Agenda Item
City Council
Item #: 3.6. 3/14/2023 File #: 23-0020
TO: Honorable Mayor and Members of the City Council
THRU: Tom Kisela, Interim City Manager
FROM: Susan Galvan, Assistant City Manager
1. SUBJECT
Agreement with Hinderliter De Llamas & Associates (HdL) for Business License and Tax Services Software as a single source vendor.
2. SUMMARY
The City has used a desktop version of Progressive Solutions Business License software for 14 years. Progressive Solutions Inc. (PSI) no longer provides upgrades or updates to the desktop version; however, the web version of the software is not as robust. Staff recommends converting to Business License and Tax Services Software (HdL Prime) from Hinderliter De Llamas & Associates as a cost-effective long-term solution.
3. RECOMMENDED ACTION
Approve the three-year agreement with Hinderliter De Llamas & Associates (HdL) in the amount of $143,722 for Business License and Tax Services Software and authorize the Mayor and City Clerk to execute on behalf of the City.
4. FISCAL IMPACT
The total expenditure for this agreement is $143,722 and will be funded through General Fund (100).
5. STRATEGIC PLAN GOALS
Goal 2: Be a fiscally healthy community
b: Analyze future fiscal needs and potential revenue opportunities.
Goal 4: Provide outstanding public service
c: Enhance technology to improve public accessibility to information and services.
6. DISCUSSION AND BACKGROUND
A Business License is required for any business owner, business entity, self-employed person or business organization based in or operating from Orange. This includes home based businesses, independent contractors, home offices, and others, yielding an average annual revenue of $3.5 million. The Business License division ensures that businesses pay their required tax and comply with the City’s business tax ordinance.
For 14 years the City has contracted with Progressive Solutions Inc., (PSI), a software to manage records of past and current business applications and activity, including, annual renewals, tax payments, delinquencies, sellers permits, and state licenses. New applications and business license City of Orange Printed on 3/9/2023Page 1 of 3
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Item #: 3.6. 3/14/2023 File #: 23-0020
payments, delinquencies, sellers permits, and state licenses. New applications and business license renewals can be handled online, by mail or in person.
Due to ongoing challenges with the current business license software, staff conducted a review of products available from PSI, HdL, and Tyler Technologies’ EDEN Enterprise Resource Planning system which the City uses for financial applications. Qualities such as ease of use for both internal and external customers, system response time, and integration with internal systems were measured. Additional features such as hosted platforms, familiarity with Short Term Rental and Hotel Permits, and cost effectiveness were also considered.
The City has a data exchange agreement with the Franchise Tax Board (FTB) to provide information that allows us to research accounts requiring a business license in Orange. In addition, the City currently has an existing sales tax consulting agreement with HdL which provides us with data sources to find unlicensed businesses.
After careful review of the options and considering long-term benefits, staff recommends converting to the HdL Prime Business License and Tax Services Software from Hinderliter De Llamas & Associates (HdL) as a single source vendor to manage the business license function. No other vendor provided the long term solutions needed, including the integration with the Franchise Tax Board, as well as the variety of options and benefits such as:
· Discovery and compliance services that provide additional revenue by maximizing existing revenue streams
· Provide updates on trends and legislation that could impact the City’s revenue streams · Cloud based - Software Hosting Services - This will offload most IT concerns such as system and hardware upgrades, database management, and disaster recovery. · Approval process that works with other departments, streamlining approvals required from the Police, Fire, Planning, or Building departments to approve and issue a business license · Connect Short Term Rental (STR) permits to Business License in one database · Transient Occupancy Tax (TOT) module to allow better tracking for TOT funds and STR TOT funds
· Implement optional resources to fill out new applications - iPads or a central desktop in the lobby. Eliminates double entry and errors can be addressed at the time of application instead of asking for more information and delaying the issuance of a business license · Offer an online PCI-compliant gateway
HdL currently provides business license services to several surrounding cities such as Brea, Fullerton, Fountain Valley, and Tustin.
Recurring costs
The cost for this software use and hosting fee portion of this agreement is $19,040 per year, with an annual CPI increase, the total cost of which is not to exceed $63,022.
Implementation costs
The proposed agreement has a one-time implementation cost of $80,700, the payment of which will City of Orange Printed on 3/9/2023Page 2 of 3
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Item #: 3.6. 3/14/2023 File #: 23-0020
The proposed agreement has a one-time implementation cost of $80,700, the payment of which will be earned by engaging HdL to perform Discovery and Compliance services using their many available sources to discover new unlicensed businesses and bring them into compliance. The agreement is structured for HdL to apply 100% of the collected funds to the implementation cost, with an estimated recovery time of two years. Beginning year three of the agreement, any remaining implementation costs which have not been paid by HdL Compliance Services revenue will be paid by the City.
Once the implementation threshold of $80,700 has been met, HdL will continue their recovery efforts, retaining 40% of the recovered funds, with the anticipated amount of $40,000 (60%) of additional revenue per year remitted to the City.
Based on the benefits of HdL’smore robust system, additional business license resources, increased annual revenue, and comparable cost to the current system, staff recommends the three-year agreement with HdL for Business License and Tax Services Software as a single source vendor.
7. ATTACHMENTS
· Software Services Agreement
· Single Source Vendor certification
City of Orange Printed on 3/9/2023Page 3 of 3
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