CITY OF PACIFICA
COUNCIL AGENDA SUMMARY REPORT
8/11/2025
1 SUBJECT:
Resolution to approve a contract with Hinderliter, de Llamas & Associates (HdL Companies) for Business License, Transient Occupancy Tax, and Short-Term Rental Services.
RECOMMENDED ACTION:
Adopt the attached resolution to approve the renewal of the consultant services agreement with HdL Companies to continue providing business license administration, Transient Occupancy Tax (TOT), and other municipal revenue compliance services, and authorize the City Manager to execute the agreement and any necessary amendments.
STAFF CONTACT:
Yulia Carter, Assistant City Manager
(650) 501-6004
[email protected]
SUMMARY:
HdL Companies has been providing the City with specialized revenue management services since 2021, including business license administration, TOT compliance, and short-term rental (STR) tax enforcement. HdL’s turnkey system, deep expertise in municipal finance, and exceptional customer service have allowed the City to modernize its revenue operations, improve compliance, and reduce internal workload.
The proposed agreement extends HdL’s services for an additional two years, with updated terms and cost structure. Given the complexity of tax administration, ongoing staffing constraints, and the City’s fiscal sustainability goals, staff recommends approval of the contract renewal.
BACKGROUND/DISCUSSION:
HdL Companies was founded in 1983 and is a recognized industry leader in local government revenue enhancement, working with over 380 California agencies. HdL developed California’s first computerized sales tax management system and played a key role in legislation that allowed cities to independently verify state allocations. HdL’s business licensing and revenue solutions are used by more California municipalities than any other firm, and they maintain a 99%+ client retention rate.
In 2021, the City expanded its contract with HdL to include business license tax and TOT management services, following the implementation of STR regulations and growing concerns over tax compliance and administrative capacity. HdL’s services include the following:
• Full-service business license administration
• Online tax filing and renewal portal (24/7)
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• Customer service support (phone/email)
• Compliance audits and revenue recovery
• Taxpayer outreach and education
• Monthly and annual reporting
• TOT and STR assessment collection support
Since then, HdL has significantly improved the City’s business license database integrity, streamlined renewal processing, and supported compliance communications. The STR compliance work by HdL has also positioned the City to better capture revenue in this sector.
HdL Business License Compliance and Revenue
Over the past several years, HdL has played a key role in supporting the City of Pacifica’s business license tax program through ongoing administrative support, compliance services, and data analysis. Although, the FY 2024-25 data is still being reviewed and analyzed, between FY2021-22 and FY2023-24, HdL-assisted compliance and discovery efforts resulted in the identification and registration of hundreds of previously unlicensed businesses, including 493 residential rentals (both long-term and short-term rentals), and 109 independent contractors.
These efforts contributed to 18% or over $100,000 of increased revenue and broader compliance following the COVID-19 pandemic recovery. Discovery and collection services alone have contributed over $200,000 in cumulative revenue since FY2021-22.
While compliance revenue is expected to gradually taper as businesses achieve full compliance, HdL’s partnership has positioned the City to better manage its licensing program, respond to evolving business trends, and consider longer-term modernization of its tax structure in the future to evaluate potential benefits of simplification, equity across business categories, and regional competitiveness.
HdL Transient Occupancy Tax and Short-Term Rental Compliance and Revenue HdL has been providing full-service Transient Occupancy Tax (TOT) administration for the City’s hotel and lodging establishments. This includes return processing, payment posting, compliance monitoring, and periodic audit support to ensure accurate reporting and timely remittance. HdL’s efforts have generated over $3.1 million in total TOT revenue in 2024-25, also streamlined the City’s TOT processes through the online platform, educational materials and communication with the lodging providers, and helped maintain strong compliance.
HdL has also supported the City of Pacifica’s efforts to improve compliance and revenue collection from short-term rentals (STRs), which remain a key source of Transient Occupancy Tax (TOT) revenue. In FY2024-25, 144 STRs submitted TOT payments totaling $1.52 million, an increase of 6.9% from the last year. Notably, 83% of these payments were remitted through Airbnb, with the remaining 17% submitted directly by individual STR operators as a result of HdL’s efforts and commitment to responsible hosting and thriving tourism economy.
HdL’s discovery and compliance efforts have significantly expanded the STR registration base and brought non-compliant operators into compliance. Between 2024 and 2025, 59 new STR leads were identified, and 53 (approximately 90%) have either registered or ceased operations in response to enforcement. Of these, 27 STRs remain registered and in good standing, 16 paid outstanding tax liability and closed their accounts, and 10 ceased operations entirely, as a result of the HdL’s outreach and compliance efforts.
New Contract
While the scope and cost related to Business License and Transient Occupancy Tax (TOT) Pacifica City Council 3
August 11, 2025
management services remain consistent with the original agreement, the scope of services related to Short-Term Rental (STR) compliance has evolved significantly over the past year. In response to growing community concerns over the STR program and enforcements, including several Council discussions of the program, the City, in partnership with HdL, implemented improved compliance workflows and outreach strategies to improve compliance processes that expanded way beyond the original contract terms, limited to basic TOT administration and minimal discovery.
HdL has been a valued and flexible partner throughout this process, adapting to the City’s needs and delivering expanded services beyond the originally contracted scope. As the City prepares to implement a new and stricter STR ordinance, it became critical to formally capture the expanded scope of services and also reflect the additional workload now required to support the ordinance’s enforcement and program administration. This includes expanded platform monitoring by scanning over 20 rental platforms, enhanced host education and engagement, stricter permitting and registration support, and enhanced compliance tracking, back-tax calculations, penalty assessments, and escalated follow-up for non-compliant operators. HdL’s customer service team will handle direct host inquiries, filing support, and compliance disputes before elevating matters to the City.
The resulting contract adjustments align the scope and cost of services with the City’s policy direction to continue implementation and enforcement of the STR program, recognizing that certain provisions of the new ordinance will present practical challenges or limitations in enforcement.
The new agreement will support the following objectives:
• Operational efficiency: Outsourcing business license management frees up limited staff time to focus on strategic initiatives.
• Revenue enhancement: HdL’s compliance tools and audit expertise help identify underreported and unregistered businesses.
• Improved customer service: Business owners have access to a 24/7 online portal and weekday support from HdL’s service team.
• Regulatory alignment: HdL ensures that tax collection practices are consistent with the City’s Municipal Code and new STR ordinance.
• HdL’s professional expertise includes Certified Revenue Officers, tax auditors, and municipal finance professionals to ensure that the City’s needs are addressed with both technical accuracy and real-world insight
Formalizing this contract renewal with an updated scope ensures continuity of service as the City continues to enhance regulatory compliance and pursue fiscal sustainability. HdL’s demonstrated partnership, familiarity with the City, responsiveness, and technical expertise make them well-qualified to support the City’s evolving needs.
ALTERNATIVE ACTION:
There are no reasonable alternatives as the City needs to continue services related to Business License, TOT, and STR. However, the Council may choose to approve a one-year agreement and direct staff to add preparing an RFP for these services to the FY 2026-27 workplan.
FISCAL IMPACT:
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The total annual cost of the contract will increase from approximately $85,000 (previously based on a combination of fixed fees and variable contingency fees tied to recovered revenues) to $125,000 fixed contract fee, plus the ongoing variable contingency fees tied to additional revenue collected through compliance activities. This increase has already been incorporated into the FY 2025-26 budget under the Finance Department’s Professional Services account.
ORIGINATED BY:
City Manager's Office
ATTACHMENT LIST:
Consultant Services Agreement - HdL (DOCX)
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RESOLUTION NO. ________
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PACIFICA AUTHORIZING THE
CITY MANAGER TO EXECUTE A CONTRACT WITH HDL COMPANIES FOR BUSINESS
LICENSE ADMINISTRATION AND REVENUE COMPLIANCE SERVICES
WHEREAS, the city of Pacifica has contracted with HdL companies since 2021 to support the administration and collection of business license tax (BLT), transient occupancy tax (TOT), and short-term rental (STR) compliance; and
WHEREAS, the city has expanded its partnership with HdL over time to address audit, discovery, and enforcement services that require specialized municipal revenue expertise; and WHEREAS, HdL Companies is a California-based firm with a proven track record of serving over 380 public agencies and offering a turnkey solution that improves compliance, enhances customer service, and reduces internal staff workload; and WHEREAS, the renewal contract will allow HdL to continue providing essential revenue management services for the City through an updated scope of work and cost structure aligned with current STR needs;
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Pacifica, as follows:
The City Council hereby authorizes the city manager to execute a contract with HdL Companies for business license administration, TOT and STR revenue compliance, and associated revenue management services in the amount of $250,000 ($125,000 per fiscal year), plus variable contingency fees tied to revenues collected through compliance activities, in accordance with the terms set forth in the agreement for a period of up to three years. • • • • •
PASSED AND ADOPTED at a regular meeting of the City Council of the City of Pacifica, California, held on the 11h day of August, 2025, by the following vote:
AYES, Councilmembers:
NOES, Councilmembers:
ABSENT, Councilmembers:
ABSTAIN, Councilmembers:
_________________________________
Sue Beckmeyer, Mayor
ATTEST: APPROVED AS TO FORM:
______________________________ _________________________________ Sarah Coffey, City Clerk Michelle Kenyon, City Attorney