024.
18 Section 5. Severability. If any provision of this Ordinance or the application thereof to any person or circumstance is held invalid, the remainder of the Ordinance and the application of such provi sion to other persons or circumstances shall not be affected thereby.

I hereby
certify that the Goleta Transactions and Use Tax Ordinance was PASSED, APPROVED, AND ADOPTED by the People of the City of Goleta on the 8th day of November, 2022.

CITY

OF GOLETA

PAULA PER OTTE
MAYOR
ATTEST: APPROVED AS TO FORM:
_______________________
DEBORAH S. LOPEZ

CITY CLERK
__________________________

MEGAN GARIBALDI

CITY ATTORNEY
19 Sect
ions:

3.10.010 - Purpose.

3.10.020 - Contract With State.

3.10.030 - Transactions Tax Rate.

3.10.040 - Place of Sale.

3.10.050 - Use Tax Rate.

3.10.060 - Adoption of Provisions of State Law.

3.10.070 - Limitations on Adoption of State Law and Collection of Use Taxes.

3.10.080 - Permit Not Required.

3.10.090 - Exemptions and Exclusions.

3.10.100 - Amendments.

3.10.110 - Enjoining Collection Forbidden.

3.10.120 - Duration of Tax
Sect
ions:

3.10 .010 - Purpose.

Thi
s ordinance is adopted to achieve the following, among other purposes, and directs that the provisions hereof be interpreted in order to accomplish those purposes:

A. To i
mpose a retail transactions and use tax in accordance with the provisions of Part

1.6 (commencing with Section 7251) of Division 2 of the Revenue and Taxation Code and Section 7285.9 of Part 1.7 of Division 2 which authorizes the City to adopt this tax ordinance which shall be operative if a majority of the electors voting on the measure vote to approve the imposition of the tax at an election called for that purpose.

B. To ad
opt a retail transactions and use tax ordinance that incorporates provisions identical to those of the Sales and Use Tax Law of the State of Califor nia insofar as those provisions are not inconsistent with the requirements and limitations contained in Part 1.6 of Division 2 of the Revenue and Taxation Code.

C. To a
dopt a retail transactions and use tax ordinance that imposes a tax and provides a meas ure therefore that can be administered and collected by the California Department of Tax and Fee Administration in a manner that adapts itself as fully as practicable to, and requires the least possible deviation from, the ex isting statutory and administrative procedures followed by the California Department of Tax and Fee Administration in administering and collecting the California State Sales and Use Taxes.

D. To a
dopt a retail transactions and use tax ordinance that can b e administered in a manner that will be, to the greatest degree possible, consistent with the provisions of Part 1.6 of Division 2 of the Revenue and Taxation Code, minimize the cost of collecting the transactions and use taxes, and at the same time, minimize the burden of record- keeping upon persons subject to taxation under the provisions of this ordinance.

Chapter 3.10 - Transactions and Use Tax
20 3.10.020 - Contract With State.

Pr
ior to the operative date, the City shall contract with the California Department of T ax and Fee Administration t o p erform all functions incident to the administration and operation of this transactions and use tax ordinance; provided, that if the City shall not have contracted with the California Department of Tax and Fee Administration prior to the operative date, it shall nevertheless so contract and in such a case the operative date shall be the first day of the first calendar quarter following the execution of such a contract.

3.10 .030- Transactions Tax Rate.

For t
he privilege of selling tangible personal pr operty at retail, a tax is hereby imposed upon all retailers in the incorporated territory of the City at the rate of one per cent (1%) of the gross receipts of any retailer from the sale of all tangible personal property sold at retail in said territory on and after the operative date of this ordinance.

3.10 .040 - Place of Sale.

For
the purposes of this ordinance, all retail sales are consummated at the place of business of the retailer unless the tangible personal property sold is delivered by the retailer or his agent to an out -of-state destination or to a common carrier for delivery to an out -of-state destination. The gross receipts from such sales shall include delivery charges, when such charges are subject to the state sales and use tax, regardless of the place to which delivery is made. In the event a retailer has no permanent place of business in the State or has more than one place of business, the place or places at which the retail sales are consummated shall be determined under rules and regulations to be prescribed and adopted by the California Department of Tax and Fee Administration.

3.10 .050 - Use Tax Rate.

An exc
ise tax is hereby imposed on the storage, use or other consumption in the City of tangible personal property purchased from any retailer on and after the operative date of this ordinance for storage, use or other consumption in said territory at the rate of one percent (1%) of the sales price of the property. The sales price shall include delivery charges when such charges are subject to state sales or use tax regardless of the place to which delivery is made.

3.10 .060 - Adoption of Provisions of State Law.

Ex
cept as otherwise provided in this ordinance and except insofar as they are inconsistent with the provisions of P art 1.6 of Division 2 of the Revenue and Taxation Code, all of the provisions of Part 1 (commencing with Section 6001) of Division 2 of the Revenue and Taxation Code are hereby adopted and made a part of this ordinance as though fully set forth herein.

3.10.0 70 - Limitations on Adoption of State Law and Collection of Use Taxes. 21 In a
dopting the provisions of Part 1 of Division 2 of the Revenue and Taxation Code:

A. Wher
ever the State of California is named or referred to as the t axing agency, the name of this City shall be substituted therefor. However, the substitution shall not be made when:

1. The w
ord “State” is used as a part of the title of the State Controller, State Treasurer, California Victim Compensation Board, California Department of Tax and Fee Administration, State Tre asury, or the Constitution of the State of California;

2. The r
esult of that substitution would require action to be taken by or against this City or any agency, officer, or employee thereof rather than by or against the California Department of Tax and Fee Administration, in performing the functions incident to the administration or operation of this Ordinance.

3. In t
hose sections, including, but not necessarily limited to sections referring to the exterior boundaries of the State of California, where the result of the substitution would be to:
a. Pr
ovide an exemption from this tax with respect to certain sales, storage, use or other consumption of tangible personal property which would not otherwise be exempt from this tax while such sales, storage, use or other consumption remain subject to tax by the State under the provisions of Part 1 of Division 2 of the Revenue and Taxation Code, or; b. Im
pose this tax with respect to certain sales, storage, use or other consumption of tangible personal property which would not be subject to tax by the state under the said provision of that code.

4. In ref
erence to Sections 6701, 6702 (except in the last sentence thereof), 6711, 6715, 6737, 6797 or 6828 of the Revenue and Taxation Code.

B. The w
ord “ city” shall be substituted for the word “ state” in the phrase “retailer engaged in business in this state ” in Section 6203 of the Revenue and Taxation Code and in the definition of that phrase in Section 6203.

1. “A
retailer engaged in business in the District” shall also include any retailer that, in the preceding calendar year or the current calendar year, has total combined sales of tangible personal property in this state or for delivery in the State by the retailer and all persons related to the retailer that exceeds five hundred thousand dollars ($500,000). For purposes of this section, a person is related to another person if both persons are related to each other pursuant to Section 267(b) of Title 26 of the United States Code and the regulations thereunder.

3.10 .080 - Permit not Required.
22 If a seller’s permit has been issued to a retailer under Section 6067 of the Revenue and Taxation Code, an additional transactor’s permit shall not be required by this ordinance.

3.10 .090 - Exemptions and Exclusions.

A. Ther
e shall be excluded from the measure of the transactions tax and the use tax the amount of any sales tax or use tax imposed by the State of California or by any city, city and co unty, or county pursuant t o the Bradley-Burns Uniform Local Sales and Use Tax Law or the amount of any state-administered transactions or use tax.

B. Ther
e are exempted from the computation of the amount of transactions tax the gross receipts from:

1. Sales
of tangible personal p roperty, other than fuel or petroleum products, to operators of aircraft to be used or consumed principally outside the county in which the sale is made and directly and exclusively in the use of such aircraft as common carriers of persons or property unde r t he authority of the laws of this State, the United States, or any foreign government.

2. Sal
es of property to be used outside the City which is shipped to a point outside the City, pursuant to the contract of sale, by delivery to such point by the re tailer or his agent, or by delivery by the retailer to a carrier for shipment to a consignee at such point. For the purposes of this paragraph, delivery to a point outside the City shall be satisfied:
a. Wi
th respect to vehicles (other than commercial vehi cles) subject to registration pursuant to Chapter 1 (commencing with Section 4000) of Division 3 of the Vehicle Code, aircraft licensed in compliance with Section 21411 of the Public Utilities Code, and undocumented vessels registered under Division 3. 5 (commencing with Section 9840) of the Vehicle Code by registration to an out -of-City address and by a declaration under penalty of perjury, signed by the buyer, stating that such address is, in fact, his or her principal place of residence; and
b. With
respect to commercial vehicles, by registration to a place of business out-of-City and declaration under penalty of perjury, signed by the buyer, that the vehicle will be operated from that address.

3. The s
ale of tangible personal property if the sell er i s obligated to furnish the property for a fixed price pursuant to a contract entered into prior to the operative date of this ordinance.

4. A l
ease of tangible personal property which is a continuing sale of such property, for any period of time for which the lessor is obligated to lease the property for an amount fixed by the lease prior to the operative date of this ordinance.

5. For
the purposes of subparagraphs (3) and (4) of this sub section, the sale or lease of tangible personal property shall be deemed not to be obligated pursuant 23 to a c
ontract or lease for any period of time for which any party to the contract or lease has the unconditional right to terminate the contract or lease upon notice, whether or not such right is exercised.

C. Ther
e are exempted from the use tax imposed by this ordinance, the storage, use or other consumption in this City of tangible personal property:

1. The gr
oss receipts from the sale of which have been subject to a transactions tax under any state-administered transactions and use tax ordinance.

2. Ot
her than fuel or petroleum products purchased by operators of aircraft and used or consumed by such operators directly and exclusively in the use of such aircraft as common carriers of persons or property for hire or compensation under a certificate of public convenience and necessity issued pursuant to the laws of this State, the United States, or any foreign government. This exemption is in addition to the exemptions provided in Sections 6366 and 6366.1 of the Revenue and Taxation Code of the State of California.

3. If
the purchaser is obligated to purchase the property for a fixed price pursuant to a contract entered into prior to the operative date of this ordinance.

4. If the
poss ession of, or the exercise of any right or power over, the tangible personal property arises under a lease which is a continuing purchase of such property for any period of time for which the lessee is obligated to lease the property for an amount fixed by a lease prior to the oper ative date of this ordinance.

5. For
the purposes of subparagraphs (3) and (4) of this sub section, storage, use, or other consumption, or possession of, or exercise of any right or power over, tangible personal property shall be deemed not to be obligated pursuant to a contract or lease for any period of time for which any party to the contract or lease has the unconditional right to terminate the contract or lease upon notice, whether or not such right is exercised.

6. Exce
pt as provided in subparagraph (7), a retailer engaged in bu siness in the City shall not be required to collect use tax from the purchaser of tangible personal property, unless the retailer ships or delivers the property into the City or participates within the City in making the sale of the property, including, but not limited to, soliciting or receiving the order, either directly or indirectly, at a place of business of the retailer in the City or through any representative, agent, canvasser, solicitor, subsidiary, or person in the C ity under the authority of the retailer.

7. “A
retailer engaged in business in the City” shall also include any retailer of any of the following: vehicles subject to registration pursuant to Chapter 1 (commencing with Section 4000) of Division 3 of the V ehicle Code, aircraft licensed in compliance with Section 21411 of the Public Utilities Code, or undocumented vessels registered under Division 3.5 (commencing with Section 24 9840) of the Vehicle Code. That retailer shall be required to collect use tax from any purchaser who registers or licenses the vehicle, vessel, or aircraft at an address in the City.

D. Any
person subject to use tax under this ordinance may credit against that tax any transactions tax or reimbursement for transactions tax paid to a dis trict imposing, or retailer liable for, a transactions tax pursuant to Part 1.6 of Division 2 of the Revenue and Taxation Code with respect to the sale to the person of the property the storage, use or other consumption of which is subject to the use tax.

3.10. 100 - Amendments.

All am
endments subsequent to the effective date of this ordinance to Part 1 of Division 2 of the Revenue and Taxation Code relating to sales and use taxes and which are not inconsistent with Part 1.6 and Part 1.7 of Division 2 of the Revenue and Taxation Code, and all amendments to Part 1.6 and Part 1.7 of Division 2 of the Revenue and Taxation Code, shall automatically become a part of this ordinance, provided however, that no such amendment shall operate so as to affect the rate of tax imposed by this ordinance.

3.10 .110 - Enjoining Collection Forbidden.

No i
njunction or writ of mandate or other legal or equitable process shall issue in any suit, action or proceeding in any court against the State or the City, or against any officer of the State or the City, to prevent or enjoin the collection under this ordinance, or Part 1.6 of Division 2 of the Revenue and Taxation Code, of any tax or any amount of tax required to be collected.

3.10 .120 – Duration of Tax.

The t
ax imposed by this chapter shall continue until this ordinance is repealed. 25 ATTACHMENT 2:

Resolution No. 23-__, entitled, “A Resolution of the City Council of the City of Goleta, California, Authorizing Examination of Sales or Transactions and Use Tax Records.” 26 RESOLUTION NO. 23-__

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF

GOLETA, CALIFORNIA, AUTHORIZING EXAMIN ATION OF

SALES OR TRANSACTIONS AND USE TAX RECORDS

WHEREAS, pursuant to Ordinance N o. 2 2-17 of the City of Goleta hereinafter called District, and Section 7270 of the Revenue and Taxation Code, the District entered into a contract with the California Department of Tax and Fee Administration (Department) to perform all functions incident to the administration and collection of transactions and use taxes; and

WHEREAS, the District deems it desirable and necessary for authorized officers, employees, and representatives of the District to examine confidential sales or transactions and use tax records of the Department pertaining to transactions and use taxes collected by the Department for the District pursuant to that contract; and

WHEREAS, Section 7056 of the California Revenue and Taxation Code sets forth certain requirements and conditions for the disclosure of Department records, and Section 7056.5 of the California Revenue and Taxation Code establishes criminal penalties for the unlawful disclosure of information contained in, or derived from, the sales or transactions and use tax records of the Department; and

NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF GOLETA, AS FOLLOWS:

SECTION 1. That t he City Manager, Assistant City Manager, Finance Director, or other officer or employee of the District designated in writing by the City Manager or Finance Director to the California Department of Tax and Fee Administration is hereby appointed to represent the District with authority to examine sales or transactions and use tax records of the Department pertaining to transactions and use taxes collected for the District by the Department pursuant to the contract between the District and the Department.

SECTION 2 . The information obtained by examination of Department records shall be used only for purposes related to the collection of District transactions and use taxes by the Department pursuant to that contract , and for the purposes related to the following government functions of the District:

a) Revenue projections
b) Budget forecasting
c) Economic development planning
d) Business license review
27 Resolution No. 23-__ Authorizing Examination of Sales or Transactions and Use Tax Records SECTION 3. That Hinderliter de Llamas and Associates (HdL Companies) is hereby designated to examine the sales or transactions and use tax records of the Department pertaining to transactions and use taxes collected for the District by the Department. The person or entity designated by this section meets all of the following conditions, which are also included in the contract between the District and Hinderliter de Llamas and Associates:

a) has an existing contract with the District to examine those sales or transactions and use tax records;

b) is required by that contract to disclose information contained in, or derived from, those sales or transactions and use tax records only to the officer or employee authorized under Section 1 of this resolution to examine the information.

c) is prohibited by that contract from performing consulting services for a retailer during the term of that contract;

d) is prohibited by that contract from retaining the information contained in or derived from tho se sales or transactions and use tax records, after that contract has expired.

BE IT FURTHER RESOLVED that the information obtained by examination of Department records shall be used only for purposes related to the collection of District transactions and use taxes by the Department pursuant to the contract between the District and the Department and for those purposes related to the governmental functions of the District listed in Section 2 of this resolution.

SECTION 4. The City Clerk shall certify to the passage and adoption of this resolution and enter it into the book of original resolutions.

PASSED, APPROVED AND ADOPTED this 18th day of July, 2023.

__________________________

PAULA PEROTTE, MAYOR

ATTEST: APPROVED AS TO FORM:

_________________________ __________________________
DEBORAH S. LOPEZ MEGAN GARIBALDI

CITY CLERK CITY ATTORNEY
28 Resolution No. 23-__ Authorizing Examination of Sales or Transactions and Use Tax Records

STATE OF CALIFORNIA )
COUNTY OF SANTA BARBARA ) ss.

CITY OF GOLETA )

I, DEBORAH S. LOPEZ, City Clerk of the City of Goleta, California, DO HEREBY CERTIFY that the foregoing Resolution No. 23-__ was duly adopted by the City Council of the City of Goleta a t a regular meeting held on the 18th day of July, 2023 by the following vote of the Council:

AYES:

NOES:

ABSENT:

(SEAL)

_________________________
DEBORAH S. LOPEZ

CITY CLERK

29 ATTACHMENT 3:

Professional Services Agreement with Hinderliter, de Llamas & Associates for Transactions and Use Tax Audit & Information Services
30 City of Goleta and Hinderliter de Llamas and Associates

AGREEMENT FOR PROFESSIONALSERVICES

BETWEEN THE CITY OF GOLETA

AND HINDERLITER DE LLAMAS AND ASSOCIATES

This AGREEMENT FOR PROFESSIONAL SERVICES (herein referred to as “AGREEMENT”) is made and entered into this ________ day of ______ , 2023, by and between the CITY OF GOLETA, a municipal corporation (herein referred to as " CITY"), and Hinderliter de Llamas and Associates . (herein referred to as "CONSULTANT"), do agree as follows:

SECTION A. RECITALS

1. The CITY has a need for professional auditing services for Transactions, Tax Audit, and information Services.

2. The CITY does not have the personnel able and/or available to perform the services required under this AGREEMENT, and therefore, the CITY desires to contract for professional services to accomplish this work; and

3. The CITY procured these services in compliance with Goleta Municipal Code Section 3.05.260.

4. The City Council, on this _____ day of _______, 2023, approved this AGREEMENT and authorized the City Manager to execute the AGREEMENT.

SECTION B. TERMS

1. RETENTION AS CONSULTANT
CITY hereby retains CONSULTANT, and CONSULTANT hereby accepts such engagement, to perform the services described in Section 2. CONSULTANT warrants it has the qualifications, experience, and facilities to properly and timely perform said services.

2. DESCRIPTION OF SERVICES
The services to be performed by CONSULTANT are as follows:

CONSULTANT shall deliver to CITY the deliverables defined in Exhibit “A.”
DocuSign Envelope ID: C8804B3E-EFD9-472E-B394-47B685F23CE7 31 City of Goleta and Hinderliter de Llamas and Associates

3. COMPENSATION AND PAYMENT
(a) Compensation. CONSULTANT shall be entitled to receive an amount equal to the total compensation payable to CONSULTANT by CITY for the services under this AGREEMENT in the amount of $2,400 annually. (b) Payment. CONSULTANT shall provide CITY with written verification of the actual compensation earned, which written verification shall be in a form satisfactory to CITY's Project Manager , as described in Section 5 .

Invoices shall be made no more frequently than on a monthly basis, and describe the work performed (including a list of hours worked by personnel classification).

All payments shall be made within 30 days after CITY’s approval of the invoice.

4. EXTRA SERVICES
CITY shall pay CONSULTANT for those CITY authorized extra s ervices, not reasonably included within the services described in Section 2, as mutually agreed to writing in advance of the incurrence of extra services by CONSULTANT.

Unless CITY and CONSULTANT have agreed in writing before the performance of extra servi ces, no liability and no right to claim compensation for such extra services or expenses shall exist. The applicable hourly rates for extra services shall be at the hourly rates set forth in Exhibit B, if one is included as part of this agreement. Any compensation for extra services shall be part of the total compensation and shall not increase the not to exceed amount identified in Section

3. 5. CITY PROJECT MANAGER AND SERVICES BY CITY
The services to be performed by CONSULTANT shall be accomplished under the general direction of, and coordinate with, CITY's "Project Manager", as that staff person is designated by CITY from time to time, and who presently is Luke Rioux, Finance Director shall have the authority to act on behalf of the CITY in administering this AGREEMENT but shall not be authorized to extend the term of the AGREEMENT or increase the not to exceed amount.

6. TERM, PROGRESS AND COMPLETION
The term of this AGREEMENT is from the date first written above unless the AGREEMENT is terminated as provided for herein.

CONSULTANT shall not commence work on the services to be performed until (i) CONSULTANT furnishes proof of insurance as required by Section 10 below, and (ii) CITY gives written authorization to proceed with the work provided by CITY's Project Manager.

DocuSign Envelope ID: C8804B3E-EFD9-472E-B394-47B685F23CE7 32 City of Goleta and Hinderliter de Llamas and Associates

7. OWNERSHIP OF DOCUMENTS
All drawings, designs, data, photographs, reports and other documentation (other than CONSULTANT's drafts, notes and internal memorandum), including duplication of same prepared by CONSULTANT in the performance of these services, are the property of CITY. CITY shall be entitled to immediate possession of the same upon completion of the work under this AGREEMENT, or at any earlier or later time when requested by CITY. CITY agrees to hold CONSULTANT harmless from all damages, claims, expenses, and losses arising out of any reuse of the plans and specifications for purposes other than those described in this AGREEMENT, unless written authorization of CONSULTANT is first obtained.

8. PERSONAL SERVICES/NO ASSIGNMENT/SUBCONTRACTOR
This AGREEMENT is for professional auditing services for Transactions, Tax Audit and information Services which are personal to CITY. Hinderliter de Llamas and Associates is deemed to be specially experienced and is a key member of CONSULTANT's firm and shall be directly involved in the performance of this work. This key person shall communicate with, and periodically report to, CITY on the progress of the work. Should any such individual be removed from assisting in this contract ed work for any reason, CITY may terminate this AGREEMENT. This AGREEMENT may not be assigned or subcontracted without the City Manager’s prior written consent.

9. HOLD HARMLESS AND INDEMNITY
(a) Hold Harmless for CONSULTANT's Damages. CONSULTANT holds CITY, its elected officials, officers, agents, and employees, harmless from all of CONSULTANT's claims, demands, lawsuits, judgments, damages, losses, injuries or liability to CONSULTANT, to CONSULTANT's employees, to CONSULTANT’s contra ctors or subcontractors, or to the owners of CONSULTANT's firm, which damages, losses, injuries or liability occur during the work required under this AGREEMENT, or occur while CONSULTANT is on CITY property, or which are connected, directly or indirectly, with CONSULTANT's performance of any activity or work required under this AGREEMENT. (b) Defense and Indemnity of Third-Party Claims/Liability.

CONSULTANT shall investigate, defend, and indemnify CITY, its elected officials, officers, agents, and employees, from any claims, lawsuits, demands, judgments, and all liability including, but not limited to, monetary or property damage, lost profit, personal injury, wrongful death, general liability, automobile, infringement of copyright/patent/trademark, or profess ional errors and omissions arising out of, directly or indirectly, an error, negligence, or omission of CONSULTANT or any of CONSULTANT’s officers, agents, employees, representatives, subconsultants, or subcontractors, or the willful misconduct of CONSULTA NT or any of CONSULTANT’s officers, agents, employees, representatives, subconsultants, or subcontractors, in performing the services described in, or normally associated DocuSign Envelope ID: C8804B3E-EFD9-472E-B394-47B685F23CE7 33 City of Goleta and Hinderliter de Llamas and Associates

with, this type of contracted work. The duty to defend shall include any suits or actions concerning any activity, product or work required under this AGREEMENT, and also include the payment of all court costs, attorney fees, expert witness costs, investigation costs, claims adjusting costs and any other costs required for and related thereto.
(c) No Waiver. CITY does not waive, nor shall be deemed to have waived, any indemnity, defense or hold harmless rights under this section because of the acceptance by CITY, or the deposit with CITY, of any insurance certificates or policies described in Section 10.

10. INSURANCE
CONSULTANT shall, at CONSULTANT's sole cost and expense , provide insurance as described herein. All insurance is to be placed with insurers authorized to do business in the State of California with an A.M. Best and Company rating of A- or better, Class VII or better, or as otherwise approved by CITY.

Insurance shall include the following (or broader) coverage:

a) Insurance Services Office Commercial Liability coverage “occurrence” form CG 00 01 or its exact equivalent with an edition date prior to 2004 and with minimum limits of $1,000,000 per occurrence and $2,000,000 general aggregate.

b) Insurance Services Office form number CA 00 01 or equivalent covering Automobile Liability, including hired and non -owned automobile liability with a minimum limit of $1,000,000 per accident. If the Service Provider owns no vehicles, this requirement may be satisfied by a non -owned and hired auto endorsement to Service Provider’s commercial general liability policy.

c) Workers’ Compensation insuran ce complying with California worker’s compensation laws, including statutory limits for workers’ compensation and an Employer’s Liability limit of $1,000,000 per accident or disease.

d) Professional liability insurance that covers the services to be performed in connection with this agreement, in the minimum amount of $1,000,000 per claim.

Liability insurance policies required to be provided by CONSULTANT hereunder shall contain or be endorsed to contain the following provisions:

DocuSign Envelope ID: C8804B3E-EFD9-472E-B394-47B685F23CE7 34 City of Goleta and Hinderliter de Llamas and Associates

a) Except for professional liability insurance, CITY, its employees, officials, agents, and member agencies shall be covered as additional insurers. Coverage shall apply to any and all liability arising out of the work performed or related to the contract. Additional insured status under the general liability requirement shall be provided on Insurance Services Office Form CG 20 10, with an edition date prior to 2004, or its equivalent. Additional insured status for completed operations shall be provided either in the additional insured form or through another endorsement such as CG 20 37, or its equivalent.

b) General and automobile liability insurance shall apply separately to each insured against whom a claim is made, or suit is brought, except with respect to the limits of the insurer’s liability. Coverage will not be limited to CITY’s vicarious liability.

c) Professional liability insurance policies inception date, continuity date, or retroactive date must be before the effective date of this agreement.

CONSULTANT agrees to maintain continuous coverage through a period of no less than three years after completion of the services required by this agreement.

d) Except for professional liability insurance, liability coverage shall be primary and non-contributing with any insurance maintained by CITY.

e) Evidence of coverage (including the workers’ compensation and employer’s liability policies) shall provide that coverage shall not be suspended, voided, canceled, or reduced in coverage or in limits except after 30 days’ prior written notice has been given to CITY. Such provision shall not include any limitation of liability of the insurer for failure to provide such notice.

f) No liability insurance coverag e provided to comply with this AGREEMENT shall prohibit CONSULTANT, or CONSULTANT’s
employees, or agents, from waiving the right of recovery prior to a loss.

CONSULTANT waives its right of recovery against CITY.

g) CONSULTANT agrees to deposit with CITY within fifteen days of Notice to Proceed of the Contract certificates of insurance and required endorsements.

h) There shall be no recourse against CITY for payment of premiums or other amounts with respect to the insurance required to be provided by CONSULTANT hereunder. Any failure, actual or alleged, on the part of CITY to monitor compliance with these requirements will not be deemed as a waiver of any rights on the part of CITY. CITY has no additional obligations by virtue of requiring the insura nce set forth DocuSign Envelope ID: C8804B3E-EFD9-472E-B394-47B685F23CE7 35 City of Goleta and Hinderliter de Llamas and Associates

herein. In the event any policy of insurance required under this AGREEMENT does not comply with these requirements or is canceled and not replaced, CITY has the right but not the duty to obtain the insurance it deems necessary, and any premium paid by CITY will be promptly reimbursed by CONSULTANT or CITY will withhold amounts sufficient to pay premium from CONSULTANT payments.

i) CONSULTANT agrees to provide immediate notice to CITY of any claim or loss against CONSULTANT arising out of the work performed under this AGREEMENT. CITY assumes no obligation or liability by such notice but has the right (but not the duty) to monitor the handling of any such claim or claims if they are likely to involve CITY.

11. RELATIONSHIP OF CONSULTANT TO CITY
The relationship of the CONSULTANT to CITY shall be that of an independent contractor and that in no event shall CONSULTANT be considered an officer, agent, servant or employee of CITY. CONSULTANT shall be solely responsible for any workers compensation in surance, withholding taxes, unemployment insurance, and any other employer obligations associated with the described work.

12. CORRECTIONS
In addition to the above indemnification obligations, CONSULTANT shall correct, at its expense, all errors in the work that may be disclosed during CITY's review of CONSULTANT's report or plans. Should CONSULTANT fail to make such correction in a reasonably timely manner, such correction shall be made by CITY, and the cost thereof shall be charged to CONSULTANT or withheld from any funds due to CONSULTANT hereunder.

13. TERMINATION BY CITY
CITY, by notifying CONSULTANT in writing, may upon 10 calendar days’ notice, terminate without cause any portion or all of the service s agreed to be performed under this AGREEMENT. If termination is for cause, no notice period need be given. In the event of termination, CONSULTANT shall have the right and obligation to immediately assemble work in progress for the purpose of closing out the job. All compensation for actual work performed and charges outstanding at the time of termination shall be payable by CITY to CONSULTANT within 30 days following submission of a final statement by CONSULTANT unless termination is for cause. In such event, CONSULTANT shall be compensated only to the extent required by law.

DocuSign Envelope ID: C8804B3E-EFD9-472E-B394-47B685F23CE7 36 City of Goleta and Hinderliter de Llamas and Associates

14. ACCEPTANCE OF FINAL PAYMENT CONSTITUTES RELEASE
The acceptance by CONSULTANT of the final payment made under this AGREEMENT shall operate as and be a release of CITY from all cla ims and liabilities for compensation to CONSULTANT for anything done, furnished, or relating to CONSULTANT'S work or services. Acceptance of payment shall be any negotiation of CITY's check or the failure to make a written extra compensation claim within 10 calendar days of the receipt of that check. However, approval or payment by CITY shall not constitute, nor be deemed, a release of the responsibility and liability of CONSULTANT, its employees, subcontractors, agents and CONSULTANTs for the accuracy and competency of the information provided and/or work performed; nor shall such approval or payment be deemed to be an assumption of such responsibility or liability by CITY for any defect or error in the work prepared by CONSULTANT, its employees, subcontr actors, agents and consultants.

15. AUDIT OF RECORDS
At any time during normal business hours and as often as it may deem necessary, CONSULTANT shall make available to a representative of CITY for examination of all its records with respect to all matters covered by this AGREEMENT and will permit CITY to audit, examine and/or reproduce such records. CONSULTANT will retain such financial records, time sheets, work progress reports, invoices, bills, and project records for at least two years after termination or final payment under this AGREEMENT.

16. WAIVER; REMEDIES CUMULATIVE
Failure by a party to insist upon the strict performance of any of the provisions of this AGREEMENT by the other party, ir respective of the length of time for which such failure continues, shall not constitute a waiver of such party's right to demand strict compliance by such other party in the future. No waiver by a party of a default or breach of the other party shall be e ffective or binding upon such party unless made in writing by such party, and no such waiver shall be implied from any omissions by a party to take any action with respect to such default or breach. No express written waiver of a specified default or breach shall affect any other default or breach, or cover any other period of time, other than any default or breach and/or period of time specified. All of the remedies permitted or available to a party under this AGREEMENT, or at law or in equity, shall be cumulative and alternative, and invocation of any such right or remedy shall not constitute a waiver or election of remedies with respect to any other permitted or available right of remedy.

17. CONFLICT OF INTEREST
CONSULTANT is unaware of any CITY employee or official that has a financial interest in CONSULTANT'S business. During the term of this DocuSign Envelope ID: C8804B3E-EFD9-472E-B394-47B685F23CE7 37 City of Goleta and Hinderliter de Llamas and Associates

AGREEMENT and/or as a result of being awarded this AGREEMENT, CONSULTANT shall not offer, encourage, or accept any financial interest in CONSULTANT'S business by any CITY employee or official.

18. CONSTRUCTION OF LANGUAGE OF AGREEMENT
The provisions of this AGREEMENT shall be construed as a whole according to its common meaning of purpose of providing a public benefit and not strictly for or against any party. It shall be construed consistent with the provisions hereof, in order to achieve the objectives and purposes of the parties. Wherever required by the context, the singular shall include the plural and vice versa, and the masculine gender shall include the feminine or neutral genders or vice versa.

19. MITIGATION OF DAMAGES
In all situations arising out of this AGREEMENT, the parties shall attempt to avoid and minimize the damages resulting from the conduct of the other party.

20. GOVERNING LAW
This AGREEMENT, and the rights and obligations of the parties, shall be governed and interpreted in accordance with the laws of the State of California.

Should litigation occur, venue shall be in Superior Court of Santa Barbara County.

21. NONDISCRIMINATION
CONSULTANT shall not discriminate on the basis of race, color, gender, gender identity/expression, pregnancy, sexual orientation, disability, marital status, or any other characteristic protected under applicable federal or state law.

22. TAXPAYER IDENTIFICATION NUMBER
CONSULTANT shall provide CITY with a complete Request for Taxpayer Identification Number and Certification, Form W-9 (Rev. October 2018), as issued by the Internal Revenue Service.

23. NON-APPROPRIATION OF FUNDS
Payments due and payable to CONSULTANT for current services are within the current budget and within an available, unexhausted and unencumbered appropriation of CITY funds. In the event CITY has not appropriated sufficient funds for payment of CONSULTANT services beyond the current fiscal year, this AGREEMENT shall cover only those costs incurred up to the conclusion of the current fiscal year.

DocuSign Envelope ID: C8804B3E-EFD9-472E-B394-47B685F23CE7 38 City of Goleta and Hinderliter de Llamas and Associates

24. MODIFICATION OF AGREEMENT
The tasks described in this AGREEMENT and all other terms of this AGREEMENT may be modified only upon mutual written consent of CITY and CONSULTANT.

25. USE OF THE TERM “CITY”
Reference to “ CITY” in this AGREEMENT includes City Manager or any authorized representative acting on behalf of CITY.

26. PERMITS AND LICENSES
CONSULTANT, at its sole expense, shall obtain and maintain during the term of this AGREEMENT all appropriate permits, licenses, and certificates that may be required in connection with the performance of services under this AGREEMENT.

27. CAPTIONS
The captions or headings in this AGREEMENT are for convenience only and in no other way define, limit, or describe the scope or intent of any provision or section of the AGREEMENT.

28. AUTHORIZATION
Each party has expressly authorized the execution of this AGREEMENT on its behalf and bind said party and its respective administrators, officers, directors, shareholders, divisions, subsidiaries, agents, employees, successors, assigns, principals, partners, joint venturers, insurance carriers and any others who may claim through it to this AGREEMENT.

29. ENTIRE AGREEMENT BETWEEN PARTIES
Except for CONSULTANT'S proposals and submitted representations for obtaining this AGREEMENT, this AGREEMENT supersedes any other agreements, either oral or in writing, between the parties hereto with respect to the rendering of services and contains all of the covenants and agreements between the parties with respect to said services.

30. PARTIAL INVALIDITY
If any provision in this AGREEMENT is held by a court of competent jurisdiction to be invalid, void, or une nforceable, the remaining provisions will nevertheless continue in full force without being impaired or invalidated in any way.

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31. NOTICES
Any notice required to be given hereunder shall be deemed to have been given by depositing said notice in the United St ates mail, postage prepaid, and addressed as follows:

TO CITY: Attention: Robert Nisbet, City Manager
City of Goleta
130 Cremona Drive, Suite B
Goleta, CA 93117

TO CONSULTANT: Attention: Maria Soto Sanchez, Contracts Administrator
Hinderliter de Llamas and Associates
120 S. State College Blvd. #200
Brea, CA 92821

32. COUNTERPARTS AND ELECTRONIC/FACSIMILE SIGNATURES
This Agreement may be executed in several counterparts, which may be facsimile or electronic copies. Each counterpart is fully effective as an original, and together constitutes one and the same instrument.

In concurrence and witness whereof , this AGREEMENT has been executed by the parties effective on the date and year first above written.

CITY OF GOLETA CONSULTANT

_____________________________ _____________________________ Robert Nisbet, City Manager By: Andrew Nickerson
Title: President/CEO

ATTEST

_____________________________ _____________________________ Deborah Lopez, City Clerk By: Title:

APPROVED AS TO FORM:

MEGAN GARIBALDI, CITY ATTORNEY

_____________________________
Scott Shapses, Deputy City Attorney
DocuSign Envelope ID: C8804B3E-EFD9-472E-B394-47B685F23CE7 40 City of Goleta and Hinderliter de Llamas and Associates

Exhibit A

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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 “B” 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 “B” 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 “B” 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 “B” Transactions Tax District.

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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.

2.3. 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.

FEES

3. Transactions Tax and Economic Analysis/Forecasting Services/Reports

3.1. 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.

3.2. Consultant may change the non-hourly Fees established above upon at least 30 days’ prior written notice to City (but not more than 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”).

4. 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.

5. Consulting and Other Optional Services

5.1. 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 DocuSign Envelope ID: C8804B3E-EFD9-472E-B394-47B685F23CE7 43 City of Goleta and Hinderliter de Llamas and Associates

- $195.

5.2. Consultant may change the rates for its hourly Fees from time to time. A 30 days’ prior written notice to City will be given.

6. General Provisions Relating to Fees

6.1. 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.

6.2. 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 DocuSign Envelope ID: C8804B3E-EFD9-472E-B394-47B685F23CE7 44 City of Goleta and Hinderliter de Llamas and Associates

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 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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