Vallejo City Council
June 28, 2022

The grant period for this grant starts on February 15, 2022 and continues through February 14, 2023.

FISCAL IMPACT
The City of Vallejo Police Department will receive $286,957 in funding. There is net zero fiscal impact on the General Fund as the proposed revenues received are equal to the proposed expenditure authorizations.

There is no cost share or match requirement for the grant.

ENVIRONMENTAL REVIEW
This action is exempt from the California Environmental Quality Act (CEQA) because it is not a project which has a potential for resulting in either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment, pursuant to CEQA Guideline section 15378.

ATTACHMENTS

1. Resolution Amending GF - BHJIS CAO Stamp

CONTACT
Jason Ta, Deputy Chief of Police (707) 648-4653
[email protected]
Approved as to form:

By: for
Veronica Nebb, City Attorney
RESOLUTION NO.

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF VALLEJO AMENDING THE FISCAL YEAR 2021/2022 BUDGET TO RECOGNIZE REVENUE FROM

THE BEHAVIORAL HEALTH JUSTICE INTERVENTION SERVICES (BHJIS) PROJECT GRANT IN THE AMOUNT OF $286,957 AND APPROPRIATE EXPENDITURES OF $286,957 WHEREAS, in June 2021, the City Council adopted a budget for the Fiscal Year 2021/2022; and
WHEREAS, City Charter Section 703 requires that available funds not included in the budget may be appropriated by the City Council after giving one week's notice of intention to do so said notice being provided at the June 14, 2022 City Council meeting; and WHEREAS, the Police Department has subsequently received a grant totaling $286,957 from the California Department of Health Care Services (DHCS) Behavioral Health Justice Intervention Services (BHJIS) Project; and
WHEREAS, the grant funding will be used to fund “community needs assessment to track progress and gaps in current mental health, substance abuse, and crisis response and identify the need for additional core services in Vallejo.

NOW, THEREFORE, BE IT RESOLVED that the Council hereby recognizes the Behavioral Health Justice Intervention Services Project Grant award and amends the City’s General Fund budget for the Fiscal Year 2021/2022 by adding $286,957 and appropriates the expenditures in the amount of $286,957 to permit the receipt and disbursement of grant funds.

CONSENT CALENDAR 8.E.

DATE: June 28, 2022
TO: Mayor and Members of the City Council
FROM: Rekha Nayar, Finance Director
SUBJECT: AUTHORIZE CONSULTANT AND PROFESSIONAL SERVICES AGREEMENT TO

HINDERLITER DE LLAMAS AND ASSOCIATES FOR REVENUE DISCOVERY, AUDIT

AND TAX COMPLIANCE AND CONSULTING SERVICES

RECOMMENDATION
Adopt a resolution authorizing the City Manager to execute a Consultant and Professional Services Agreement ("Agreement") with Hinderliter De Llamas and Associates (HDL) for Revenue Discovery, Audit and Tax Compliance, and Consulting services, with an annual fixed fee not to exceed $350,000 and an additional fee based on the percentage of new revenue collected.

REASONS FOR RECOMMENDATION
Due to the complex nature of administering local Utility User Tax, Cannabis Taxes, Transient Occupancy Taxes, Franchise Taxes, Sales & Use taxes, as well as Business license fees, The City of Vallejo ("City") feels that Hinderliter De Llamas and Associates (HDL) have the expertise, knowledge and skill sets needed to perform these complex tasks, while providing the confidentiality needed in these types of audit operations.

Hinderliter De Llamas and Associates performing these services can better monitor and increase the City's recovery of misallocated revenues, thereby providing more accurate revenue forecasting and assisting in related revenue collections.

BACKGROUND AND DISCUSSION
The City has previously utilized services from multiple vendors for consulting and auditing of Utility User Tax, Cannabis Taxes, Transient Occupancy Taxes, Franchise Taxes, Sales & Use taxes, and Business license fees. In order to make managing these items more cost efficient for the City and with industry standard pricing for these services being reduced significantly from the original contract pricing, the City found it necessary to consolidate these services under one vendor and therefore issued an RFP for revenue audit and consulting services on February 26, 2020. Staff took this opportunity to review the services we currently utilize and develop an RFP to expand the contracted services to include additional revenue audit services typically utilized by other government agencies, and to expand protection and review of the City's main sources of tax revenue. As such, the RFP was expanded to request services in addition to the Sales and Use Tax services, including revenue audit and consulting services related to Business License Tax administration, and other self-reported and calculated fees related to various agreements, including Cannabis Business Tax, Franchise Fees, Utility Users Tax and similar revenues. The overall objectives for seeking qualified consultants for this work are:
 Maintain and enhance the City’s general revenue base
 Ensure complete and accurate remittance of taxes, franchise fees, and other fees through audits, compliance reviews, and education training.
 Receive regular and timely updates on trends and legislation impacting the City's revenue sources  Receive assistance in projecting future revenues
 Receive written and verbal economic analyses and meaningfully organized reports Date: June 28, 2022
Subject: AUTHORIZE CONSULTANT AND PROFESSIONAL SERVICES AGREEMENT TO

HINDERLITER DE LLAMAS AND ASSOCIATES FOR REVENUE DISCOVERY,

AUDIT AND TAX COMPLIANCE AND CONSULTING SERVICES

 Work with a partner that’s available to consult on miscellaneous revenue-related questions, as needed.

In the event that HDL recovers additional revenue for the City from HDL's audit and compliance services, then the City will pay HDL the following percentages of fixed fees based on the following programs; 15% of all new, increased, and recovered sales and use tax revenue (Sales Tax) as a result of the allocation and audit recovery service
25% of all new, increased, and recovered transactions and use tax revenue (Measure B/V) as a result of the allocation and audit recovery service
25% of business license collection services provided
35% of the business license audit and discovery revenue received as a result of the service.

FISCAL IMPACT
The contract to be awarded to Hinderliter de Llamas and Associates (HDL) for Audit and Tax compliance & Consulting is for total annual compensation not exceeding $350,000.00 on fixed fees for three years. In the event that HDL recovers additional revenue for the City from HDL's audit services, then the City will pay HDL an additional fee based on the percentage of any revenue recovered within the contract term. This amount is in addition to the $350,000 annual fee, the percentage varies per program, and is offset by the additional revenue recoveries from audits. Funds are available in the FY 2022-23 budget in the Finance Department.

The amount will be budgeted through the annual budget process for subsequent years.

ENVIRONMENTAL REVIEW
This action is exempt from the California Environmental Quality Act (CEQA) because it is not a project which has a potential for resulting in either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment, pursuant to CEQA Guideline section 15378.

ATTACHMENTS

1. HdL Response_Vallejo Final RFP

2. HdL_Addendum 1_City of Vallejo_Revenue Discovery Audit Tax Services

3. Revenue Tax Consultant Agreement City of Vallejo_Hinderliter De Llamas

4. Resolution CAO Stamp

CONTACT
Rekha Nayar, Finance Director (707) 648-4592
[email protected]
Proposal for Sales and Use Tax Services 1
City of
Vallejo

PROPOSAL TO PROVIDE REVENUE

DISCOVERY, AUDIT AND TAX

COMPLIANCE AND CONSULTING

SERVICES
MARCH 16, 2020

SUBMITTED BY
HdL Companies
120 S. State College Blvd., Ste 200
Brea, CA 92821
hdlcompanies.com

CONTACT
Andy Nickerson (HdL)
T: 714.879.5000
E: [email protected]
Paula Cone (HdL Coren& Cone)
T: 714.879.5000
E: [email protected]
Proposal to Provide Revenue Discovery, Audit and Tax Compliance and Consulting Services City of Vallejo, CA March 16, 2020
1 TABLE OF CONTENTS
A. COVER LETTER ..................................................................................................2 B. EXPERIENCE AND QUALIFICATIONS ...............................................................4 C. SCOPE OF SERVICES........................................................................................7

1. SALES AND USE TAX ....................................................................................7

2. PROPERTY TAX ...........................................................................................19

3. UTILITY USERS TAX ....................................................................................23

4. FRANCHISE TAX ..........................................................................................25

5. TRANSIENT OCCUPANCY TAX...................................................................29

6. BUSINESS LICENSE ....................................................................................32

7. CANNABIS BUSINESS TAX..........................................................................36 D. STAFFING..........................................................................................................44 E. PRICING.............................................................................................................53 F. REFERENCES....................................................................................................60 G. ADDITIONAL INFORMATION.............................................................................65 H. AGREEMENT.....................................................................................................66 I. APPENDIX...........................................................................................................67

1. SALES TAX SAMPLE REPORTS

2. PROPERTY TAX SAMPLE REPORTS
Proposal to Provide Revenue Discovery, Audit and Tax Compliance and Consulting Services City of Vallejo, CA March 16, 2020
2 A. COVER LETTER
March 16, 2020
City of Vallejo, Finance Department
Alison Hughes
Revenue Consulting Services
555 Santa Clara Street, 3rd Floor
Vallejo, CA 94590
Dear Ms. Hughes,
Founded in 1983, HdL Companies has been the leader in providing revenue management services to California local governments for over 35 years. Our commitment to innovative solutions and quality customer service is valued by our clients, as demonstrated by our 99% client retention rate and the over 50 municipalities who have switched to HdL from other service providers. The firm currently serves over 400 local governments in California and has recovered more than $2 billion in revenue for its clients. Our team of professionals has extensive local government finance, economic development, and revenue management experience. We use this expertise to analyze the City’s tax data in detail and provide relevant, useful and timely information to support your financial strategies and business retention/expansion programs. Our highly focused and accurate revenue forecasts have proven to be particularly valuable for financial planning.

As President/CEO of HdL, I will serve as the key contact on matters relating to sales and use tax, utility users tax, franchise tax, transient occupancy tax, business license and cannabis business tax for this proposal. Paula Cone, President of HdL Coren & Cone (HdLCC) will be the key contact for property tax services. HdL and HdLCC’s corporate headquarters are in Brea, CA and with additional offices in Pleasanton, Fresno and San Dimas. HdL will partner with Azavar Government Solutions and Ashpaugh & Sculco as subcontractors for utility users tax and franchise fee services. This proposal shall remain valid for 90 days after the proposal submission date of March 16, 2020.

Our contact information is:

HdL Companies
120 S. State College Blvd., Suite 200, Brea, CA 92821
Phone: 714.879.5000 Fax: 909.861.7726
www.hdlcompanies.com
HdL’s approach to maximizing local revenues offers the following advantages:
• Reliable continuity of service by a firm with stable employee ownership and a low staff turnover rate.
• Sales and use tax forecasts that fall within 2% of actual receipts two-thirds of the time. • The unmatched size of HdLCC’s database plus a sophisticated computer system uniquely qualifies the firm to provide the most comprehensive property tax analysis available in California.
• A service team comprised of individuals with extensive experience in tax assessment, administration, auditing, economic development and financial management.

Proposal to Provide Revenue Discovery, Audit and Tax Compliance and Consulting Services City of Vallejo, CA March 16, 2020
3 • All the firms’ key personnel have worked in or with public agencies and thoroughly understand their challenges and needs, ensuring prompt and knowledgeable response to inquiries with relevant information.
• Relevant, timely and ongoing staff support by a team with decades of direct experience in municipal finance and budgeting, economic development and maximization of revenues.
• The largest and most complete sales tax database in California structured in a manner to allow more thorough revenue audits, accurate budget forecasts and identification of emerging economic trends and opportunities.
• User-friendly web-based applications for data analysis and reporting capabilities, providing immediate and convenient access to the most up-to-date tax information available.
• Business friendly approach ensuring business tax and transient occupancy tax compliance and maximized revenues through education in regulations and filing procedures and improves customer service through online support and filing options. • Our subcontractors, Azavar Government Solutions and Ashpaugh & Sculco work with municipalities throughout the U.S. to ensure accurate receipt of all revenue due from franchise fee agreements.
• An unparalleled reputation for providing quality services promptly and efficiently. A review of our performance with the included references will affirm HdL’s reputation for providing business-friendly and cost-effective recovery of misallocated or uncollected revenues, as well as, timely and relevant reports, analysis and management support.

The firm has Vallejo’s current and historical sales tax database back to fiscal year 1993-94; moreover, HdL’s audit team has developed specialized taxpayer information files and is thoroughly familiar with economic activities in Solano County. This familiarity allows HdL’s staff to identify and correct, in a business friendly and timely manner, complex reporting errors involving retailers, distributors, contractors, processors and manufacturers engaged in “business to business” and ecommerce sales in Vallejo and throughout the County.

HdLCC maintains property tax data from 45 California counties, including all cities and successor agency project areas in those counties. Our data resources include 15-25 years of historical data in most counties and the company maintains twenty-eight years of annual property tax records for Solano County. Our audit team has worked extensively with key County staff and is thoroughly familiar with county revenue processing processes in California.

HdL is uniquely prepared to deliver our high quality and full-service solutions to the City and its business community in each of the areas outlined in this proposal. HdL will provide unparalleled service, reporting, and analytics due to synergies between the various tax programs requested in the City’s RFP. HdL acknowledges receipt of Addendum #1, received on February 26, 2020.

We look forward to reviewing our proposal with you in more detail. We can be reached at 714.879.5000 or by email at [email protected] and [email protected].

Sincerely,
Andy Nickerson Paula Cone
President/CEO, HdL President, HdL Coren & Cone
Proposal to Provide Revenue Discovery, Audit and Tax Compliance and Consulting Services City of Vallejo, CA March 16, 2020
4 B. EXPERIENCE AND QUALIFCATIONS OF THE FIRM

1. Firm History
Hinderliter, de Llamas and Associates (HdL) was established in 1983 to maximize local government revenues by providing allocation audits, analytical services and software products to local governments. The firm, which is a 100% employee owned company, provides audit and consulting services for sales, use and transaction taxes, cannabis taxes and other locally administered taxes. HdL developed California’s first computerized sales tax management program and was responsible for securing legislation (AB 1611) that allowed independent verification of state allocations.

HdL Coren & Cone (HdLCC) was founded in 1992 to provide property tax management, reporting and audit services to local governments. HdLCC maintains property tax data from 44 California counties, including all cities and former redevelopment project areas in those counties. Services provided include successor agency fiscal reporting, bond fiscal analysis, secured and unsecured parcel audits, assessment district processing, and general fund budget and tax increment projections.

HdL Software was formed in 1996 to provide innovative software processing tools for business licensing, and other locally administered revenues. HdL’s systematic and coordinated approach to revenue management, tax administration and economic data analysis is currently being utilized by over 500 agencies in eleven states.

HdL established our Cannabis Services Division in 2015. Our expert staff works closely with California regulatory agencies including the Bureau of Cannabis Control, California Department of Food and Agriculture, California Department of Public Health and the California Department of Tax and Fee Administration. In addition, our staff has partnered with the League of California Cities, CSAC, RCRC and California Police Chiefs Association to develop policy and regulatory strategies to manage the cannabis industry in California. We offer the resources and expertise to assist cities and counties with the design and implementation of all aspects of their regulatory and taxation policies and programs.

The Companies go beyond audits by using its databases and expertise to help clients expand their revenues by identifying economic voids; finding local companies that can restructure the way orders are taken to increase local tax revenues; ascertaining opportunities for expanding use tax from construction projects; seeking prospects for direct payment permits and purchasing corporations and by providing staff expertise to support a proactive and effective approach to short and long term fiscal and economic planning.

HdL Companies is a Corporate Partner of the League of California Cities and California State Association of Counties and works extensively with the State Association of County Auditors, California Society of Municipal Finance Officers (CSMFO) and California Municipal Revenue and Tax Association (CMRTA) on anticipation and planning of programs to strengthen local government revenues.

Proposal to Provide Revenue Discovery, Audit and Tax Compliance and Consulting Services City of Vallejo, CA March 16, 2020
5 This close understanding of local government needs coupled with extensive databases and advance methodology provides for the most relevant, productive and responsive, revenue recovery, forecasting and economic services available.

HdL has provided similar work for the following agencies that share a similar size, scope and purpose as the City of Vallejo:

City of Concord – Client Since 2001
HdL currently provides Sales, Use and Transactions Tax, Business License and Property Tax Services.

City of Fairfield – Client Since 2009
HdL currently provides Sales and Use Tax, Business License and Property Tax Services.

City of Oakland – Client Since 1998
HdL currently provides Sales and Use Tax, Cannabis, Business License and Property Tax Services.

City of Sunnyvale – Client Since 1995
HdL currently provides Sales and Use Tax, Business License and Property Tax services.

A complete client list follows this page.

The HdL Companies Revised 2/25/20
HdL Companies Clients and Services
i
Adelanto (B,C,E,I,)
Agoura Hills (A,B,C,H)
Alameda (A,B,C,D,H)
Alameda County (A,B,D,H)
Alhambra (A,B,C)
Aliso Viejo (A,B,C)
Amador County (E)
American Canyon (A,B,C,G,H)
Anderson (A,B,D,H)
Antelope Vly E Krn (C)
Apple Valley (A,B,F,H)
Arcadia (A,B,F,H)
Arcata (A,B,C,D,H)
Arcata Fire Dist (C)
Arroyo Grande (A,B,D)
Artesia (A,B,I)
Atascadero (A,B,D,)
Atherton (C)
Auburn (A,B,H)
Avalon (A,B,C)
Azusa (A,B,C,D,H)
Bakersfield (G)
Baldwin Park (A,B,C,H)
Banning (A,B,F,H)
Barstow (A,B,C,D)
Barstow Fire Dist (C)

BART (A,B,D)
Beach Cities Health Dist (C)
Beaumont (A,B,C,F,H)
Bell (A,B)
Bell Gardens (A,B,C,H)
Bellflower (A,B,C,H,I)
Bellingham, WA (H)
Belmont (A,B,C,D,F,I,J)
Belvedere (H)
Benicia (A,B,C,D,I)
Berkeley (F)
Beverly Hills (A,B,C,H)
Big Bear Lake (A,B,C)
Biggs (B,E)
Blue Lake (B)
Blythe (A,B,C,F,G)
Bothell, WA (H)
Brawley (A,B)
Brea (H,I)
Brentwood (A,B,C,F,H)
Brentwood, MO (H)
Bridgeton, MO (H)
Buellton (A,B,C)
Buena Park (A,B,C,F)
Burbank (A,B,C,D)
Burlingame (A,B,D)
Butte County (A,B)
Calabasas (C)
Calexico (A,B,C,D)
Calimesa (A,B,F)
Calistoga (A,B,C)
Camarillo (A,B,C,F,H)
Canyon Lake (A,B)
Capitola (A,B,D,G,J)
Carmel (A,B,D)
Carpinteria(A,B,D)
Carson (A,B,C,H)
Cathedral City (A,B,C,D,H)
CBRE Group Inc. (F)
Cerritos (A,B)
Chico (A,B,C,I,J,K)
Chino (A,B,C)
Chino Hills (A,B,I,J)
Chino Valley Independent
Fire District (C)
Chula Vista (A,B,D,G,H,I)
Citrus Heights (A,B,C)
Claremont (A,B,C,H)
Clayton (H)
Clearlake (A,B,D)
Cloverdale (G)
Clovis (A,B,F,H)
Coachella (G)
Coachella Valley Water
District (C)
Coalinga (B,D,E)
Colfax (B,E,G)
Colma (A,B)
Colton (A,B,C,G,H,I)
Colusa (A,B,C)
Commerce (A,B,C,D,H)
Compton (A,B,D,I)
Concord (A,B,C,D,H,I)
Contra Costa Co. (A,B,H)
Contra Costa Trans Auth
(A, D)
Corcoran (B,D,E)
Corning (A,B,D)
Corona (A,B,G,H)
Coronado (A,B,C,H)
Corte Madera (A,B,D,F)
Costa Mesa (A,B,C,G,H,I)
Cotati (A,B,C,D,G)
Covina (A,B,C,D,F,I)
Crescent City (A,B)
Cudahy (A,B,C,F)
Culver City (A,B,C,F,J)
Cupertino (A,B,C,F,G)
Cypress (H,I)
Dana Point (A,B)
Danville (C,F,H)
Del Rey Oaks (A,B,D)
Desert Hot Springs
(A,B,C,F,G)
Diamond Bar (A,B,C,F)
Dixon (A,B,C)
Downey (A,B,C,D,H)
Duarte (A,B)
Dublin (A,B,C)
East Bay Reg Pk Dist (C)
Eastvale (A,B,C,F,H)
El Cajon (H)
El Centro (A,B,D)
El Cerrito (A,B,C,D,F)
El Dorado County (A,B)
El Monte (A,B,C,D,G,H,I)
El Segundo (A,B,C,J)
Elk Grove (A,B)
Encinitas (A,B,C)
Eureka (A,B,C,D)
Fairfield (A,B,C,D,H)
Farmersville (B,D,F,G)
Fillmore (A,B)
Firebaugh (B,G)
Fontana (A,B,C,F,H)
Foothill Transit (F)
Fortuna (A,B,C,D)
Fountain Valley (A,B,C,D,I)
Fowler (A,B,D,H)
Fremont (A,B,C,H)
Fullerton (A,B,C,G,H,I,J)
Galt (A,B,D,F)
Garden Grove (A,C,D)
Gardena (A,B,F)
Glendale (A,B,C,D,I)
Glendora (A,B,C,D,F,I,J)
Glenn County (A,B)
Goleta (A,B,C,G)
Gonzales (A,B,C,D)
Grand Terrace (A,B,C,F)
Grass Valley (A,B,D,I)
Greenfield (B,C,D,E,G)
Gridley (B)
Grover Beach (G)
Guadalupe (B,D,E)
Half Moon Bay (H,I,J)
Hanford (G)
Hawaiian Gardens
(A,B,C,F,H)
Hawthorne (A,B,C,D)
Hayward (C,H)
Healdsburg (A,B,D)
Hemet (A,B,C,D,F)
Henry County, GA (H)
Hercules (C)
Hermosa Beach (A,B,C,H)
Hesperia (A,B)
Highland (E,H)
Hollister (A,B,D)
Holtville (B,C,E)
Hoquiam, WA (H)
Hughson (A,B)
Humboldt County (B,E)
Huntington Beach (A,B,C,F)
Huntington Park
(A,B,C,D,H,I)
Huron (B,C)
Imperial (A,B,C,G)
Imperial Beach (A,B,C,G)
Imperial County (A,B)
Imperial County Local
Trans Auth. (D,E)
Indio (A,B,C,D)
Industry (A,B,C)
Inglewood (A,B,C,D)
Inyo County (B,E)
Irvine (A,B,C,G)
Irwindale (A,B,C,H)
Jackson (A,B)
Jones Real Estate (F)
Jurupa Valley (A,B,C,H)
Kennewick, WA (H)
Kern County (A,B)
King City (A,B,C,D,G,H)
Kings County (A,B)
La Canada Flintridge
(A,B,F,H)
La Habra (A,B,C,D,F,G,H)
La Habra Heights (C,F)
La Mesa (A,B,C,D,H)
La Mirada (A,B,C,F,H)
La Palma (A,B,C,D,H)
La Puente (A,B,C,D,F)
La Quinta (A,B,C,D)
La Verne (A,B,C)
Lafayette (C)
Laguna Hills (A,B,C)
Laguna Niguel (A,B)
Laguna Woods (B,E,F)
Lake County (B)
Lake Elsinore (A,B,C,H)
Lake Forest (A,B,C,F,J,K)
Lakewood (A,B,C)
Lancaster (A,B,I,J)
Lassen County (B,E)
Lathrop (A,B,C,D,F)
Lawndale (A,B,C,H)
Lemon Grove (A,B,C)
Lemoore (A,B)
Lewis Management Grp (F)
Lincoln (A,B)
Live Oak (B,C,E,G)
Livermore (A,B,C,H)
Livingston (A,B,C,F)
Lodi (A,B,D,F,H,I,J,K)
Loma Linda (A,B)
Lomita (A,B,I)
Lompoc (A,B,C,H)
Long Beach (A,B,C,D)
Loomis (B)
Los Alamitos (A,B,C,I)
Los Altos (A,B,C)
Los Altos Hills (C,I)
Los Angeles County (A,B)
Los Banos (F)
Lynwood (I)
Madera County (B,E)
Malcolm Riley & Assoc (F)
Malibu (A,B)
Mammoth Lakes (A,B,D,G)
Manhattan Beach (A,B,C)
Marin County (A,B,H)
Marina (A,B,D,F,G,I)
Mariposa County (E)
Legend of Services:

A = Sales Tax Reports E = Small City H = Local Tax Software B = Sales Tax Audit F = ECONSolutions I = Business License Services C = Property Tax Services G = Cannabis Services J = TOT Services D = Transactions Tax Services K = STR Services

The HdL Companies Revised 2/25/20
HdL Companies Clients and Services
Martinez (A,B,C,D,I)
Marysville (A,B,C,D,G,H)
Maywood (A,B,C,G,H)
McFarland (A,B)
Mendocino County (A,B,F)
Menifee (A,B,C,D,F,H)
Menlo Park (C,H)
Merced (A,B,D,F)
Merced County (A,B)
Metro Trans Commission (A,B)
Milpitas (C,H)
Mission Viejo (A,B,C)
Modesto (G,H)
Modoc County (B,E)
Mojave Water Agency (C)
Mono County (B,E)
Monrovia (A,B,C)
Montclair (A,B,C,D)
Montebello (A,B,C,H)
Monterey (A,B)
Monterey County (A,B,H)
Monterey Park (A,B,C,F,I,J)
Moorpark (A,B,C,H)
Moreno Valley (A,B,C,H)
Morgan Hill (A,B,F,G,I)
Morro Bay (A,B,D,H)
Moulton Niguel Water Dist (C)
Mountain House (F)
Mountain View (A,B,C,)
Murrieta (A,B,D,F,H,I)
Napa County (A,B,D)
Napa Valley Transportation
Authority (A,D)
National City (A,B,C,D,F)
Needles (B,E)
Nevada City (A,B,D,J)
New Hanover County (H)
Newark (A,B,D,H)
Newman (B)
Newport Beach (F)
Norco (A,B,C,D,H)
Norwalk (A,B,C)
Novato (A,B,D,F,G,I,J)
Oakland (A,B,C,H)
Oakley (A,B,F)
Oceanside (A,B,C,D,G)
Ojai (A,B,J,K)
Ontario (F)
Orange (A,B,C)
Orange Cove (B)
Orinda (A,B,D,I)
Orland (B,D,E)
Oxnard (A,B,C,D,G)
Pacific Grove (A,B,D,F,I,J)
Pacifica (A,B,H)
Palmdale (A,B,C,G)
Palos Verdes Estates (C,I)
Paradise (B,E)
Paramount (A,B,C,F)
Parlier (A,B,C)
Pasadena (A,B,C,G)
Paso Robles (A,B,C,G,H)
Patterson (A,B)
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Proposal to Provide Revenue Discovery, Audit and Tax Compliance and Consulting Services City of Vallejo, CA March 16, 2020
7 C. SCOPE OF SERVICES

1. Sales and Use Tax
A. Objective, Strategy and Methodology
Sales and Use Tax Audits
Using confidential taxpayer records as authorized by Revenue and Taxation Code Section 7056, HdL will identify and correct errors that result in underpayments of tax to the City of Vallejo. The firm will employ a series of analyses, comparisons with other data sources and physical field canvassing to find, document and submit for correction all taxpayer errors that result in lost City revenue or could result in lost revenue in the future. When errors are identified, HdL staff will promptly file claims for their correction following CDTFA procedures.

Thereafter, HdL will work with CDTFA to ensure the prompt recovery of all escaped revenues.

Documentation of errors will be regularly provided to the City.

In conducting these activities on behalf of the City, HdL will provide reports that accurately depict the City’s sales tax base, use tax collections and revenues. All reports, graphs, tables and revenue forecasts are designed to enhance the City’s capacity to plan for, expand and manage its sales, use and district tax revenues. Reports identifying and comparing the retail composition of various sub-geographic areas of the City will also be provided.

HdL has recovered $2,195,036 for the City of Vallejo since 2001. This represents a return of 806% on all audit, reporting and management fees paid to HdL. An additional $88,519.88 was recovered from ongoing audit of the City’s transactions tax.

Audit Method and Approach
To achieve the highest audit and recovery results, HdL employs the following audit techniques and programs:

1. Identification of Errors and Revenue Maximization Opportunities Field Surveys: Field inventories of the City’s business and industrial areas are conducted to identify businesses located within the City that appear to be underreporting revenues or are not on the CDTFA allocation rolls. Specially trained field auditors, using the latest in mapping, GPS and digital recording technology, document not only the existence of sales tax producing businesses but also any relevant factors such as size, presence of a large stock of goods, will-call windows and any specific references to sales activity. This process identifies a wide range of registration errors including erroneous consolidation of multiple outlets, misreporting of point of sale from an erroneous location and delays in reporting new outlets.

Tax Area Code (TAC) Review: HdL reviews every active account on the CDTFA’s allocation rolls reporting $50 or more in local tax to ensure proper TAC assignment.

Government and private sector property tax mapping and GIS databases are used extensively in this process. These programs are important because physical canvassing will not reveal businesses with missing or incomplete signage, or those that are homebased. A complete TAC review is performed at least once every 3-6 months.

Proposal to Provide Revenue Discovery, Audit and Tax Compliance and Consulting Services City of Vallejo, CA March 16, 2020
8 Deviation Assessment: Each quarter, HdL applies proprietary queries and analyses to its statewide allocation database to identify all accounts for which there has been a substantial change in allocation pattern. HdL’s database, unmatched in size, comprises over 99.8% of all sales and use tax transactions in California and allows for the most comprehensive audits in the state. The review is applied to direct allocations and to the county pools and allows for a much broader view and understanding of what has happened in any given quarter. Well-founded leads are quickly extracted from this process, often without the need for time-consuming manual reviews of taxpayer files.

This allows for faster processing and less time used for preparing submittals. This in turn lowers recovery fees by reducing the amount of prior quarter revenue requiring redistribution.

Use Tax Errors and Opportunities: HdL analyzes the use tax allocation pools of the 58 counties and the state each quarter to identify instances where a taxpayer may have misidentified a transaction as use tax rather than sales tax. Further specialized reviews and techniques are employed to identify direct allocation opportunities of local use tax.

CDTFA Regulation 1802(d) allows for direct allocation of local use tax on qualifying individual sales or purchases over $500,000. Out-of-state and foreign-based companies in particular often have large transactions that meet the criteria for direct allocation under this section. Under Regulation 1699.6, businesses and organizations (including local government agencies) with aggregate purchases subject to use tax of least $500,000 per year can apply for a Use Tax Direct Payment Permit, allowing for direct allocation of the corresponding local share. Finally, under a resolution adopted in December 1994, a construction contractor who enters into a contract equal to or greater than $5,000,000 may elect to obtain a sub-permit for the jobsite resulting in a direct allocation of local use tax to the jurisdiction where the jobsite is located.

Regulation 1699 Evaluations: CDTFA Regulation 1699 controls when and where a permit should be issued to a given business location. Wholesalers, contractors, processors, manufacturers, and other non-retail businesses that do not normally sell merchandise often conduct occasional sales, self-accrue use tax or are levied deficiency assessments by the state. HdL uses proprietary methods for finding companies that should be taking out permits so that those revenues are allocated to the City.

2. Recovery of Misallocated Revenue
Development of Correction Data: Preliminary lead lists developed through the audit programs are further refined using a variety of programs and databases to reduce the need for taxpayer contact. Companies remaining in the audit database are then contacted by a specialized audit team whose members are specifically selected and trained to interview tax preparers and marketing, warehouse and management staff.

Taxpayer interviews are always conducted in a business friendly, non-intrusive manner that emphasizes cooperation and protection of confidentiality.

Documentation: Telephone contacts are often accompanied by a written follow-up questionnaire concerning business activities, a specific one-time transaction or a written confirmation of our findings. This documentation is always filed with the petition to minimize CDTFA processing time. Solid documentation and follow-up lowers client fees by reducing the number of quarters requiring retroactive adjustment and ensures faster recovery of misallocated revenues.

Proposal to Provide Revenue Discovery, Audit and Tax Compliance and Consulting Services City of Vallejo, CA March 16, 2020
9 City Review: HdL will provide the City with a quarterly report of all revenue recovery work in progress. This report will include an electronic Work Authorization which, once approved, will include active links to copies of all inquiries filed with the CDTFA on the City’s behalf. This information is archived and is accessible to authorized users at any time through the HdL client portal. HdL will also keep the City apprised of any additional oral or written communication with the CDTFA on any matter directly impacting the City These reports, along with a detailed quarterly invoice listing all relevant information about the taxpayer and the amount of revenue recovered, will keep the City of well informed of all ongoing audit activity.

Preparation and Submittal of Corrections: Petitions are prepared (CDTFA Form 549-S or 549-L) that notify the CDTFA the existence and nature of the misallocation. All relevant and available supporting documentation is attached, including any information from taxpayer file reviews or any other sources that provide evidence of an earlier date of knowledge regarding the error. This documentation facilitates the maximum recovery of revenue due the City from prior periods. Copies of all transmittal forms and correspondence with the CDTFA and taxpayers are sent to City staff.

Continuous Follow-up: HdL employs a full-time case manager whose responsibility is to monitor and follow-up on case inventory. An aging report is updated and reviewed on a monthly basis and the appropriate follow-up is initiated on cases that are taking an inordinate amount of time to correct. This follow-up emphasizes partnership and cooperation with CDTFA Allocation Group staff. HdL’s continuous efforts to check on the status of submittals are made to ensure that corrections are being pursued. Timely follow-up on cases reduces the time it takes for the City to recover its revenue.

Appeals: HdL cases are thoroughly researched, vetted and documented prior to submittal. This ensures the fastest possible processing times and reduces the number of cases that are initially disclaimed and must be further researched and defended through a very lengthy CDTFA appeals process. Nearly all HdL cases are resolved favorably at either the first or second levels of the CDTFA petition process described in Regulation 35056. HdL has cultivated close working relationships with the CDTFA Appeals Division.

When an appeal is required, HdL has the necessary expertise and access to competently and aggressively represent client interests. Having many cases on appeal may be presented by some vendors as evidence of a more sophisticated and aggressive audit program. It should be viewed, however, as an indication that inadequate supporting documentation tends to require more case appeals and lead to otherwise unnecessary procedural delays.

3. Track Record
HdL is effective in recovering misallocated revenue for client agencies in 97% of all cases submitted to the CDTFA. The small number of cases that do require an appeal is evidence of HdL’s thorough research and the quality of the well-documented information included to support claims.

Proposal to Provide Revenue Discovery, Audit and Tax Compliance and Consulting Services City of Vallejo, CA March 16, 2020
10 B. Reporting Overview

1. HdL Reports and Training
HdL maintains Vallejo’s detailed sales tax data back to 1993-94 and will provide City staff with unlimited access to its quarterly updated web-based sales tax system to facilitate “in-house” analysis and printing of reports. The system allows City staff to search, print and export sales tax data for a variety of financial, management and planning functions. The system provides the ability to search all sales tax producers by business name, address, CDTFA account number and current or historical sales tax allocations. The web application also provides access to archived quarterly sales tax reports. Data is easily queried and exported to either comma delimited or native Excel formats, allowing for convenient use with applications in the Microsoft Office suite. The web application is accessible from all major operating systems, internet browser platforms, and device types (laptop, tablet, PC, mobile).

HdL’s geo-area feature supports use of address ranges, which ensures the inclusion of all CDTFA registrations and allows City staff to create and modify geo-areas without a separate GIS system. HdL also supports interfacing with the City’s GIS by including accurately geocoded latitude and longitude for each business. The database includes historical allocation information and can be quickly exported by City staff on demand.

Additionally, City created shape files can be used to define Geo-areas. Training on use of the software and ongoing upgrades is provided at no additional charge.

Quarterly sales tax reports are provided on both a cash and adjusted basis. Cash reports reconcile to CDTFA payments and are necessary for any revenue sharing agreements that the City might have in place. Adjusted reports shift payment aberrations (doubleup payments, CDTFA audit adjustments, etc.) into the quarter where the sales occurred to accurately show the City’s true economic trends. The quarterly sales tax data will be presented in reports for major sales tax producers by both rank and category, analysis of sales tax activity by category, business or areas specified by the City.

HdL’s quarterly sales tax reports include a listing of top sales tax producers and comparisons with both regional and statewide trends. Retailer information is provided in grouped form or in business by business detail.

HdL’s services are superior to other vendors because the firm provides analysis done in context with regional market areas, countywide and statewide trends to better monitor and compare the City’s economic performance by business category. A non-confidential newsletter is included to support management’s efforts to inform and engage the public.

Analysis of sales tax data and presentations to City staff are led by seasoned professionals, whose experience and knowledge adds value by identifying emerging retail trends, business retention needs, leveraging of economic clusters and reviewing successes in client jurisdictions with similar characteristics.

HdL staff also prepares sales and use tax projections for proposed development projects, responds to technical questions relating to CDTFA processes and regulations, and monitors revenue sharing agreements.

Proposal to Provide Revenue Discovery, Audit and Tax Compliance and Consulting Services City of Vallejo, CA March 16, 2020
11 2. Budget Projections and Monitoring
HdL has developed a comprehensive, detail-oriented method for projecting and monitoring client sales and use tax revenues that has proved to result in estimates that fall within 2% of actual receipts two-thirds of the time. Initial and mid-year projections are made by factoring out payment aberrations that skew the base revenue and factoring in known changes such as new or closed businesses.

HdL also incorporates information from over 90 economic sources as well as information gathered from client meetings to develop economic factors to apply to individual retail business segments; the results are combined into a single estimate of anticipated revenue. HdL further enhances its projections by contacting builders of large-scale development projects to better time and estimate the value of potential use tax payments into its estimates. Three and five-year forecasts are also provided.

C. Online Tools

1. HdL Online Sales Tax Application
HdL maintains Vallejo’s detailed sales tax data back to 1993 and will provide City staff with unlimited access to its quarterly updated web-based sales tax system to facilitate “inhouse” analysis and printing of reports. The system allows City staff to search, print and export sales tax data for a variety of financial, management and planning functions. The system provides the ability to search all sales tax producers by business name, address, CDTFA account number and current or historical sales tax allocations. The web application also provides access to archived quarterly sales tax reports. Data is easily queried and exported to either comma delimited or native Excel formats, allowing for convenient use with applications in the Microsoft Office suite. The web application is accessible from all major operating systems, internet browser platforms, and device types (laptop, tablet, PC, mobile).

HdL’s geo-area feature supports use of address ranges, which ensures the inclusion of all CDTFA registrations and allows City staff to create and modify geo-areas without a separate GIS system. HdL also supports interfacing with the City’s GIS by including accurately geocoded latitude and longitude for each business. The database includes historical allocation information and can be quickly exported by City staff on demand.

Additionally, City created shape files can be used to define Geo-areas. Training on use of the software and ongoing upgrades is provided at no additional charge.

D. Support Services

1. Consultation
Quarterly, a principal of the firm analyzes the City’s data in detail and meets with appropriate City officials to review trends and discuss and make recommendations regarding the budget implications of the year’s data.

HdL also serves as “on-call” staff to provide sales tax estimates for proposed projects, assist with budget projections and answer sales and use tax questions related to economic development, budgeting and related revenue collection.

Proposal to Provide Revenue Discovery, Audit and Tax Compliance and Consulting Services City of Vallejo, CA March 16, 2020
12 When requested by the City, principals also meet with committees of the City Council, advisory committees and other groups to explain sales tax regulations, economic trends and legislative proposals that will impact the City’s tax base. HdL will, when requested by the City, conduct technical seminars for City personnel on California sales and use tax processes. To support in-house efforts to maximize use tax, the seminars will cover the fundamentals of direct payment permits, purchasing corporations and maximizing “use tax” from construction projects.

HdL maintains close and positive relationships with CDTFA executives and staff to quickly resolve policy issues unique to individual clients. The firm also advocates regulation and legislative changes when they are of benefit to clients.

Examples are the Company’s work in the change of allocation of “use tax” for major construction projects, securing an Executive Order from the Governor to allow publishing of top taxpayers in public documents and the introduction of the problem of “point of sale” for warehouses to the CDTFA.

2. Legislative Updates
HdL prepares Legislative Updates for clients to keep them informed of all proposals that may impact local revenues. The firm also provides Issue Updates which are similar in nature but deal with specific issues such as Sales Tax Participation Agreements, legal decisions or regulation changes. Each issue is presented in detail so that City staff is equipped to respond to questions on topics important to their community leaders.

Tim Cromartie, HdL Senior Advisor, who previously worked as the Legislative Representative for the League of California Cities, provides legislative support to clients.

Prior to his work with the League of California Cities, Tim held a variety of positions in the Legislature and state government, including legislative representative for CalPERS Governmental Affairs, legislative director and public safety consultant to former state Senator Gloria Romero, and field representative for Congresswoman Barbara Lee.

The firm also retains Rebecca Marcus as a lobbyist to represent client interests in matters before the CDTFA and the state legislature. With over 20 years of experience in state and national politics, Rebecca has developed the necessary institutional knowledge and established relationships to effectively advance clients’ interests in Sacramento. As a Chief of Staff for 13 years in the California State Assembly for several distinguished Members including Assembly members Mark Stone, Mike Feuer and Johan Klehs, Rebecca successfully advanced legislation across a diverse array of policy areas. As a result, over 100 of these Members’ bills became law ranging from landmark green chemistry legislative to a transformative transportation tax.

3. Use Tax Maximization Program
Major construction projects and even ongoing business operations often generate significant use tax revenues from purchases of machinery, equipment and other fixed assets. HdL has worked with numerous clients to ensure that use tax from manufacturing and assembly plants, food processing, cold storage facilities, power/energy projects, medical, research and technical facilities, oil fields/refineries and extraction/mining industries are properly allocated to the host jurisdiction.

Proposal to Provide Revenue Discovery, Audit and Tax Compliance and Consulting Services City of Vallejo, CA March 16, 2020
13 HdL’s sales tax team includes a staff of specialists who review new business startups that might present potential self-assessed use tax opportunities, meets with contractors to advise on sub-permits and reporting procedures and provides materials and advice on purchasing companies and direct payment permits. The firm monitors major construction projects to make sure that any use tax generated is properly allocated to the job site’s host jurisdiction.

When brought into a project early, HdL assists clients with inserting provisions in conditional use permits and development agreements to guarantee that use tax maximization procedures are followed and monitors projects and subcontractors to make certain that sales tax is properly allocated back to the client jurisdiction. Direct payment permits and purchasing corporations can sometimes be utilized where conditions offer mutual opportunities for the client agency to capture additional sales tax revenues and the participating company can increase control of sales and use tax liabilities.

4. Economic Development Benefits
When properly refined and organized, sales tax data analysis is an important tool for strengthening and expanding local economies. The data shows companies that are growing and may need expansion space and should be contacted as part of an agency’s business retention program.

When broken out geographically, the data produces patterns of industries that potentially share common customers, suppliers, technology and labor and therefore offer opportunities for attracting new businesses. The data further exposes retail areas that may be over saturated in some retail segments while also identifying voids and opportunities for additional retail development.

Although numerous companies and agencies use the CDTFA’s published data as a basis for analysis, the results are usually inaccurate and misleading due to address and business categorization errors in the data. To correct those deficiencies, HdL performs data validation and scrubbing techniques on an ongoing basis, fixing business addresses and re-categorizing merchants to differentiate brick and mortar retailers from “business to business” suppliers and on-line retailers.

The company further creates and groups businesses into additional categories and classifications, not provided by the CDTFA, to better track new and emerging economic trends. Samples include the breaking out of biotech/medical suppliers, online fulfillment centers, alternate energy and utility providers, wineries and marijuana dispensaries. This focused approach to data management allows agencies to more accurately compare the impact of trends in their jurisdiction with state and regional trends.

On a regional basis, it also allows for the identification of true economic voids and opportunities to expand the City’s tax base. Accurate addressing allows for improved performance monitoring and comparison of specific economic areas such as shopping centers, downtown districts and auto malls with similar projects throughout California.

In addition to using our large database, HdL’s principals leverage their experience analyzing client data throughout California to identify new trends and developments that might help other clients. The service includes analyses to identify retail voids and opportunities and an annual publication of retailers seeking expansion in the region and state.

Proposal to Provide Revenue Discovery, Audit and Tax Compliance and Consulting Services City of Vallejo, CA March 16, 2020
14 E. Other Optional Services
Transactions Tax Services
HdL can continue to monitor and report on this additional source of revenue for the City.

1. Transactions and Use Tax Audit Program
The following services would be performed by our audit team members under the direction of our Director of Audit Services.

Once data from the City’s transactions tax is uploaded and processed, several sophisticated and proprietary queries and analyses would be applied to identify potential misallocations and deficiencies. These processes are supported and supplemented by HdL’s Bradley-Burns Local Sales and Use Tax database, which includes account-level registration and allocation data for all of Solano County (incorporated cities and the unincorporated area) dating back to FY 1993-94. The HdL database also includes both historical and current transactions tax data for over 175 individual districts.

The size and quality of HdL’s database is the optimal foundation for a review of City of Vallejos’s transactions and use tax data and the basis for a thorough search for deficient or misallocated tax payments.

Our unmatched database allows for quick generation of exception or “lead lists”. It also lends legitimacy to requests for information and enhances taxpayer cooperation when HdL can demonstrate that is already has specific information from the taxpayer’s sales and use tax returns. Once a target list of potential point of sale/delivery/use errors is developed, senior auditors, who are experienced in taxpayer outreach, contact the appropriate company personnel in sales, operations and accounting to determine if a reporting error exists.

A thorough initial audit will be supplemented by ongoing reviews of quarterly distribution reports as new data is released. All countywide payments, including direct allocations, county pool distributions and deficiency assessments will be compared to the City’s transactions tax distributions to isolate all potential opportunities for revenue recovery.

The administrative process for recovery of misallocated transactions tax revenue (i.e revenue credited in error to the wrong district) is governed by the California Department of Tax and Fee Administration (CDTFA) Regulation 1828. Section (e) of this regulation limits redistributions to two quarterly periods prior to the quarter in which CDTFA is made aware of the error. Recovery of deficient payments is limited by Section 6487 of the Sales and Use Tax Law to three years after the return is filed.

HdL remains cognizant of these statutes during both initial and ongoing reviews and will target all missing revenue within reach. HdL’s audit team will also file all necessary documentation with CDTFA on a timely basis to secure the earliest possible date of knowledge. A full-time case manager actively monitors all outstanding claims and follows up with appropriate CDTFA staff as necessary to ensure prompt correction.

Proposal to Provide Revenue Discovery, Audit and Tax Compliance and Consulting Services City of Vallejo, CA March 16, 2020
15 Negative findings will be researched and further documented and pursued following all guidelines and deadlines stipulated by Regulation 1828. This includes formal appeals to the Sales and Use Tax Department and the Appeals Division.

Invoicing on audit claims will include all necessary and relevant detail to allow for quick and easy validation of claims with minimal disruption to City staff. A Work Authorization detailing audit findings and submittals to CDTFA prior to any invoicing can be provided at the option of City staff. All billings are easily verified through HdL’s paper trail, CD responses and our web-based sales tax application.

2. Transactions and Use Tax Management Program
The following services would be performed by our team of sales tax principals, production team and assisted by our IT department.
a. Economic Analysis
Although numerous companies and agencies use the CDTFA’s published data as a basis for analysis, the results are usually inaccurate and misleading due to address and business categorization errors in the data. To correct those deficiencies, HdL scrubs the data on an ongoing basis, fixing business addresses and re-categorizing merchants to differentiate brick and mortar retailers from “business-tobusiness“suppliers and on-line retailers.

The company further creates and groups businesses into additional categories not provided by the CDTFA to better track new and emerging economic trends. Samples include the breaking out of biotech/medical suppliers, online fulfillment centers, alternate energy and utility providers, wineries and marijuana dispensaries. This focused approach to data management allows agencies to more accurately compare the impact of trends in their jurisdiction with state and regional trends.

In addition to a comprehensive database, HdL’s principals use the intelligence gleaned from quarterly sales tax meetings with over 300 agencies to identify new trends and developments that might help other clients. The firm’s bi-weekly Headlines e-news service is included to keep clients informed of trends and developments that may impact individual and regional economic strategies and goals. b. Budget Projections and Monitoring
HdL has developed a comprehensive, detail-oriented method for projecting and monitoring transactions tax revenues. The state’s economic base is divided into seven major economic segments. Initial and mid-year projections are made for each category by eliminating payment aberrations and including recent revenue impacts such as newly opened or closed businesses. HdL also incorporates information gathered from over 90 industry sources and from its quarterly client meetings across the state of California; the results are combined into a single estimate of anticipated revenue.

HdL’s historical approach, which has been well-received by its clients, has been to provide each client a single “most-likely” budget estimate and to stand-by that budget projection, explaining variances when they occur. HdL has an excellent track record in supporting its clients in this way and of providing accurate estimates.

Proposal to Provide Revenue Discovery, Audit and Tax Compliance and Consulting Services City of Vallejo, CA March 16, 2020
16 Clients generally prefer this approach over a budget range, which often puts staff of client agencies in the difficult position of having to choose a single point estimate from what can often be widely dispersed options. Of course, HdL can provide three-different scenarios if that best meets the needs of the City of Vallejo and HdL will take the time to explain the factors that went into each of its estimates to help staff make the most informed budget decision possible.

HdL further enhances its projections by contacting builders of large-scale development projects to determine the estimated timing and value of potential construction related revenue in its estimates. Five-year forecasts are also provided. c. Management Support
HdL will establish a consistent liaison with City of Vallejo coordinator and define logical checkpoints for reviewing progress towards the agreed upon objectives. Each quarter, a principal of the firm will analyze the City of Vallejo transactions and use tax data in detail and meet with appropriate officials to review trends and make recommendations regarding the economic and budget implications of that quarter’s data.

HdL serves as “on-call” staff to provide transactions and use tax estimates for proposed projects and prepare budget projections. When requested, principals also meet with committees of the City Council to explain transactions tax regulations and their importance to the City of Vallejo’s tax base.

HdL maintains close and positive relationships with CDTFA Board Members and staff to quickly resolve policy issues unique to individual clients. The firm also advocates regulation and legislative changes when they are of benefit to all HdL clients.

Examples are the firm’s work in the change of allocation of “use tax” for major construction projects, securing an Executive Order from the Governor to allow publishing of top taxpayers in public documents and the introduction of the problem of “point of sale” for warehouses to the CDTFA.
d. Reports, Transactions Tax Website and Training
Within one week of receiving new quarterly data, HdL staff will import the City’s detailed transactions and use tax data into its web-based sales tax system to facilitate analysis and report preparations. The system allows City staff to search, print and export their transactions and use tax data for a variety of financial, management and planning functions.

The firm provides the ability to search transactions tax producers by business name, address, CDTFA account number and current and historical allocations. The archived quarterly transactions and use tax reports can also be accessed through the online application. Training on use of the web-based application and ongoing upgrades are provided at no additional charge.

Quarterly transactions tax reports are provided on both a cash and adjusted basis.

Cash reports reconcile to CDTFA payments while adjusted reports accurately provide economic trending data. HdL will provide reports on major tax producers and total tax receipts as requested. The data will be presented in reports for major tax producers, by both rank and category, analysis of tax activity by category and business, district or specific areas that the City of Vallejo has specified, analysis of reporting aberrations and per capita and by number of outlet comparisons.

Proposal to Provide Revenue Discovery, Audit and Tax Compliance and Consulting Services City of Vallejo, CA March 16, 2020
17 Additional quarterly reports will include reports by major retail outlets, business category, geo area growth and decline comparisons, historical revenue tables and top 100 taxpayer listings.

The firm’s quarterly analysis is done in context with regional market, countywide and statewide trends to better monitor and compare the economic performance by business category and geographical area. A non-confidential newsletter is included to support management’s efforts to inform and engage the public.

Unlike the Bradley-Burns Uniform local tax which is allocated basically to the “Point of Sale”, transactions taxes are to the extent possible collected and allocated only to those residing or physically located within the Agency levying the tax. The difference often creates confusion and difficulties in projecting revenue trends. HdL’s reports are designed to overcome these problems and provide clients with accurate revenue projections and planning forecasts.

Economic Development Services
In 2014, HdL launched ECONSolutions as an expansion of services to provide cost-effective strategic planning and consulting to local governments. ECONSolutions offers a variety of customized economic development products and services tailored around a client’s budget needs and specific development requirements.

Whether you need to understand a trade area, fill a vacancy, or market a shopping center, ECONSolutions will collaborate with City staff, developers, and real estate professionals to bring increased economic activity to your community. We will work with City staff in formulating steps to capitalize on near-term opportunities, evaluate areas for redevelopment or repositioning of commercial shopping centers, future revenue projections and feasibility studies to ultimately devise a strategy to encourage commercial development in your City through an understanding of your marketplace. Presently, ECONSolutions is working for 14 northern California cities including Clovis, Corte Madera, Cupertino, Danville, Morgan Hill, Pacific Grove, Pinole, Pleasant Hill, Redwood City, San Rafael, Scotts Valley, Tracy, Vacaville and Watsonville.

Our ECONSolutions staff has over 45 years of local economic development and community development experience in California. ECONSolutions offers up-to-date data capability, an online GIS platform with state-of-the-art software for market analytics and the ability to leverage HdL’s extensive databases systems. ECONSolutions can engage in projects of every size ranging from data analysis to comprehensive studies to advisory support and to public/private collaboration.

HdL has the largest privately held sales tax database in the State of California with sales tax data for 99% of the state’s businesses. The firm’s proprietary sales tax/software system affords numerous opportunities to leverage the data to identify economic development opportunities.

Proposal to Provide Revenue Discovery, Audit and Tax Compliance and Consulting Services City of Vallejo, CA March 16, 2020
18 INSIGHT Market Analytics
Includes the following reports:
• Consumer Demographic Profile – uses STI Popstats database with over 1,200 variables to deliver the highest accuracy level and dependable demographic data. • Household Segmentation Profile – provides a deep understanding of consumer preferences, behaviors and habits, utilizing Personix Lifestage database. • Employment Profile - provides a deep understanding of workforce statistics to provide information on daytime population, student population and employment Industry clusters.
• Consumer Demand & Market Supply Assessment – examines opportunity/surplus gaps across 31 retail segments and 40 major project and service lines to provide insight on potential opportunities within a defined market. • Supporting Trade Area Maps – visual tools to assist in understanding a trade areas’ shopping centers and retail clusters.
• Semi-Annual Update.

Business Attraction Support
• Preparation of a void analysis & market profile to a list of targeted markets and grocery stores identified and based on trade area analytics and the use of a database of over 1,100 national & regional retailers and restaurants.

Creation of a Marketing Packet
• Preparation of marketing packets for distribution to potential targets.

Marketing/Attraction Support
• On-going support services for attraction of potential targets.

2. Property Tax
HdL Coren and Cone (HdLCC) provides property tax management services to over 230 California public agencies. The company consists of a team of seasoned professionals with decades of experience in every aspect of local government including finance, management, auditing, economic development, redevelopment and legislative advocacy. This ensures prompt and knowledgeable response to inquiries and provides for relevant and timely information on issues impacting the City’s property tax. HdLCC’s specialized computer software, databases and highly trained staff have generated over $95,000,000 in new revenues for client agencies, $52.8 million since 2000.

Property taxes in California have evolved into an extremely complex system that requires experience and expertise to fully monitor. There are two broad categories of property (real and personal), three tax rolls (secured, unsecured and state assessed), and numerous peculiarities such as possessory interest and the distribution of tax revenue from private aircraft. The revenues generated by the property tax system need to be distributed to a myriad of taxing entities including cities, counties, schools, special districts and successor agencies. The company's extensive property tax information systems allow us to perform tax audits and provide information and analysis from a city's property tax data to city staff quickly and accurately.

Proposal to Provide Revenue Discovery, Audit and Tax Compliance and Consulting Services City of Vallejo, CA March 16, 2020
19 Since 2000, HdLCC has recovered $52.8 million of property tax revenue for California cities and their former redevelopment agencies. This total includes recoveries from both the secured and unsecured tax rolls
A. Objective, Strategy and Overview
Using HdLCC's custom software, a data set of all parcels in the City will be established and be available via the internet through the HdLCC Web-Based Property Tax Program. This data is prepared from the Solano County Lien Date Rolls that is purchased annually in July.

HdLCC updates the original County roll with any transfers in ownership, which have occurred between the lien date and the current month and updates the ownership information (name and mailing address), date of transfer, sale price, and document (deed) number monthly.

The methodology that the company follows in identifying, correcting and recovering property tax errors includes the following:

Task I Establishment of County Data Set
Task II Identify and Correct Errors
Task III Prepare Reports
Task IV Ongoing Analysis
HdL Coren & Cone has ample staff to devote to the tasks required in this request for qualifications. Our knowledgeable staff will be assigned to ensure that the deadlines for deliverables are met and that requests placed by City staff are handled expeditiously.

B.Property Tax Reporting Services
HdLCC furnishes a variety of reports detailing property and revenue trends for the entire City and for custom defined geographic areas. These reports can be used for budgeting purposes, planning, economic development and public information. Among the reports available are top 25, 50, 100-property owner/taxpayer listings, multiple ownership properties, non-owneroccupied parcels, identification of property ownership transfers and completed construction projects for tracking of reassessments. We also provide the City with quarterly reports of pending assessment appeals and quarterly sales transaction and trending analyses. HdLCC will provide the following reports based on the 2019-20 lien date rolls and will provide the reports annually, quarterly or monthly as appropriate. Reports are also available from prior years if needed. These reports are available in pdf, Microsoft Word and Excel formats for use in staff presentations.

Reports in the portfolio of deliverables include but are not limited to:
• A five-year history of the values within the City, and custom (city defined) geographic areas;
• A listing of the largest value changes, positive and negative between tax years; • An annual parcel listing of properties with parcel number changes between tax years identifying parcel splits and combines;
• A listing of the major property owners for the City including the combined assessed values of their property and property use code designation; • A listing of property transfers which occurred since the lien date ordered by month— sales listing;
Proposal to Provide Revenue Discovery, Audit and Tax Compliance and Consulting Services City of Vallejo, CA March 16, 2020
20 • A listing of parcels that have not changed ownership since the enactment of Proposition 13;
• Analysis of recent sales of properties not sold since prior to Proposition 13; • A comparison of property within the City by county use-code designation; • A multiple year comparison of growth by use code designation over a 5-year period; • A listing by parcel of new construction activity to identify non-residential parcels with new construction activity and to provide reports for use in the City's preparation of Proposition 4 and 111 State Appropriation Limit calculations; • A listing of multiple owned parcels;
• A listing of absentee owner parcels;
• Calculate an estimate of property tax revenue anticipated to be received for the fiscal year by the City based upon the initial information provided by the County and subject to modification.
• Analyses based on geo areas designated by the City to include assessed valuations and square footage computations for use in economic analysis and community development planning.
• One and five-year budget projections for the city general fund and special districts.

This report is interactive for tax modeling.

We currently have over 150 unique reports available that have been designed to help inform our clients and assist them in explaining and illustrating trends and concepts to other staff, City Council and the public.

C. Property Tax Audits

HdL Coren & Cone has the technology, methodology and trained staff to analyze all secured parcels within the City to identify costly errors resulting in the misallocation of property taxes on an annual basis. We perform these audits as a part of our service audit component to ensure that all parcels on the secured, unsecured and cross reference (possessory interests, mobile homes) tax rolls are correctly coded by tax rate area to the City of Vallejo to ensure that errors are submitted for correction each year.

The company has the ability to audit the secured, unsecured and cross reference property tax rolls two ways, first reviewing the entire county to find parcels miscoded to other jurisdictions; and second, reviewing the parcels within the city, county or agency to ensure that each is coded to the appropriate taxing entity. Our advanced technology, accuracy and track record have placed us in a unique position to be hired by cities to find additional revenues after audits have been performed by prior consultants.

In addition, by filing audit results with the County Assessor in a timely manner, we can assure that the repetitive errors from previous years will not re-occur. Unsecured assets are selfreported through the filing of Form 571L annually and allow for the applicant to indicate the business location and city. Addresses often repeat on streets, N and S designations are often not included, the mailing city is often a postal jurisdiction city rather than the actual city limits where the assets are located. The county staff is then responsible for assigning a parcel number and TRA to the assets. Errors are often made during the assignment of these two identifiers that place the unsecured property in a specific jurisdiction for taxation.

Proposal to Provide Revenue Discovery, Audit and Tax Compliance and Consulting Services City of Vallejo, CA March 16, 2020
21 Upon approval of the contract and authorization to proceed, the company will perform an analysis of the Assessor Rolls to identify all parcels on the secured, unsecured and cross reference tax rolls and verify that parcel assessed valuations and the resulting taxes are correctly allocated to the City. This analysis is accomplished through the use of specialized computer software, assessor maps, city GIS maps, city records, other pertinent documents, and field investigations. The review will include the lien date rolls noted for the current tax year as well as historical data back for a total of four (4) tax years.

D. Property Tax Application/Online Tools
The HdLCC web-based software application provides clients with a user-friendly tool to access the City’s property tax data. HdLCC provides monthly updates to reflect changes in ownership and deed recordings. Assessment appeals data is updated quarterly. As modifications and enhancements are made to the program, clients receive the enhanced version of the software at no additional cost.

The City will be granted a site license for the application, which does not limit the number of users. The software can be used to access secured, unsecured, cross reference, possessory interest, mineral rights and SBE non-operating unitary tax rolls. Unsecured assessments are linked to the corresponding secured parcels where parcel numbers match. This allows users to see all property tax records at a particular location.

Geo areas as defined by the City can be created in the database by City staff or, upon supplying maps with the boundary area of each requested geo defined, will be created by HdLCC staff and are included in the cost of this proposal. Additional areas can be created at no cost as they become necessary.

Property transfer information is updated monthly and the prior sales transactions are stored with each record for reference. Filtering is available for Pre-Prop 13 owned properties, nonowner-occupied properties (absentee owners), specific focused uses, targeted values, and selection of various other property characteristics. The database can be sorted by parcel number, owner, situs address, county use code designation and tax rate area. Data can be exported from the database to Excel, CSV, Text or Html to allow for further analysis through an easy to use export feature. Custom exports are also available to link or integrate with city building or code enforcement products.

Training will be provided annually at no additional cost to the client and HdLCC is available to answer questions, provide phone assistance or troubleshoot issues that arise between scheduled training events.

Proposal to Provide Revenue Discovery, Audit and Tax Compliance and Consulting Services City of Vallejo, CA March 16, 2020
22 Screen Capture of HdLCC Web based Property Tax Software E. Successor Agency Support
Redevelopment was dissolved in California as of February 1, 2012. The current Successor Agency scope of services has become a function of estimating revenues available and verifying county calculations and distributions.

SUCCESSOR AGENCY SERVICES including but not limited to:
• Annual tax increment projections and, as requested, cash flow analysis for the Successor Agency by Project Area
• Review of Redevelopment Obligation Payment Schedules (ROPS) as requested. • Provide property tax information to the Oversight Board at the direction of the Successor Agency
• Provide access to the Oversight Board to City and former redevelopment agency documents at the direction of the Successor Agency
• Monitor the County distribution of tax-sharing revenues to the taxing entities of the former redevelopment agency
• Advice and consultation on the City/Successor Agency’s preparation of required reports, such as revenue projections; review of Recognized Obligation Payment Schedules (ROPS), submittals to the Oversight Board and/or County or State agencies, and new or revised legislative requirements
• Analysis of legislative and judicial matters impacting Redevelopment Property Tax Trust Fund (RPTTF) revenues to the Successor Agency and to the City.

Prior to their dissolution, redevelopment agencies were the major beneficiaries of the $80 million HdLCC audit recovered because most of the corrections involved the miscoding of parcels in a city's general fund that belonged in a redevelopment project area, and because all of the tax increment went to the redevelopment agency. Recoveries for successor agencies offer limited advantages to their cities. Audit recoveries provide the successor agency additional revenue to wind down their obligations more quickly and may add to the residual distribution for all the taxing entities in project areas. The City, like the other taxing entities, would receive its share of any residual payments after annual Redevelopment Obligation Payments (ROPS). School districts would not benefit at all since additional residual payments reduce the State backfill payments.

Proposal to Provide Revenue Discovery, Audit and Tax Compliance and Consulting Services City of Vallejo, CA March 16, 2020
23 Given these circumstances, most cities and successor agencies do not opt for property tax audits of former redevelopment project areas. For cities, there are opportunities to capture property tax revenue incorrectly going to jurisdictions outside the city as well as former redevelopment project areas. Under these circumstances, our audit services are provided on a contingency basis as described in this proposal. For successor agencies, the audits will be performed as Additional Services with the manner of payment to be determined upon authorization to proceed.

F. On-Going Consultation/Support Services
During the term of the contract, HdLCC will serve as the City of Vallejo’s resource staff on questions relating to property tax and assist in estimating current year property tax revenues.

On-going consultation would include, but not be limited to, inquiries resolved through use of the CITY's database.

G. Optional Services
Optional services are available for a fixed fee. These services include:
• Mello-Roos Special Tax studies.
• Independent redevelopment and financial consultant reports such as escrow release reports and additional bond tests.
• Preparation of fiscal consulting reports for tax allocation bonds and other financings.

3. Utility Users Tax
Work Plan Approach Utility Users Taxes for Electric, Gas, Telecom and Water Review Utility’s Address Geographical Allocation Data and Gross Revenue Computations

1. Utilize proprietary systems and software operated by Azavar to analyze utility usage by service point in the City that are not reported as service addresses by the utility.

Azavar will identify any address coding discrepancies and will correct miscoded addresses so that the franchisee properly identifies the address property as in the City for future remittances of UUT.

2. A gross revenue audit will determine if the proper taxes derived from local users of utility service are being calculated and remitted appropriately by the utility provider.

Azavar will determine if any revenues remain unaccounted for when tax remittances are being computed by a provider.

Calculate and Report Number of Addresses and Dollar Amount of any Utility Users Tax Underpayments

3. Develop a spreadsheet model that includes the following:
a. Summarize addresses that do not appear in the utility’s database and create estimates of back taxes owed as well as recovery amounts going forward; and,
b. Independently calculate gross revenue computations of the tax for any under/over payments reported to the City for the review period.

4. Calculate interest and penalty charges based on City Ordinances and State Laws on under/over payment of UUT.

Proposal to Provide Revenue Discovery, Audit and Tax Compliance and Consulting Services City of Vallejo, CA March 16, 2020
24 Prepare and Submit Results to the Utility Provider and Final Back Tax Reports to the City

5. Submit address allocation errors and gross revenue computations errors to the utility provider for correction going forward.

6. Submit a report of back taxes owed by the utility provider to the City that will include the following:
a. A table that calculates all back taxes owed including penalty in interest for both the missing addresses and miscalculated gross revenues; b. Explanation of findings, including any ordinances and laws used and cited.

Specifically identifying the areas and nature of noncompliance including recommended corrective actions;
c. Supporting data that summarize the findings by month; and, d. Recommendations for based on the findings.

7. Based on comments provided by the City, finalize and submit notice of tax liability to the utility provider.

Recovery of Unpaid Utility Users Taxes

8. Work collaboratively with the utility provider and the City to collect all back taxes owed or reach a settlement agreement.

Deliverables

1. Submit final report to the City, which includes supporting schedules, that summarizes the findings with a detailed explanation of payment discrepancies and penalties including any proposed restitution of unpaid franchise fees for each of the following franchises:
a. Electric
b. Gas
c. Water
d. Cable

2. Submit final report to the City, which includes supporting schedules, that summarizes the findings with a detailed explanation of payment discrepancies and recoveries including any restitution of unpaid UUT for each of the following utility tax remitters:
a. Electric
b. Gas
c. Water
d. Telecom
Key Milestones, Checkpoints, and Other Decision Points

1. Kick-off meeting of the audit process

2. Sign-off of letters of agency and non-disclosure agreements

3. Start of the audits

4. Submit draft report to the City for review and comments

5. Final report

6. Review of back franchise fees owed and the best path forward to recover those fees City Resources Required

1. Onsite data intake if data is not available electronically

2. Sign-off of letters of agency

3. A designated contact to provide sign-off on documents and review work product for next steps
Proposal to Provide Revenue Discovery, Audit and Tax Compliance and Consulting Services City of Vallejo, CA March 16, 2020
25 Optional Service:

Utility Users Tax Administration and Monitoring Services HdL’s administration service unburdens the City from the day to day administration of the revenue program, while monitoring returns for compliance. HdL’s tax administration professionals are available as needed to support both the City’s team and the UUT reporters. HdL’s UUT administration service incorporates all of the following:
• Tax Registration Database Management – HdL will transfer the City’s existing databases as they relate to UUT into HdL’s internal administration tools. HdL will maintain the data and provide reports to the City.
• Return Processing – HdL will process UUT filings within 5 days of submission. Accounts will receive all applicable forms necessary to complete the filing process. • New Account Processing – HdL will process any new registrations. • Payment Posting / Processing – HdL will process all payments made. Accounts will be updated with payment information and revenues will be remitted to the City net HdL’s fees on no less than a monthly basis.
• Customer Support Center – HdL will provide reporters with multiple support options for registering, filing returns, making payments and for general inquiries. A toll-free number will be provided to businesses in order to access one of our tax specialists Monday-Friday 8:00am to 5:00pm Pacific. Providers will also have access to support via, e-mail, fax, and via the Support Center On-Line.
• On-Line Filing & Payment Processing – With input from the City, HdL creates a custom web site and domain for taxpayers to submit online forms, returns, and payments along with other customer support related items.
• Compliance Monitoring – HdL will ensure accurate filings of UUT returns by consistently monitoring returns.
• Annual Reporting – In addition to standard monthly reports, HdL will provide the City with periodic analysis reports designed to provide key insights.

4. Franchise Tax
A. Work Plan Approach for Electric Franchise Fees

FRANCHISE FEES
Work Plan Approach Electric Franchise Fees
Review Franchisee’s Calculation of Franchise Fees, Verify Compliance with Ordinance

1. Verify that the accounting methodologies and procedures used by the franchisee accurately identified kwh sales generated within the City during the review period, investigate any inconsistencies and provide recommendations, if applicable, and confirm franchisees have:
a. Identified the appropriate source of revenue on which the City’s franchisee fee collections will be based upon (kwh usage per unit);
b. Applied the appropriate franchise fee calculation; and, c. Retained supporting documentation such as customer billing and receipt records to substantiate franchise fee base.

2. Analyze payments to the City, supporting data and recalculate the franchise fees for the review period.

Proposal to Provide Revenue Discovery, Audit and Tax Compliance and Consulting Services City of Vallejo, CA March 16, 2020
26 3. Review the growth of the franchisee and perform an analysis that confirms that the revenue growth of the franchisee is similar to the growth of the revenues reported to the City in the franchise fee payment.

Calculate and Report Dollar Amount of any Franchise Fee Underpayments

4. Develop a spreadsheet model that includes the following calculations:
a. Summarize kwh sales recorded on source documents provided by the franchisee; and, b. Independently calculate the franchise fees under/over reported to the City for the review period.

5. Calculate under/overpayment of franchise fees by category of customer.

6. Calculate interest charges and any other applicable fees on under/over payment of franchise fees.

Prepare and Submit Draft and Final Reports to the City

7. Submit draft report to the City for review and comments. The draft report will include the following:
a. A table that compares, in parallel columns, the kwh sales reported to the City as compared to amounts calculated by Azavar;
b. Explanation of findings, including any noncompliance items noted during the review.

Specifically identifying the areas and nature of noncompliance including recommended corrective actions;
c. Supporting tables that summarize the findings by year; d. Calculation of under/overpayment of franchise fees plus any required penalty and interest; and,
e. Recommendations for based on the findings.

8. Based on comments provided by the City, finalize and submit final report to the City.

Recovery of Unpaid Franchise Fees

9. Work collaboratively with the franchisee and the City to formulate solutions for noted issues and recovery of unpaid franchise fees.

Work Plan Approach Gas & Water Franchise Fees
Review Franchisee’s Calculation of Franchise Fees

1. Verify that the accounting methodologies and procedures used by the franchisee accurately identified revenues subject to franchise fees within the City during the review period, investigate any inconsistencies and provide recommendations, if applicable, and franchisee, as specified in the franchise agreement, have:
a. Identified the appropriate source of revenue on which the City’s franchisee fee collections will be based upon (revenues);
b. Applied the appropriate franchise fee calculation as specified in the franchise agreement; and,
c. Retained supporting documentation such as customer billing and receipt records to substantiate franchise fee base.

2. Review payments to the City, supporting data and recalculate the franchise fees for the review period.

3. Review the growth for the franchisee and perform an analysis that confirms that the revenue growth of the franchisee is similar to the growth of the revenues reported to the City in the franchise fee payment.

Proposal to Provide Revenue Discovery, Audit and Tax Compliance and Consulting Services City of Vallejo, CA March 16, 2020
27 Calculate and Report Dollar Amount of Franchise Fee Underpayments

4. Develop a spreadsheet model that includes the following calculations:
a. Summarize revenues recorded on source documents provided by the franchisee; and,
b. Independently calculate the franchise fees under/over reported to the City for the review period.

5. Calculate under/overpayment of franchise fees by category of revenues.

6. Calculate interest charges and any other applicable fees on under/over payment of franchise fees.

Prepare and Submit Draft and Final Reports to the City

7. Submit draft report to the City for review and comments. The draft report will include the following:
a. A table that compares, in parallel columns, the revenues reported to the City as compared to amounts calculated by Azavar;
b. Explanation of findings, including any noncompliance items noted during the review.

Specifically identifying the areas and nature of noncompliance including recommended corrective actions;
c. Supporting tables that summarize the findings by year; d. Calculation of under/overpayment of franchise fees plus any required penalty and interest; and,
e. Recommendations for based on the findings.

8. Based on comments provided by the City, finalize and submit final report to the City.

Recovery of Unpaid Franchise Fees

9. Work collaboratively with the franchisee and the City to formulate solutions for noted issues and recovery of unpaid franchise fees.

Work Plan Approach Cable Franchise Fees
Review Franchisee’s Calculation of Cable Fees

1. Inspect billing and receipt records used to substantiate Cable Fees due from customers.

Summarize the franchise and PEG fee information for the review period and note any inconsistencies.

2. Review financial data of gross revenues to verify that they were reported in accordance with the definition of gross revenues set forth in California, including:
a. Comparisons of reported revenues by type over the entire review period; b. Determine if the franchisee reported amounts received from Cable Fees, PEG fees, late fees, and returned check fees; and,
c. Review and analyze read histories to identify errors in billing and revenues processes.

3. Review payments to the City, supporting data and recalculate the Cable Fees for the review period.

4. Develop a spreadsheet model that includes the following calculations:
a. Summarize revenues recorded on source documents provided by the franchisee.

Include comparison.
b. Independently calculate the Cable Fees that should be reported to the City. c. Calculate, in parallel columns, the gross revenues reported to the City vs. the gross revenues calculated Azavar, by category of revenues.
d. Calculate under/overpayment of Cable Fees by category of revenues. e. Calculate interest charges on under/over payment of Cable Fees and any possible penalties or late filing assessments.

Proposal to Provide Revenue Discovery, Audit and Tax Compliance and Consulting Services City of Vallejo, CA March 16, 2020
28 5. On a test basis, reconcile gross revenues submitted as supporting documentation with the franchise fee payments to revenues recorded on the audited financial statements or equivalent reporting information.

6. Identify each revenue type or source that the franchisee did not include in the determination of Cable Fees remitted to the City for the review period from failure to report or include as a City address.

7. Ensure that gross revenues recorded on the general ledger are properly included in the franchise and PEG fee payments in accordance with the franchise agreement.

8. Note whether the franchisee has substantively fulfilled its financial obligations in regard to its franchise agreement with the City and determine that it adheres to the general parameters of the franchise agreement.

9. Verify that the accounting methodologies and procedures used by the franchisee accurately identified revenues subject to Cable Fees within the City during the review period, investigate any inconsistencies and provide recommendations, if applicable, and franchisee, as specified in the franchise agreement, have:
a. Identified the appropriate source of revenue on which the City’s franchisee and PEG fee collections will be based upon (revenues);
b. Applied the appropriate franchise and PEG fee calculations as specified in the franchise agreement; and,
c. Retained supporting documentation such as customer billing and receipt records to substantiate franchise and PEG fee base.

10. Review the growth of the franchisee and perform an analysis that confirms that the revenue growth of the franchisee is similar to the growth of the revenues reported to the City in the franchise and PEG fee payments.

Calculate and Report Dollar Amount of Franchise and PEG Fee Underpayments

11. Develop a spreadsheet model that includes the following calculations:
a. Summarize revenues recorded on source documents provided by the franchisee; and,
b. Independently calculate the Cable Fees under/over reported to the City for the review period.

12. Calculate under/overpayment of Cable Fees by category of revenues.

13. Calculate interest charges and any other applicable fees on under/over payment of Cable Fees.

Prepare and Submit Draft and Final Reports to the City

14. Submit draft report to the City for review and comments. The draft report will include the following:
a. A table that compares, in parallel columns, the revenues reported to the City as compared to amounts calculated by Azavar;
b. Explanation of findings, including any noncompliance items noted during the review.

Specifically identifying the areas and nature of noncompliance including recommended corrective actions;
c. Supporting tables that summarize the findings by year; d. Calculation of under/overpayment of Cable Fees plus any required penalties and interest; and,
e. Recommendations for based on the findings.

15. Based on comments provided by the City, finalize and submit final report to the City.

Proposal to Provide Revenue Discovery, Audit and Tax Compliance and Consulting Services City of Vallejo, CA March 16, 2020
29 Recovery of Unpaid Cable Fees

16. Work collaboratively with the franchisee and the City to formulate solutions for noted issues and recovery of unpaid Cable Fees.

Deliverables
Submit final report to the City, which includes supporting schedules, that summarizes the findings with a detailed explanation of payment discrepancies and penalties including any proposed restitution of unpaid franchise fees for each of the following franchises:
• Electric
• Gas
• Water
• Cable
Submit final report to the City, which includes supporting schedules, that summarizes the findings with a detailed explanation of payment discrepancies and recoveries including any restitution of unpaid UUT for each of the following utility tax remitters:
• Electric
• Gas
• Water
• Telecom
Key Milestones, Checkpoints, and Other Decision Points

1. Kick-off meeting of the audit process

2. Sign-off of letters of agency and non-disclosure agreements

3. Start of the audits

4. Submit draft report to the City for review and comments

5. Final report

6. Review of back franchise fees owed and the best path forward to recover those fees City Resources Required

1. Onsite data intake if data is not available electronically

2. Sign-off of letters of agency

3. A designated contact to provide sign-off on documents and review work product for next steps

5. Transient Occupancy Tax
HdL is offering the City of Vallejo two different solutions to meet the City’s objectives: TOT Administration Services (which includes Audits and is the preferred service model; and TOT Audits as a stand-alone service.

OPTION 1 – HdL Transient Occupancy Tax Administration Services (Includes Audits; the preferred option)
HdL’s transient occupancy tax administration service goes beyond scheduled cyclical audits, providing compliance monitoring of each return as it is filed while unburdening the City from the day to day administration of the TOT revenue program. Continual monitoring of returns is the optimal way to increase compliance while maintaining positive relations with the City’s lodging providers. The program is education focused, ensuring that lodging providers are clear on reporting requirements and methodology. HdL’s tax administration professionals are available as needed to support both the City’s team and the City’s lodging providers. The City is kept up Proposal to Provide Revenue Discovery, Audit and Tax Compliance and Consulting Services City of Vallejo, CA March 16, 2020
30 to date, with 24x7 online access to HdL’s client portal containing real time access to registration and filing data, and management reporting. HdL’s TOT administration service incorporates all of the following:
• Tax Registration Database Management – HdL will transfer the City’s existing databases as they relate to TOT into HdL’s internal administration tools. HdL will maintain the data and provide reports to the City.
• Return Processing – HdL will process TOT filings within 5 days of submission. Accounts will receive all applicable forms necessary to complete the filing process. • New Account Processing – HdL will process any new registrations for lodging establishments which are new or have changed ownership. • Payment Posting / Processing – HdL will process all payments made for new and existing lodging providers. Accounts will be updated with payment information and revenues will be remitted to the City net HdL’s fees on no less than a monthly basis. • Customer Support Center – HdL will provide lodging providers with multiple support options for registering, filing returns, making payments and for general inquiries. A tollfree number will be provided to businesses in order to access one of our tax specialists Monday-Friday 8:00am to 5:00pm Pacific. Providers will also have access to support via, e-mail, fax, and via the Support Center On-Line.
• On-Line Filing & Payment Processing – With input from the City, HdL creates a custom web site and domain for taxpayers to submit online forms, returns, and payments along with other customer support related items.
• Compliance Monitoring & Lodging Provider Audits – HdL will ensure accurate filings of TOT returns by consistently monitoring returns and comparing with data obtained from the identification phase. This can include listing calendar data, average occupancy, and average room rates. HdL will also provide compliance audits as mutually agreed to by the City and HdL, ensuring all providers are audited at least once every three years. • Annual Reporting – In addition to standard monthly reports, HdL will continue to provide the City with annual analysis reports designed to provide key insights on the lodging provider community and the reporting details of each provider. • Reporting – HdL Offers a variety of hardcopy, electronic, and online reports designed to facilitate the City’s administration of TOT as well as provide valuable information for budget forecasting. HdL’s reporting contains a wealth of knowledge compiled from interactions with taxpayers, City information, HdL proprietary databases, as well as industry leading providers such of travel related data such as Smith Travel and PKF-HR.

HdL will work with the City during implementation to identify the standard and custom reports required by the City as well as establish the frequency of the delivery.

OPTION 2 – Transient Occupancy Tax Audits - Stand-alone service The HdL Transient Occupancy Tax Audit Program involves a two-phase business friendly approach that reduces City administrative costs and provides the City with assurances of future compliance and reporting practices from the City’s lodging industry.

The phased approach starts with a detailed analysis of all of the lodging providers registered with the City. A preliminary report of the analysis is reviewed with the City and used for planning of specifics in the following phase. The Program will include:

Proposal to Provide Revenue Discovery, Audit and Tax Compliance and Consulting Services City of Vallejo, CA March 16, 2020
31 Phase 1 – Transient Occupancy Tax Analysis
Ordinance and Filing Procedure Review – Analysis of Transient Occupancy tax ordinances and City procedures are conducted to identify possible deficiencies or other administration related issues. Recommendations are made by the audit team for items such as to best practices, form design, and potential ordinance modifications to insure the most effective policies and controls.

Specifically, HdL will:
• Review City’s ordinance to identify possible deficiencies, areas subject to legal challenge, or missing provisions such as successor liability;
• Review City’s procedures in applying the ordinance to identify potential challenges based on administration of the ordinance;
• Compare City’s key ordinance provisions to ordinances of cities of comparable size and demographics;
• Provide a written report to the City identifying provisions of the City ordinance that may warrant further review;
• Meet with the City to discuss the findings and report, as well as select provisions or administrative recommendations for further review; and
• Recommend changes to the City’s ordinance or administrative procedures, including additional language to cover identified issues, potential loopholes, and improper procedures that could result in an Equal Protection or Due Process claim.

Analysis Report and Compliance Review – HdL’s audit team will obtain and conduct a review of the most recent 48 months of transient occupancy tax filings. In order to verify and augment the data, the audit team will compile a variety of supplemental information on each property, including number of rooms, occupancy rate, physical condition, and business dynamics. Data is then further scrutinized in order to identify unusual or suspicious reporting and/or other variables that indicate cause for further review. Information and findings are documented in the analysis report for review with the City. Key components of this process include:
• Obtain and analyze lodging provider return information in the possession of the City initially for the prior four (4) year period (most recent 48 months); • Conduct unobtrusive collection of a variety of information on each property, including number of rooms, occupancy rate, physical condition, and business dynamics; • Provide a report to the City on trend analysis to include projections for gross rent revenue and occupancy rates, and other information conducive to assessment of visitation; • Perform discovery services designed to identify and locate lodging providers not properly registered with the City and not appearing on the City rolls as Tax remitters; • Analyze lodging provider return information from the past four (4) year period (most recent 48 months) in order to identify unusual or suspicious reporting and/or activities that warrant further review; and
• Provide a detailed report to the City identifying and recommending lodging providers who require additional investigation or examination to determine their compliance with the City’s ordinance.

Analysis Review – Upon completion of the analysis report, meetings are scheduled with the city to review the results as well as identify lodging providers who require additional investigation under phase 2 of the program.

Proposal to Provide Revenue Discovery, Audit and Tax Compliance and Consulting Services City of Vallejo, CA March 16, 2020
32 Phase 2 – Lodging Provider Audits
Audit Notification & Scheduling – Lodging providers selected by HdL and approved by the City are sent a letter and scheduled for a Compliance Analysis Audit. Every effort is made to promote a positive taxpayer experience. Businesses will be reminded of the documents required for the audit that were discussed in webinars and previous communications. Lodging providers are afforded the opportunity to schedule flexible appointment times by contacting the Business Support Center or visiting our online support center.

Compliance Analysis & Audit – The HdL audit team reviews the books and records of the lodging provider to determine compliance with transient occupancy tax regulations. HdL validates taxable gross rents, exemptions, bank statements, daily/monthly summaries, and other relevant information for determining compliance. Supporting documentation for relevant items such as exemptions will also be documented for accuracy.

Audit & Compliance Report – Upon completion of the audit and analysis, and prior to additional actions, a compliance report is generated and reviewed with the City. The report indicates specific results of the reviews and recommended actions. Documentation will be included with the report to assist the City and HdL in determining next steps.

Deficiency and Commendation Notification – Upon final review with the City, businesses that are found to have deficiencies are notified of the findings as well as payment and appeal processes.

Appointments are also scheduled to review the findings and educate taxpayers on proper filing procedures designed to prevent future errors and deficiencies. Lodging Providers found to be in compliant, are sent a commendation letter thanking them for their cooperation and compliance.

Invoicing & Collections – Lodging providers found to be underreporting are invoiced through the standard City approved collections process. Taxpayers will have access to all of the services provided including the Business Support Center and online support systems. Balances are collected and remitted along with supporting documentation to the City through approved remittance processes.

6. Business License
Business License Compliance Services – (Revenue Discovery and Audit) HdL offers robust solutions for managing compliance of municipal Business License Taxes and its related functions. HdL is ever mindful of the important role that customer service plays in the successful implementation of a compliance and revenue collection program. Therefore, HdL will make every effort to ensure that all communications with the City’s business community is kept at a professional level maintaining a careful balance between compliance, revenue collection, tactfulness, sensitivity and taxpayer education.

Revenue Discovery
Enriched Data Portfolio / Lead Identification – Utilizing data provided by the City, as well as the HdL Enriched Data Portfolio (EDP), HdL’s team builds an enhanced listing of entities subjected to licensure or taxation including, but not limited to, those businesses physically located in the City, itinerant businesses, and entities participating in the sharing economy such as short-term rentals (STRs), drive sharing services and others.

Proposal to Provide Revenue Discovery, Audit and Tax Compliance and Consulting Services City of Vallejo, CA March 16, 2020
33 These entities are electronically matched to the existing files of the City using advanced data matching algorithms, allowing HdL staff to identify which entities are compliant and which entities require follow up.

Field Surveys – Experienced field crews, equipped with the most advanced tools available (mobile mapping/GPS systems, tablet computers pre-loaded with various City and state-wide databases, etc.) may canvass commercial areas of the City to develop and enhance the leads identified in the EDP. Field Surveys provide additional inventories of active businesses as well as to provide on-site verifications of data culled from other sources.

Exception Resolution – Records are reviewed by our skilled team members, filtering out records that may lead to erroneous contacts. This extra step allows staff to find additional revenues not otherwise identifiable through electronic means and assists in reducing potential complaints levied at City staff and management from pursuit of false positives.

Compliance Communication and Outreach – Upon exception resolution, HdL staff initiates contact with the identified entities through a series of City approved communication methods.

HdL makes every effort to simplify the process for taxpayers and utilizes a variety of mediums for communication including mail, telephone, email and web-site access. Potential non-compliant entities are notified of their options to comply or dispute their non-compliant status. Initial notification packets include everything a business needs to become compliant and multiple methods of resolving their accounts.

Business Support Center – HdL operates a business support and service center where the business community can access expert staff during normal business hours. Businesses calling our toll-free line can expect minimal hold times along with access to a variety of options which include filing support, payment options, resolution of specific tax issues and other services designed to reduce the burden of registering and filing taxes. Our team of experts, including our resident Certified Revenue Officers (CRO), implements a business friendly and education centric approach to supporting the business community in all aspects of the management and compliance process.

Business Support Center ~Online – Businesses are encouraged to take advantage of the range of services available on-line, 24 hours a day, seven days a week. With HdL Flex File, businesses can choose to file their new business registration as well as make payments via our on-line filing portal. In addition to filing and paying for taxes, businesses can obtain copies of applications, general support and FAQs, schedule appointments and request copies of their tax registration all with the click of a button. Our on-line services underscore HdL’s commitment to excellence in customer service and education by continually improving the registration and payment experience for the business community.

Document Submission / Processing – Whether the taxpayer chooses to respond by mail, email or our online filing website, each application submission is reviewed for completion and accuracy prior to processing. Any additional documentation needed to complete the approval of a submission, such as a home occupation permit, can also be requested or forwarded to other City departments either as a pre-requisite or as a courtesy to the business. All submissions are filed and stored electronically and made available to the City via standard reporting processes or upon request.

Invoicing – Once an application is approved, invoices are forwarded to the taxpayer indicating detailed tax calculations and balances owed. Taxpayers are provided the opportunity to pay their balances via mail, online, or over the phone services. Taxpayers will also have continued access to our Business Support Center for any questions or disputes arising from the invoice process.

Proposal to Provide Revenue Discovery, Audit and Tax Compliance and Consulting Services City of Vallejo, CA March 16, 2020
34 Registry Update – Upon collection of all requirements which may include the payment, application and/or other documentation, HdL will prepare a Registry Update package to include payment as well as copies of all taxpayer correspondence and other relevant information. Data in the City registry file stored in the HdL Prime Software Suite is updated daily with packages from the Compliance Management Services. Once completed, the business will be processed through the standard processes approved through the HdL Operations Management Component.

Audits
Analysis & Selection- Audit candidates are selected using a variety of selection methodologies developed by our audit team using decades of business license tax audit experience. Preliminary analysis reports on each business selected are shared with the City prior to moving through the audit phases.

Audit Notification & Scheduling – Businesses selected by HdL and approved by the City are sent a letter notifying them of a scheduled Compliance Analysis Audit. Every effort is made to promote a positive experience for the taxpayer. A detailed description of the requirements and relevant documentation required for the audit is provided to the business two (2) weeks in advance of the proposed audit date. If the business is unable meet the audit date selected by the City all efforts to reschedule the audit to a more accommodating date will be made.

Businesses are also afforded the opportunity to schedule flexible appointment times by contacting the Business Support Center or visiting our online support center.

Compliance Analysis & Audit - The HdL audit team will audit the financial records of the business to determine compliance with business tax regulations. HdL validates taxing variables such as gross receipts and other relevant information for determining compliance. In addition to identifying underreporting issues, the HdL Audit Program will also focus on other compliance related issues such as assuring correct classifications, multiple location allocation, apportionment issues, and identifying business to business relationships that may create tax liability for 3rd parties.

Audit & Compliance Report – Upon completion of the audit and analysis, and prior to additional actions, a compliance report will be generated and reviewed with the City. The report will indicate specific results of the review and recommended future actions. Documentation that substantiates the findings in the report will be included with the report to assist the City and HdL in determining next step of the process.

Deficiency and Commendation Notification – Upon final review of the audit and analysis report businesses that are found to have deficiencies will be notified of the findings as well as the payment and appeal processes. HdL will also work with businesses found to be deficient to explain the current findings and educate taxpayers on proper future filing procedures so as to prevent future errors and deficiencies. Businesses found to be in compliance, will be sent a commendation letter thanking them for their compliance.

Invoicing & Collections – Business found to be underreporting are invoiced through the standard City approved collections process. Balances are collected and remitted along with supporting documentation to the City through the approved remittance processes.

Business License Tax Ordinance/Fee Study & Consultation Current Tax Registry Analysis:

Proposal to Provide Revenue Discovery, Audit and Tax Compliance and Consulting Services City of Vallejo, CA March 16, 2020
35 HdL will conduct an analysis of the current business license ordinance and the City’s tax registration database. Data will be compiled on the number of businesses, current tax revenues received by City, categories, and other related information in order to provide an accurate baseline for current models and the impact of changes
Fee Analysis and Comparative Study:

Using the data compiled from the registration analysis, as well as data compiled from other sources such as neighboring cities, HdL will prepare a report comparing the City model and best practices to those of neighboring cities. The report will assist and provide the City with guidance as to possible positive changes to its current model. The report will also include filing options, sample tax forms, and other tax administration related data/documents.

Modified Tax Structure Options:

As a result of the findings of the comparison report, HdL, in conjunction with City staff will draft a series of possible business tax re-structuring options for City consideration. Options may include the proposing of gross receipt-based taxes, employee-based taxes, flat taxes or a hybrid of all mentioned options. HdL will draft potential new and detailed structures to be used in the City’s new ordinance. HdL will also review and provide sample ordinance language from neighboring cities “model ordinances”. The final report will include, among other things, a complete business license tax structure recommendation along with revenue and cost impacts associated with each proposed model.

Other Optional Services
Business License Tax Administration - (Includes Revenue Discovery/Audits) HdL will transfer the City’s existing databases as they relate to business license tax into HdL’s internal administration tools. HdL will maintain the data and provide access to or copies of data or reports at the City’s request. While access to online systems will be available for the City to use at their discretion, the City will not be required to use or maintain any software in house for managing the business license registry.

Renewal Processing – Send active business license accounts a renewal notice within 45 days of the renewal period ending. Accounts will receive all applicable forms necessary to complete the renewal process.

New Account Processing – HdL will process any new business license applications and complete the new account registration process in a timely fashion. HdL will also facilitate intra-city departmental approvals such as zoning, code compliance, fire inspection, and other regulatory related functions.

Delinquent Account Processing – HdL will endeavor to collect delinquent accounts through a series of City approved processing methods. This will include at minimum two follow up delinquent notice and up to two telephone calls. Delinquent accounts will be collected with full penalties as allowed by the Municipal code or through current City practices. Accounts that remain delinquent will be processed through the City approved processes established in HdL’s collections component of the Compliance Management Program.

Proposal to Provide Revenue Discovery, Audit and Tax Compliance and Consulting Services City of Vallejo, CA March 16, 2020
36 On-Line Filing & Payment Processing – HdL registers a City approved domain name which will serve as the starting point for all web-based activities. This City specific site is designed to look and feel like the City’s own web pages and ensures a level of continuity between the business community, the City, and HdL.

With HdL Flex File, businesses can choose to file their new business registration as well as renew their license and make payments via our on-line filing portal. In addition to filing and paying for taxes, businesses can obtain copies of applications, general support and FAQs, schedule appointments and request copies of their tax registration all with the click of a button. Our online services underscore HdL’s commitment to excellence in customer service and education by continually improving the registration and payment experience for the business community.

Payment Posting/Processing – HdL will process all payments received in an expedited manner.

License accounts will be updated daily with payment information and revenues to be disbursed to the City net applicable fees at an interval to be agreed to during the project planning phase.

Disbursements typically occur monthly but can be remitted as often as weekly depending on volumes and City needs. HdL’s payment acceptance process accepts the following payment types:
✓ Check / Money Order /Cashier’s Check
✓ E-Check
✓ Debit Cards
✓ Credit Cards (Visa, Mastercard, Discover, & American Express) ✓ Check by Phone
HdL currently utilizes multiple payment gateway providers for on-line payment acceptance. HdL will work with the City to determine which provider, rate structures, and card types meet the City’s needs. HdL can also utilize the same provider and process used by the City’s current on-line functionality.

Business Support Center – HdL will provide businesses with multiple support options for registering, renewing, making payments and for general inquiries. A toll-free number will be provided to businesses in order to access one of our license specialists Monday-Friday 8:00am to 5:00pm Pacific. Businesses will also have access to support via, e-mail, fax, and via the Business Support Center On-Line. HdL constantly monitors quality control points to ensure courteous customer service, minimal hold times under 2 minutes, and the return of voice messages the same business day.

7. Cannabis Business Tax
HdL is recognized as the industry leader in providing cannabis management services to local governments. We have partnered with over 150 California agencies on cannabis-related consulting projects in the past five years, including cannabis tax audits, regulatory compliance inspections, revenue monitoring, ordinance development, application and permitting processes, cost recovery, development agreements, fiscal analyses, subject matter expertise, community outreach and education and staff training.

HdL’s team of professionals has over 46 years of direct experience developing and implementing cannabis regulatory and taxation programs at the state, county and local level. Our team has conducted over 16,000 cannabis compliance inspections, investigations and financial audits in California, Colorado, and Nevada.

Proposal to Provide Revenue Discovery, Audit and Tax Compliance and Consulting Services City of Vallejo, CA March 16, 2020
37 Section 7 of the City’s scope of services includes 8 specific services. HdL has combined these services into 4 primary components, consistent with the City’s response to Item 1.4 in Addendum 1 to the RFP.

Conduct Annual Cannabis Business Tax Audits (includes requested services A and B) A. Perform specific procedures to detect, correct and recover cannabis business tax revenues for the City.

B. Perform audit and discovery procedures for cannabis retail properties to gain tax compliance.

HdL will conduct an annual financial audit to verify the accuracy of cannabis taxes reported to the City during the review period and will recommend a tax assessment to correct and recover any unreported revenue. As part of the process, HdL will conduct a risk based analytical review of the business using the proprietary Cannabis Analytical Tracking Solution (CATS™) program to detect any diversion of product or cash. Our unique audit approach allows us to identify if a cannabis operator is under-reporting its taxes or diverting product from its facility, so as to gain increased compliance. HdL audit staff will also use information gathered by the on-site compliance inspection team (Requested Service H) to assist with the financial audit.

HdL shall coordinate with the City to develop the scope and any specific procedures to be performed. Audits shall be tailored to each specific cannabis business type as needed or desired by the City. HdL will advise and inform the City regarding recommended procedures and methods of verification, subject to the City’s concurrence. HdL recommends that the audit include all of the following components:
• Site visit
• Gross receipts verification
• Risk based CATS™ Analytic Review
• Inventory review (subject to access to the track and trace system) • POS data entry requirements review
• Preparation and issuance of report
• Exit conference with the City
The City will provide HdL with a list of businesses to be audited, including license issuance and renewal dates and the dates of any tax payments. HdL will determine the annual audit schedule and test period in consultation with the City. HdL will help the City prepare a notification letter to send to the business to start the audit. The letter will contain pertinent information about the audit, including a list of the records requested and a request for access to the business’ point of sale system. HdL recommends the notification letter be sent by the City to encourage cooperation from the business and communicate HdL’s authority to conduct the audit. However, HdL may also send the letters to the operators directly, if requested by the City.

HdL will hold an exit-conference with each audited business, at which the business will be provided with a draft audit report. The report shall clearly present all audit findings and shall explain any identified variance between the audit findings and the amounts reported and remitted to the City. The business will be given an appropriate amount of time to respond or to provide any additional documentation to address or dispute any findings.

Proposal to Provide Revenue Discovery, Audit and Tax Compliance and Consulting Services City of Vallejo, CA March 16, 2020
38 HdL will review any additional documentation provided by the business and will adjust the tax assessment as appropriate, so as to resolve any findings where possible prior to issuing the final report to the City and reduce the likelihood of any appeal. The final report shall clearly describe all audit procedures and any findings or recommendations. HdL shall also advise the business regarding best practices or other recommended procedures to improve future compliance.

HdL shall be available to provide assistance to the City with any post-audit corrective actions as warranted, upon request by the City, including any appeals. This does not include any direct involvement in enforcement actions or collection of revenues, late fees or penalties.

HdL’s assistance with any such post-audit corrective actions or audits shall be provided as needed or requested by the City and shall be billed at HdL’s hourly rate for the staff assigned or at a flat rate as otherwise negotiated with the City.

HdL’s cannabis business tax audit services will be overseen by Compliance Director David McPherson, with compliance management provided by Deputy Compliance Director Matt Eaton and financial audit oversight by Audit Manager Christina Altringer. They will be assisted by Senior Compliance Investigator Kami Miller, Senior Auditor Elizabeth Eumurian, Alfredo Marquez and Auditor Odette Mikhail.

Conduct On-Site Compliance Inspections (includes requested services C and H) C. Assist the City in gaining increased cannabis retail business compliance.

H. Provide cannabis compliance teams, which includes inspection services in addition to audit services.

HdL will conduct one on-site compliance inspection annually (or more, as requested by the City), for each permitted cannabis business to determine compliance with State and/or local laws. If HdL identifies any non-compliant activities, we will provide the City with a recommended appropriate action to address the deficiency and to ensure future compliance by the permittee.

Inspections shall ascertain both regulatory and financial compliance. Information gathered during the on-site compliance inspection shall be used to inform and assist with the financial audit (Requested Services A and B). HdL’s compliance team shall provide a draft report to both the City and the business identifying any deficiencies or non-compliance issues. The report shall advise the business regarding best practices or other recommended procedures to encourage and improve future compliance. HdL will prepare a Notice to Comply, where indicated, and shall advise the City of any recommended enforcement action.

The cost for this service shall include all of the following:
• Notifying permittee of pending inspection
• 2-hour on-site inspection to ensure that each business complies with all State and local laws and regulatory protocols for all of the following:
o Inventory management
o Cash handling procedures
o Access control
o Video surveillance
o Product safety
Proposal to Provide Revenue Discovery, Audit and Tax Compliance and Consulting Services City of Vallejo, CA March 16, 2020
39 o Alarm system maintenance and safety
o Lock standards
o Packaging and labeling
o Waste management
o Transportation documentation
o Surveillance equipment maintenance
o Occupational badges
o Business records
o Other items as necessary to ensure compliance with laws • Preparation of a draft report detailing the findings of the inspection and providing recommendations for improvement where needed. If the inspection identifies any violations of law or other non-compliance issues, then HdL will prepare a Notice to Comply as an included part of the report.
• All travel costs associated with the inspection
• All phone, email and other communications involved in preparing for, scheduling and coordinating the inspections and providing the report.

The cost for this service assumes one inspection of each permitted cannabis business per year. Additional inspections of specific businesses or business types can be provided as needed or requested by the City and will be billed as a multiple of the same rate. The cost for this service does not include review of any supplemental documents provided to address or contest any findings of non-compliance, nor does it include any assistance with the appeal of any enforcement action by the City. Any costs associated with such additional services would be billed at HdL’s hourly rate, or at an alternate flat rate to be negotiated with the City.

Provide Quarterly Revenue Monitoring Reports and Database (requested services E and F)
E. Provide written cannabis business tax reports on a quarterly basis to the City.

F. Provide an electronic database of the City’s cannabis business tax data to the City.

HdL has developed a quarterly revenue-monitoring system that provides a risk-based assessment of each cannabis business to identify outliers or possible errors that may warrant further investigation. Our proprietary Tax Analytical Remittance Report (TARR) uses specially designed algorithms to analyze confidential data from each cannabis business and make recommendations to the City to address tax liability deficiencies or other financial compliance issues.

Our TARR process gathers operator and industry data from a variety of confidential and public sources and compares the revenue and volume of sales to the amounts reported to the City. Our analysis identifies any variances between amounts reported to the City and amounts reported elsewhere and provides a report to the City highlighting any high-risk businesses and making recommendations for performing a full audit where indicated.

HdL shall begin the process by collecting data from the following sources:
• METRC or other inventory track-and-trace program
• Business point-of-sale (POS) systems
• Questionnaire to be completed by each business
• Cannabis Business Tax Returns
Proposal to Provide Revenue Discovery, Audit and Tax Compliance and Consulting Services City of Vallejo, CA March 16, 2020
40 • CDTFA1 excise and cultivation tax returns
• HdL proprietary data sources
• Other data sources or reports as requested or required by the City HdL’s TARR system will cross-analyze data from these various sources and identify any internal inconsistencies or errors. Our system also utilizes our proprietary CATSTM software to generate estimates for average wholesale price, projected harvest yield and value, and projected sales for each business for the time period reviewed. Our system identifies any outliers, where data provided by a business falls outside the normal range for similar businesses. Variances of greater than 10% (or as determined in consultation with the City) shall trigger further investigation.

Specific reports to be generated by our TARR program may include any or all of the following:

Sales Reported in METRC vs. Sales Reported to the City
• METRC vs. City Cannabis Business Tax Returns
• Over or Under-Reported Revenues
Projected Sales vs. Sales Reported in METRC
• Projected Sales vs. Actual Sales Reported in METRC
• Variance Between Projected Sales and Actual Sales
Sales Analysis
• Point of Sale (POS) vs Sales Tax Returns (Retail)
• Point of Sale (POS) vs Other Retail (Dispensary) Sales in the Region Sales Trends
• Quarterly Sales by Operator
• Quarterly Sales by License Type
• Total Sales by Operator
• Quarter-Over-Quarter Change
• Year-Over-Year Change
Wholesale/Retail Price Analysis
• Average Sales Price by Operator by Quarter
Regional and State Comparison
• Compare Sales with Regional Averages by License Type
• Compare Sales with State Averages by License Type
• Variance Between Projected and Actual Pounds Harvested • Pounds Harvested per Square Foot
• Pounds Harvested per Harvest Cycle
Specialized Reports for Other License Types Upon Request • Cultivation
• Manufacturing
• Distribution
Reports shall be provided for each cannabis business in the City. Data generated by the TARR program shall also be provided to the City in a database format that will allow the City to sort or identify each cannabis tax producer by name, address, current and historical tax 1 California Department of Tax and Fee Administration
Proposal to Provide Revenue Discovery, Audit and Tax Compliance and Consulting Services City of Vallejo, CA March 16, 2020
41 payments, or other results. HdL shall work with the City to determine the desired database format and content2.

HdL can also create additional reports upon request by the City. Reports can also be provided in a non-confidential format utilizing information gathered from cannabis businesses throughout the state, region and City to create regional or statewide comparisons. HdL will continue to modify and develop our TARR program as new data sources become available or to address changes in the cannabis industry. HdL will work with the City to determine the best suite of reports to be provided based on the number and type of cannabis businesses within the City.

Provide Technical Assistance and Subject Matter Expertise (requested services D and G) D. Assist the City with strategies to preserve and enhance cannabis business tax revenue generated by existing businesses with the City.

G. Provide updates on legislative actions or bills that can impact or materially alter cannabis business tax revenue to the City.

HdL shall provide the City with general consulting in the form of technical assistance and subject matter expertise to be used as needed at the City’s request. Such assistance may include monitoring of changes to State laws and regulations, advising the City on industry trends, prevailing tax rates or legislation that may affect the City’s cannabis program and revenues, and recommending strategies to maintain and maximize cannabis tax revenues over time. HdL shall also provide a monthly cannabis E-newsletter, along with legislative updates and issue alerts as needed.

HdL’s technical assistance may also be used to review and revise the City’s cannabis regulatory and tax ordinances as necessary or appropriate to address changes in state law or to reflect emerging best practices. HdL will identify and alert the City to any pending or proposed changes that may impact the City’s cannabis businesses and anticipated cannabis tax revenues. Monitoring of legislation, regulations, tax rates and industry trends shall be ongoing over the term of any ensuing contract.

HdL’s team of subject matter experts shall also be available to the City to provide guidance, interpretation, references or legal citations or opinions as necessary to assist with the City’s consideration of relevant regulatory or taxation issues.

Technical assistance may also include participation in conference calls, on-site meeting attendance and presentations, responding to staff inquires via phone and email, reviewing staff reports to the City Council, assisting with responses to inquiries from cannabis business operators and the public or other issues yet to be determined as requested by the City.

Legislative analysis and general consulting services will be led by HdL’s Compliance Director David McPherson, who is one of the state’s most recognized experts in cannabis regulatory policies, compliance implementation and tax policies. Mr. McPherson will be assisted as needed by Senior Policy Advisors Tim Cromartie (legislative and regulatory analysis) and Mark Lovelace (fiscal analysis). These team members will be available to provide assistance and expertise to the City on an as-needed basis. HdL will respond to all inquiries from the City in a timely manner and conduct appropriate research for the City where applicable. 2 NOTE: HdL’s Tax Analytical Remittance Report (TARR) program utilizes our proprietary Cannabis Analytical Tracking Solution (CATS™) software and includes analysis of data which may be confidential.

Proposal to Provide Revenue Discovery, Audit and Tax Compliance and Consulting Services City of Vallejo, CA March 16, 2020
42 D. STAFFING
Key Personnel
HdL has a staff of over 150 employees in six states. HdLCC has a staff of 13 employees. Key personnel are listed below, followed be organizational charts.

1. Sales and Use Tax
Executive Team
Andy Nickerson – President/CEO
Mr. Nickerson possesses over 27 years of experience working with cities, counties and special districts on programs to enhance tax revenues, ensure regulatory compliance and provide accurate revenue forecasting and financial planning. Throughout his career he has been instrumental in guiding market expansion and new product development for the HdL Companies. In his tenure as President/CEO of HdL, Mr. Nickerson has led this employee owned company from an established regional firm to a multi-state, multi-service corporation admired for its commitment to quality and client service. With a broad range of experience in leadership, finance, public policy, and taxation, he is a trusted adviser to local government leaders and is known for possessing high standards for responsiveness, accuracy and integrity. Throughout his career, he has been involved in various municipal organizations including The League of California Cities, California Society of Municipal Finance Officers, State Association of County Auditors, California State Association of Counties, Texas Municipal League and Government Finance Officers Association. Mr. Nickerson earned a Bachelor of Science degree (Finance & Real Estate Law) from California State Polytechnic University, Pomona.

Gary Lott – Chief Operating Officer
Gary Lott leads HdL’s operational business units, taking on varied strategic initiatives allowing our service teams to remain focused on their core responsibilities. Previously, Gary served as Regional Vice President at Automatic Data Processing (ADP) where he established a track record of successful strategic projects, including numerous acquisitions, service improvement projects and new product launches. He has been recognized for his significant contributions at ADP having been awarded the ADP President’s Award and numerous President’s Club awards. Mr. Lott holds a Bachelor of Arts degree from California State Polytechnic University, Pomona and a Master’s Degree from Claremont Graduate University’s Drucker School.

Sales, Use and Transactions Tax Management Team
Led by our Director of Client Services, three sales and use tax principals and a management analyst will provide the City of Vallejo with sales tax, budget and revenue management services. The team will advise the City on economic development opportunities, including analyzing the City’s sales tax data for presentations and preparing sales, use and transactions tax revenue estimates of various terms up to five years. A principal will also meet with City staff each quarter to present the City’s quarterly reports and address any issues or concerns. Providing these services to the City are:

Proposal to Provide Revenue Discovery, Audit and Tax Compliance and Consulting Services City of Vallejo, CA March 16, 2020
43 Bobby Young - Director of Client Services
Mr. Young has over 20 years of local government experience. Prior to joining HDL, he served the City of Costa Mesa for 13 years, the last 5 as Finance Director. During the majority of his tenure, he led the City’s strategic financial planning and decision making and fulfilled the duties of City Treasurer. He has also spent time as an external auditor of government and non-profit entities specializing in assessment and documentation of internal controls and annual review and preparation of client’s Comprehensive Annual Financial Report (CAFR). He’s been an active member in municipal affairs with both the Government Finance Officers Association (GFOA) and California Society of Municipal Finance Officers (CSMFO), and holds a Bachelor’s degree from California State University, Fullerton in Accounting.

Ken Nordhoff – Principal
Mr. Nordhoff has over 25 years of local government experience in various leadership roles, including Administrative Services Director, Assistant City Manager and more recently as City Manager in San Rafael and Walnut Creek. During his tenures, he was responsible for a broad range of budget, financial management and long-range fiscal planning functions. His experience includes strategic planning and economic development, plus serving on various regional JPA Boards. Prior to his local government service, he spent several years in the private sector as a Certified Public Accountant conducting municipal audits. As an active member of the League of California Cities, he is a former City Manager’s Department Officer, recipient of the prestigious John H. Nail award and has served on the Revenue and Taxation Policy Committee. He holds a Bachelor’s degree from California State Polytechnic University, Pomona in Accounting.

Denise Ovrom – Principal
During her 19-year tenure with HdL, Ms. Ovrom has worked with over 250 cities and counties assisting with revenue issues and trends by providing financial information including sales tax, budget projections and economic data. Her 25 years as a government executive provides a deep understanding of the operations and challenges of local government. She served as the Assistant City Manager of Beverly Hills, Brea and Claremont and City Manager of Temple City. Her areas of interest included budget development, finance and information technology.

Over the years she has served as HdL’s representative to the League of California Cities Revenue & Taxation Policy Committee and League Partner Program. Other professional affiliations include CSMFO, ASPA, MMASC and ICMA. She has served on CSMFO's Committee on Budgeting and Management Reporting and is a past member of USC's Master of Public Administration Advisory Board. Ms. Ovrom has a Bachelor of Science and Master’s degree in Public Administration from the University of Southern California.

Susie Woodstock – Principal
Ms. Woodstock has been a municipal executive for more than 25 years with experience in finance, accounting, engineering and public works. Most recently she was the Administrative Services Director at the City of Newark where she oversaw accounting, IT, waste management and recycling. With Professional Engineer Certifications in the states of California and Washington, she was also the Public Works Maintenance Superintendent at the City of Newark, a development engineer at the City of Fremont and a bridge engineer in Spokane, Washington. She is also a member of the California Society Municipal of Financial Officers (CSMFO) and Government Finance Officers Association (GFOA). Ms. Woodstock earned a bachelor’s degree in civil engineering from California State University, Chico and a second bachelor’s degree from Whitworth University in Organizational Management.

Proposal to Provide Revenue Discovery, Audit and Tax Compliance and Consulting Services City of Vallejo, CA March 16, 2020
44 Audit Services Team
Our Audit Services Director and Associate Director of Audit Services have over 40 years combined experience auditing local tax, place of sale and CDTFA administrative issues. The firm has continually adapted to legislative changes, CDTFA regulation changes, and technology advances and will utilize these tools for the City. HdL has an audit team in place that is highly trained and familiar with state regulations and guidelines concerning tax reporting for the City.

Matt Hinderliter – Director of Audit Services
Mr. Hinderliter leads HdL’s Audit Service Team. He joined the firm in 1990 after receiving his Bachelor of Arts degree in Business Administration from California State University, Fullerton, and during his 29-year tenure has directly participated in all aspects of the HdL’s comprehensive audit program. This includes field canvasses, in-house analysis of quarterly distribution reports and county pool data, and the presentation of appeals before the CDTFA legal division. Mr. Hinderliter is the author of an extensive audit training manual, including indepth information regarding complex point of sale issues, as well as updates regarding proposed changes in legislation and regulations. He created the State’s first multi-dimensional audit process, which includes extensive in-house data mining and web-based analysis combined with field surveys. As Director of the Audit Team, he is responsible for quality control, and for ensuring that HdL’s audit techniques and programs remain at the industry’s leading edge through continuous innovation and improvement.

Quang Dang – Associate Director of Audit Services
Mr. Dang is the lead analyst for the audit services team. He works closely with the Director of Audit Services on operational and management aspects of the team, supervises and trains audit team members and is a principal liaison with CDTFA Allocation Group staff. Mr. Dang holds a Bachelor of Science degree in Computer Electronics and Engineering from ITT Technical Institute.

Production Services Team
The Production Team ensures that the data received from the CDTFA is accurately reported and is quickly made available for on-demand access by the firm’s client agencies through its sales tax web application. The team is also responsible for running reports that will be delivered at quarterly meetings with City staff and for fulfilling special reporting requests.

Mary Hubbell – Manager of Production Services
Ms. Hubbell supervises the conversion of the CDTFA sales tax data to HdL’s proprietary software and its subsequent translation into various client reports. She assists with client technical support and client software training and is responsible for the production of client newsletters and reports. Ms. Hubbell received a Bachelor of Science degree in Administration and Marketing from the University of Arizona.

Proposal to Provide Revenue Discovery, Audit and Tax Compliance and Consulting Services City of Vallejo, CA March 16, 2020
45 2. Property Tax
The firm’s staff have performed thousands of secured and unsecured property tax audits for client agencies over the past twenty-eight years and recovered millions of dollars in misallocated property tax revenue. Our management team and staff pride themselves on being highly responsive to client needs and cordial in our contacts with county staff. This philosophy has served our clients and the company well. This is evident by the fact that 83% of our property tax audit and information services clients have been using our services for more than 10 years and 50% of our clients have been under contract for more than 15 years.

Paula Cone - President
Paula Cone is the President of HdLCC, the property tax arm of the HdL Companies, and has over twenty years of municipal experience in finance and city management and 30 years of property tax analysis, local agency interface and audit review experience. She joined the firm in 1990 to oversee the development of the property tax analysis, audit and software elements in use today. She developed the first cost-effective and accurate computer program for identifying, monitoring, auditing and correcting property tax misallocations. Paula oversees the company's property tax management and auditing division which is also responsible for verifying and correcting jurisdictional and boundary errors. She and her team have identified errors which have resulted in a redistribution of net tax revenues of $ 52.6 million to client agencies since 2000. The property tax database is also used to verify jurisdictional and boundary errors for sales tax audit purposes. Ms. Cone earned her Bachelor's degree from California State University at Long Beach. She is former Parks and Recreation Director and Assistant City Manager for the City of Lawndale.

David Schey – Vice President
David has 26 years of experience with HdLCC since joining the firm in 1994. His prior experience includes service as Planning Director, Community Development Director and Deputy Director of Redevelopment as well as having provided development and consulting services to municipal clients. As a principal with HdLCC, David has provided client services in connection with tax allocations bonds; property tax and tax increment issues; tax sharing calculation; and analysis of legislative actions. David has spoken at numerous conferences and seminars sponsored by the California Redevelopment Association and the League of California Cities. In addition to his professional work in connection with local government, David served for over six years as a member and chairman of both the Planning Commission and Parks and Recreation Commission. Education: Bachelor of Arts, University of California; Los Angeles, California; Bachelor of Arts, California State University; Long Beach, California; Master of Public Administration, University of Southern California; Los Angeles, California.

Nichole Cone - Vice President
Nichole has 20 years property tax analytical and processing experience. She specializes in understanding the data received from Assessor & Auditor, used for secured and unsecured parcel audits and property tax analysis. Nichole Cone joined HdLCC in 1992. She oversees the acquisition and processing of county assessor and auditor controller data into HdLCC’s database. Preparation and production of property tax reports and client data sets are also under Ms. Cone’s direction. She oversees the staff responsible for the HdLCC Comprehensive Annual Financial Report (CAFR) product and fields many of the general day to day client inquires. Ms.

Cone was instrumental in our system redesign which closely mirrors the systems used by counties. Education: Bachelor of Arts, Loyola Marymount University, Los Angeles, California.

Proposal to Provide Revenue Discovery, Audit and Tax Compliance and Consulting Services City of Vallejo, CA March 16, 2020
46 Cheryl Murase – Vice President
Cheryl Murase joined HdL Coren & Cone in 1997 after five years with O’Connor & Company Securities as a Vice President. Prior to that, Ms. Murase worked for a California municipal financial advising firm for five years in Senior Associate and Associate positions where she gained experience in structuring a wide variety of issues including tax allocation, certificates of participation, Marks-Roos and Mello-Roos issues. Her understanding of county assessments of property value and tax collections has aided in the projection of tax increment revenue. She has assisted clients with the various government reporting requirements, and has gathered information necessary for continued rating of debt.

Ms. Murase gained her municipal accounting background from working in a variety of capacities for the cities of Montebello and Commerce. She served as the Redevelopment Accountant for the City of Commerce.

Robert Scherer – IT Manager
Robert Scherer joined HdL Coren and Cone in 2004. He is responsible for the acquisition and preparation of county data and is the lead designer of HdLCC's property tax analytical reports system. Mr. Scherer earned his Bachelor’s degree in Business Administration, Computer Information Systems from California State Polytechnic University, Pomona, California.

Joel Hermann – Programmer, Associate
Joel Hermann has been with The HdL Companies for 23 years, 19 of those with HdL Coren & Cone as a Software Developer and Associate. Mr. Hermann studied Computer Science at the University of California – Riverside. He is a key developer for both the HdL Coren & Cone Property Tax Web Application and The HdL Companies web site. Mr. Hermann has been in charge of training our clients on the use of the Property Tax Web Application for the past 7 years. In his recent role as an Associate, he is now meeting with clients.

3. Utility Users Tax and 4. Franchise Fees (HdL and Azavar Government Solutions) Jason Perry – President
Mr. Perry is the firm’s founder and developed Azavar’s specialized software and methodologies to manage tax reviews and perform tax analysis. For the past 17 years, Mr. Perry has led the Azavar team of consultants, analysts, and auditors to successfully complete projects for large and small organizations that include complex multi-facility and multi-stage requirements.

Scott Shamberg – Vice President
Scott Shamberg is Vice President of Azavar Government Solitons. Mr. Shamberg has been with Azavar Government Solutions for nine years and has diligently worked his way up through the company. He has a background in municipal management with a master’s in public administration (MPA) and has worked for Elk Grove Village in the village manager’s office and the City of Highland Park in economic development. Mr. Shamberg led the development of Azavar’s sales tax review program and has spearheaded audits on natural gas, electric, cable, telecom, water and other revenue streams, returning millions of dollars to municipalities. Mr.

Shamberg is a frequent presenter to various municipal organizations throughout Illinois on topics related to local government revenues.

Proposal to Provide Revenue Discovery, Audit and Tax Compliance and Consulting Services City of Vallejo, CA March 16, 2020
47 Ashpaugh & Sculco - Subcontractor for portion of Cable Franchise Fees Garth Ashpaugh, CPA
Garth Ashpaugh is an independent Certified Public Accountant with over 30 years of utility regulatory experience and has worked for over 200 cities and counties on municipal franchise related matters including electric, natural gas, telecommunications, and cable utilities. Mr.

Ashpaugh has conducted audits for local governments including the Cities of Albuquerque, Los Angeles, and Lincoln, Nebraska and Metropolitan Nashville / Davidson County, Tennessee.

Mr. Ashpaugh has extensive background in utility reviews, rate and tariff filings, contract audits and internal audits of electric and gas companies.

Carolyn Sculco, CPA
Carolyn Sculco has been performing franchise fee reviews since 1995. She is a Certified Public Accountant with over 27 years of experience. Ms. Sculco’s area of expertise is focused on reviews of fees paid to the municipalities. These reviews encompass multiple years, transfers of cable operators, and varying definitions of gross revenues. Ms. Sculco has reviewed or is in the process of reviewing cable franchise fees for franchisers in Arizona, California, Florida, Maryland, Michigan, Minnesota, Nebraska, New Jersey, New York, New York, Tennessee, and Virginia. The collective findings have resulted in unreported revenues exceeding $10MM.

These findings are a result of reviewing historical revenues and do not include the impact of unreported revenues on future years.

5. Transient Occupancy Tax and 6. Business Tax
Robert Gray – Director of Tax and Fee Administration, CIO Robert Gray has extensive experience in the design, development, implementation and support of local tax software systems. He has played a key role in the design of 8 municipal software systems and approximately 200 successful implementations of those systems. He introduced HdL’s local tax services, which provide tax administration and consulting services to an ever-growing number of municipalities. While leading HdL’s local tax team through a period of significant growth, he has ensured that HdL maintains its commitment to providing excellent customer service. He earned a Bachelor of Science degree in Computer Science and a Master's degree in Business Administration from Azusa Pacific University.

Joshua Davis – Associate Director of Tax and Fee Administration Mr. Davis has over 20 years of experience with local tax administration, discovery, and audit, and oversees a skilled team which provides the most sophisticated local tax administration services available to California municipalities. Trained in revenue audit and discovery techniques, he is skilled in navigating the complex scenarios and needs often encountered during such services. He also possesses strong technical and business process capabilities which he employs to aid HdL clients in meeting their strategic objectives. Prior to joining HdL, he was employed as a compliance service manager at a government services firm. His reputation amongst municipalities is that of a very capable local taxation expert who will help the municipality achieve their objectives while providing excellent customer service throughout the engagement. Notable projects he has managed include a long term and broad engagement supporting the City of Beverly Hills business tax team and administering business tax for the City of Roseville. All services provided through Mr. Davis’s team enable municipalities to administer their tax programs more effectively, through both efficient operations and increased discovery and collection of tax due.

Proposal to Provide Revenue Discovery, Audit and Tax Compliance and Consulting Services City of Vallejo, CA March 16, 2020
48 Tony Unger –Project Manager
Tony has over 20 years of experience serving local government. As a project manager, he is responsible for the development and implementation of business license products and services. Working in partnership with cities for the last two decades, Tony has become very familiar with the business license requirements and procedures that are unique to each jurisdiction and business community. Tony has assisted in multiple areas of business license including; local tax compliance, licensing software, customer service, collections, enforcement, administration, and special projects. Mr. Unger has been an associate member of the California Municipal Revenue & Tax Association (CMRTA) since 1993 and received his BA in Business Administration from California State University, Fresno.

7. Cannabis Business Tax
HdL’s Cannabis Compliance Team has 18 employees with over 46 years’ combined experience developing and implementing cannabis regulatory and taxation programs at the state, county and local level. Our team has conducted over 16,000 cannabis compliance inspections, investigations and financial audits in California, Colorado, and Nevada. We have provided bios for those team members who will be assigned to this project. Bios for other members of our Cannabis Compliance Team will be provided upon request.

David McPherson, Compliance Director
David McPherson works with local agencies to prepare them to mitigate tax and regulatory issues surrounding Proposition 64 and SB 94. Prior to joining HdL, David served 28 years in local government for the County of Orange and the cities of Newport Beach, San José and Oakland. David’s experience as a law enforcement officer, compliance auditor, and tax administrator has provided him a wealth of experience that makes him uniquely qualified to manage HdL’s Cannabis Management Program. While working for the City of Oakland, he became the first Tax Administrator in the country to successfully tax, regulate and audit medical marijuana businesses. David has over 10 years of experience working with cannabis tax and regulatory programs.

David is one of the state’s most recognized experts in cannabis and hemp regulatory policies, compliance implementation and tax policies. His unique knowledge in horticulture, processing and retail (dispensary) operations while working for the City of Oakland has made him one of the pioneers in creating a Cannabis Management Program. He uses his experience to assist local and state agencies in developing cannabis and hemp policies for regulation, compliance, auditing and economic development. He worked closely with the League of Cities on the development of the Medical Cannabis Regulation and Safety Act (MCRSA) and helped shape SB 94, the Medicinal Adult-Use Cannabis Regulation and Safety Act (MAUCRSA).

David provides technical support on cannabis and hemp-related tax and regulatory matters to the League of Cities, the Police Chief’s Association, Rural County Representatives of California and the California State Association of Counties. In addition, David is working collaboratively with the Department of Consumers Affairs, Department of Food & Agriculture, Department of Health Services and the California Department of Tax & Fee Administration on the implementation of best practices for taxing and regulating the cannabis industry for local agencies.

David received his Bachelor’s Degree in History from California State University, Fullerton and his Master’s Degree in Public Administration from California State University, Long Beach.

While at Long Beach, he was named “Future Urban Administrator of the Year”.

Proposal to Provide Revenue Discovery, Audit and Tax Compliance and Consulting Services City of Vallejo, CA March 16, 2020
49 Matt Eaton, Deputy Compliance Director
Matt Eaton is the Compliance Deputy Director at HdL and plays a critical role in implementing the Cannabis Compliance Program for local agencies. Prior to joining the firm, he was a progressive law enforcement professional with 29 years’ experience conducting criminal/regulatory investigations, and corporate/individual background investigations.

While working as a Supervisory Investigator at the Colorado Department of Revenue in the Marijuana Enforcement Division (MED), Matt managed criminal investigators and civilian staff in the Denver Metro and Longmont field offices.

During his six-year tenure at the MED, he conducted approximately 10,000 criminal investigations and compliance reviews which included regulatory and financial investigations.

In addition, he is a subject matter expert on track and trace systems. He understands the complexity of reviewing data to ensure businesses are in compliance with state and local regulations. Matt was responsible for planning, developing and implementing report and field inspection protocols for the agency. He also played an instrumental role in recommending changes to current regulations and identifying essential language for new legislation in Colorado. Matt is well known for his ability to maintain working relationships with cannabis industry leaders and external stakeholders in resolving issues.

Matt received his Bachelor of Science Degree from Biola University and currently maintains a Colorado Post Certificate. He has also served as an adjunct instructor teaching law enforcement principle related to criminology, correctional processes, procedural law, interviews, interrogations and criminal evidence at AIMS Community College in Greeley, Colorado.

Tim Cromartie, Senior Policy Advisor
Tim Cromartie is a Senior Policy Advisor at HdL His primary role is providing policy expertise related to cannabis regulatory and tax policies at the state and local level. Prior to joining HdL, Tim served as the legislative representative covering public safety issues for the League of California Cities since 2013, with a heavy emphasis on shaping legislation governing state and local regulation of marijuana. He has been actively involved in educating cities on changes in the law resulting from the Medical Cannabis Regulation and Safety Act, as well as Proposition 64, the Adult Use of Marijuana Act. When these two Acts were merged into a single regulatory structure in 2017, Tim successfully advocated for clarification of local government’s regulatory and enforcement authority in the cannabis context, and for related environmental safeguards in cultivation operations, protections against over-concentration of businesses, regulation of testing labs, and the inclusion of fire safety standards and a definition of volatile solvents in state law governing cannabis manufacturing operations. Since then he has been engaged in educating local governments on the more recent Medical and Adult Use Cannabis Regulation and Safety Act (MAUCRSA), as well as advocating for a reduction in the cumulative state tax rate for cannabis, improvements in the state’s track-and-trace program, and the restoration of a statewide cultivation cap.

Prior to the League, he held a variety of positions in the Legislature and state government, including legislative representative for CalPERS Governmental Affairs, legislative director and public safety consultant to former state Senator Gloria Romero, and field representative for Congresswoman Barbara Lee during her term in the state Senate. Mr. Cromartie holds degrees from the University of California at Berkeley (B.A. Political Science) and UC Hastings College of the Law. Tim is an ardent aviation buff and a member of the California Aerospace Museum at the site of the former McClellan Air Force Base in Sacramento.

Proposal to Provide Revenue Discovery, Audit and Tax Compliance and Consulting Services City of Vallejo, CA March 16, 2020
50 Christina Altringer, Audit Manager
Christina Altringer is the Audit Manager at HdL. Her primary role is to oversee the audit staff, conduct forensic audits, review staffs reports, and be the point person to work directly with client cities and counties as it pertains to financial audits. In addition, she is responsible for managing and developing the data intelligence CATS™ program. Furthermore, in preparation of conducting forensic audits she also prepares Tax Analytical Remittance Report (TARR) summaries to evaluate under reporting or anomalies in the remittance of tax payments to local jurisdictions.

Christina previously worked as a Forensic Accountant for the Federal Bureau of Investigation (FBI). In this role, she examined financial records for violations of federal and state laws involving bribery and kickbacks, corruption, money laundering, white collar crimes, health care fraud and drug trafficking. Prior to this, she worked at a Public Accounting firm performing financial statement audits for entities in the nonprofit, government, small business, and insurance sectors. Christina earned her Bachelor of Science degree in Accounting from Minnesota State University. Christina is also a Certified Public Accountant and a Certified Fraud Examiner.

Mark Lovelace, Senior Policy Advisor
Mark Lovelace has 16 years of broad experience in public policy, community engagement and advocacy and is recognized as a leader in advancing the statewide discussion of medical and recreational cannabis as a policy issue in California. Mark served on the Humboldt County Board of Supervisors from 2009 through 2016 where he was instrumental in developing a comprehensive approach to regulating cannabis, including a voter-approved tax on commercial cultivation and an innovative track and trace pilot program. Mark established and co-chaired the Medical Marijuana Working Group for the California State Association of Counties (CSAC) and helped draft CSAC’s legislative platform for cannabis issues. Mark pioneered the first-ever six-County regional summit on cannabis issues in 2015 which resulted in the North Coast Counties Marijuana Policy Statement. His work and input were pivotal in guiding the development of SB 643 and AB 243, two components of the Medical Cannabis Regulation and Safety Act (MCRSA).

Mark has worked extensively with public agencies and statewide associations on cannabis tax and regulatory issues, including CSAC, Rural County Representatives of California, the Association of California Water Agencies, the North Coast Resource Partnership, California Department of Fish and Wildlife, the State Water Board, the North Coast Regional Water Board, the Bureau of Cannabis Control, state legislators, the Department of Justice, members of Congress and others. He has led numerous presentations, workshops and panel discussions on cannabis tax and regulatory issues and has been a sought-after speaker on the topic for government agencies, community organizations and cannabis industry groups.

Mark received his Bachelor of Science degree in Industrial Design from California State University, San José. Prior to his time on the Board, he worked for many years as a respected advocate on land use, planning, development and environmental issues, and has developed radio, television, internet, print media and direct mail advertising for numerous local political and issue-oriented public outreach campaigns.

Proposal to Provide Revenue Discovery, Audit and Tax Compliance and Consulting Services City of Vallejo, CA March 16, 2020
51 Kami Miller, Senior Compliance Inspector
Kami Miller is a Senior Compliance Inspector at HdL whose primary role is to ensure cannabis compliance and identify the risk assessment in the supply chain process of each permitted business. Prior to joining the firm, she served three years as a Marijuana Compliance Manager for the Department of Public Behavior and Health (DPBH) for the State of Nevada. During this time Kami played a key role in Nevada’s implementation of its Medical Marijuana Program in which she was responsible for statewide monitoring of medical marijuana facilities that included cultivation, production, testing labs and retail stores.

During her tenure at the DPBH, Kami managed compliance auditors and support staff in the Las Vegas office. She conducted approximately 1,000 compliance and financial inspections for which she developed the inspection protocols documentation to create comprehensive reports. In addition, her experience with various cannabis track and trace systems allowed her to develop industry supply chain practices for the Department of Taxation. Kami received her Bachelor of Business Administration in E-Commerce and Supply Chain Management from Tennessee State University.

Elizabeth Eumurian, Senior Auditor
Elizabeth Eumurian is a Senior Auditor at HdL. Her primary role is to conduct financial audits, evaluate cannabis applications and conduct background checks. As part of the audit program, she will be conducting and preparing analytical information through the CATS™ program to prepare Tax Analytical Remittance Reports (TARR) summaries to evaluate under reporting or anomalies in the remittance of tax payments to local jurisdictions.

Elizabeth previously worked as a senior auditor in the entertainment industry. In this role, she executed testing procedures for targeted audit programs, analyzed findings and prepared audit and compliance reports. She also has experience working for a large financial institution analyzing data for reporting anomalies and performing internal audits. Elizabeth has recently provided services for the cities of Berkeley, Cotati, Dixon, Desert Hot Springs, Grover Beach, Mammoth Lakes, Maywood, Modesto, Perris, Port Hueneme, Vallejo and West Sacramento.

She earned her Bachelor of Arts degree in History from California State University, Fullerton.

She has also received a certificate in CannaBusiness from Oaksterdam University.

Michelle Shaw, Compliance Inspector
Michelle is a Compliance Inspector at HdL and is tasked with conducting onsite inspections, reviewing pro formas and financial statements and other actions to monitor compliance with established standards for local licensed cannabis businesses. Prior to joining HdL, she was a Compliance Specialist Officer at a large, multinational bank where she managed, validated and oversaw the effectiveness and accuracy of numerous compliance issues within the consumer retail space. Throughout her eight years of experience at the bank, she performed onsite assessments of affiliate businesses to determine compliance/non-compliance of their processes and procedures pursuant to bank standards and state regulations. A graduate of Cypress College, Michelle holds a Foundations of Banking Risk certificate from the Global Association of Risk Professionals and a paralegal certificate from the Southern California College of Business and Law.

Proposal to Provide Revenue Discovery, Audit and Tax Compliance and Consulting Services City of Vallejo, CA March 16, 2020
52 Alfredo Marquez, Senior Auditor
Alfredo Marquez is a Senior Auditor at HdL. His primary role is to conduct financial audits.

Alfredo previously worked for a publicly traded corporation as a Senior Internal Auditor where he performed risk assessments of new business acquisitions, financial and Sarbanes & Oxley audits. He also conducted compliance audits in the areas of commercial and government contracts, export and import activities, and general information technology controls. In these roles he worked with employees at various levels within the organization across North America, Latin America, Europe, and Asia in order to meet organizational objectives. Alfredo has recently provided service to the cities of Cotati, Cloverdale, Desert Hot Springs, Maywood, Perris, Port Hueneme, Vallejo and West Sacramento. He earned his Bachelor’s degree in Accounting from the University of La Verne.

Odette Mikhail, Auditor
Odette Mikhail is an Auditor at HdL. Her primary role is to conduct financial audits. Odette previously worked as a senior auditor at public accounting firms. In this role, she executed testing procedures for audit and review engagements, identified accounting issues, reviewed internal controls, and prepared financial reports and statements. Odette earned her Bachelor of Science degree in Accounting and Business Administration from Ain Shams University in Cairo, Egypt. She has been assigned to work on audits for the cities of Berkeley, Capitola, Davis, Hanford, Hesperia, Farmersville, Moreno Valley, Turlock and Vista. Odette is also a Certified Public Accountant.

Proposal to Provide Revenue Discovery, Audit and Tax Compliance and Consulting Services City of Vallejo, CA March 16, 2020
53 E. PRICING

1. Sales and Use Tax Services
A. Audit Services
HdL proposes a fee of 15% of all new sales and use tax revenue received by the City as a result of audit and recovery work performed by the firm. This audit fee applies to monies received in the first eight consecutive reporting quarters beginning with the receipt of the audit revenue and includes retroactive back quarter adjustments obtained by HdL.

Audit fees are billed only after completion of the audit, submittal of corrections to the CDTFA and receipt of revenues by the client. 100% of all new revenue generated by HdL flows to the City after the completion of the eight quarters. The fee constitutes the full reimbursement to HdL and covers all direct and indirect costs incurred by the firm under this contract. This includes all salaries of our employees, travel expenses and service contracting costs as well as the software to be delivered to the City of Vallejp under this proposal.

Invoices are submitted only for recoveries previously approved by the City. HdL does not bill for audit revenues until the client has actually received said monies. Further, if during the billing cycle, a taxpayer receives a refund for overpayment of taxes generated during that cycle, HdL credits back any proportionate share of the fee that may have been levied.

Invoices are submitted quarterly after the City has received the revenue from the audit correction. The invoice includes a printout showing the name, address, and sales tax registration number of each company, and the specific amount of revenue allocated by the CDTFA to the City for those businesses.

If a misallocation correction involves additional revenue from a company that had already been partially allocating revenues to the City, the City and HdL will agree in a Work Authorization, prior to billing, the methodology for identifying the incremental revenue attributable to HdL’s work.

B. Sales and Use Tax Management Services
This includes access to the City’s sales tax database through our web-based software and quarterly meetings with one of our principals. In preparation for each meeting, a principal of the firm analyzes the City’s data in detail and meets with appropriate City officials to review trends, point out businesses that should be contacted as part of the City’s business retention program and discuss and make recommendations regarding the economic and budget implications of the quarter’s data. Also included is a non-confidential newsletter that can be shared with your council and the public. The price for this option is $750 per month.*
*The monthly fee will increase annually by the percentage increase in the “CPI” for the preceding twelve-month period.

Proposal to Provide Revenue Discovery, Audit and Tax Compliance and Consulting Services City of Vallejo, CA March 16, 2020
54 C. Transactions Tax Services
HdL will monitor and report on this additional revenue source at the City’s option for $250 per month. The only requirement is that the City’s adopt a separate resolution of confidentially authorizing HdL’s access to the confidential database. Should the City desire HdL to audit its transactions and use taxes, the charge would be a 25% contingency fee against retroactive adjustments only (no prospective billing). Audit fees are billed only after the completion of the audit, submittal of corrections to the CDTFA and receipt of revenue by the City.
*The monthly fee will increase annually by the percentage increase in the “CPI” for the preceding twelve-month period.

D. Economic Development Services
The following is the cost for the services contained in the proposal presented by ECONSolutions.

INSIGHT Market Analytics
Fixed fee of $5,000
Other work possibilities to consider include site selection assistance, reuse and redevelopment studies and special economic development projects, shall be done on an hourly basis or negotiated with hourly rates of:

Staff Hourly Rate
Managing Director $250
Senior Advisor $190
Analyst $125
E. Additional Services
Additional services beyond the scope of services in this proposal are priced separately depending on the complexity of the tasks involved. Such fees can either by fixed or time and materials. Our currently hourly rates are listed below.

Hourly Rate
Principal $325
Programmer $295
Senior Analyst $245
Analyst $195
Proposal to Provide Revenue Discovery, Audit and Tax Compliance and Consulting Services City of Vallejo, CA March 16, 2020
55 2. Property Tax Services
Based on the number of parcels within Vallejo, our fee for property tax services is $4,620.00 per quarter, ($18,480.00 per year) plus 25% of net tax revenues recovered for the City in the audits performed over the period allowable by State statute (current year and 3 prior lien date years). Net tax revenues mean the taxes received by the City through our audit efforts. There are no on-time or implementation fees.

The cost is fixed for the first three years of the contract. The increase for each of the two oneyear extension periods would be adjusted annually by the California Consumer Price Index (CCPI) for all items as determined by the California Department of Industrial Relations as measured February to February by the California All Urban Consumers index.

During the term of the contract, we serve as the resource staff to the City on questions relating to property tax. This includes being "on-call" to assist with any property tax issues. On-going consultation would include, but not be limited to inquiries resolved through use of the City data base. All requests for information based upon the County’s property tax data sets are provided without additional costs. Special reports, additional research, or requests requiring additional computer programming may entail some additional costs. Attendance at City and/or Successor Agency meetings will be billed at our hourly rates. Optional services will only be provided upon written notice to proceed by the City.

Fees for Optional Services shall be billed at the following hourly rates:

Partner $225 per hour
Principal $195 per hour
Programmer $175 per hour
Associate $150 per hour
Senior Analyst $100 per hour
Analyst $ 65 per hour
Administrative $ 45 per hour
Hourly rates are exclusive of expenses. Expenses, reasonable travel and lodging fees are billed at 1.15 times actual incurred costs.

3. Utility Users Tax (HdL, Subcontractor Azavar Government Solutions) The City will pay Azavar forty (40) percent (%) of any retroactive funds, savings, and fair market value for any other special consideration or compensation recovered for and/or by the City from any audited tax or fee payer. The City will also pay Azavar twenty-five (25) percent (%) of funds recovered going forward for twenty-four (24) months following the correction of any Azavar Finding.

Optional Service:

The City will pay HdL $150 per reporter per year for Utility Users Tax administration and monitoring services.

Proposal to Provide Revenue Discovery, Audit and Tax Compliance and Consulting Services City of Vallejo, CA March 16, 2020
56 4. Franchise Tax (HdL, Subcontractor Azavar Government Solutions) Azavar bills on a per franchise provider basis. Cost to provide audit, management, discovery and recovery services for each franchise is billed at the following rates with a cap not to exceed $25,000.

Principal: $190 per hour
Analyst: $125 per hour

5. Transient Occupancy Tax
OPTION 1
Transient Occupancy Tax Administration
(Includes Audits – The Preferred Solution)
$700.00/property/year + CPI (Quarterly Filers)
$800.00/property/year + CPI (Monthly Filers)
OPTION 2
Transient Occupancy Tax Services – Audits Only
$2,000.00/property
Travel costs: Travel and lodging expenses, if any, are billed at cost and apply to all meetings; including process, pre-installation, installation, training, and support. HdL is dedicated to conserving public funds, and ensures any travel costs are indeed required and reasonable.

6. Business License
Revenue Discovery 35% of all recovered revenue
Audits 35% of all recovered revenue
Business License Ordinance/Fee Study
& Consultation
$15,000.00
Optional Services:

Business License Tax Administration Services
$13.00 per account/year + CPI

7. Cannabis Business Tax
A. Perform specific procedures to detect, correct and recover cannabis business tax revenues for the City.

B. Perform audit and discovery procedures for cannabis retail properties to gain tax compliance.

HdL will conduct an annual financial audit to verify the accuracy of cannabis taxes reported to the City during the review period and will recommend a tax assessment to correct and recover any unreported revenue. As part of the process, HdL will conduct a risk based analytical review of the business using the proprietary Cannabis Analytical Tracking Solution (CATS™) program to detect any diversion of product or cash. Our unique audit approach allows us to identify if a cannabis operator is under-reporting its taxes or diverting product from its facility, so as to gain increased compliance. HdL audit staff will also use information gathered by the on-site compliance inspection team (Requested Service H) to assist with the financial audit.

Proposal to Provide Revenue Discovery, Audit and Tax Compliance and Consulting Services City of Vallejo, CA March 16, 2020
57 Service Description Cost
A, B Provide annual cannabis business tax audit of each licensed cannabis business.
$5,000
per business
per year
A, B Provide assistance with post-audit corrective actions or appeals.

To be billed at
HdL’s hourly rate for
the assigned staff or
as negotiated with
the City
(see rate chart)
C. Assist the City in gaining increased cannabis retail business compliance.

H. Provide cannabis compliance teams, which includes inspection services in addition to audit services.

HdL will conduct one on-site compliance inspection annually (or more, as requested by the City), for each permitted cannabis business to determine compliance with State and/or local laws. If HdL identifies any non-compliant activities, we will provide the City with a recommended appropriate action to address the deficiency and to ensure future compliance by the permittee. The cost for this service assumes one inspection of each permitted cannabis business per year. Additional inspections of specific businesses or business types can be provided as needed or requested by the City and will be billed as a multiple of the same rate. The cost for this service does not include review of any supplemental documents provided to address or contest any findings of non-compliance, nor does it include any assistance with the appeal of any enforcement action by the City. Any costs associated with such additional services would be billed at HdL’s hourly rate, or at an alternate flat rate to be negotiated with the City.

Service Description Cost
C, H Provide one site inspection per year of each permitted cannabis business.
$1,000
per business
per inspection
C, H Provide assistance with appeals or review of
supplemental documents to contest any findings of noncompliance.

To be billed at
HdL’s hourly rate
for the assigned
staff or as
negotiated with
the City
(see rate chart)
Proposal to Provide Revenue Discovery, Audit and Tax Compliance and Consulting Services City of Vallejo, CA March 16, 2020
58 E. Provide written cannabis business tax reports on a quarterly basis to the City.

F. Provide an electronic database of the City’s cannabis business tax data to the City.

HdL has developed a quarterly revenue-monitoring system that provides a risk-based assessment of each cannabis business to identify outliers or possible errors that may warrant further investigation. Our proprietary Tax Analytical Remittance Report (TARR) uses specially designed algorithms to analyze confidential data from each cannabis business and make recommendations to the City to address tax liability deficiencies or other financial compliance issues.

Reports shall be provided for each cannabis business in the City. Data generated by the TARR program shall also be provided to the City in a database format that will allow the City to sort or identify each cannabis tax producer by name, address, current and historical tax payments, or other results. HdL shall work with the City to determine the desired database format and content3.

Service Description Cost
E, F Provide quarterly Tax Analytical Remittance Report (TARR) for all licensed cannabis businesses
$2,500
per business
per year
D. Assist the City with strategies to preserve and enhance cannabis business tax revenue generated by existing businesses with the City.

G. Provide updates on legislative actions or bills that can impact or materially alter cannabis business tax revenue to the City.

HdL shall provide the City with general consulting in the form of technical assistance and subject matter expertise to be used as needed at the City’s request. Such assistance may include monitoring of changes to State laws and regulations, advising the City on industry trends, prevailing tax rates or legislation that may affect the City’s cannabis program and revenues, and recommending strategies to maintain and maximize cannabis tax revenues over time. HdL shall also provide a monthly cannabis E-newsletter, along with legislative updates and issue alerts as needed.

Service Description Cost
G Provide monthly cannabis E-newsletter, legislative
updates and issue alerts as needed
No Charge
D, G Provide general consulting in the form of technical assistance and subject matter expertise to be used as
needed at the City’s request.

HdL shall provide
up to 40 hours at no
charge. Any
additional hours
shall be billed at
3 NOTE: HdL’s Tax Analytical Remittance Report (TARR) program utilizes our proprietary Cannabis Analytical Tracking Solution (CATS™) software and includes analysis of data which may be confidential.

Proposal to Provide Revenue Discovery, Audit and Tax Compliance and Consulting Services City of Vallejo, CA March 16, 2020
59 HdL’s hourly rate for
the assigned staff
(see rate chart)
Proposal to Provide Revenue Discovery, Audit and Tax Compliance and Consulting Services City of Vallejo, CA March 16, 2020
60 F. REFERENCES

1. Sales and Use Tax
Agency Name: City of Concord
Address: 1950 Parkside Drive
City, State, Zip Code: Concord, CA 94519
Contact Person: Karan Reid, Finance Director
Contact Information: 925.671.3000, [email protected] Dates of Service: 2001 - Present
Project Background Sales and Use Tax Audit and Management Services, Business License Software and Property Tax Services
Agency Name: City of Oakland
Address: 150 Frank Ogawa Plaza, 5th Floor
City, State, Zip Code: Oakland, CA 94612
Contact Person: Margaret O’Brien, Revenue and Tax Administrator Contact Information: 510.238.3301, [email protected] Dates of Service: 1998- Present
Project Background Sales and Use Tax Audit and Management Services, Business License Software and Property Tax Services.

Agency Name: City of Sunnyvale
Address: 456 W. Olive Ave.

City, State, Zip Code: Sunnyvale, CA 94086
Contact Person: Tim Kirby, Financial Director
Contact Information: 408.730.7500, [email protected] Dates of Service: 1995 - Present
Project Background Sales and Use Tax Audit and Management Services, Business License Software and Property Tax Services.

2. Property Tax
Agency Name: City of Benicia
Address: 250 E. L Street
City, State, Zip Code: Benicia, CA 94510
Contact Person: Cindy Mosser, Finance Director
Contact Information: 707.746.4217, [email protected] Dates of Service: 1993 - Present
Project Background Property Tax reports, database, audit, and special projects as necessary, Sales, Use and Transactions Tax Services, Business License Services.

Agency Name: City of Fairfield
Address: 1000 Webster Street
City, State, Zip Code: Fairfield, CA 94533
Contact Person: Emily Coombs, Budget Manager
Contact Information: 707.428.7629, [email protected] Proposal to Provide Revenue Discovery, Audit and Tax Compliance and Consulting Services City of Vallejo, CA March 16, 2020
61 Dates of Service: 1994 - Present
Project Background Property tax reports, database, audit, and special projects as necessary. Sales. Use and Transactions Tax Services, Business License Software.

Agency Name: City of Vacaville
Address: 650 Merchant Street
City, State, Zip Code: Vacaville, CA 944590
Contact Person: Ken Matsumiya, Finance Manager
Contact Information: 707.449-5180, [email protected] Dates of Service: 2000 - Present
Project Background Property tax reports, database, audit, and special projects as necessary, Sales, Use and Transactions Tax Services,
Economic Development, Cannabis Compliance Services and
Business License Software.

3. Utility Users Tax and 4. Franchise Fees (Subcontractor Azavar Government Solutions)
Agency Name: City of O’Fallon. IL
Address: 255 S Lincoln Ave
City, State, Zip Code: O'Fallon, IL 62269
Contact Person: Sandy Evans, Director of Finance
Contact Information: 618.624.4500 x8723, [email protected] Dates of Service: 2006 - 2016
Project Background Tax revenue audits of electric, gas, and telecom taxes and cable franchise fees. This consisted of address audits and gross revenue calculation audits.

Agency Name: City of Joliet, IL
Address: 150 W Jefferson St
City, State, Zip Code: Joliet, IL 60432
Contact Person: Jim Ghedotte, Finance Director
Contact Information: 815.724.3900, [email protected] Dates of Service: 2011 - Present
Project Background Tax revenue audits of electric, gas, water, sales, food and beverage, and telecom taxes and cable franchise fees. This consisted of address audits and gross revenue calculation audits.

Agency Name: City of Long Beach
Address: 411 W. Ocean Blvd
City, State, Zip Code: Long Beach, CA 90802
Proposal to Provide Revenue Discovery, Audit and Tax Compliance and Consulting Services City of Vallejo, CA March 16, 2020
62 Contact Person: Geraldine Alejo, Revenue Management Officer Contact Information: 562.570.5478, [email protected] Dates of Service: 2019 - Present
Project Background Forecasted projections of UUT and franchise fee revenues for electric, gas, water, cable, and telecom. Tax revenue audits of electric, gas, water, cable and telecom taxes and cable franchise fees. This consisted of address audits and gross revenue calculation audits.

5. Transient Occupancy Tax
Agency Name: City of San Mateo
Address: 330 W. 20th Avenue
City, State, Zip Code: San Mateo, CA 94403
Contact Person: Jason Reed
Contact Information: [email protected] (650) -522-7660 Dates of Service: 01/2018 to present
Project Background TOT Administration, Short-Term Rental, Business License Services and Property Tax.

Agency Name: City of Pacific Grove
Address: 300 Forest Ave
City, State, Zip Code: Pacific Grove, CA 93950
Contact Person: Lori Frati, Finance Management Analyst
Contact Information: [email protected] (831)-648-3133 Dates of Service: Ongoing since September 2015
Project Background TOT Administration/Audits, Sales and Use Tax Services, Economic Development and Business License Services.

Agency Name: Santa Clara County
Address: 70 West Hedding St 2nd Floor, E Wing
City, State, Zip Code: San Jose, CA
Contact Person: Ramsin Nasseri
Contact Information: [email protected] (408) 282-3267 Dates of Service: 2019 - Present
Project Background TOT Administration, Sales, Use and Transactions Tax Services.

6. Business Tax
Agency Name: City of Sausalito
Address: 300 Locust Street
City, State, Zip Code: Sausalito, CA 94965
Contact Person: Cindi Kato
Contact Information: 415-289-4148, [email protected]
Dates of Service: 2015 - Present
Project Background Business License Tax Administration and Compliance Services and Property Tax Services.

Proposal to Provide Revenue Discovery, Audit and Tax Compliance and Consulting Services City of Vallejo, CA March 16, 2020
63 Agency Name: City of Santa Rosa
Address: 100 Santa Rosa Avenue
City, State, Zip Code: Santa Rosa, CA 95404
Contact Person: Manny Silveiro – Revenue Op. Manager
Contact Information: 707.543.3163 - [email protected] Dates of Service: 2018 - Present
Project Background Business License Tax Administration and Compliance Services
Agency Name: City of San Bruno
Address: 567 El Camino Real
City, State, Zip Code: San Bruno, CA 94006
Contact Person: Keith DiMartini – Finance Director
Contact Information: 650.616.7054
Dates of Service: 2019 - Present
Project Background Business License Tax Compliance Services

7. Cannabis Business Tax
Agency Name: City of Modesto
Address: 1010 Tenth Street, Suite 3300
City, State, Zip Code: Modesto, CA 95345
Contact Person: Steve Mitchell, Acting Planning Manager Contact Information: 209.577.5287, [email protected] Dates of Service: 2018 - present
Project Background Cannabis business tax audits and compliance inspections, application processes, cost recovery fees, background
checks, subject matter expertise and Business License
Software.

Agency Name: City of Port Hueneme
Address: 250 N Ventura Road
City, State, Zip Code: Port Hueneme, CA 93041
Contact Person: Tony Stewart, Director of Community Development Contact Information: 805.986.6520, [email protected] Dates of Service: 2017 - present
Project Background Cannabis business tax audits and compliance inspections, application processes, cost recovery fees, background
checks, subject matter expertise and Sales, Use and
Transactions Tax Services, Economic Development, Business Proposal to Provide Revenue Discovery, Audit and Tax Compliance and Consulting Services City of Vallejo, CA March 16, 2020
64 License Services, TOT, Short Term Rental and Property Tax Services.

Agency Name: City of Desert Hot Springs
Address: 11-999 Palm Drive
City, State, Zip Code: Desert Hot Springs, CA 92240
Contact Person: Geoffrey Buchheim, Finance Director
Contact Information: 760.329.6411 Ext 227, [email protected] Dates of Service: 2016 - present
Project Background Cannabis business tax audits and compliance inspections, Sales and Use Tax Services, Economic Development and
Property Tax Services.

Proposal to Provide Revenue Discovery, Audit and Tax Compliance and Consulting Services City of Vallejo, CA March 16, 2020
65 G. ADDITIONAL INFORMATION
The HdL Advantage
Exceptional Personnel: The HdL team is vested in your success. We are 100% employee owned and view your success as our success. Many of our key employees previously served local government agencies in positions of management, and have extensive experience in economic development, finance and revenue collection. We use a team approach so that there is always someone available to take your questions during our normal business hours of 8:00 am – 5:00 pm.

Audits: HdL has the largest database outside of the CDTFA which allows for a “fresh” look at revenue collections. This advantage coupled with the HdL’s advanced technology and processes consistently finds allocation errors and revenue opportunities often missed by other firms.

Forecasting: HdL has developed a comprehensive, detail-oriented method for projecting and monitoring client sales and use tax revenues that has proved to result in estimates that fall within 2% of actual receipts two-thirds of the time.

Reports and Services: HdL’s quarterly analysis is done in context with the surrounding market region to better identify retail trends, voids and opportunities. The service includes a custom nonconfidential newsletter that can be shared with the Council and community. The firm’s sophisticated economic support program provides special reports and data to assist the City in monitoring and leveraging existing economic development programs, identifying new revenue opportunities and maximizing use tax revenues.

Software: Our web-based sales tax application is user-friendly and offers clients immediate access to current and historical sales tax data. The application allows for easy printing of reports and export to other systems or programs. Reports are available on the website within 5 days of receiving the Quarterly Data Report from the CDTFA.

Proposal to Provide Revenue Discovery, Audit and Tax Compliance and Consulting Services City of Vallejo, CA March 16, 2020
66 H. AGREEMENT
HdL and HdLCC agree to execute an Agreement for Services with the City and will work with the City to meet their terms and conditions, and insurance requirements.

Proposal to Provide Revenue Discovery, Audit and Tax Compliance and Consulting Services City of Vallejo, CA March 16, 2020
67 I. APPENDIX – SAMPLE REPORTS

1. Sales and Use Tax Reports

2. Property Tax Sample Reports

3. Cannabis Business Tax
Audit, inspection reports all contain certain confidential or proprietary information. The City is in possession of audit and inspection reports produced by HdL for existing cannabis businesses. If requested by the City, HdL will provide sample TARR reports in a format that protects such confidential business information.

Proposal to Provide Revenue Discovery, Audit and Tax Compliance and Consulting Services City of Vallejo, CA March 16, 2020
68 Sales and Use Tax Reports
Trends by Major Groups
Major Industry Groups
Quarterly Line Graph
Annual Line Graph
Major business type changes, including comparisons with state and county averages.

Allocations by Business Type Including Pools
Adjusted for Reporting Aberrations
Top sales tax generators listed in descending order. Used by management to track trends and identify companies who should be contacted as part of a business retention program.

Top 100 Sales Tax Generators
Quarterly Deviation Analysis
Reports for Revenue Projections.

Sales Tax Allocation Summary
Cash Reconciliation Report
Budget Projections
Five Year Forecast
Consensus Forecast
Quarterly customized newsletter summarizing sales tax highlights presented in a manner to protect confidentiality and that can be shared with the public.

City of Vallejo, Q32019
City of Oakland, Q22019
Special reports as needed for economic development and other purposes.

Regional Updates
Market Competition Comparisons
Surplus/Gap Comparison
Retail Analytics Brochure
Sample of Legislative and Issue Updates.

Legislative Update – Sales, Use and Property Tax, October 2019 Issue Update – November 2019
HeadLines Bi-Monthly E-Newsletter–Trends Affecting California’s Economy

CITY OF PROSPERITY

MAJOR INDUSTRY GROUPS
Major Industry Group Count 3Q18 3Q17 $ Change % Change
Autos and Transportation 168 1,435,142 1,343,627 91,515 6.8% General Consumer Goods 824 1,002,786 940,965 61,822 6.6% Restaurants and Hotels 268 629,459 558,120 71,339 12.8% State and County Pools - 546,990 498,105 48,886 9.8%
Building and Construction 48 289,778 207,600 82,178 39.6% Fuel and Service Stations 11 220,142 206,126 14,016 6.8% Food and Drugs 90 137,337 134,740 2,597 1.9%
Business and Industry 563 107,183 81,704 25,479 31.2%
Transfers & Unidentified 50 1,024 (13,360) 14,384 107.7% Total 2,022 4,369,841 3,957,625 412,216 10.4%
$0K
$200K
$400K
$600K
$800K
$1,000K
$1,200K
$1,400K
$1,600K
Autos
and
Transportation
General
Consumer
Goods
Restaurants
and
Hotels
State and
County
Pools
Building
and
Construction
Fuel and
Service
Stations
Food
and
Drugs
Business
and
Industry
3Q17 Compared To 3Q18
3Q17 3Q18
3Q18 Percent of Total
33%
Autos
and
Transportation
23%
General
Consumer
Goods
14%
Restaurants
and
Hotels
State 13%
and
County
Pools
7%
Building
and
Construction
5%
Fuel and
Service
Stations
3%
Food
and
Drugs
2%
Business
and
Industry

CONFIDENTIAL INFORMATION - DO NOT COPY OR DISTRIBUTE WITHOUT AUTHORIZATION 01/24/2019 8:42 am HdL • 909.861.4335 • www.hdlcompanies.com Page 1 of 1

CITY OF PROSPERITY
MAJOR INDUSTRY GROUPS - 13 QUARTER HISTORY
Sales Tax by Major Industry Group
($200)K
$0K
$200K
$400K
$600K
$800K
$1,000K
$1,200K
$1,400K
$1,600K
$1,800K
3Q
15 4Q
15 1Q
16 2Q
16 3Q
16 4Q
16 1Q
17 2Q
17 3Q
17 4Q
17 1Q
18 2Q
18 3Q
18 Count: 168
Autos And Transportation
Count: 824
General Consumer Goods
Count: 268
Restaurants And Hotels
Count: 48
Building And Construction
Count: 11
Fuel And Service Stations
Count: 90
Food And Drugs
Count: 563
Business And Industry
Count: 50
Transfers & Unidentified
$3,000K
$3,200K
$3,400K
$3,600K
$3,800K
$4,000K
$4,200K
3Q
15 4Q
15 1Q
16 2Q
16 3Q
16 4Q
16 1Q
17 2Q
17 3Q
17 4Q
17 1Q
18 2Q
18 3Q
18 Agency Trend
Prosperity
13 Quarter Trend: +0.9%
Periods shown reflect the period in which the sales occurred - Point of Sale 01/24/2019 8:44 am HdL • 909.861.4335 • www.hdlcompanies.com

CONFIDENTIAL INFORMATION - DO NOT COPY OR DISTRIBUTE WITHOUT AUTHORIZATION

CITY OF PROSPERITY
MAJOR INDUSTRY GROUPS - 13 YEAR HISTORY*
Sales Tax by Major Industry Group
($200)K
$0K
$200K
$400K
$600K
$800K
$1,000K
$1,200K
$1,400K
$1,600K
06-07 07-08 08-09 09-10 10-11 11-12 12-13 13-14 14-15 15-16 16-17 17-18 18-19 Count: 168
Autos And Transportation
Count: 824
General Consumer Goods
Count: 268
Restaurants And Hotels
Count: 48
Building And Construction
Count: 11
Fuel And Service Stations
Count: 90
Food And Drugs
Count: 563
Business And Industry
Count: 50
Transfers & Unidentified
$2,400K
$2,800K
$3,200K
$3,600K
$4,000K
$4,400K
$4,800K
06-07 07-08 08-09 09-10 10-11 11-12 12-13 13-14 14-15 15-16 16-17 17-18 18-19 Agency Trend
Prosperity
13 Year Trend: +36.2%
Periods shown reflect the period in which the sales occurred - Point of Sale 01/24/2019 8:45 am HdL • 909.861.4335 • www.hdlcompanies.com

CONFIDENTIAL INFORMATION - DO NOT COPY OR DISTRIBUTE WITHOUT AUTHORIZATION

CITY OF PROSPERITY
3Q 2018 COMPARED TO 3Q 2017
TOP 25 BUSINESS TYPES LISTED BY ALLOCATION
HdL STATE
Code Business Type Description (Count)
AGENCY
3Q 2018 3Q 2017 Change 3Q 2018 3Q 2017 Change
60 New Motor Vehicle Dealers (18) 1,011,477 976,578 3.6% 189,628,461 168,303,640 12.7% 08 Discount Dept Stores (3) 612,524 613,866 -0.2% 108,333,511 91,559,198 18.3% 35 Casual Dining (92) 302,022 289,839 4.2% 106,256,987 92,551,154 14.8% 65 Auto Lease (16) 246,906 225,276 9.6% 27,796,436 19,379,181 43.4% 24 Quick-Service Restaurants (150) 243,823 216,536 12.6% 87,684,360 77,302,896 13.4% 50 Building Materials (6) 233,245 157,066 48.5% 104,935,271 80,854,029 29.8% 62 Service Stations (11) 220,142 206,126 6.8% 179,179,764 125,253,019 43.1% 03 Family Apparel (93) 100,321 64,983 54.4% 58,302,059 42,780,891 36.3% 34 Grocery Stores (18) 59,367 58,069 2.2% 50,764,592 43,736,533 16.1% 12 Sporting Goods/Bike Stores (13) 58,858 40,948 43.7% 14,436,444 11,920,470 21.1% 19 Specialty Stores (238) 57,338 75,161 -23.7% 33,585,479 31,000,863 8.3% 31 Electronics/Appliance Stores (54) 55,465 46,184 20.1% 38,695,810 34,417,695 12.4% 85 Transportation/Rentals (31) 45,437 32,553 39.6% 18,581,196 16,477,374 12.8% 37 Fast-Casual Restaurants (12) 42,008 26,824 56.6% 19,766,050 17,163,036 15.2% 76 Leisure/Entertainment (12) 41,552 24,916 66.8% 20,466,251 17,513,564 16.9% 61 Automotive Supply Stores (37) 39,949 21,943 82.1% 20,576,743 18,984,188 8.4% 27 Drug Stores (31) 39,755 39,921 -0.4% 14,791,836 14,387,855 2.8% 07 Department Stores (13) 38,540 36,582 5.4% 26,485,459 27,469,247 -3.6% 71 Auto Repair Shops (50) 37,297 35,537 5.0% 17,509,746 15,316,376 14.3% 22 Convenience Stores/Liquor (21) 37,150 36,290 2.4% 26,575,103 22,032,826 20.6% 66 Boats/Motorcycles (3) 33,916 22,254 52.4% 7,414,599 6,464,201 14.7% 82 Contractors (31) 28,273 27,998 1.0% 59,130,508 42,934,360 37.7% 52 Plumbing/Electrical Supplies (9) 23,233 16,329 42.3% 25,251,588 21,811,378 15.8% 86 Electrical Equipment (25) 21,478 11,900 80.5% 23,449,762 17,173,697 36.5% 64 Used Automotive Dealers (12) 19,358 28,697 -32.5% 37,626,365 25,611,496 46.9% All Others (1023) 173,415 127,147 36.4% 484,964,309 396,814,494 22.2% TOTAL ALL TYPES (2022) 3,822,851 3,459,520 10.5% 1,802,188,688 1,479,213,661 21.8% Major Industry Groups
Autos And Transportation (168) 1,435,142 1,343,627 6.8% 328,859,501 17.6% Building And Construction (48) 289,778 207,600 194,359,081 Business And Industry (563) 107,183 81,704 306,123,844
Food And Drugs (90) 137,337 134,740 100,551,152
Fuel And Service Stations (11) 220,142 206,126 208,488,893 General Consumer Goods (824) 1,002,786 940,965 392,294,434 Restaurants And Hotels (268) 629,459 558,120 269,699,975 Transfers & Unidentified (50) 1,024 (13,360) 1,811,808
TOTAL ALL GROUPS (2022) 3,822,851 3,459,520 10.5% 1,802,188,688 21.8%

39.6% 29.4%

31.2% 24.6%

1.9% 17.0%

6.8% 40.2%

6.6% 17.5%

12.8% 14.7%
107.7% na
1,479,213,661
279,640,964
150,188,651
245,667,786
85,954,885
148,675,108
333,930,776
235,060,413
95,079

21.8%
4,369,841 3,957,625 10.4%

10.0%
-26.8%
544,930 495,291
2,061 2,813
3,822,851 3,459,520 10.5% 1,802,188,688

GROSS RECEIPTS

ALLOCATIONS FROM STATE POOL

ALLOCATIONS FROM COUNTY POOL
TOTAL ALL BUSINESSES (2022) 1,479,213,661

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CITY OF PROSPERITY
3Q 2018 COMPARED TO 3Q 2017 ADJUSTED FOR

ECONOMIC DATA
TOP 25 BUSINESS TYPES LISTED BY ALLOCATION
HdL STATE
Code Business Type Description (Count)
AGENCY
3Q 2018 3Q 2017 Change 3Q 2018 3Q 2017 Change
60 New Motor Vehicle Dealers (18) 983,768 976,578 0.7% 181,921,072 168,881,436 7.7% 08 Discount Dept Stores (3) 573,028 613,866 -6.7% 92,906,567 91,559,198 1.5% 35 Casual Dining (92) 278,363 290,944 -4.3% 91,557,793 91,504,845 0.1% 65 Auto Lease (16) 232,389 245,084 -5.2% 22,465,026 20,824,462 7.9% 24 Quick-Service Restaurants (150) 229,819 217,993 5.4% 78,310,050 76,564,788 2.3% 62 Service Stations (11) 220,302 196,865 11.9% 141,695,850 123,693,394 14.6% 50 Building Materials (6) 165,575 157,066 5.4% 83,295,782 80,448,653 3.5% 03 Family Apparel (93) 66,064 65,022 1.6% 44,960,749 42,842,774 4.9% 34 Grocery Stores (18) 60,224 58,069 3.7% 44,562,332 43,647,081 2.1% 19 Specialty Stores (238) 49,935 75,744 -34.1% 29,372,259 30,595,262 -4.0% 31 Electronics/Appliance Stores (54) 48,385 55,360 -12.6% 35,288,972 34,199,099 3.2% 37 Fast-Casual Restaurants (12) 41,993 30,747 36.6% 17,965,557 17,149,516 4.8% 12 Sporting Goods/Bike Stores (13) 39,836 40,827 -2.4% 11,802,768 12,188,862 -3.2% 27 Drug Stores (31) 39,274 39,921 -1.6% 14,387,014 14,381,756 0.0% 61 Automotive Supply Stores (37) 38,991 21,837 78.6% 18,299,378 18,758,317 -2.4% 07 Department Stores (13) 37,662 36,538 3.1% 26,789,300 27,429,600 -2.3% 71 Auto Repair Shops (50) 34,698 35,676 -2.7% 14,591,632 14,992,400 -2.7% 85 Transportation/Rentals (31) 32,516 32,781 -0.8% 17,111,157 16,406,435 4.3% 22 Convenience Stores/Liquor (21) 32,434 31,928 1.6% 22,523,652 21,716,502 3.7% 76 Leisure/Entertainment (12) 30,614 24,848 23.2% 18,525,810 17,306,192 7.0% 05 Variety Stores (43) 24,289 19,375 25.4% 7,894,425 7,567,651 4.3% 82 Contractors (31) 23,945 26,304 -9.0% 49,618,465 42,975,701 15.5% 64 Used Automotive Dealers (12) 19,349 28,696 -32.6% 25,828,659 25,451,277 1.5% 86 Electrical Equipment (25) 18,056 14,124 27.8% 18,660,274 17,921,921 4.1% 66 Boats/Motorcycles (3) 15,780 21,456 -26.5% 6,371,674 6,396,830 -0.4% All Others (989) 137,023 133,720 2.5% 420,455,837 406,721,452 3.4% TOTAL ALL TYPES (2022) 3,474,312 3,491,370 -0.5% 1,537,162,055 1,472,125,405 4.4% Major Industry Groups
Autos And Transportation (168) 1,358,294 1,362,898 -0.3% 296,229,725 5.5% Building And Construction (48) 208,453 205,328 160,529,865 Business And Industry (563) 88,186 85,642 247,601,111
Food And Drugs (90) 132,731 130,268 87,917,800
Fuel And Service Stations (11) 220,302 196,865 167,976,822 General Consumer Goods (824) 884,197 945,832 337,224,031 Restaurants And Hotels (268) 580,820 564,537 238,030,291 Transfers & Unidentified (50) 1,329 0 1,652,410
TOTAL ALL GROUPS (2022) 3,474,312 3,491,370 -0.5% 1,537,162,055 4.4%

1.5% 7.2%

3.0% 1.7%

1.9% 3.0%

11.9% 14.8%
-6.5% 1.2%

2.9% 2.2%
na 410.2%
1,472,125,405
280,674,524
149,706,208
243,431,811
85,368,555
146,274,516
333,364,857
232,981,062
323,871

4.4%
3,474,312 3,491,370 -0.5%
na
na
0 0
0 0
3,474,312 3,491,370 -0.5% 1,537,162,055

GROSS RECEIPTS

ALLOCATIONS FROM STATE POOL

ALLOCATIONS FROM COUNTY POOL
TOTAL ALL BUSINESSES (2022) 1,472,125,405

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CITY OF PROSPERITY
TOP 100 SALES TAX PRODUCERS - 3Q 2018
Rank Firm Name Business Address 3Q 2018 3Q 2017
Business
Type
Percent
of Total
Cumulative
Prior 4 Qtrs Percent
Percent
Change
1 08 Dougco Discount Dept Stores 2207 W Butler Ave 447,503 488,945 2,018,788 -8.48% 11.71% 12% 2 50 Giftprints Building Materials 500 S East Ave 224,162 155,506 521,095 44.15% 5.86% 18% 3 60 Silverstone New Motor Vehicle Dealers 400 S Ingersoll Blvd 187,966 209,733 909,529 -10.38% 4.92% 22% 4 60 Macnetworks New Motor Vehicle Dealers 2 Locations 172,906 180,556 660,155 -4.24% 4.52% 27% 5 08 Verdalee Discount Dept Stores 2120 W East St 165,021 124,921 478,018 32.10% 4.32% 31% 6 60 Djgraphic New Motor Vehicle Dealers 4 Locations 139,733 160,529 535,653 -12.95% 3.66% 35% 7 65 Kiaras Auto Lease No Address In City 124,547 122,995 553,290 1.26% 3.26% 38% 8 60 Bonega New Motor Vehicle Dealers 1247 W East St 111,029 91,546 385,945 21.28% 2.90% 41% 9 60 Ooohlala New Motor Vehicle Dealers 2 Locations 109,194 110,223 449,276 -0.93% 2.86% 44% 10 60 Archetype New Motor Vehicle Dealers 1100 W East St 94,297 58,511 313,696 61.16% 2.47% 46% 11 62 Survive Service Stations 600 N Gibson Ave 66,378 37,090 69,667 78.96% 1.74% 48% 12 03 Socorros Family Apparel 201 E East St 66,254 33,253 105,328 99.24% 1.73% 50% 13 60 Dls New Motor Vehicle Dealers 1200 W East St 63,047 40,138 100,382 57.08% 1.65% 52% 14 60 Beachtownrules New Motor Vehicle Dealers726 E East St 53,251 53,288 198,302 -0.07% 1.39% 53% 15 65 Eventos Auto Lease No Address In City 48,031 44,032 182,357 9.08% 1.26% 54% 16 60 Crepery New Motor Vehicle Dealers 1811 W East St 43,766 36,705 152,011 19.24% 1.14% 55% 17 65 Nesting Auto Lease No Address In City 39,785 20,835 61,637 90.96% 1.04% 56% 18 12 Primeco Sporting Goods/Bike Stores 2801 W Dunkirk Rd 37,251 18,500 63,195 101.35% 0.97% 57% 19 62 Keyman Service Stations 1201 S Ingersoll Blvd 36,453 31,210 130,163 16.80% 0.95% 58% 20 60 Formerica New Motor Vehicle Dealers 1700 W East St 36,287 35,348 120,281 2.66% 0.95% 59% 21 07 Asd Department Stores 1201 S Townsend Ave 35,788 36,232 154,087 -1.23% 0.94% 60% 22 66 Nuvart Boats/Motorcycles 3001 W East St Unit A 33,790 22,242 59,193 51.92% 0.88% 61% 23 03 Francesca Family Apparel 150 E East St Ste 130 32,403 30,661 137,579 5.68% 0.85% 62% 24 24 Chaunceys Quick-Service Restaurants 1210 N Ingersoll Blvd 28,029 21,246 79,065 31.92% 0.73% 63% 25 35 Coopersoft Casual Dining 740 E Yukon Blvd 26,606 13,239 40,352 100.96% 0.70% 63% 26 24 Awch Quick-Service Restaurants 2 Locations 24,769 24,914 101,914 -0.58% 0.65% 64% 27 62 Capelli Service Stations 601 W Yukon Blvd 24,153 19,948 83,964 21.08% 0.63% 65% 28 62 Natuurlik Service Stations 525 N Ingersoll Blvd 22,883 16,939 69,538 35.09% 0.60% 65% 29 19 Maxies Specialty Stores 2568 W Butler Ave 20,426 20,648 83,255 -1.07% 0.53% 66% 30 61 Epm Automotive Supply Stores 1200 E Yukon Blvd 19,607 0 32,396 n/a 0.51% 66% 31 27 Kade Drug Stores 4 Locations 19,269 19,415 82,220 -0.75% 0.50% 67% 32 85 Samkhya Transportation/Rentals 2 Locations 18,419 15,869 58,099 16.07% 0.48% 67% 33 52 Travelube Plumbing/Electrical Supplies 2220 W East St 18,213 11,111 33,052 63.91% 0.48% 68% 34 62 Possessions Service Stations 2601 W East St 17,536 14,780 63,201 18.65% 0.46% 68% 35 62 Metropoly Service Stations 3201 W Yukon Blvd 17,529 16,437 65,534 6.64% 0.46% 69%

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CITY OF PROSPERITY
TOP 100 SALES TAX PRODUCERS - 3Q 2018
Rank Firm Name Business Address 3Q 2018 3Q 2017
Business
Type
Percent
of Total
Cumulative
Prior 4 Qtrs Percent
Percent
Change
36 76 Qualitype Leisure/Entertainment 700 S Republic St 17,407 8,524 28,138 104.21% 0.46% 69% 37 34 Hotdog Grocery Stores 2400 W Butler Ave 16,528 18,617 73,981 -11.22% 0.43% 70% 38 34 Mulkeyland Grocery Stores 725 E East St 15,169 17,892 59,904 -15.22% 0.40% 70% 39 65 Joyce Auto Lease No Address In City 14,923 13,282 49,557 12.35% 0.39% 70% 40 35 Kese Casual Dining 2223 W Butler Ave 14,900 12,863 54,121 15.84% 0.39% 71% 41 62 Lanimar Service Stations 848 S Gibson Ave 14,632 22,680 65,256 -35.48% 0.38% 71% 42 76 Truckstuff Leisure/Entertainment 741 S Townsend Ave 14,352 8,085 37,381 77.52% 0.38% 72% 43 86 Cynmar Electrical Equipment 2015 Morris St 14,217 9,203 32,411 54.48% 0.37% 72% 44 85 Katana Transportation/Rentals No Address In City 13,800 6,026 11,508 129.02% 0.36% 72% 45 31 Axion Electronics/Appliance Stores 2121 W East St Ste 300 13,684 14,118 50,184 -3.07% 0.36% 73% 46 35 Greenbrew Casual Dining 33 W East St 12,993 12,738 48,369 2.00% 0.34% 73% 47 62 Trails Service Stations 2600 W Yukon Blvd 12,863 11,669 47,573 10.23% 0.34% 73% 48 35 Insidecomputer Casual Dining 245 W Yukon Blvd 11,862 11,173 43,370 6.16% 0.31% 74% 49 64 Oic Used Automotive Dealers 1744 W Yukon Blvd 11,795 20,898 64,096 -43.56% 0.31% 74% 50 98 Willowerks Heavy Industrial 1147 S Dupont Ave 11,671 4,649 15,366 151.04% 0.31% 74% 51 04 Neurina Shoe Stores 420 S Gibson Ave 11,223 2,221 9,145 405.21% 0.29% 75% 52 35 Confeccion Casual Dining 68 W East St 11,142 10,375 44,120 7.40% 0.29% 75% 53 12 Chavas Sporting Goods/Bike Stores 2801 W Dunkirk Rd 10,848 11,221 48,899 -3.33% 0.28% 75% 54 35 Heatherstone Casual Dining 700 W Yukon Blvd 10,693 10,471 42,279 2.12% 0.28% 75% 55 35 Sportaction Casual Dining 500 W East St Ste A 10,277 10,483 42,072 -1.96% 0.27% 76% 56 35 Goldmart Casual Dining 2131 W Butler Ave 10,239 10,420 39,779 -1.74% 0.27% 76% 57 31 Ctm Electronics/Appliance Stores 2 Locations 9,963 5,083 21,741 96.01% 0.26% 76% 58 27 Mandalay Drug Stores 2551 W East St 9,943 9,374 30,755 6.08% 0.26% 76% 59 24 Eastwind Quick-Service Restaurants 138 E Yukon Blvd 9,845 9,698 36,040 1.51% 0.26% 77% 60 27 Bondesign Drug Stores 2 Locations 9,691 10,068 40,553 -3.74% 0.25% 77% 61 12 Euphorbia Sporting Goods/Bike Stores 620 E Yukon Blvd 9,618 10,229 36,138 -5.97% 0.25% 77% 62 31 Profab Electronics/Appliance Stores 810 E Yukon Blvd Ste D 9,468 8,871 50,169 6.73% 0.25% 77% 63 18 Waxworks Office Supplies/Furniture 1200 W Yukon Blvd 9,390 9,655 34,197 -2.74% 0.25% 78% 64 50 Sades Building Materials 616 S East Ave 8,848 1,560 14,430 467.18% 0.23% 78% 65 31 Muchos Electronics/Appliance Stores 6 Locations 8,623 9,178 42,303 -6.05% 0.23% 78% 66 35 Primitives Casual Dining 2 S Gibson Ave Ste 100 8,603 10,188 31,388 -15.56% 0.23% 78% 67 34 Greenland Grocery Stores 150 E East St Ste 150 8,589 8,034 33,298 6.90% 0.22% 79% 68 35 Alteryears Casual Dining 2000 W East St 8,430 9,326 35,097 -9.60% 0.22% 79% 69 82 Imt Contractors 3001 W Dunkirk Rd Ste B 8,264 7,402 30,807 11.64% 0.22% 79% 70 35 Zyzzle Casual Dining 21 E East St 7,872 7,354 31,528 7.04% 0.21% 79% 71 24 Rainscape Quick-Service Restaurants 2310 W Butler Ave 7,683 0 0 n/a 0.20% 79%

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CITY OF PROSPERITY
TOP 100 SALES TAX PRODUCERS - 3Q 2018
Rank Firm Name Business Address 3Q 2018 3Q 2017
Business
Type
Percent
of Total
Cumulative
Prior 4 Qtrs Percent
Percent
Change
72 35 Monico Casual Dining 301 E Yukon Blvd 7,634 7,061 29,139 8.12% 0.20% 80% 73 01 Mobileader Women's Apparel 3025 W Dunkirk Rd 7,507 1,522 3,932 393.23% 0.20% 80% 74 65 Dcs Auto Lease No Address In City 7,385 6,537 28,072 12.98% 0.19% 80% 75 65 Notions Auto Lease 1330 W East St 7,370 0 0 n/a 0.19% 80% 76 71 Frances Auto Repair Shops 328 S East Ave 7,362 8,912 34,501 -17.39% 0.19% 80% 77 83 Bundles Office Equipment No Address In City 7,294 0 0 n/a 0.19% 81% 78 35 Loshas Casual Dining 228 W Yukon Blvd Ste 101 6,866 5,984 24,542 14.74% 0.18% 81% 79 05 Fernoll Variety Stores 2810 W Republic Rd 6,801 6,573 28,054 3.47% 0.18% 81% 80 19 Ardove Specialty Stores 2115 W Butler Ave 6,697 6,260 29,318 6.98% 0.18% 81% 81 24 Nomad Quick-Service Restaurants 511 W Yukon Blvd 6,467 0 0 n/a 0.17% 81% 82 85 Nike Transportation/Rentals 2 Locations 6,435 3,861 11,660 66.66% 0.17% 81% 83 24 Travelsmith Quick-Service Restaurants 2528 W Butler Ave 6,424 6,674 25,793 -3.74% 0.17% 82% 84 34 Normans Grocery Stores 2 Locations 6,379 6,981 26,986 -8.63% 0.17% 82% 85 35 Chanfield Casual Dining 1412 S Gibson Ave 6,336 0 13,239 n/a 0.17% 82% 86 62 Martinetti Service Stations 1401 S Gibson Ave 6,304 6,207 26,258 1.56% 0.16% 82% 87 35 Croissanteria Casual Dining 1032 E Yukon Blvd 6,278 6,025 24,261 4.20% 0.16% 82% 88 35 Lara Casual Dining 369 W East St 6,278 5,896 24,172 6.48% 0.16% 82% 89 24 Calmaka Quick-Service Restaurants 245 S Ingersoll Blvd 6,278 6,171 24,788 1.72% 0.16% 83% 90 35 Greenfield Casual Dining 1224 N Ingersoll Blvd 6,248 6,740 20,803 -7.30% 0.16% 83% 91 35 Dawsons Casual Dining 2234 W Yukon Blvd 6,100 6,046 24,944 0.89% 0.16% 83% 92 24 Savage Quick-Service Restaurants 2531 W Yukon Blvd 6,052 0 862 n/a 0.16% 83% 93 35 Envirotherm Casual Dining 201 W East St 6,017 5,899 23,862 2.00% 0.16% 83% 94 37 Summerwood Fast-Casual Restaurants 2300 W Butler Ave 5,959 0 0 n/a 0.16% 83% 95 86 Zoweecars Electrical Equipment 3044 W East St 5,959 1,289 7,568 362.26% 0.16% 84% 96 35 Giulianos Casual Dining 701 S Townsend Ave 5,943 6,146 25,560 -3.31% 0.16% 84% 97 82 Phorms Contractors 1600 Dewey St 5,919 5,066 18,217 16.83% 0.15% 84% 98 37 Lockserv Fast-Casual Restaurants 2121 W East St Ste 210 5,822 5,561 21,961 4.68% 0.15% 84% 99 19 Sante Specialty Stores 2 Locations 5,772 5,512 28,643 4.72% 0.15% 84% 100 35 Altatron Casual Dining 515 W East St 5,689 7,212 26,251 -21.12% 0.15% 84% Amount Paid By Top 100 Accounts 3,223,904 2,835,310 11,081,562 84.33% 84%

84.33% 81.96% 80.99%
3,822,851 3,459,520 13,682,960
Percent Paid By Top 100 Accounts
Total Paid By All Accounts

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CITY OF PROSPERITY
TOP 20 DEVIATING BUSINESSES
Firm Name
Account Number
$ Change
3Q 2018
3Q 2017 Prior Year Comparison 3Q 2017
% Change 3Q 2018
Giftprints Building Materials
SRZ AP 030835794
155,506
224,162
68,656
50 44%
Verdalee Discount Dept Stores
SRZ AP 017847614
124,921
165,021
40,099
08 32%
Archetype New Motor Vehicle Dealers
SR 103242360
58,511
94,297
35,786
60 61%
Socorros Family Apparel
SRZ RC 100651817
33,253
66,254
33,002
03 99%
Survive Service Stations
SRY AP 097694550
37,090
66,378
29,288
62 79%
Dls New Motor Vehicle Dealers
SR 102679104
40,138
63,047
22,909
60 57%
Epm Automotive Supply Stores
SR 102462054 19,607
19,607
-n/aNP
61 Bonega New Motor Vehicle Dealers
SR 102384022
91,546
111,029
19,483
60 21%
Nesting Auto Lease
SRZ OHA 102400356
20,835
39,785
18,950
65 91%
Primeco Sporting Goods/Bike Stores
SR 100759302
18,500
37,251
18,750
12 101%
Stylization Auto Lease
SRS AB 018879697x
(15,116) 15,116
65 NP 100%
Coopersoft Casual Dining
SR 101449821
13,239
26,606
13,367
35 101%
Ets Receivables/Master Outlets
052180767
(13,004)
(42)
12,962
00 100%
Nuvart Boats/Motorcycles
SRY AP 102259152
22,242
33,790
11,549
66 52%
Msb Auto Lease
SRS EA 100888705x
17,944 (17,944)
65 NP -100%
Djgraphic New Motor Vehicle Dealers
SRX AP 017252957
160,529
139,733
(20,796)
60 -13%
Silverstone New Motor Vehicle Dealers
SRX AP 098183274
209,733
187,966
(21,767)
60 -10%
Keris Specialty Stores
SRZ AP 030782741x
23,713
0 (23,713)
19 -100%
Ravenous Service Stations
AP 018747872
28,061 (28,061)
62 NP -100%
Dougco Discount Dept Stores
SRZ AP 030823777
488,945
447,503
(41,441)
08 -8%
Agency Total 3,459,520
3,822,851
363,331

10.5%
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CITY OF PROSPERITY

SALES TAX ALLOCATION SUMMARY
Seven Major
Industry Groups
Fiscal Yr
2016-17
Totals
FY 2017-18 Sales Quarters Fiscal Yr
2017-18
Totals
Fiscal Yr
2018-19
YTD Totals
FY 2018-19 Sales Quarters
3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q
Dollar
Change
Prior Yr
Percent
Change
Prior Yr
YTD
% Change
Prior Yr
Point of Sale
Autos And Transportation 5,452,712 1,343,627 1,291,518 1,077,117 1,618,047 5,330,309 (122,403) -2% 1,435,142 1,435,142 7% Building And Construction 810,854 207,600 194,068 190,904 116,961 709,532 (101,321) -12% 289,778 289,778 40% Business And Industry 384,670 81,704 110,121 68,174 54,738 314,738 (69,932) -18% 107,183 107,183 31% Food And Drugs 501,608 134,740 136,303 114,380 123,276 508,699 7,092 1% 137,337 137,337 2% Fuel And Service Stations 734,383 206,126 225,816 162,401 147,986 742,329 7,946 1% 220,142 220,142 7% General Consumer Goods 3,907,027 940,965 1,228,861 848,081 859,725 3,877,632 (29,396) -1% 1,002,786 1,002,786 7% Restaurants And Hotels 2,190,961 558,120 557,478 550,364 541,139 2,207,100 16,139 1% 629,459 629,459 13% Transfers & Unidentified (7,190) (13,360) 3,213 923 1,846 (7,379) (189) -3% 1,024 1,024 108% Total Point of Sale 13,975,024 3,459,520 3,747,378 3,012,344 3,463,718 13,682,960 (292,064) -2% 3,822,851 3,822,851 11% State Pool Allocations 7,923 2,813 1,112 2,734 1,361 8,019 96 1% 2,061 2,061 -27% County Pool Allocations 2,003,449 495,291 560,246 425,792 570,511 2,051,841 48,392 2% 544,930 544,930 10% Total (Net Collections) 15,986,395 3,957,625 4,308,736 3,440,870 4,035,590 15,742,820 (243,575) -2% 4,369,841 4,369,841 10% Less: Cost of Administration (197,468) (47,272) (48,157) (43,377) (48,832) (187,638) 9,831 5% (39,045) (39,045) 17% Subtotal 15,788,927 3,910,353 4,260,578 3,397,493 3,986,759 15,555,183 (233,744) -1% 4,330,796 4,330,796 11% Unaccrued Q2 Cleanup (307,988) 307,988 307,988
Grand Total 15,480,939 4,218,341 4,260,578 3,397,493 3,986,759 15,863,171 382,232 2% 4,330,796 4,330,796 11% Budget
**Due to the monthly allocation changes by CDTFA, as of 1st Quarter 2018 all fiscal year totals will be reported on an accrual basis (July to June sales). 3,470,872 4,086,449 3,534,818 2,929,063 14,021,201 4,184,945 4,184,945 Less: Cost of Administration
Total
(143,080) (37,470) (37,470) (22,890) (38,880) (136,710) (38,880) (38,880) 14,114,319 3,433,402 4,048,979 3,511,928 2,890,183 13,884,491 4,146,065 4,146,065 (236,197)
6,370
(229,827)
-2%
4%
-2%
21%
-4%
21%
Budget 0 0 0
Transactions Taxes 14,257,399
Budget vs.

Receipts
(In Thousands)
01/24/2019 8:51 am HdL • 909.861.4335 • www.hdlcompanies.com

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CITY OF PROSPERITY

SALES TAX ALLOCATION CASH RECONCILIATION
Fiscal Year
2017-18
Fiscal Year
2018-19
Payment
Month
60 Day Accrual60 Day Accrual
90 Day Accrual90 Day Accrual
1st Advance June $ 1,095,400.00 $ 1,270,729.32
2nd Advance July 1,095,400.00 1,372,793.84
3rd Advance August 1,460,400.00 -
Clean Up September 307,987.96 1,343,235.46
2nd Quarter Allocation 3,959,187.96 3,986,758.62
1st Advance September 1,159,800.00 1,410,943.03
2nd Advance October 1,159,800.00 1,627,114.11
3rd Advance November 1,546,500.00 -
Clean Up December 44,252.58 1,292,739.15
3rd Quarter Allocation 3,910,352.58 4,330,796.29
1st Advance December 1,199,900.00 -
2nd Advance January 1,199,900.00 -
3rd Advance February 1,600,000.00 -
Clean Up March 260,778.47 -
4th Quarter Allocation 4,260,578.47 -
1st Advance March 1,037,100.00 -
2nd Advance April 1,037,100.00 -
3rd Advance May - -
Clean Up June 1,323,292.98 -
1st Quarter Allocation 3,397,492.98 -
1st Advance June 1,270,729.32 -
2nd Advance July 1,372,793.84 -
3rd Advance August - -
Clean Up September 1,343,235.46 -
2nd Quarter Allocation 3,986,758.62 -
Fiscal Year Reconciliation
60 Day Accrual Period $ 14,519,935.15 $ 5,674,031.75
90 Day Accrual Period $ 15,555,182.65 $ 4,330,796.29
01/24/2019 8:52 am HdL Page 1 of 1 • 909.861.4335 • www.hdlcompanies.com 3Q 2019
2Q 2019
1Q 2019
4Q 2018

CITY OF PROSPERITY
FY 2019-20 (ending June)
Mid-Year Sales and Use Tax Revenues Projection
Agency Adopted Budget Estimate for FY 2019-20
Total Allocation From CDTFA
Includes State and County Pools Current Quarter 4,208,333 Previous Quarter 4,092,663
2nd Previous Quarter 4,008,524
3rd Previous Quarter 4,213,710
Total Allocation 16,523,230
Adjustments
Economic Adjustments
State & County Pools (11.2%) 192,000
Restaurants & Hotels (2.5%) 45,000
Fuel & Service Stations (2.3%) 15,000
Building & Construction (1.7%) 10,000
Autos & Transportation (0.2%) 7,000
Food & Drugs (1.5%) 6,000
Business & Industry (2.5%) 5,000
Other Adjustments (see attached) 271,000
Total Adjustments 551,000
Subtotal (2.3% increase from FY 2018-19 actual) 17,074,230 Administration Cost (1.3%) (210,131)
Estimated FY 2019-20 Sales Tax Revenues 16,864,099
Rounded to Nearest Thousand (2.1%increase fromFY 2018-19 actual) 16,864,000 Note: FY 19-20: $123,000 of fuel-service stations missing payments are recovered in 4q19. New restaurant that opened in October is included in forecast.

Supreme Court ruling regarding the ‘Wayfair’ decision occurred in 2018. California passed legislative enactment - AB147 - in 2019. CDTFA implemented ‘Wayfair’ decision effective April 1, 2019. Forecast for State and County Pools reflects new taxes from out of state retailers, including those whose use and transactions taxes are collected and remitted by marketplace facilitators (e.g. Etsy).

CONFIDENTIAL INFORMATION - DO NOT COPY OR DISTRIBUTE WITHOUT AUTHORIZATION 2/22/2020 11:32 AM HdL · 909.861.4335 · www.hdlcompanies.com Prepared: 2/22/20 By: knn Other Adjustments
General Consumer Goods:Double Payment:2Q19 138,000
Fuel & Service Stations:3q19 missing payments:4Q19 123,000 Office Hub:Close Out:2Q19,4Q19-1Q20 (65,000)
Harley Davidson:Adjust for ownership change:4Q18-1Q19 25,000 Cement Mix:Adjust for impact of heavy winter rain:1Q19 20,000 Dennys:Audit Adjustment:1Q19 15,000
Habit Burger:New Outlet:4Q19-2Q20 15,000
Total Other Adjustments 271,000

CONFIDENTIAL INFORMATION - DO NOT COPY OR DISTRIBUTE WITHOUT AUTHORIZATION 2/22/2020 11:32 AM HdL · 909.861.4335 · www.hdlcompanies.com Prepared: 2/22/20 By: knn

CITY OF PROSPERITY

EXTENDED SALES AND USE TAX BUDGET ESTIMATE
FY 2018-19 FY 2019-20 FY 2020-21 FY 2021-22 FY 2022-23 FY 2023-24 FY 2024-25 Industry Group Actuals Projection % Projection % Projection % Projection % Projection % Projection % Autos & Transportation 5,450,116 5,414,044 -0.7% 5,414,044 0.0% 5,387,044 -0.5% 5,387,044 0.0% 5,387,044 0.0% 5,387,044 0.0% Building & Construction 898,757 847,344 -5.7% 864,344 2.0% 890,344 3.0% 917,344 3.0% 945,344 3.1% 973,344 3.0% Business & Industry 318,576 236,167 -25.9% 220,167 -6.8% 223,167 1.4% 227,167 1.8% 232,167 2.2% 237,167 2.2% Food & Drugs 544,640 551,274 1.2% 559,274 1.5% 567,274 1.4% 576,274 1.6% 585,274 1.6% 594,274 1.5% Fuel & Service Stations 844,486 986,828 16.9% 872,828 -11.6% 881,828 1.0% 890,828 1.0% 899,828 1.0% 908,828 1.0% General Consumer Goods 3,952,569 4,027,385 1.9% 3,875,385 -3.8% 3,875,385 0.0% 3,875,385 0.0% 3,875,385 0.0% 3,875,385 0.0% Restaurants & Hotels 2,425,616 2,485,059 2.5% 2,537,059 2.1% 2,588,059 2.0% 2,640,059 2.0% 2,693,059 2.0% 2,747,059 2.0% Transfers & Unidentified (5,787) (521) - N/A - (521) - N/A - (521) - N/A - (521) - N/A - (521) - N/A - (521) - N/A - State & County Pools 2,255,767 2,526,650 12.0% 2,690,650 6.5% 2,851,650 6.0% 3,022,650 6.0% 3,203,650 6.0% 3,395,650 6.0% Total 16,684,738 17,074,230 2.3% 17,033,230 -0.2% 17,264,230 1.4% 17,536,230 1.6% 17,821,230 1.6% 18,118,230 1.7% Administration Cost (174,194) (210,131) (221,432) (224,435) (227,971) (231,676) (235,537) Total 16,510,545 16,864,099 2.1% 16,811,798 -0.3% 17,039,795 1.4% 17,308,259 1.6% 17,589,554 1.6% 17,882,693 1.7% CDTFA Allocation Adjustment (1) 0
With Accrual 16,510,544 16,864,099 2.1% 16,811,798 -0.3% 17,039,795 1.4% 17,308,259 1.6% 17,589,554 1.6% 17,882,693 1.7% *Estimate is on an accrual basis (allocations for sales through June) Note: FY 18-19: Prosperity received $415,000 in late sales tax payments for 2q19 which inflated results for this fiscal year.

FY 19-20: $123,000 of fuel-service stations missing payments are recovered in 4q19. New restaurant that opened in October is included in forecast.

Supreme Court ruling regarding the ‘Wayfair’ decision occurred in 2018. California passed legislative enactment - AB147 - in 2019. CDTFA implemented ‘Wayfair’ decision effective April 1, 2019. Forecast for State and County Pools reflects new taxes from out of state retailers, including those whose use and transactions taxes are collected and remitted by marketplace facilitators (e.g. Etsy).

CONFIDENTIAL INFORMATION - DO NOT COPY OR DISTRIBUTE WITHOUT AUTHORIZATION 2/22/2020 11:32 AM HdL · 909.861.4335 · www.hdlcompanies.com Prepared: 2/22/20 By: knn Delivering Revenue, Insight and Efficiency
to Local Government Since 1983
HdL provides relevant information and analyses on the economic forces affecting California’s local government agencies. In addition, HdL’s Revenue Enhancement and Economic Development Services help clients to maximize revenues.

HdL serves over 500 cities, counties and special districts in California and across the nation.

CALIFORNIA

FORECAST

SALES TAX TRENDS

AND ECONOMIC

DRIVERS
JANUARY 2020
Half Dome, Yosemite National Park
HDL CONSENSUS FORECAST – JANUARY 2020

STATEWIDE SALES TAX TRENDS
Autos/Transportation -1.5% | 0.3%
Auto and transportation receipts fell this quarter for the first time since the end of the Great Recession, but this deterioration was largely the result of an aberration rather than a symptom of economic decline. The anomaly was caused by the fulfillment of a large backlog of orders for a recently released model by an emerging vehicle manufacturer, which spiked results in the third and fourth quarters of last year. Results are otherwise expected to be flat to slightly down over the next year. Sales activity will be negatively impacted by the high price of today’s vehicles but sustained by record manufacturer incentives.

Building/Construction 1.6% | 2.1%
As the quantity of permits issued for residential and commercial developments continues to decline, the value of permitted projects is beginning to drop as well. Meanwhile, prices for materials are rising but the lack of demand for lumber is a drag against the volume of total sales. The good news is that there are plenty of permitted projects left to be built since construction timelines have been extended from the lack of available workforce. Infrastructure projects are expected to keep construction crews busy for some time. Overall, this sector will reflect reasonable activity, however, tax gains will be sluggish through the 2020-21 fiscal year.

Business/Industry 2.4% | 1.8%
Labor shortages and ongoing uncertainty over trade and tariff policies appear to be slowing capital investment decisions and new orders.

California’s high-tech service economy is expected to do better than the country as a whole with most analysts predicting more modest growth in procurement of equipment and supplies to support healthcare, food processing, logistics/warehouse operations and information/data technology. Much of the group’s projected gain is related to the acceleration of online shopping which shifts consumer retail tax revenue from brick and mortar stores to industrial zoned logistics centers. Minimal growth and some declines are expected across other categories.

Food/Drugs 1.9% | 1.5%
Customers routinely express the desire to shop locally. Grocery chains are meeting this demand by establishing same day deliveries for online alcohol purchases and partnering with companies to establish micro-fulfillment centers. Pharmacies, also sensitive to purchaser preferences, are embracing technology in various ways.

Artificial intelligence is being used more to create drugs while specialty medication and 3-D printed prescriptions become more common. Recent healthcare megamergers will impact this industry in 2020 and beyond. Taxes from this group will also grow as more cannabis businesses are licensed and become operational at the local level.

Fuel/Service Stations 1.0% | 1.0%
Higher gas prices in California due to refinery issues ahead of the holiday shopping period may push consumers to
reprioritize spending. Should supply remain tight into the spring of 2020, future summer fuel pricing could reach
levels not seen since 2014 when crude was over $100/
barrel. Currently, global crude oil appears stable, however, tension in the Middle East remains and OPEC appears
ready to reduce production output levels, both of which will increase future cost per barrel.

General Consumer Goods -0.1% |-0.4%
As retailers invest in customer engagement through social media platforms and omnichannel capabilities, they are
leveraging mobile technology to drive buyers into physical stores. Greater use of smartphones will improve buyonline-pickup-in-store (BOPIS) services which can influence additional in-store purchases. Changes in consumer
attitudes by younger shoppers are fueling the rise of
recommence. Off-price or discount shopping is still a major trend, but the resale market is expected to double its size in the next five years. Low unemployment and solid wage growth are good indicators although in-store sales should stay flat or dip moving into 2020.

Restaurants/Hotels 2.5% | 2.1%
Restaurant traffic has remained sluggish as low
unemployment is making hiring and retention extremely
difficult while food service options intensify competition within categories. Restaurant operators increase menu
prices as labor costs and lease rates continue to rise. In the short term, the rising menu prices offset the slowing traffic stabilizing restaurant sales tax revenue.

State and County Pools 12.4% | 6.5%
Business to business plus consumer spending on out-ofstate merchandise will surge as companies expand digital investments while managing shipping wars, data privacy
and logistic challenges. This segment is expected to stay strong and outpace all other traditional sales tax groups without letting up. Early results from the Wayfair decision implementation, which launched in the second quarter
of 2019 under AB147, added new revenues at the State
and local level. The marketplace facilitator phase started October 1st; current and next year forecasting comprises Wayfair’s total impact on anticipated use taxes distributed through the countywide pools.
2019/20 | 2020/21
HdL Companies | hdlcompanies.com
Proposition 172 projections vary from statewide Bradley-Burns calculations due to the state’s utilization of differing collection periods in its allocation to counties. HdL forecasts a statewide increase of 3.51% for Fiscal Year 2019/2020 and a gain of 1.44% in 2020/2021.

TOTAL 2.4% | 1.8%
2019/20 | 2020/21

NATIONAL AND STATEWIDE

ECONOMIC DRIVERS
Beacon Economics | BeaconEcon.com
U.S. Real GDP Growth 2.3% | 2.0%
What is most notable about current GDP data is just how steady growth has been despite all the frantic headlines.

U.S. GDP growth was 2.8% in 2017, 2.5% in 2018, and has averaged 2.4% for the first three quarters of 2019. Throughout this entire period consumer spending has been the primary driver of growth and that spending is now growing at roughly the same pace as U.S. GDP. Much of the overall confidence surrounding the ongoing health of the U.S. economy sits with the consumer. The one weak spot in the nation’s GDP data in 2019 was in business investment, although spending is down in that area for a number of specific reasons, but not too many general ones. Weak export data has played a role in slowing investment but the overall impact of the trade war with China has been highly overstated. The biggest issue for U.S. exports isn’t China, but rather a U.S. dollar that hasn’t been this expensive in global currency markets since 2002. Alongside a weak global economy, the dollar’s value actually illustrates the resilience of the U.S. economy overall.

U.S. Unemployment Rate 3.7% | 3.8%
What will not make negative headlines is the actual health of the United States economy. Pessimistic press coverage and punditry aside, the sum total of indicators for the year show that the U.S. economy is continuing to grow at the same steady rate that has now become the hallmark of the longest expansion on record. The health of the consumer and, therefore, the growth of the economy is being supported by record tight labor markets. The U.S. unemployment rate fell to 3.6% in the latest quarterly read, and has trended below the national jobs opening rate for two years. Competition for scarce labor resources has led many workers to receive a significant increase in earnings, and a growing share of national income. In 2014, compensation for employees was 60% of national income compared to 63% in 2019.

CA Total Nonfarm 1.7% | 1.4%
Employment Growth
Since October 2018, California’s economy has added 308,000 jobs, which is equivalent to a 1.8% year-over-year increase, exceeding the nation’s growth rate of 1.4% over the same period. This rate of growth is well above the state’s long-term employment growth rate, which has averaged 1.2% per year since 1991. Within the state, we see considerable variation in job growth rates by region. Perhaps the most impressive performance within the state occurred in the San Francisco Bay Area. Together, San Francisco, San Jose, and Oakland added jobs at a rate of 3.0% and accounted for one-third of California’s job growth over the past year. Fully 40% of the state’s job growth over the past year was concentrated in just two sectors: Health Care and Social Assistance and Leisure and Hospitality. Secular trends, such as a growing elderly population, account for growth in Health Care and Social Assistance employment, while growth in Leisure and Hospitality employment reflects underlying strength in the health of the consumer. The more confident consumers feel, the more likely they are to travel or dine at a restaurant.

CA Unemployment Rate 4.2% | 4.1%
Despite a nagging perception that there are murky clouds on the horizon, California’s economy reached a number of significant milestones in the most recent quarter. The state’s unemployment rate dipped to 3.9%, which represents a new record low – all while employment and wages reach all-time highs. The longer the current expansion persists, the closer we are to the next recession, but business cycles do not die of old age, and at present, there are few signs of a slowdown in the state’s economy.

CA Median Existing $488,900 | $509,500
Home Price
Home price growth has shown some signs of exhaustion over the past year. The median price for a single-family home in California grew 2.2% over this period, which when adjusted for inflation, means that price growth has effectively been flat.

Following the run up in prices in recent years, such a slowdown is not surprising; after all, when the median home price in a place like San Francisco stands at $1.4 million, the room for sustained price inflation is limited, no matter the strength of the local economy. To be sure, lower interest rates should spur home price growth in the state, but it’s unrealistic to expect the rate of growth we’ve seen in recent years to continue.

CA Residential 111,310 | 124,150
Building Permits
The issue of home building permits is a cause for concern.

The supply of building permits peaked in the first quarter of 2018, and permit growth turned negative in the third quarter of that year. This growth has remained negative throughout 2019. Constrained housing supply will continue to place upward pressure on home prices and could also limit growth of the state’s labor force. At least at the national level, the third quarter saw residential investments contribute to overall growth. Hopefully this continues and materializes within California sooner rather than later.
2019/20 | 2020/21
Beacon Economics
Southern California Office
5777 West Century Boulevard, Suite 895
Los Angeles, CA 90045
Telephone: 310.571.3399
Fax: 424.646.4660
Beacon Economics has proven to be one of the most thorough and accurate economic research/analytical forecasting firms in the country. Their evaluation of the key drivers impacting local economies and tax revenues provides additional
perspective to HdL’s quarterly consensus updates. The
collaboration and sharing of information between Beacon and HdL helps both companies enhance the accuracy of the work that they perform for their respective clients.

HdL Companies
120 S. State College Blvd., Suite 200
Brea, CA 92821
Telephone: 714.879.5000 • 888.861.0220
Fax: 909.861.7726
California’s allocation data trails actual sales activity by three to six months. HdL compensates for the lack of current
information by reviewing the latest reports, statistics and perspectives from fifty or more economists, analysts and trade associations to reach a consensus on probable trends for coming quarters. The forecast is used to help project revenues based on statewide formulas and for reference
in tailoring sales tax estimates appropriate to each client’s specific demographics, tax base and regional trends.
714.879.5000 | hdlcompanies.com
Sales Tax Update
In Brief
Top 25 Producers
In Alphabetical Order
www.hdlcompanies.com | 888.861.0220
Q32019
Vallejo
Vallejo’s receipts from July
through September were 5.1% below the third sales period in 2018. $119,000 of current missing payments combined with last years delayed disbursements of $98,000
skewed the cash comparisons. Excluding reporting aberrations, actual sales as reflected in the adjacent graph were up 5.3%.

Newer merchants boosted quick
service restaurants and service stations. Maturation of the cannabis establishments yielded 17% growth
from this sector.

First time returns by out-of-state retailers generated new taxes under the ‘Wayfair’ decision; when combined with the rise in online buying behavior, countywide pool allocations experienced 20% growth.

Beyond closures, new vehicle
dealers saw sales slump. Declines
in foot traffic pulled specialty, family
apparel and electronics stores into
negative territory.

Adjusted for State computer issues
over the past year and accounting
aberrations, Measure V collections
were $4,182,062, a brisk 7% gain
over year-ago tallies.

Net of aberrations, taxable sales
for all of Solano County grew 4.4%
over the comparable time period;
the Bay Area was down 0.5%.

City of Vallejo
Fourth Quarter Receipts for Third Quarter Sales (July - September 2019) Published by HdL Companies in Winter 2020
Arco
Au Energy Shell
Station
Autolinx
Avery Greene
Honda
Best Buy
Costco
Foster Lumber Yard
G & M Oil
Home Depot
Kohls
Lowes
Marshalls
McDonalds
N & M Market
Ross
Safeway
Safeway Fuel
Six Flags Discovery
Kingdom
Target
Team Chevrolet
Cadillac Mazda
Hyundai
Toyota Vallejo
Tributary Point Arco
Vallejo Gas & Shop
Vallejo Holistic
Health Center
Vallejo Nissan
$0
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000
$800,000

SALES TAX BY MAJOR BUSINESS GROUP
3rd Quarter 2018*
3rd Quarter 2019*
General
Consumer
Goods
Autos
and
Transportation
Restaurants
and
Hotels
County
and State
Pools
Fuel and
Service
Stations
Building
and
Construction
Food
and
Drugs
Business
and
Industry
*Allocation aberrations have been adjusted to reflect sales activity $4,252,881 $4,037,618
1,921 1,382
566,811 582,427
$3,684,149 $3,453,809
2018-19 2019-20
Point-of-Sale
County Pool
State Pool
Gross Receipts

REVENUE COMPARISON
One Quarter – Fiscal Year To Date (Q3)
Measure V $4,411,865 $4,341,999
NOTES
Q3 2019 City of Vallejo Sales Tax Update
$0
$1,000
$2,000
$3,000
$4,000
SALES PER CAPITA*
Vallejo
Q3
16 Q3
19 Q3
17 Q3
18 County California
*Allocation aberrations have been adjusted to reflect sales activity 20%
Cons.Goods
18%
Autos/Trans.
15%
Restaurants
14%
Pools
12%
Fuel
9%
Building
8%
Food/Drug
Bus./Ind.

Vallejo This Quarter*

REVENUE BY BUSINESS GROUP
*Allocation aberrations have been adjusted to reflect sales activity 3%
Q3 '19*
Vallejo
VALLEJO TOP 15 BUSINESS TYPES**
Business Type Change Change Change
*In thousands of dollars County HdL State
Automotive Supply Stores 61.6 6.9% 8.7% 3.8%
Building Materials 277.1 -4.8% 0.5% 0.1%
Cannabis Related 90.8 17.0% 23.8% 38.1%
Casual Dining 182.4 3.4% -1.3% 2.4%
Convenience Stores/Liquor 66.0 4.2% 1.1% 1.1%
Discount Dept Stores — CONFIDENTIA 359.5 3.4%L — 2.8% 2.8% Electronics/Appliance Stores 100.8 -1.7% -4.2% -3.1%
Family Apparel 78.8 -1.1% -2.7% 1.5%
Grocery Stores 133.0 4.4% 4.0% 1.8%
Leisure/Entertainment — CONFIDENTIA 114.6 -11.4%L — -9.0% 7.2% New Motor Vehicle Dealers 434.0 -2.9% 0.6% -7.2%
Quick-Service Restaurants 260.0 8.6% 2.5% 2.6%
Service Stations 483.0 10.3% 1.0% -1.5%
Specialty Stores 46.9 -1.7% -2.5% 0.3%
Used Automotive Dealers 107.6 3.2% -1.8% 2.1%

3.2% 2.8% 0.2%

21.2%

5.4%
3,374.5
544.5
3,919.0
Total All Accounts
County & State Pool Allocation
Gross Receipts

16.7% 14.9%

4.5% 2.3%
** Accounting aberrations such as late payments, fund transfers, and audit adjustments have been adjusted to reflect the quarter in which the sales occurred.

Statewide Results
The local one-cent share of statewide
sales and use tax from sales occurring
July through September was 2.2% higher than the summer quarter of 2018 after adjusting for accounting anomalies.

The bulk of the increase came from the
countywide use tax allocation pools and
is due to the acceleration in online shopping where a large volume of the orders are shipped from out-of-state.

Online shopping also produced gains
in the business-industrial group with
in-state industrial zoned logistics centers filling orders previously taken by brick and mortar retailers. Purchases
to support healthcare, food processing,
logistics/warehouse operations and information/data technology also helped offset declines in other business-related
categories.

With the exception of some discount
and value-oriented retail, most categories
of general consumer goods were down.

New cannabis related start-ups offset
declines in the food and drug group
while a softening in building-construction receipts was consistent with recent declines in the volume and value of new
building permit issuances.

Overall growth in restaurant receipts
continued to soften with a shift toward
lower cost dining establishments and
takeout meal options. Reports of labor
shortages and the impact of homelessness on customer traffic in metropolitan areas were reportedly factors in the decline in tax revenues from higher price, fine dining establishments.

Despite a slight uptick in used auto and
auto lease receipts, the auto related group
was significantly down due to a drop
in new car and RV sales. Previously
propped up by a 23% subprime rated
customer base and six- and seven-year
financing, loan delinquencies have recently surged back to levels last seen in 2009.

Additional Tax Districts Approved
Voters approved eight of the nine sales
tax measures on the November 2019
ballot adding six new districts and extending two others.

This brings the total number of local transactions and use tax districts (TUT’s) to 325 with 62 that are levied countywide and 263 imposed by individual cities. The number of local
districts have close to tripled over the last
decade as agencies deal with rising costs
and service needs. TUT’s have been a
favorable option as visitors contribute to
the tax and a collection system is already
in place that minimizes administrative
and monitoring costs.

California’s basic rule is that the rate
for all local TUT’s combined, shall not
exceed 2.0% or a total of 9.25% including the state levy. However, the state legislature has authorized higher caps
in some jurisdictions with the highest
voter-approved, combined state/local
rate now at 10.5%.

Thirty-five or more additional local
TUT measures are currently being
considered for the March 2020 ballot.

Sales Tax Update
In Brief
Top 25 Producers
In Alphabetical Order
www.hdlcompanies.com | 888.861.0220
Q22019
Oakland
Oakland’s receipts from April
through June were 26.6% above the
second sales period in 2018. Cash
results reflected year-ago taxpayer
returns processing issues which delayed distributions to the City; consequently, current quarter comparisons are overinflated. Excluding all reporting aberrations, actual sales
were up 5.7%.

Comparisons in segments like service stations, grocery stores, plumbing/electrical suppliers and casual dining were more heavily impacted
by the late 2q18 allocations. Overall performance was superior to last year on an adjusted basis; activity
outpaced regional and State trends.

Transportation/rentals included
an unexpectedly large gain due to
sales of fleet equipment. With exceptions removed, new vehicle dealerships and contractors reported better returns.

Countywide pool allocations were
up; a combination of online buying
growth coupled with one time audit
revenues and account adjustments.

Missing payments for this quarter
adversely impacted building materials and leisure/entertainment.

Net of aberrations, taxable sales
for all of Alameda County grew

0.2% over the comparable time period; the Bay Area was up 1.9%.

City of Oakland
Third Quarter Receipts for Second Quarter Sales (April - June 2019) Published by HdL Companies in Fall 2019
Bay Area Rapid
Transit
Best Buy
Blaisdells Office
Supply Service
Chevron
Coliseum Lexus
Downtown Toyota/
Subaru
East Bay Restaurant
Supply
Economy Lumber
Enterprise Rent A
Car
Harborside Health
Center
Home Depot
Honda of Oakland
LN Curtis & Sons
Mercedes Benz of
Oakland
Oakland Coliseum
One Toyota of
Oakland
Pace Supply
Rainin Instrument
Rexel
Safeway
Southwest Jet Fuel
Swissport Fueling
Target
Walgreens
Westside Building
Material
$0
$400,000
$800,000
$1,200,000
$1,600,000
$2,000,000
$2,400,000
$2,800,000

SALES TAX BY MAJOR BUSINESS GROUP
2nd Quarter 2018
2nd Quarter 2019
Restaurants
and
Hotels
Autos
and
Transportation
County
and State
Pools
Business
and
Industry
Fuel and
Service
Stations
Building
and
Construction
General
Consumer
Goods
Food
and
Drugs
$54,369,557 $63,820,102
27,291 27,786
7,723,099 9,769,412
$46,619,167 $54,022,903
2017-18 2018-19
(2,718,478) (3,191,005)
$51,651,079 $60,629,097
Cty/Cnty Share
Net Receipts
Point-of-Sale
County Pool
State Pool
Gross Receipts

REVENUE COMPARISON
Four Quarters – Fiscal Year To Date (Q3 to Q2)
NOTES
Q2 2019 City of Oakland Sales Tax Update
$0
$2,000
$4,000
$6,000
$8,000

SALES PER CAPITA
Oakland
Q2
16 Q2
19 Q2
17 Q2
18 County California
17%
Restaurants
17%
Autos/Trans. 16%
Pools
12%
Bus./Ind.
10%
Fuel
10%
Building
9%
Cons.Goods 9%
Food/Drug
Oakland This Quarter

REVENUE BY BUSINESS GROUP
Q2 '19*
Oakland
OAKLAND TOP 15 BUSINESS TYPES
Business Type Change Change Change
*In thousands of dollars County HdL State
Building Materials 615.0 -3.7% 36.1% 34.1%
Cannabis Related 282.1 1.5% 22.0% 71.7%
Casual Dining 1,297.7 28.1% 25.3% 24.5%
Contractors 430.6 22.6% 16.6% 26.8%
Convenience Stores/Liquor 357.2 39.7% 17.1% 14.9%
Electronics/Appliance Stores 243.9 -1.6% 6.8% 7.0%
Grocery Stores 536.2 20.2% 19.2% 9.6%
Leisure/Entertainment 316.3 -23.2% 2.0% 16.4%
Light Industrial/Printers 384.0 47.1% 37.4% 51.3%
New Motor Vehicle Dealers 1,163.2 1.2% -18.0% 5.4%
Petroleum Prod/Equipment 365.4 8.6% 9.5% 15.3%
Plumbing/Electrical Supplies 401.9 64.6% 68.3% 28.9%
Quick-Service Restaurants 765.3 5.5% 19.8% 15.8%
Service Stations 1,241.7 92.0% 50.4% 51.4%
Transportation/Rentals 766.8 134.2% 44.0% -9.1%
-26.6%

26.6%

25.7% 17.6% 20.1%

31.3%

26.6%
13,182.1
2,573.0
15,755.1
(787.8)
14,967.3
Total All Accounts
County & State Pool Allocation
Gross Receipts
City/County Share
Net Receipts

22.9% 22.4%

18.5% 20.4%
California Overall
The local one percent share of California’s sales and use tax from April through June sales was 20.4% higher
than the same quarter in 2018. However, the actual gain came to 2.9% after factoring for online filing issues and accounting anomalies. Fiscal year 2018-19 ended with an increase of 3.6% over the
previous year after similarly adjusting
for reporting aberrations.

The quarter exhibited continuation
of a recent softening for most taxable
categories. Rising used car sales and
rentals helped offset what was otherwise, a generally flat quarter for the auto-transportation group. An acceleration in online shopping boosted receipts from county wide pools while
gains for brick and mortar stores were
limited to value-priced apparel, discount
department stores and jewelry.

Restaurant patronage appears to be
leveling with a shift toward lower cost
dining options that produced relatively modest gains for the group when compared to previous quarters. New
cannabis operations resulted in a small
rise in food and drug receipts.

A 2.5% gain in business-industrial sales
and use tax revenues came primarily
from online fulfillment centers, logistics and utility company purchases and ongoing investment in automation and
information technology. A similar rise
in receipts from the building-construction group was due to a variety of infrastructure and onetime special projects that offset declines in material purchases
for new home construction.

Marketplace Facilitator Act
Effective Oct. 1, 2019, companies such
as Amazon, eBay and Google who provide sales tax related services to other retailers are required to assume the obligation for collecting and remitting their client’s sales and use tax. The definition
of sales-related services includes payment
processing, inventory and shipping of
merchandise, order taking, providing
customer service, or assisting with returns and exchanges.

The Marketplace provision was part of
AB 147 which was adopted to implement California’s approach to the U.S.

Supreme Court decision in South Dakota v. Wayfair Inc.

AB 147 requires out-of-state retailers
with annual combined sales of $500,000
or more to now collect and remit this
state’s sales and use tax from its customers. Applying the $500,000 threshold to the sum total of all the third-party transactions that facilitators process for their clients, is hoped to produce moderate
gains in previously uncollected revenues
for the state, cities, counties and local
transaction tax districts.

Facilitator tax remittances from merchandise inventoried in California will be allocated to specific jurisdictions
while receipts from deliveries outside of
the state will be distributed via the pools.

Some facilitators have begun to collect
and remit taxes ahead of this deadline.

This is evidenced by new pool allocations and increases in direct allocations to certain jurisdictions.

BAY AREA

ACTUAL/ADJUSTED COMPARISON - BY COUNTY AND MAJOR INDUSTRY GROUP

ACTUAL RECEIPTS ADJUSTED FOR ECONOMIC DATA
3Q 2019 3Q 2018 % Change 3Q 2019 3Q 2018 % Change
Alameda County
Autos And Transportation 15,532,810 22,759,764 -31.8% 15,231,936 21,262,658 -28.4% Building And Construction 9,505,181 10,514,570 -9.6% 9,113,351 8,976,166 1.5% Business And Industry 15,821,463 18,903,957 -16.3% 15,582,426 15,640,790 -0.4% Food And Drugs 4,318,905 4,699,750 -8.1% 4,065,229 3,958,785 2.7% Fuel And Service Stations 5,955,050 7,158,722 -16.8% 5,841,854 6,136,063 -4.8% General Consumer Goods 14,248,436 17,164,450 -17.0% 14,026,810 14,173,731 -1.0% Restaurants And Hotels 10,332,515 11,071,519 -6.7% 9,865,527 9,830,728 0.4% Transfers & Unidentified 156,067 210,143 -25.7% 129,914 219,286 -40.8% County & State Pool 15,390,832 15,245,823 1.0% 14,904,787 12,695,130 17.4% 91,261,258 107,728,700 -15.3% 88,761,835 92,893,337 -4.4% Contra Costa County
Autos And Transportation 7,821,248 8,527,716 -8.3% 7,704,072 7,951,399 -3.1% Building And Construction 4,551,494 5,348,278 -14.9% 4,404,387 4,325,954 1.8% Business And Industry 4,546,372 5,662,682 -19.7% 4,464,993 4,293,868 4.0% Food And Drugs 2,941,881 3,109,143 -5.4% 2,767,396 2,686,560 3.0% Fuel And Service Stations 4,869,595 5,207,815 -6.5% 4,609,664 4,961,149 -7.1% General Consumer Goods 8,842,025 10,183,265 -13.2% 8,656,882 8,864,593 -2.3% Restaurants And Hotels 5,474,317 5,876,136 -6.8% 5,309,583 5,151,032 3.1% Transfers & Unidentified 71,909 24,406 194.6% 70,408 37,941 85.6% County & State Pool 8,847,647 8,255,625 7.2% 8,041,888 7,129,277 12.8% 47,966,487 52,195,065 -8.1% 46,029,273 45,401,773 1.4%
Marin County
Autos And Transportation 2,575,542 3,335,408 -22.8% 2,540,555 2,880,546 -11.8% Building And Construction 1,520,918 1,740,912 -12.6% 1,547,447 1,510,387 2.5% Business And Industry 453,871 1,206,195 -62.4% 792,450 942,561 -15.9% Food And Drugs 1,013,504 1,109,050 -8.6% 959,919 947,715 1.3% Fuel And Service Stations 1,057,940 1,140,868 -7.3% 1,028,722 1,032,062 -0.3% General Consumer Goods 3,049,321 3,337,650 -8.6% 2,835,456 2,895,885 -2.1% Restaurants And Hotels 1,939,186 2,126,933 -8.8% 1,914,777 1,943,999 -1.5% Transfers & Unidentified 36,507 23,657 54.3% 18,834 14,366 31.1% County & State Pool 2,478,020 2,572,021 -3.7% 2,372,172 2,031,115 16.8% 14,124,809 16,592,694 -14.9% 14,010,332 14,198,636 -1.3% Napa County
Autos And Transportation 678,606 718,798 -5.6% 673,645 688,419 -2.1% Building And Construction 1,011,260 1,083,312 -6.7% 971,889 1,028,388 -5.5% Business And Industry 2,687,782 2,812,735 -4.4% 2,564,356 2,522,180 1.7% Food And Drugs 491,915 553,014 -11.0% 473,174 459,310 3.0% Fuel And Service Stations 644,494 781,517 -17.5% 646,258 651,471 -0.8% General Consumer Goods 1,156,695 1,334,285 -13.3% 1,106,878 1,109,659 -0.3% Restaurants And Hotels 2,064,908 2,022,335 2.1% 2,026,726 1,926,071 5.2% Transfers & Unidentified 8,306 4,325 92.1% 3,991 5,970 -33.2% County & State Pool 1,185,091 1,441,393 -17.8% 1,271,020 1,142,653 11.2% 9,929,058 10,751,714 -7.7% 9,737,937 9,534,122 2.1%
San Francisco County
Autos And Transportation 2,708,147 3,338,527 -18.9% 2,561,881 2,916,843 -12.2% Building And Construction 3,651,678 3,679,024 -0.7% 3,426,757 3,170,098 8.1% Business And Industry 5,031,888 8,031,602 -37.3% 5,104,617 6,769,109 -24.6% Food And Drugs 3,242,796 3,720,227 -12.8% 3,037,221 3,082,850 -1.5% Fuel And Service Stations 2,413,076 2,301,545 4.8% 2,335,403 2,591,423 -9.9% General Consumer Goods 11,302,233 13,336,135 -15.3% 10,947,448 11,159,421 -1.9% Restaurants And Hotels 14,971,628 15,493,962 -3.4% 14,160,420 14,370,088 -1.5% Transfers & Unidentified 149,232 105,853 41.0% 113,415 96,333 17.7% County & State Pool 11,031,201 10,744,036 2.7% 10,393,900 8,447,100 23.0% 54,501,879 60,750,911 -10.3% 52,081,062 52,603,265 -1.0% San Mateo County
Autos And Transportation 8,921,584 8,848,792 0.8% 8,320,518 8,577,933 -3.0% Building And Construction 4,211,997 5,093,221 -17.3% 4,278,358 4,232,734 1.1% Business And Industry 4,771,571 5,768,547 -17.3% 4,802,365 4,230,604 13.5% Food And Drugs 2,319,649 2,369,544 -2.1% 2,170,552 2,065,059 5.1% Fuel And Service Stations 3,625,114 3,815,762 -5.0% 3,713,818 3,889,851 -4.5% General Consumer Goods 7,877,674 9,376,580 -16.0% 7,695,989 7,818,589 -1.6% Restaurants And Hotels 7,009,279 7,559,117 -7.3% 6,877,755 6,586,068 4.4% Transfers & Unidentified 86,507 38,769 123.1% 60,545 25,793 134.7% County & State Pool 9,130,057 9,194,957 -0.7% 8,692,691 7,669,989 13.3% 47,953,431 52,065,289 -7.9% 46,612,590 45,096,622 3.4%
02/28/2020 10:21 am Page 1 of 2

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BAY AREA

ACTUAL/ADJUSTED COMPARISON - BY COUNTY AND MAJOR INDUSTRY GROUP

ACTUAL RECEIPTS ADJUSTED FOR ECONOMIC DATA
3Q 2019 3Q 2018 % Change 3Q 2019 3Q 2018 % Change
Santa Clara County
Autos And Transportation 16,394,064 19,117,397 -14.2% 16,245,733 18,040,588 -9.9% Building And Construction 8,866,229 10,652,734 -16.8% 8,845,095 8,949,489 -1.2% Business And Industry 28,936,814 33,753,600 -14.3% 26,963,503 28,454,400 -5.2% Food And Drugs 4,619,002 5,158,996 -10.5% 4,461,029 4,324,672 3.2% Fuel And Service Stations 6,736,535 8,157,893 -17.4% 6,596,577 6,813,025 -3.2% General Consumer Goods 18,780,746 21,628,366 -13.2% 18,065,517 18,785,217 -3.8% Restaurants And Hotels 15,130,249 15,179,721 -0.3% 14,301,887 13,858,117 3.2% Transfers & Unidentified 535,516 -194,127 375.9% 262,363 152,774 71.7% County & State Pool 19,956,454 22,379,049 -10.8% 21,341,054 18,706,305 14.1% 119,955,609 135,833,630 -11.7% 117,082,759 118,084,587 -0.8% Solano County
Autos And Transportation 3,415,219 3,894,137 -12.3% 3,374,331 3,309,798 1.9% Building And Construction 2,023,121 2,181,964 -7.3% 1,894,204 1,892,482 0.1% Business And Industry 3,956,940 4,115,052 -3.8% 3,921,164 3,604,813 8.8% Food And Drugs 917,563 892,093 2.9% 876,633 837,105 4.7% Fuel And Service Stations 2,161,452 2,742,484 -21.2% 2,146,429 2,157,424 -0.5% General Consumer Goods 3,991,634 4,495,845 -11.2% 3,943,452 3,871,974 1.8% Restaurants And Hotels 2,153,123 2,312,181 -6.9% 2,077,855 2,067,708 0.5% Transfers & Unidentified 4,795 -4,953 196.8% 5,724 2,579 121.9% County & State Pool 3,148,049 3,184,521 -1.1% 2,936,162 2,516,547 16.7% 21,771,896 23,813,324 -8.6% 21,175,954 20,260,431 4.5%
Sonoma County
Autos And Transportation 3,909,615 4,670,524 -16.3% 4,075,854 4,101,428 -0.6% Building And Construction 3,868,296 4,134,391 -6.4% 3,756,878 3,504,861 7.2% Business And Industry 3,706,482 5,152,600 -28.1% 3,646,772 3,978,360 -8.3% Food And Drugs 1,891,754 1,958,867 -3.4% 1,829,010 1,732,813 5.6% Fuel And Service Stations 1,931,239 2,454,662 -21.3% 2,091,715 2,088,381 0.2% General Consumer Goods 4,263,147 5,238,896 -18.6% 4,460,652 4,609,296 -3.2% Restaurants And Hotels 3,144,468 3,477,315 -9.6% 3,176,155 3,152,441 0.8% Transfers & Unidentified 46,111 45,011 2.4% 32,269 23,588 36.8% County & State Pool 3,817,119 3,746,188 1.9% 3,646,034 3,195,420 14.1% 26,578,230 30,878,454 -13.9% 26,715,339 26,386,587 1.2% Bay Area Totals
Autos And Transportation
Building And Construction
Business And Industry
Food And Drugs
Fuel And Service Stations
General Consumer Goods
Restaurants And Hotels
Transfers & Unidentified
61,956,835 75,211,064 60,728,526 69,729,613
39,210,174 44,428,407 38,238,366 37,590,559
69,913,181 85,406,969 67,842,647 70,436,686
21,756,968 23,570,683 20,640,161 20,094,871
29,394,495 33,761,269 29,010,440 30,320,848
73,511,912 86,095,472 71,739,085 73,288,365
62,219,672 65,119,219 59,710,685 58,886,252
1,094,950 253,084 697,463 578,631
-17.6% -12.9%
-11.7% 1.7%
-18.1% -3.7%
-7.7% 2.7%
-12.9% -4.3%
-14.6% -2.1%
-4.5% 1.4%
332.6% 20.5%
434,042,657 490,609,780 -11.5% 422,207,080 424,459,360 -0.5% County & State Pools 74,984,470 76,763,614 -2.3% 73,599,706 63,533,535 15.8% 1,841,776,030 2,021,284,604 1,780,758,245 1,741,282,692 HdL State Totals
-8.9% 2.3%
Autos And Transportation
Building And Construction
Business And Industry
Food And Drugs
Fuel And Service Stations
General Consumer Goods
Restaurants And Hotels
Transfers & Unidentified
282,011,790 316,207,426 276,412,623 286,895,195
162,973,567 187,152,917 158,585,041 156,021,588
259,291,496 295,365,413 248,674,531 242,728,040
93,769,485 97,038,370 88,329,938 85,710,523
170,909,341 202,040,467 164,549,898 167,511,380
337,230,865 382,009,085 327,789,644 328,807,743
248,015,671 258,179,976 238,784,313 232,731,990
3,305,666 880,339 2,509,535 1,487,527
-10.8% -3.7%
-12.9% 1.6%
-12.2% 2.4%
-3.4% 3.1%
-15.4% -1.8%
-11.7% -0.3%
-3.9% 2.6%
275.5% 68.7%
County & State Pools 284,268,150 282,410,612 0.7% 275,122,722 239,388,705 14.9% *
02/28/2020 10:21 am Page 2 of 2

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CITY OF 35263(5,7<
REGIONAL RETAIL CENTERS - 13 QUARTER HISTORY
Geo areas Sales Tax by Geographic areas
$0K
$500K
$1,000K
$1,500K
$2,000K
$2,500K
$3,000K
$3,500K
$4,000K
$4,500K
$5,000K
3Q
15 4Q
15 1Q
16 2Q
16 3Q
16 4Q
16 1Q
17 2Q
17 3Q
17 4Q
17 1Q
18 2Q
18 3Q
18 Count: 268
Washington Centre
Count: 275
Pelican Cove
Count: 385
Gotham Village
Count: 402
Fashion Island
Count: 227
Coley Square
Count: 257
The Follies
Periods shown reflect the period in which the sales occurred - Point of Sale 01/20/2019 5:21 pm HdL • 909.861.4335 • www.hdlcompanies.com

CONFIDENTIAL INFORMATION - DO NOT COPY OR DISTRIBUTE WITHOUT AUTHORIZATION

CITY OF PROSPERITY
PER CAPITA SALES TAX SURPLUS/GAP COMPARISON - 4 QUARTERS ENDING 3Q 2018 ADJUSTED FOR

ECONOMIC DATA
($400) $0 $400 $800 $1,200 $1,600 $2,000 $2,400
($400) $0 $400 $800 $1,200 $1,600 $2,000 $2,400
Discount Dept Stores
Casual Dining
Quick-Service Restaurants
Sporting Goods/Bike Stores
Lumber/Building Materials
Drug Stores
Variety Stores
Auto Repair Shops
Specialty Stores
Automotive Supply Stores
Men's Apparel
Fast-Casual Restaurants
Art/Gift/Novelty Stores
Convenience Stores/Liquor
Jewelry Stores
Office Supplies/Furniture
Shoe Stores
Electronics/Appliance Stores
Women's Apparel
Department Stores
Grocery Stores
Family Apparel
Service Stations
Fine Dining
Home Furnishings
Retail Category
The above graph compares per capita sales tax generated from targeted retail categories against countywide averages. A retail surplus suggests the community is capturing its local market for that category of goods plus attracting shoppers from outside the jurisdiction. A retail gap suggests the possibility that residents may have a greater demand for products in the specific category than is being satisfied by local businesses. The information is provided only as a starting point in identifying potential sources of sales tax loss and should not automatically be interpreted as an expansion or leveraging opportunity without more detailed analysis and assessment. 01/24/2019 9:03 am HdL • 909.861.4335 • www.hdlcompanies.com Page 1 of 2

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CITY OF PROSPERITY
PER CAPITA SALES TAX SURPLUS/GAP COMPARISON - 4 QUARTERS ENDING 3Q 2018
Retail Category Per Cap Sales
Capture (+) or Gap (-)
Sales Tax
Deviation
Typical Sales Per
Sq Ft by Retail Type
Approx Sq Ft to
Close Gap
Discount Dept Stores $2,087 $1,808,447 $475 n/a
Casual Dining 414 358,611 525 n/a
Quick-Service Restaurants 128 110,567 500 n/a
Sporting Goods/Bike Stores 111 96,103 225 n/a
Lumber/Building Materials 46 40,247 300 n/a
Drug Stores 28 24,622 350 n/a
Variety Stores 20 17,671 100 n/a
Auto Repair Shops 18 15,548 215 n/a
Specialty Stores 14 12,454 175 n/a
Automotive Supply Stores 10 9,004 275 n/a
Men's Apparel (19) (16,614) 225 7,000
Fast-Casual Restaurants (25) (22,004) 520 4,000
Art/Gift/Novelty Stores (61) (52,597) 150 35,000
Convenience Stores/Liquor (63) (54,920) 375 15,000
Jewelry Stores (80) (69,271) 500 14,000
Office Supplies/Furniture (83) (71,906) 225 32,000
Shoe Stores (96) (83,441) 200 42,000
Electronics/Appliance Stores (137) (118,306) 500 24,000 Women's Apparel (138) (119,693) 375 32,000
Department Stores (143) (123,766) 175 71,000
Grocery Stores (175) (151,308) 110 138,000
Family Apparel (200) (173,356) 375 46,000
Service Stations (230) (199,659) n/a n/a
Fine Dining (236) (204,625) 800 26,000
Home Furnishings (256) (221,819) 175 127,000
Average sales per square foot are based on HdL's overview of average statewide chain store sales. The square footage needed to close the gap is only on approximation and specfic demand will vary with regional and local market conditions and individual retailers. 01/24/2019 9:04 am HdL • 909.861.4335 • www.hdlcompanies.com Page 2 of 2

CONFIDENTIAL INFORMATION - DO NOT COPY OR DISTRIBUTE WITHOUT AUTHORIZATION ECONSolutions collaborates with City staff, developers, and local real estate professionals to bring increased
economic activity to your community.

Expanding Retailers and Retail Stores Sales Estimate

CALIFORNIA

RETAIL ANALYTICS
2019
714.879.5000 | hdlcompanies.com

BUSINESS NAME

LEASABLE

SQ FT IN
000'S
EST.

ANNUAL
TAX IN
$000'S
SITE

PREFERENCES

EXPANSION
AREA

CONTACT
NAME

CONTACT

INFORMATION

GENERAL RETAIL
Ace Hardware 8-12 $11-32 2, 4, 13, 14 CA - Northern Robert Nelson [email protected] Ace Hardware 8-12 $11-35 2, 4, 13, 14 CA - Southern Paul Overton [email protected] Aki-Home 22-35 $17-33 3, 4, 9 CA Shumpei Yoshizawa [email protected] Ann Taylor 4-7.5 $14-30 6, 7, 9, 11, 13 CA Whitney Welch [email protected] Apple Stores 1-6 $247-472 6, 7, 8 CA Chris Morse [email protected] Athleta 2-5 $20-42 11 CA Rachel Rosenberg [email protected] AutoZone 6.5-8 $14-23 2, 3, 4, 13, 14 CA - Northern Michael Chastain [email protected] AutoZone 6.5-8 $14-23 2, 3, 4, 13, 14 CA - Southern Steven King [email protected] Big 5 Sporting Goods 10-12 $21-30 2, 3, 4, 6, 13 CA Jim Berlin [email protected] Big Lots 30-35 $26-36 2, 4, 13, 14 CA Joshua Nanberg [email protected] Bob’s Discount Furniture 25-60 NA 8, 4, 2, 13, 14 CA Jim Reuter [email protected] Bowlero 35-40 NA 4, 3, 9 Nationwide David Hochberg [email protected] Burlington 40-50 $85-123 2, 3, 4, 13, 14 CA - Northern Eric Corpuz [email protected] Burlington 40-50 $85-123 2, 3, 4, 13, 14 CA - Southern Chris Kiehler [email protected] Carter’s 3.5-7 $12-19 2, 9, 11, 13, 14 CA - Southern Marc Klein [email protected] Catherine’s 4-5 $4-7 3, 9, 13, 14 CA - Southern Paul Bartlett [email protected] Costco 115-150 $1,000-1,400M4, 13 CA - Northern Mike Dobrota [email protected] Costco 115-150 $1,000-1,400M4, 13 CA - Southern Steve McArthur [email protected] dd’s Discounts 20-25 $72-105 2, 8, 13, 14 CA - Southern Jack Toth [email protected] Dick’s Sporting Goods 40-60 $73-109 3, 4, 9, 13, 14 CA Kristen Holst [email protected] Dollar General 9-12 $11-17 2, 4, 8, 13, 14 CA - Northern David Fritz [email protected] Dollar General 9-12 $11-17 2, 4, 8, 13, 14 CA - Southern Randy Wilson [email protected] Dollar Tree/Family Dollar 8-12/7.8-10 $11-16 2, 4, 8, 13, 14 CA - Northern Trace Johnson [email protected] Dollar Tree/Family Dollar 8-12/7.8-10 $11-16 2, 4, 8, 13, 14 CA - Southern Jeff Forman [email protected] Dress Barn 6.5-8 $8-14 2, 3, 9, 13, 14 CA Richard Sosnovy [email protected] Five Below 8-10 $18-27 3, 6, 7, 9, 11, 14 Nationwide Zach Minteer [email protected] Forever 21/F21 Red 20-100/12-20 $25-50/$34-47 2, 3, 6, 7, 8, 9, 11, 13, 14 CA - Northern Matt Kircher [email protected] Forever 21/F21 Red 20-100/12-20 $25-50/$34-47 2, 3, 6, 7, 8, 9, 11, 13, 14 CA - Southern Mike Rielly [email protected] Fossil 1.5-5 $2-42 3, 6, 7, 8, 9, 13, 14 Nationwide Bob Higgins [email protected] Francesca’s 1.2-1.4 $4-6 3, 6, 7, 8, 9 Nationwide Mike Stanley [email protected] GameStop 1.5-2 $12-15 2, 3, 6, 7, 8, 11, 13, 14 CA Bree Russell [email protected] Guitar Center 9-20 $25-66 2, 3, 4, 13, 14 Nationwide Roberto Guerrero [email protected] H&M 15-40 $37-58 2, 6, 8, 13, 14 Nationwide Kai Aejmelaeus [email protected] Harbor Freight Tools 13-18 $39-$60 2, 3, 4, 9, 13, 14 CA Trey Feiler [email protected] Hibbett Sports 5-6 $5-8 2, 3, 4, 6, 9, 13 CA David Nichols [email protected] Hobby Lobby 40-60 $53-77 3, 4, 13 Nationwide Scott Nelson [email protected] HomeGoods 24-28 $70-$100 4, 9, 13, 14 CA Deborah Holmsen [email protected] Indochino 2-3 NA 8, 9 CA Dean Handspiker [email protected] Justice 4-5 $10-14 2, 6, 9, 11, 13, 14 CA John Beaney [email protected] Kirkland’s Home 6.5-10 $12-16 2, 4, 11, 13, 14 Nationwide Sarah Weaver Dickerson [email protected] Lane Bryant 5-7 $7-12 3, 6, 7, 9 CA - Northern Jason Gallelli [email protected] Lane Bryant 5-7 $7-12 3, 6, 7, 9 CA - Southern Paul Bartlett [email protected] Les Schwab Tire Center 10-15 $17-30 4 CA Rona Dhruv [email protected] Lululemon 3-3.2 $30-60 8, 9 Nationwide Wynn Spencer [email protected] Marshalls 20-35 $96-122 4, 9, 13, 14 CA Deborah Holmsen [email protected] Nordstrom Rack 25-40 $190-160 3, 6 CA Tony Sekora [email protected] Off Broadway Shoe Warehouse 18-20 $16-49 2, 6, 11, 13, 14 CA Kent Gonnerman [email protected] Party City 10-15 $6-17 2, 3, 4, 13, 14 CA Dane Gladden [email protected] Petco 10-15 $19-29 3, 4, 13, 14 CA Bill Engen [email protected] Rack Room Shoes 5-7 $14-21 2, 3, 6, 7, 9, 11, 13 Nationwide Rick Brown [email protected] Ross Dress for Less 25-30 $80-$121 2, 4, 6, 13 CA Jack Toth [email protected] Sally Beauty 1.2-1.8 $6-9 2, 3, 9, 13 CA Cathy Richards [email protected] Sephora 5.2-5.5 $60-103 2, 6, 9, 13, 14 Nationwide David Hart [email protected] Sherwin-Williams 4-6 $12-30 2, 4, 13, 14 CA Ray Starbuck [email protected] Skechers 6-25 $9-18 4, 11, 13, 14 Nationwide Peter Mow [email protected] Sprint 1.5-2.8 $0.8-5 3, 6, 7, 9, 11, 13 CA - Northern Jeff Halbert [email protected] Sprint 1.5-2.8 $0.8-5 3, 6, 7, 9, 11, 13 CA - Southern Rob Pratt [email protected] T.J. Maxx 20-31 $81-122 4, 9, 13, 14 CA - Northern Tami DeFrank [email protected] T.J. Maxx 20-31 $81-122 4, 9, 13, 14 CA - Southern Anthony Mansour [email protected] T.J. Maxx 20-31 $81-122 4, 9, 13, 14 San Diego County Don Moser [email protected] Target 100-178 $295-392 2, 3, 4, 6, 8, 9, 13 CA Brian Treber [email protected] The Home Depot 125-135 $367-568 3, 4, 6, 8, 13 CA - Northern Neil Danville [email protected] The Home Depot 125-135 $367-568 3, 4, 6, 8, 13 CA - Southern, Central Jeff Hardman [email protected] T-Mobile 1.5-2.5 $2-7 2, 3, 4, 6, 7, 8, 9, 13 CA - Southern Larry Simpson [email protected] Torrid 2.3-2.5 $7-12 6, 7, 9 CA - Northern Larry Keel [email protected] Torrid 2.3-2.5 $7-12 6, 7, 9 CA - Southern Pam Wallace [email protected] Tractor Supply 19-25 $38-58 2, 4, 13, 14 Nationwide Tim Hoelscher [email protected] Tuesday Morning 10-15 $10-16 2, 3, 4, 8, 13, 14 CA Karen Slayton [email protected] ULTA Beauty 10-10.5 $42-63 3, 6, 7, 9 CA Pamela Lent [email protected] Under Armour 5-12 $40-75 6, 7, 9, 11 Nationwide Patrick Stringer [email protected] Urban Outfitters 10-15 $27-47 3, 6, 7, 8, 9 Nationwide Wade McDevitt [email protected] Verizon Wireless 1-5 $22-45 2, 3, 4, 9, 13 CA Elizabeth Johnson [email protected] Wal-Mart 40-235 $320-527 3, 4 CA - Northern Colin Sangster [email protected] Wal-Mart 40-235 $320-527 3, 4 CA Damian Tutt [email protected] WSS Shoes 10-14 $31-43 1, 3, 4, 5, 12 CA William Argueta [email protected]

BUSINESS NAME

LEASABLE

SQ FT IN
000'S
EST.

ANNUAL
TAX IN
$000'S
SITE

PREFERENCES

EXPANSION
AREA

CONTACT
NAME

CONTACT

INFORMATION

RESTAURANTS

FOOD & DRUGS
Bad Ass Coffee 0.7-2.5 NA 2, 4, 8, 13, 14 CA Nick Naumann [email protected] Black Bear Diner 4-6 $24-31 2, 3, 4, 9, 13, 14 CA Mark Seferian [email protected] Blaze Pizza 2.5-3 $9-15 2, 3, 9, 13, 14 CA - Northern Robert Kluger [email protected] Blaze Pizza 2.5-3 $9-15 2, 3, 9, 13, 14 CA - Southern Garrett Snyder [email protected] Buffalo Wild Wings 4-7 $34-51 2, 3, 4, 6, 8, 9 CA Tom Berzinski [email protected] Burgerim 0.8-3 $2-5 2, 3, 4, 8, 13, 14 CA Stefan Siegel [email protected] Café Rio Mexican Grill 2.4-3 $10-19 2, 4, 13, 14 CA Donald Lewandowski [email protected] California Fish Grill 2.8-3 $19-31 2, 4, 13, 14 CA-Southern Dani Mayer [email protected] Chick-Fil-A 1-4.5 $44-67 2, 3, 4, 6, 13 CA Kevin Curtis [email protected] Chipotle 2.2-2.8 $14-18 2, 4, 8, 13, 14 CA - Inland Region James Beus [email protected] Chipotle 2.2-2.8 $14-18 2, 4, 8, 13, 14 CA - Los Angeles, Central Jessica Garcia [email protected] Chronic Tacos 2-2.2 $4-9 2, 3, 4, 9, 13, 14 CA - Northern Blair Wheatley [email protected] Coffee Bean & Tea Leaf 1.2-1.9 $2-4 9, 5, 8, 9, 10, 12 CA Patti Nelson [email protected] Corky’s Kitchen & Bakery 5-6 $25-32 1, 2, 9, 12 CA-Southern Brandon Beauchemin [email protected] The Counter Custom Burgers 2.5-3 $10-22 3, 4, 9, 10, 12 Nationwide Randy Caraucci [email protected] Cracker Barrel 11-12 $55-75 3, 4 Nationwide Joe Jaynes [email protected] Dickey’s Barbecue Pit 1.6-2.5 $5-7 3, 6, 7, 9, 10 Nationwide John Lockett [email protected] Dog Haus 1.8-2.2 $7-10 2, 4, 13, 14 CA-Southern Aditya Ramnath [email protected] Dunkin’ Donuts 1.5-2.6 $2-5 2, 4, 13, 14 CA - Northern Ed Williams [email protected] Dunkin’ Donuts 1.5-2.6 $2-5 2, 4, 13, 14 CA - Southern Jason Askinosie [email protected] Eureka! 4-5 $24-39 3, 8, 9 CA Justin Nedelman [email protected] Farmer Boys 2.8-3.2 $16-21 4 CA Joyce Dery [email protected] Firehouse Subs 1.4-2 $6-8 2, 9, 13, 14 CA - Northern Scott Kinner [email protected] Firehouse Subs 1.4-2 $6-8 2, 9, 13, 14 CA - Southern Jeff Press [email protected] Five Guys Burgers & Fries 2.8-3.5 $8-12 4, 8, 9, 13 CA Rod Lucio [email protected] Golden Corral 8-11 $43-59 4 CA - Southern Glen Kinkade [email protected] In-N-Out Burger 3-4 $51-66 3, 4 CA - Northern Kimberly Onishi [email protected] In-N-Out Burger 3-4 $51-66 3, 4 CA - Southern Josie Auer [email protected] Jersey Mike’s Subs 1.2-1.8 $2-3 2, 3, 4, 9, 13, 14 CA Natalie Pebbles [email protected] Jimmy John’s 1-1.5 $0.4-1 2, 3, 8, 9, 13, 14 CA - Southern Jason Gordon [email protected] L&L Hawaiian Barbecue 1-1.8 $6-9 2, 3, 9, 11, 13, 14, 15 CA Josie Akana [email protected] Luna Grill 1.5-2.6 $14-17 2, 4, 13, 14 CA - Southern Lee Ann Rosenblum [email protected] Menchie’s Frozen Yogurt 1.2-1.5 $0.8-3 2, 3, 6, 8, 13, 14 CA - Southern Lynn Aliment [email protected] Mendocino Farms 2.5-3.5 $30-36 2, 4, 9, 13, 14 CA Reid Tussing [email protected] MOD Pizza 2-3 $7-12 2, 3, 8, 9, 14 CA Natasha Fischer [email protected] Mooyah Burger & Fries 1.8-2.4 $6-12 2, 3, 8, 9, 14 CA - Northern Loren Katzman [email protected] Mooyah Burger & Fries 1.8-2.4 $6-12 2, 3, 8, 9, 14 CA - Southern Gregory Spalter [email protected] Panda Express 0.8-2.5 $16-22 3, 4, 13, 15 CA Lucy Gan [email protected] Panera Bread 3.5-4.5 $15-23 2, 3, 4, 6, 9, 13, 14 CA Tim O’Kane [email protected] Pieology Pizzeria 1.8-3.1 $7-12 2, 3, 6, 9, 13, 15 CA Glynelle Henson [email protected] PizzaRev 2-3 $6-11 2, 3, 8, 9, 12 CA Emily Schade 805-418-5269 Raising Cane’s 3-3.7 $60-102 4 CA - Southern Robert Montgomery [email protected] Septembers Taproom & Eatry 5-6 NA 1,2,5,9,12 LA, OC, RIV, SB Cnty Brandon Beauchemin [email protected] Smashburger 1.8-2.2 $8-12 2, 4, 13, 14 Nationwide Jessica Johnson [email protected] Sonic Drive-In 1.5-1.8 $10-17 4 CA Joe Morian [email protected] Starbucks 0.8-2 $3-4 All CA - Northern Evelyn Yee [email protected] Starbucks 0.8-2 $3-4 All CA - Southern Mike Abbate [email protected] Steak ‘n Shake 2-4.5 $9-14 4, 7, 8, 9, 13, 14 CA - Northern John Austin [email protected] Stonefire Grill 4.5-6 $52-78 1, 2, 9, 12 LA, OC, RIV, SB, SD, Ventura Cnty Irwin Hayman [email protected] The Broken Yolk Cafe 3.5-6 $16-22 2, 4, 13, 14 CA-Southern Jared Davis [email protected] The Habit Burger Grill 1.5-2.5 $17-23 2, 3, 4, 8, 9, 13, 14 CA - Southern, Central Shannon Coleman [email protected] The Habit Burger Grill 1.5-2.5 $17-23 2, 3, 4, 8, 9, 13, 14 CA Christopher Schlueter [email protected] Waba Grill 1.4-2.5 $5-8 2, 3, 5, 10 CA - Southern Steven Wang [email protected] Wingstop 1.2-1.8 $9-16 2, 13, 14 CA- Bay Area Michael Seigel [email protected] Zpizza Tap Room 2-3.8 $3-5 2, 4, 9, 13, 14 CA Chris Bright [email protected] Aldi 16-18 $10-15 2, 13, 14 CA Skip Janes [email protected] BevMo 5-11 $36-52 2, 3, 4, 13, 14 CA - Northern Matt Alexander [email protected] BevMo 5-11 $36-52 2, 3, 4, 13, 14 CA - Southern Paul Bartlett [email protected] Cardenas/Mi Pueblo 35-45 $29-42 2, 4, 13, 14 CA Patrick Charriou [email protected] CVS 11-13 $15-31 2, 3, 4, 8, 9, 13, 14 CA - Northern Stephen LaBonge [email protected] CVS 11-13 $15-31 2, 3, 4, 8, 9, 13, 14 CA - Southern Holly Jensen [email protected] Grocery Outlet 15-25 $12-22 4, 11 CA Bill Coyle [email protected] Northgate Markets 40-45 $20-38 2, 4, 13, 14 CA - Southern Michael Navarro [email protected] Rite Aid 14-18 $21-33 3, 4, 8, 9 CA - Northern Nathan Cromeenes [email protected] Rite Aid 14-18 $21-33 3, 4, 8, 9 CA - Southern Tracy Verastegui [email protected] Safeway 42-55 $64-87 4, 9, 13 CA - Northern Steve Berndt [email protected] Safeway 42-55 $64-87 4, 9, 13 CA - Southern Kevin Wing [email protected] Smart & Final Extra! 20-35 $31-46 2, 3, 4, 13, 14 CA - Northern Kimberly Cervantes [email protected] Smart & Final Extra! 20-35 $31-46 2, 3, 4, 13, 14 CA - Southern Pat Barber [email protected] Sprouts Farmers Markets 23-28 $28-40 2, 3, 4, 9, 13, 14 CA Chuck Kutschko [email protected] Total Wine & More 20-25 $97-156 2, 3, 4, 6, 7, 8, 9, 14 CA Phil Armstrong [email protected] Walmart Neighborhood Market 30-45 $66-91 2, 3 CA - Northern Colin Sangster [email protected] Walmart Neighborhood Market 30-45 $66-91 2, 3 CA Damian Tutt [email protected] Whole Foods Market/365 30-45 $73-109 2, 4, 8, 13 CA - Northern Matt Holmes [email protected] Whole Foods Market/365 30-45 $73-109 2, 4, 8, 13 CA - Southern Patrick Gilhooly [email protected] WinCo Foods 90-110 $90-117 2, 4, 13, 14 CA - Northern Mark Lavin [email protected] 1 Community Strip 4 Freestanding 7 Enclosed Super Regional Mall 10 Mixed Use 13 Regional Strip Mall 2 Neighborhood Strip 5 Pad/Out Parcel 8 Downtown / CBD 11 Outlet Center 14 Specialty Strip 3 Power Center 6 Enclosed Regional Mall 9 Lifestyle Center 12 Endcaps 15 Transit Terminal KEY TO
PREFERRED SITES:

STORE TYPE

TYPICAL

SQ FT IN
000’S

EXAMPLE STORES
EST.

ANNUAL
TAX IN 000’S

ANNUAL SALES/
SQ FT
WOMEN’S APPAREL STORES
Accessories 1.5-3.5 Charming Charlie, Claires $4.5-$7.5 $150-$350 Small Format 2-5 Catherine’s, Chico’s, Kate Spade, Torrid $9-$15 $250-$650 Mid-Size Format 5-8 Ann Taylor, Charlotte Russe, Dress Barn, Lane Bryant, Maurices $9.5-$18 $190-$300 Large Format 8-15 Anthropologie, Banana Republic, Express, Urban Outfitters, Zara $23-$48 $285-$535 Bargain Chic 15-30 F21 Red, Forever 21, H&M, Uniqlo $30-$65 $170-$330 Casual 3-6 Casual Male XL, Nautica, Tommy Hilfiger, Van Heusen $7-18 $230-$470 Business Attire 4-6 Brooks Brothers, Jos. A. Bank, Men’s Wearhouse $10.5-$26 $325-$485 Children 3-10 Buy Buy Baby, Carter’s, Gymboree, OshKosh B’Gosh, The Childern’s Place $8-$17 $190-$450 Casual 20-45 Burlington, Gap, Kohl’s, Old Navy $45-$120 $125-$385 Discount 25-35 Marshalls, Nordstrom Rack, Ross, T.J. Maxx $80-$125 $300-$415 Small 2-3 Clarks, Cole Haan, Johnston & Murphy, Journeys, Stride Rite $6-$12 $300-$450 Mid-Sized 3-6 Aldo, Payless ShoeSource, Rack Room Shoes, Shiekh, Skechers $4.5-$11 $130-$260 Large 10-18 Boot Barn, DSW, Shoe City, WSS $17-$38 $200-$375 Athletic 2-10 Adidas, Foot Locker, New Balance, Nike, Puma, Reebok, Under Armour $11-$42 $300-$1,500 Closeout / Dollar Stores 12-25 99 Cents Only, Big Lots, Dollar General, Dollar Tree, Family Dollar $11-$25 $70-$150 Discount Department 125-150 Target, Walmart $295-$485 $250-$300 Membership Warehouse* 140-180 Costco, Sam’s Club $625-$1,200 $500-$650 Traditional Department 100-150 Dillards, JC Penney, Macy’s $135-$270 $150-$225 Upscale Department 100-175 Bloomingdales, Neiman Marcus, Nordstrom, Saks $95-$545 $225-$400 Specialty Markets 15-30 Mother’s Market, Sprouts Farmers Market, Trader Joe’s, Whole Foods $33-$65 $180-$360 Chain Supermarket* 45-55 Albertson’s, Ralphs, Safeway, Stater Bros., Vons $52-$80 $125-$155 Warehouse Grocery 35-80 Food 4 Less, Food Maxx, Smart & Final, WinCo $33-$62 $65-$145 Ethnic Market 35-50 99 Ranch Market, Cardenas, El Super, H Mart, Northgate, Rio Ranch $20-$38 $60-$90 Drug Stores / Pharmacy 12-15 CVS, Rite Aid, Walgreens $18-32 $170-$215 Coffee House 1-2 Coffee Bean & Tea Leaf, Dunkin’ Donuts, Peet’s Coffee, Starbucks $2-$4 $165-$330 Fast Food - Burger 2-4 Burger King, Carl’s Jr., In N Out, Jack in the Box, McDonald’s $13.5-$30 $575-$1,140 Fast Food - Hispanic 2-3 Del Taco, El Pollo Loco, Miguel’s Jr., Taco Bell $12-18 $500-$765 Fast Food - Asian 2-3 Ono Hawaiian BBQ, Panda Express, Pick up Stix, Yoshinoya $10-$19 $500-$760 Fast Casual 2-3.5 Chipotle, Five Guys, Habit Burger, Mooyah, Panera Bread, Smashburger $12-$20 $440-$770 Fast Casual - Pizza 2-3 Blaze Pizza, MOD Pizza, Pieology, Pizza Studio, PizzaRev, Zpizza $7.5-$13 $350-$520 Family Dining 6-9 BJ’s, Cheescake Factory, Claim Jumper, Islands, Red Robin, TGI Fridays $30-$72 $565-$845 Dinner House 7-10 Chart House, Fleming’s, McCormick & Schmick, Nobu, Roys, Ruth’s Chris $42-$68 $595-$850 Home Décor / Accessories 20-35 Bed Bath & Beyond, Cost Plus World Market, HomeGoods, Kirklands $30-$85 $185-$325 Paint 4-6 Dunn Edwards, Sherwin Williams, Vista Paint $12-$22 $310-$465 Home Improvement / Building Supply 100-150 Home Depot, Lowe’s, ProBuild $280-$480 $260-$400 Hardware 15-30 Ace Hardware, Harbor Freight Tools, Orchard Supply Hardware, True Value $14-$55 $130-$265 Furniture/Bedroom 4.5-7 Ortho Mattress, Sit ‘n Sleep, Sleep Number $8.5-$28 $240-$375 Furniture/General 12-25 Aki-Home, Bassett Furniture, Ethan Allen, Mor Furniture for Less $30-$68 $225-$470 Warehouse Furniture 80-250 Ashley Homestore, Ikea, Jeromes, Living Spaces, Mathis Brothers $165-$800 $160-$500 Small Electronics 1-6 Apple, Microsoft $165-$365 $5,000-$30,000 Cell Phones 1.5-4 AT&T, Sprint, T-Mobile, Verizon $8-$35 $400-$1,000 Volume Electronics / Appliances 30-50 Best Buy, Fry’s, Howards, Pacific Sales $80-$270 $335-$555 Bath & Beauty 3-10 Bath & Body Works, LUSH, Sephora, ULTA Beauty $20-$58 $425-$1,400 Craft Shops 20-40 Hobby Lobby, Jo-Ann Fabrics & Crafts, Michaels Arts & Crafts $28-$55 $110-$215 Multiplex Cinemas 40-160 Regal, AMC, Cinemark, Studio Movie Grill $650-1,000/screen Office Supplies 18-25 OfficeMax, Staples, Office Depot $30-$45 $165-$230 Party Supplies 10-15 Party City $8-$22 $75-$110
Pet Supplies 10-15 Kahoots, Petco, Petsmart, Unleashed by Petco $22-$45 $200-$310 Sporting Goods (Sm. Concept) 6-15 Big 5 Sporting Goods, Hibbett Sports $15-$30 $165-$415 Sporting Goods (Lg. Concept) 25-50 Dick’s Sporting Goods, REI $75-$135 $225-$445 *May include gasoline sales.

HdL receives expanding retailer information from a variety of sources that tend to emphasize large regional and national chains with less focus on small, regional retailers. While many of these chains are also looking to expand, their plans are not as well publicized due to their size. HdL therefore encourages agencies to regularly communicate with their regional business community to maximize the expansion opportunities offered by these smaller chains.

MEN’S APPAREL STORES

FAMILY APPAREL

SHOE STORES

DEPARTMENT STORES/GENERAL MERCHANDISE

FOOD STORES

DRUG STORES

RESTAURANTS

HOME IMPROVEMENT/FURNISHINGS

MISCELLANEOUS RETAIL

RETAILERS EXPANDING IN CALIFORNIA
LEGISLATIVE UPDATE, OCTOBER 2019 • 714.879.5000 • hdlcompanies.com 1 Sales and Use Tax Legislation
AB 31 (C. Garcia) Sales and Use Tax Exemption for Feminine Hygiene Products This bill, on or after January 1, 2020, would exempt from sales and use taxes the gross receipts from the sale in this state of, and the storage, use, or other consumption in this state of, tampons, sanitary napkins, menstrual sponges, and menstrual cups. UPDATE: April 4th amendments include a sunset provision of January 1, 2025.

Status: Died on the Senate Appropriate Suspense File, however a 2-year sales and use tax exemption on these products was included in the 2019/20 budget.

AB 66 (Gonzalez) Sales and Use Tax Exemption for Diapers This bill would exempt from sales and use taxes the gross receipts from the sale in this state of, and the storage, use, or other consumption in this state of diapers for infants and toddlers, designated size 3 or under. UPDATE: March 3rd amendments include a sunset provision of January 1, 2025. Amendments taken on April 22 added intent language as well as language authorizing the Legislative Analyst’s office to collect data from CDTFA and any other relevant agency to review the effectiveness of the tax exemption.

Status: Died on the Senate Appropriate Suspense File, however a 2-year sales and use tax exemption on these products was included in the 2019/20 budget.

AB 176 (Cervantes) California Alternative Energy and Advanced Transportation Financing Authority Sales and Use Tax Exclusions
Under current law, the California Alternative Energy and Advanced Transportation Financing Authority Act authorizes the California Alternative Energy and Advanced Transportation Financing Authority to provide financial assistance in the form of a sales and use tax exclusions, not to exceed $100,000,000 for each calendar year until January 1, 2021. Qualifying alternative energy projects that promote California-based manufacturing, reduction in greenhouse gases, or reduction in air and water pollution or energy consumption are eligible for a sales and use tax exclusion.

These bills will extent the exclusion date to January 1, 2026 and require the Authority to evaluate project applications based on criteria that includes creation of new, or result in the loss of, permanent, full-time jobs in the state.

Status: Signed into law by the Governor October 9, 2019.

As of September 13th, the first session of the 2019-20 two-year legislative session came to a close. Governor Newsome had until midnight Sunday, October 13th to take action on each bill that was passed by the Legislature. The Legislature is now in recess until January 7, 2020.

The following includes updates for 2019 legislative statuses on bills related to sales and use tax, medical and adult use cannabis taxation and regulation, property taxation, economic development and business licenses that HdL has been tracking.

LEGISLATIVE
UPDATE
OCTOBER 2019
LEGISLATIVE UPDATE, OCTOBER 2019 • 714.879.5000 • hdlcompanies.com 2 AB 723 (Quirk) Transactions and Use Taxes: City of Fremont: County of Alameda This bill would make three changes to create room under the cap for Alameda County, cities in Alameda County, and cities in Santa Cruz County to impose a district tax. First, the bill provides that the tax imposed by BART, in Alameda County, shall not be considered for purposes of the 2% cap. Second, the bill clarifies that the 0.5% previously authorized for Alameda County shall not be considered for purposes of the 2% cap either, and states that this change is declaratory of existing law. Lastly, the measure changes state law authorizing the Santa Cruz County Metropolitan Transit District to impose a district tax to state that this tax shall not be considered for purposes of the 2% cap. This bill is sponsored by Alameda County, City of Fremont and Santa Cruz County Metropolitan Transit District.

Status: Signed into law by the Governor on October 11, 2019.

AB 1413 (Gloria) Transportation Authorities Transactions and Use Taxes This bill would authorize the Placer County Transportation Planning Agency and San Diego County Regional Transportation Commission, the San Diego Association of Governments, the San Diego Metropolitan Transit System and the North County (San Diego) Transit District to impose a transaction and use tax applicable to the entirety of, or a portion of the county. This bill requires the district(s) levying the tax to spend resulting revenues within the area subject to the tax.

Status: Signed into law by the Governor on October 11, 2019.

SB 43 (Allen) Carbon Taxes
This would require the State Air Resources Board, in consultation with the CDTFA, to submit a report to the Legislature on the results of a study, as specified, to propose and to determine the feasibility and practicality of a system to replace the tax imposed pursuant to the SUT Law with an assessment on retail products sold or used in the state based on the carbon intensity of the product to encourage the use of less carbon-intensive products.

Status: Failed passage in Assembly Revenue and taxation on July 8, 2019. Now a two-year bill.

SB 531 (Glazer) Local Agency Retailer Agreements
This bill would, after january 1, 2020, prohibit a local agency from entering into any agreement that would result, directly or indirectly, in the payment, transfer, diversion, or rebate of Bradley-Burns local tax revenues to any retailer in exchange for the retailer locating or continuing to maintain a place of business that serves as the place of sale within the territorial jurisdiction of the local agency if that place of business would generate revenue, from the sale of tangible property delivered to and received by the purchaser in the territorial jurisdiction of another local agency.

Status: Passed off of the Assembly Floor on September 12, 2019, but vetoed by the Governor on October 12, 2019.

SB 732 (Allen) South Coast Air Quality Management District Transaction Tax District Existing law establishes the South Coast Air Quality Management District the authority to regulate air emissions from stationary sources located in the South Coast Air Basin and establishes a district board to govern the district. This bill would authorize the South Coast District Board to impose a transactions and use tax within the boundaries of the south coast district, as specified, with the moneys generated from the transactions and use tax to be used to supplement existing revenues being used for south coast district purposes, as specified. Current language also allows the transaction and use tax to exceed the combined tax rate limits of each jurisdiction within the boundaries of the purposed District.

Status: On the Senate Appropriations Committee Suspense file. Now a two-year bill.

Cannabis-Related Legislation
AB 286 (Bonta) Cannabis Tax
The Control, Regulate, and Tax Adult Use of Marijuana Act (AUMA) imposed an excise tax commencing January 1, 2018 on the purchase of cannabis and cannabis products at the rate of 15% of the average market price of any retail sale by a cannabis retailer. This bill would reduce that excise tax rate to 11% on and after the operative date of this bill until July 1, 2022, at which time the excise tax rate would revert back to 15%. Commencing January 1, 2018, AUMA also imposed a cultivation tax upon all cultivators on all harvested cannabis that enters the commercial market. This bill would suspend the imposition of the cultivation tax on and after the operative date of this bill until July 1, 2022 as well.

Status: Held on Assembly Appropriations Suspense File on May 1, 2019.

LEGISLATIVE UPDATE, OCTOBER 2019 • 714.879.5000 • hdlcompanies.com 3 AB 1356 (Ting) Cannabis and Local Jurisdictions
The Control, Regulate, and Tax Adult Use of Marijuana Act (AUMA) imposed an excise tax commencing January 1, 2018 on the purchase of cannabis and cannabis products at the rate of 15% of the average market price of any retail sale by a cannabis retailer. This bill would reduce that excise tax rate to 11% on and after the operative date of this bill until July 1, 2022, at which time the excise tax rate would revert back to 15%. Commencing January 1, 2018, AUMA also imposed a cultivation tax upon all cultivators on all harvested cannabis that enters the commercial market. This bill would suspend the imposition of the cultivation tax on and after the operative date of this bill until July 1, 2022 as well. .

Status: Ordered to Assembly Inactive File on May 30, 2019. Now a two-year bill.

AB 1530 (Cooley) Regulations for Cannabis Deliveries
The Bureau of Cannabis Control (BCC) established permanent regulations that authorized cannabis delivery to “any jurisdiction” (through the compliance of State law). This regulation prohibited local jurisdictions from banning the delivery of cannabis within California. In response, 24 cities sued the BCC on April 5, 2019, arguing that the final regulations contradicted the voter’s intent in the AUMA. The lawsuit would seek to clarify that statutory language banning local restrictions on “delivery” were intended to further earlier language banning restrictions on “transport,” and that the law’s general deference to local control must be preserved by the BCC through its rulemaking. This bill seeks to give local government full authority to ban cannabis activities in their jurisdictions, including delivery, and provide grant funding to incentivize local jurisdictions to allow for cannabis activity. This bill would require the Board of State and Community Corrections to establish a local enforcement grant program for jurisdictions to offset the cost of enforcing licensing and regulatory issues, as well as distinguishing between illicit and legal marketplaces.

Status: Died in the Assembly Business and Professions Committee on April 26, 2019.

SB 51 (Hertzberg) Cannabis Financial Institutions
This bill would create the Cannabis Limited Charter Banking and Credit Union Law, to be administered by the Commissioner of Business Oversight and the Department of Business Oversight. The bill would create the Cannabis Limited Charter Bank and Credit Union Advisory Board and specify its composition, to include the Treasurer, the Controller, and the Chief of the Bureau of Cannabis Control, and commit to it the general responsibility that this law functions in a safe and efficient way.

Status: Ordered to Assembly Inactive File on September 9, 2019. Now a two-year bill.

SB 153 (Wilk) Industrial Hemp
This bill revises the law regulating cultivation and testing of industrial hemp to conform to the requirements for a state plan under the Agriculture Improvement Act of 2018 (the federal Farm Bill), which amended the federal Agriculture Marketing Act of 1946. It specifies testing methods for hemp, and prohibits persons convicted of controlled substances felonies on or after January 1, 2020 from participation in the Industrial Hemp program for 10 years. Also, the bill directs the Secretary of the California Department of Food and Agriculture to develop and submit a state plan for industrial hemp to the United States Secretary of USDA on or before May 1, 2020. And facilitates large scale commercial cultivation and sales of CBD products derived from hemp, with potentially significantly less regulation than that in place for cannabis.

Status: Ordered to Assembly Inactive File on September 9, 2019. Now a two-year bill.

Property Tax Legislation
AB 42 (Gallagher) Disaster Relief for County of Butte Camp Fire This bill would state the intent of the Legislature to enact legislation that would provide property tax revenue reductions resulting from reassessments for damages incurred within the County of Butte due to the 2018 Camp Fire.

Status: Introduced December 3, 2018. Failed Policy Committee deadline. Now a two-year bill.

LEGISLATIVE UPDATE, OCTOBER 2019 • 714.879.5000 • hdlcompanies.com 4 AB 213 (Reyes, Bauer-Kahan, Gallagher, and Smith) Property Tax Revenue Allocation Adjustments for Vehicle License Fees
This bill, for the 2019-2020 fiscal year, will alter the vehicle license fee adjustment fee calculation to the product of that sum and the percentage change in gross taxable assessed valuation within the jurisdiction of that entity between the 2018-2019 fiscal year, and the product of the amount of specified motor vehicle license fee revenues that the Controller allocated to the applicable city in July 2010 before SB 89 eliminated the adjustment multiplied by 1.17 to account for inflation. Additionally, beginning fiscal year 2020-2021, the vehicle license fee adjustment would amount to be the sum of the vehicle license fee adjustment amount for the prior fiscal year and the product of the amount as so described and the percentage change from the prior fiscal year in gross taxable assessed valuation within the jurisdiction of the entity.

Status: Held under submission by Senate Appropriations Committee. Now a two-year bill.

SB 15 (Portantino) - Property Tax Revenue for Local-State Sustainable Investment Program UPDATE: This bill would establish the Local-State Sustainable Investment Program, which would be administered by the Department of Finance. The bill would authorize a city, a county, or a specified joint powers agency that meets specified eligibility criteria to apply to the Department of Finance for funding for projects that further certain purposes, including increasing the availability of affordable housing. The bill would require that funding under the program b e provided by an allocation of ad valorem property tax revenues, as provided, and would limit the amount of funding approved under the program to $200,000,000 per fiscal year and $1,000,000,000 total.

Status: On the Senate Appropriations Committee Suspense File. Now a two-year bill.

Economic Development Legislation
AB 11 (Chiu) Community Redevelopment Law of 2019
This bill would authorize a city or county, or two or more cities acting jointly, to propose the formation of an affordable housing and infrastructure agency by adoption of a resolution of intention that meets specified requirements, including that the resolution of intention include a pass-through provision and an override pass-through provision.

Status: Held in the Assembly Appropriations Committee. Now a two-year bill.

AB 485 (Medina) Local Government Economic Development Subsidies This bill would require each local agency to provide specified information to the public and hold hearings before approving an economic development subsidy for a warehouse distribution center. This bill is similar to Medina’s AB 2853 which was vetoed by Governor Brown. UPDATE: Amendment taken on August 19th removed the requirement that "the amount of space being requested for future automation be included in the local agency's annual report."
Status: Signed into law by the Governor on October 12, 2019.

SB 5 (Beall) Affordable Housing and Community Development Investment Program This would establish in state government the Affordable Housing and Community Development Investment Program, which would be administered by the Affordable Housing and Community Development Investment Committee. The bill would authorize a city, county, city and county, joint powers agency, enhanced infrastructure financing district, affordable housing authority, community revitalization and investment authority or transit village development district to apply to the Committee to participate in the program and would authorize the committee to approve or deny applications for projects meeting specific criteria. This bill would also require the committee to approve no more than $200 million per year from a county’s ERAF for local approved plans.

Status: Passed off the Assembly Floor on September 13, 2019, but vetoed by the Governor on October 13, 2019.

LEGISLATIVE UPDATE, OCTOBER 2019 • 714.879.5000 • hdlcompanies.com 5 Business Licenses and Other Tax Legislation
AB 498 (Weber) Business Licensing Fee Exemptions for Veterans This bill would exempt veterans from having to pay fees when applying for a business license to provide services if the veteran is the sole proprietor of the business. June 10th amendments specify that any “state or local” business license fees” are covered by the provisions of the bill and clarify that the changes proposed by the bill apply to all cities, including charter cities.

Status: Passed off the Senate Floor on consent on July 11, 2019. Pending concurrence on the Assembly Floor.

SB 205 (Hertzberg) Stormwater Discharge Compliance and Licensing This bill would require businesses to demonstrate compliance with stormwater discharge permits when applying for, or renewing, a business license with a city or county, and allows cities to develop a provisional license procedure for renewals that provides businesses three months to comply with the requirements. Cities that don’t already have a licensing process have been excluded from the provisions of the bill.

Status: Signed into law by the Governor October 2, 2019.

SB344 (McGuire) Local Prepaid Mobile Telephony Services Collection Act The Local Prepaid Mobile Telephony Services Collection Act (local prepaid MTS act), until January 1, 2020, suspends the authority of a city (including any charter city), county, or city and county, to impose a utility user tax on the consumption of prepaid communications service and any charge that applies to prepaid mobile telephony service, as defined, on access to communication services or access to local “911” emergency telephone systems, and instead requires those taxes and charges to be applied during the period beginning January 1, 2016, and ending January 1, 2020, under any local ordinance to be at specified rates. The local prepaid MTS act requires local charges imposed by a city or county on prepaid mobile telephony services be collected from the prepaid consumer by a seller at the same time of the retail sale, as specified. Existing law requires that all local charges be collected and paid to the CDTFA pursuant to the Fee Collection Procedures Law be deposited in the Local Charges for Prepaid Mobile Telephony Services Fund and transmitted to the city, county, or a city and county, as provided. This bill would extend operation of the local prepaid MTS act until January 1, 2021. By extending the application of the Fee Collection Procedures Law, the violation of which is a crime, this bill would impose a state-mandated local program. Further, this bill would provide that local charges apply to the entire price unless the seller can identify the mobile data services and other services or products from its books and records kept in the ordinary course of business. This bill would make other non-substantive changes.

Status: Signed into law by the Governor October 8, 2019.

Constitutional Amendments
ACA 1 (Aguiar-Curry) Voter Approval for Affordable Housing and Public Infrastructure Exception The California Constitution prohibits the ad valorem tax rate on real property from exceeding 1% of the full cash value of the property, subject to certain exceptions. This measure would create an additional exception to the 1% limit that would authorize a city, county, or city and county to levy an ad valorem tax to service bonded indebtedness incurred to fund the construction, rehabilitation, or replacement of public infrastructure or affordable housing, if the proposition proposing that tax is approved by 55% of the voters of the city, county, or city and county, as applicable, and the proposition includes specified accountability requirements.

Status: Motion failed on Assembly Floor on August 19, 2019. Now a two-year bill.

ACA 2 (Nazarian) State Tax Agency
This would authorize the Legislature to abolish the State Board of Equalization and instead vest all powers, duties and responsibilities in a single state tax agency or separately in multiple state tax agencies. The measure would deem the CDTFA and the Office of Tax Appeals to be state tax agencies for purposes of these provisions and vest those entities specified powers, duties and responsibilities currently vested in the SBOE.

Status: Introduced December 3, 2018. Referred to Assembly Revenue and Tax Committee in May. Now a two-year bill.

LEGISLATIVE UPDATE, OCTOBER 2019 • 714.879.5000 • hdlcompanies.com 6 ACA 13 (Obernolte) Online Sales and Local Sales Tax Destination Distribution This measure would provide that, on and after January 1, 2021, for the purpose of distributing the revenues derived under a sales tax imposed pursuant to the Bradley-Burns Uniform Local Sales and Use Tax Law, the retail sale of tangible personal property by a qualified retailer, as defined, that is transacted online is instead consummated at the point of the delivery of that tangible personal property to the purchaser’s address or to any other delivery address designated by the purchaser.

Status: Introduced March 28, 2019. Pending policy committee referral. Now a two-year bill.

SCA 3 (Hill) Inheritance Exclusion for Change in Ownership The California Constitution generally limits ad valorem taxes on real property to 1% of the full cash value of that property. For purposes of this limitation, “full cash value” is defined as the assessor’s valuation of real property as shown on the 1975-76 tax bill under “full cash value” or, thereafter, the appraised value of that real property when purchased, newly constructed, or a change in ownership has occurred. The California Constitution specifies various transfers that are not deemed to be a “purchase” or “change in ownership” of a property for these purposes, including the purchase or transfer of a principal residence from parents to their children, or, under certain circumstances, from grandparents to their grandchildren, and the purchase or transfer of the first $1,000,000 of the full case value of all other real property transferred from parents or grandparents to their children or grandchildren. This measure would limit the above-described $1,000,000 exclusion for purchases or transfers of real property other than a principal residence to purchases or transfers of nonresidential real property.

Status: Ordered to Senate Inactive File on May 21, 2019. Now a two-year bill.

ISSUE UPDATE, NOVEMBER 2019 • 714.879.5000 • hdlcompanies.com 1 ISSUE
UPDATE

NOVEMBER
2019
In October, Governor Newsom signed SB 153 by Senator Scott Wilk (RLancaster) bringing California closer to compliance with HR.2, the 2018 federal Farm Bill which removed hemp from the list of Schedule I drugs and required states that wish to license and regulate hemp businesses to submit a state plan to the Secretary of the U.S. Department of Agriculture (USDA).

Governor Signs Senate
Bill 153, Facilitating
Hemp Production in
California
SB 153 facilitates large-scale hemp production in California and the sale of CBD (cannabidiol) oil from hemp seeds by requiring the Secretary of the California Department of Food and Agriculture (CDFA), in consultation with the Governor and the Attorney General, to develop and submit a state plan for industrial hemp to the USDA on or before May 1, 2020. That state plan will establish the framework by which California will regulate the cultivation, testing and sale of industrial hemp, and the licensing of associated businesses within its borders. Once the USDA Secretary approves the plan, CDFA can then proceed to implement it – provided that federal regulations implementing the 2018 Farm Bill have been published. According to statements issued by the USDA, those regulations are due to be published by the end of this year.

This is a major development because hemp was once in widespread use as a textile product, from which paper, rope, and even clothing were manufactured, dating back to the time of the American Revolution. According to Senator Wilk, Thomas Jefferson drafted the Declaration of Independence on hemp paper. It has the advantage of being cheaper than wood pulp for the manufacturing of paper products. In addition, CBD oil that is extracted from hemp may be significantly cheaper than cannabis-based CBD oil. The key reason is that since it has been removed from the list of Schedule 1 drugs, it will not be as tightly regulated so the costs of regulatory compliance will be reduced for the business owner.

With the enactment of the Marijuana Tax Act of 1937, hemp, which is genetically closely related to cannabis but lacks the latter’s high concentration of the psychotropic substance THC, was lumped with cannabis and subjected to a de facto federal ban by virtue of its appearance and smell, which are very similar to cannabis. Hemp production has since continued but on a limited scale, under the supervision of the Drug Enforcement Agency (DEA).

The 2018 Farm Bill changed all that by not only removing hemp from the list of Schedule I substances but by transferring federal oversight of hemp production from the DEA to the USDA. Once the Farm Bill was enacted, legally speaking, hemp was no longer a matter for criminal enforcement and became the subject of civil regulation literally overnight.

While 38 states, including California, had enacted legislation regulating hemp in some fashion prior to 2018, these laws were limited in scope due to hemp’s status as a Schedule I substance. Since 2018, at least seven states have enacted regulations for hemp production on an industrial scale in response to the federal Farm bill -- Alaska, Arizona, Kansas, Louisiana, Missouri, New Jersey and Oklahoma.

ISSUE UPDATE, NOVEMBER 2019 • 714.879.5000 • hdlcompanies.com 2 However, as far as the Feds are concerned, no state is authorized to begin licensing hemp businesses until the USDA has published implementing regulations, which at this writing are still pending. States must also submit a state plan to, and receive approval from, the USDA.

In California, a number of cities are already being approached by hemp businesses seeking permits for cultivation and manufacturing. While implementing regulations at the federal and state level are necessary, prerequisites to local hemp ordinances, many businesses sense economic opportunity and are reluctant to wait.

Their enthusiasm may be well grounded. One product the industry is keen to manufacture, and sell is CBD oil from hemp seeds, which based on how it is extracted has similar healing properties as CBD oil from cannabis. However, once the state regulations permitting hemp flower to be manufactured are approved, hemp products will be widely available commercially and will likely be significantly less expensive to manufacture than cannabis or any cannabis derivative.

From a marketing standpoint, currently CBD oil from hemp seeds is being advertised as an effective non-opioid remedy for pain, and could itself give birth to a new, major industry. While it is not yet legal in California for human consumption (which includes topical ointments and analgesics), signs are that it soon will be, with the aforementioned changes in state and federal law, plus an amendment to California’s Sherman Food and Drug Act, The Sherman Act currently classifies CBD oil from hemp seeds, if intended for human consumption, as an adulterated food, and prohibits it on that basis. Legislation introduced earlier this year, AB 228 by Assembly Member Cecilia Aguiar-Curry (D-Napa) would have changed that but stalled in the Senate Appropriations Committee. Hemp industry advocates reportedly intend to see to it that the bill is re-introduced in 2020, paving the way to the widespread – and legal – availability of hemp-based CBD products being produced from hemp seed oil and flower.

The key take-away for cities is while it is time to plan for local hemp regulations, to the degree there is local interest in hosting this new industry, enacting such regulations and issuing permits to hemp businesses may be premature, based on three factors:
1) The pending federal regulations implementing the federal Farm Bill; 2) The need for corresponding state implementation in the form of a state plan that meets with federal approval, and 3) The need for the Legislature in Sacramento to amend the Sherman Food and Drug Act to remove a legal impediment to production and sale of some of the more marketable hemp-based CBD products.

Although HdL is currently working with some cities that wish to move forward with developing regulatory ordinances for the hemp industry, other local agencies are approaching this more cautiously. Therefore, HdL will continue to monitor developments in this area closely and keep its clients apprised.

For additional information on this issue, please contact Tim Cromartie at [email protected] or David McPherson at [email protected].

Retail Trends Affecting Sales Tax
Vol. 10 Issue 2 - February 6, 2020
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Our HeadLines e-news service provides HdL clients with the most up-to-date information on trends affecting California's economy and is meant to provide you with insight and support in your budget preparation and economic planning.

IN THIS ISSUE:
• How Did Holiday Sales Hold Up?
• Macy’s to Close 125 Stores, Cut 2,000 Corporate Jobs, in Hunt for Growth • How Off-Price Continues to be On Point
• Amazon, Already The Nation’s Top Fashion Retailer, Is Positioned To Grab Even More Market Share
• Confident Consumers and Broader Buying Lead to Record Valentine's Day Spending Plan
How Did Holiday Sales Hold Up?
U.S. holiday sales rose 4.1 percent in 2019 from a year earlier as steady wages and job growth along with strong household balance sheets encouraged consumers to shop during November and December. A 6.7 percent year-over-year upsurge in retail spending in December provided a major boost for the season following a modest 1.3 percent increase in November. Total holiday sales (excluding automobile dealers, gasoline stations and restaurants) came to a record $730.2 billion. While these are preliminary results, they still represent a good benchmark to measure the accuracy of the forecast. Read More
Macy’s to Close 125 Stores, Cut 2,000 Corporate Jobs, in Hunt for Growth Stuck in a sales slump, Macy’s is shrinking to grow. The department store chain announced it plans to shut 125 stores over the next three years and slash about 2,000 corporate jobs, as it closes its Cincinnati headquarters and tech offices in San Francisco.

Macy’s said it plans to exit weaker shopping malls, and instead shift its focus toward opening smaller-format stores in strip centers. Macy’s has shuttered more than 100 stores since 2015. Still, looking ahead three years from now, even with these changes, growth at Macy’s looks abysmal. Read More
How Off-Price Continues to be On Point
Apparel retail has never been for the faint-hearted, and today the segment has retailers by their throats. Customers don't want to pay full price for apparel and few need dressy clothes. The Off-Price model seems to endure no matter what — attracting shoppers of all ages and incomes, in all kinds of economies. It's particularly attractive in an era when the middle class is challenged, experts say. Nordstrom Rack now sells Rent the Runway apparel, a prime example of why this sector is poised to have yet another good year. Read More
Amazon, Already The Nation’s Top Fashion Retailer, Is Positioned To Grab Even More Market Share
With its fingers in many fashion pies, Amazon quietly became the nation’s leading apparel retailer, topping $30 billion in sales, according to estimates. Amazon, however, does not report fashion sales. Coresight Research confirmed Amazon’s dominance in the fashion space, finding that it was the number one destination for apparel shoppers, beating Target and Walmart. Amazon’s share of fashion shoppers jumped from 50% in 2017 to 61% in 2018 by Wells Fargo and seconded by Morgan Stanley. Read More Confident Consumers and Broader Buying Lead to Record Valentine's Day Spending Plan
Coming off a strong holiday season, Americans are expected to set another record for Valentine’s Day spending this year as they continue to widen the range of those they’re buying for, according to the annual survey released by the National Retail Federation and Prosper Insights & Analytics. “Valentine’s Day is a sentimental tradition, but gift-giving can be driven by the economy,” NRF President and CEO Matthew Shay said. Spending is expected to total $27.4 billion, up 32 percent from last year’s record $20.7 billion. Read More
Prepared for you by
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• Sales, Use and Transaction Tax
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• Software Solutions
• Cannabis Regulation
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By The Numbers
Percent of change from one year ago.

CALIFORNIA DATA
Ports (December):

Containers
Imported ↓ 13.18%
Exported ↑ 0.57%
Airport Traffic (November)
Passengers
Domestic ↓ -2.87%
International ↓ -0.71%
Unemployment Rate:

December 2019 3.9%
December 2018 4.1%

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unsubscribe from this list | update subscription preferences Proposal to Provide Revenue Discovery, Audit and Tax Compliance and Consulting Services City of Vallejo, CA March 16, 2020
69 Property Tax Reports
Secured
Nonunitary
Unsecured
2012/13 TO 2016/17 ASSESSED VALUES

THE CITY OF VALLEJO
- 2012/13 - 2013/14 - 2014/15 - 2015/16 - 2016/17
$4,000,000,000 $8,000,000,000 City County
Percent Change
$2,000,000,000 $6,000,000,000 $0
Land
$1,890,536,451 I
$2,030,961,077 7.4% I 6.0%
$2,225,722,913 9.6% I 8.0%
$2,364,852,987 6.3% I 5.8%
$2,482,750,745 5.0% I 5.0%
Improvements
$5,791,878,226 I
$6,281,986,962 8.5% I 7.7%
$6,884,192,902 9.6% I 7.6%
$7,348,373,834 6.7% I 5.8%
$7,796,324,993 6.1% I 6.7%
Personal Property
$303,848,618 I
$274,576,197 -9.6% I 6.6%
$292,829,574 6.6% I 0.5%
$278,334,275 -5.0% I-3.6%
$316,403,325 13.7% I-3.7%
Exemptions
$1,004,710,300 I
$1,030,094,276 2.5% I 2.3%
$1,046,003,721 1.5% I 2.2%
$1,065,910,916 1.9% I 3.6%
$1,084,991,580 1.8% I 1.3%
$3,000,000,000 $6,000,000,000 $9,000,000,000 $12,000,000,000 City County Gross Assessed
$7,986,263,295 I
$8,587,524,236 7.5% I 7.2%
$9,402,745,389 9.5% I 7.2%
$9,991,561,096 6.3% I 5.2%
$10,595,479,063 6.0% I 5.7%
Net Taxable Value
$6,981,552,995 I
$7,557,429,960 8.2% I 7.5%
$8,356,741,668 10.6% I 7.5%
$8,925,650,180 6.8% I 5.3%
$9,510,487,483 6.6% I 5.9%
This report is not to be used in support of debt issuance or continuing disclosure statements without the written consent of HdL, Coren & Cone
Data Source: Solano County Assessor 2012/13 To 2016/17 Combined Tax Rolls Prepared On 2/12/2020 By MV 2016/17 TOP 40 NET TAXABLE SECURED VALUE CHANGES

THE CITY OF VALLEJO
Current Net
Taxable Value
Net Taxable
Parcel Use Category Owner Situs Value Change Value Change from Prior Year 0052-330-150 Commercial Sutter Health Sac Sierra Reg 100 Hospital Dr $14,572,250 +$6,361,113 +77% 0052-230-410 Commercial Park Management Corporation 1001 Fairgrounds Dr $80,326,799 +$3,854,542 +5% 0081-010-460 Commercial Chick-Fil-A Inc 1191 Admiral Callaghan Ln $4,193,716 +$3,824,390 +1,036% 0055-160-390 Residential Marina Annex Associates 575 Sacramento St $3,752,708 +$3,752,708 +9,999% 0051-010-610 Commercial Ogino Ii Llc 3445 Sonoma Blvd $4,771,675 +$2,721,936 +133% 0051-250-620 Industrial Sst Ii 1401 Enterprise St Llc 1401 Marine World Pkwy $5,319,909 +$2,558,176 +93% 0061-160-180 Residential Harbor Park Apartments Lp 933 Porter St $19,720,023 +$2,500,000 +15% 0081-800-280 Commercial Ross Kenneth B And Lissa J Trust 301 Automall Pkwy $11,474,791 +$2,474,791 +27% 0058-071-360 Industrial Vallejo Anchor Self St Prt Llc 501 Solano Ave $3,461,740 +$2,457,622 +245% 0081-560-020 Commercial Brixmor Vallejo Llc 149 Plaza Dr $6,700,000 +$2,086,283 +45% 0071-051-480 Residential Oakwood Care Llc 1025 Oakwood Ave $2,424,000 +$1,576,736 +186% 0066-050-100 Industrial Lennar Mare Island Llc 125 15Th St $21,000,000 +$1,400,000 +7% 0081-500-010 Residential 350 Locust Drive Llc 350 Locust Dr $18,386,921 +$1,377,209 +8% 0051-080-330 Residential Christian Help Center 2168 Sacramento St $1,275,111 +$1,275,111 +9,999% 0075-170-040 Commercial Bay Area Hotel Partners Llc 160 E Lincoln Rd $2,815,000 +$1,240,404 +79% 0059-013-050 Commercial Evergreen Cemetary Association 1301 Georgia St $1,200,000 +$1,200,000 +9,999% 0069-410-220 Residential Vallejo Family Housing Ptr Lp 301 Avian Dr Unit A11 $1,692,861 +$1,198,284 +242% 0061-160-200 Residential Seabreeze Apartments Vj Lp 100 Larissa Ln $12,943,800 +$922,558 +8% 0053-023-170 Commercial L And M Properties 506 Couch St $2,384,373 +$915,814 +62% 0053-200-740 Residential Orinda Investors Lp 2 Panorama Dr $8,131,199 +$898,602 +12% 0053-030-080 Commercial Kaiser Foundation Hospitals 931 Sereno Dr $12,942,187 +$885,642 +7% 0051-240-250 Institutional Hillcrest Baptist Chch Vallejo 2201 Sacramento St $818,160 +$818,160 +9,999% 0056-093-050 Commercial Mabco Investments Llc 1039 Tennessee St $744,900 +$744,900 +9,999% 0082-471-310 Residential Chang Catherine See Kun Joint Trust 7155 Stonebrooke Dr $769,800 +$700,442 +1,010% 0051-163-190 Residential Larrabee James V And Irene J Joint Trust 124 Benson Ave $1,251,803 +$679,920 +119% 0056-173-190 Residential Mabco Investments Llc 800 Capitol St $915,000 +$646,895 +241% 0056-191-130 Commercial Evergreen Cemetery Assoc 336 Georgia St $775,000 +$633,174 +446% 0082-471-320 Residential Yoon Elizabeth Reynolds Trust 7159 Stonebrooke Dr $660,289 +$590,931 +852% 0051-080-420 Institutional Reynaissance Family Center 2160 Sacramento St $588,012 +$588,012 +9,999% 0082-471-360 Residential Hiles Eric 7179 Stonebrooke Dr $630,200 +$560,842 +809% 0082-474-060 Residential Ko Kit S 7178 Stonebrooke Dr $629,800 +$560,442 +808% 0082-471-350 Residential Toledo Dominador And Christine 7175 Stonebrooke Dr $624,651 +$555,293 +801% 0082-474-070 Residential Becerra Maria E Joint Trust 7170 Stonebrooke Dr $613,800 +$544,442 +785% 0082-471-330 Residential Brown Jocelyn A 7163 Stonebrooke Dr $612,648 +$543,290 +783% 0057-146-110 Commercial Area Agency On Aging Sv N And S 400 Contra Costa St $546,837 +$542,197 +11,685% 0055-073-190 Residential Sf Bay Rental I Llc 121 Louisiana St $1,240,000 -$579,311 -32% 0054-020-120 Govt. Owned United States Postal Service 2635 Napa St $0 -$600,000 -100% 0066-020-100 Industrial Kantor Mare Island Properties Limited 321 Azuar Dr $1,113,592 -$953,457 -46% 0183-080-050 Govt. Owned Solano Community College District 1687 N Ascot Pkwy $0 -$1,466,592 -100% 0055-160-180 Residential Marina Tower Associates 601 Sacramento St $639,587 -$9,528,390 -94% This report is not to be used in support of debt issuance or continuing disclosure statements without the written consent of HdL, Coren & Cone Data Source: Solano County Prepared On 2/12/2020 By MV Assessor 2015/16 And 2016/17 Secured Tax Rolls 2016/17 ROLL SUMMARY

THE CITY OF VALLEJO
Taxable Property Values
Secured Nonunitary Utilities Unsecured
2,465,202,709
7,669,091,491
124,722,339
21,466,997
Aircraft
Fixtures
Personal Property
Improvements
Land
TRAs
Parcels
Values
Total Value $10,280,483,536
0 $314,723,735
0 $271,792
0 0
94,733,368
191,680,986
11,033,137
17,276,244
43 1,877
0 0
271,792
6 39,956 25
80 Total Net Value $9,225,819,730
Total Exemptions* $1,054,663,806
Homeowners* 103,794,600
Aircraft
Fixtures 9,101,960
Personal Property 42,379,118
Real Estate 1,003,182,728
Exemptions
0 $30,327,774
$284,395,961
0 0
$0
0 $271,792
84,600
0 2,745,364
26,574,520
1,007,890
0 0
Combined Values Total
Total Values $10,595,479,063
Net Total Values
Total Exemptions
$9,510,487,483
$1,084,991,580
* Note: Homeowner Exemptions are not included in Total Exemptions This report is not to be used in support of debt issuance or continuing disclosure statements without the written consent of HdL, Coren & Cone
Data Source: Solano County Assessor 2016/17 Combined Tax Rolls Prepared On 2/12/2020 By MV

PROPERTY TAX DOLLAR BREAKDOWN

THE CITY OF VALLEJO
$ 0.01527 Solano County Water Agency
$ 0.01474 Vsfcd Operating
$ 0.01365 Library Special Tax Zone 7
$ 0.01025 County Superintendent-co. School Series Fund Sup. $ 0.00807 Acc Cap Outlay*
$ 0.00587 Mosquito Abatement District
$ 0.00334 County Superintendent-board Of Education
$ 0.00219 B A A Q M D
$ 0.00217 County Superintendent-development Center
$ 0.00203 Recreation
$ 0.00119 Aviation
$ 0.00109 County Superintendent-co. School Series Fund Supp. $ 1.0000
$ 0.14297 ERAF Share of County General Fund
$ 0.1703 County General Fund
$ 0.05821 ERAF Share of Vallejo General Fund
$ 0.1880 Vallejo General Fund
$ 0.2407 Vallejo Unified School District M & O
$ 0.02076 ERAF Share of G V R D
$ 0.0441 G V R D
$ 0.0276 Solano Community College M & O
$ 0.0274 County Free Library
ATI (Annual Tax Increment) Ratios for Tax Rate Area 007000, Excluding Redevelopment Factors & Additional Debt Service This report is not to be used in support of debt issuance or continuing disclosure statements without the written consent of HdL, Coren & Cone Data Source: Solano County Assessor 2016/17 Annual Tax Increment Tables Prepared On 2/12/2020 By MV

THE CITY OF VALLEJO
PROPERTY TAX REVENUE - 2016/17
Estimated Revenue, Assuming Zero Delinquency, County Admin Fees Not Deducted TOTAL $9,126,502,971 0.238178400 $21,737,358.71 0.000000 $0.00 $21,737,358.71 UNS $224,385,788 0.246978726 0.000000
UTIL $139,100 0.246223005 0.000000
SEC $8,901,978,083 0.237956450 0.000000
Roll Debt Rate Debt Revenue Total Revenue
General Fund
Rate Revenue
Non SA TRAS
Taxable Value
General Fund Summary - Non SA TRAs
$21,182,831.05
$554,185.16
$342.50
$0.00
$0.00
$0.00
$21,182,831.05
$554,185.16
$342.50
+ Aircraft $0 $0.00 $0.00 $0.00
Total Before Adjustments $9,126,502,971 0.238178400 $21,737,358.71 0.000000 $0.00 $21,737,358.71 + Adjustment for AB-8 Growth (Net effective Total Revenue Loss/Gain) $526,066.72 $526,066.72 + Adjustment for ERAF (From Basic Non-Aircraft Tax Rate Revenue Only) -$5,263,753.88 -$5,263,753.88 Non SA TRAs Total $9,126,502,971 0.186267091 $16,999,671.55 $16,999,671.55 TOTAL $27,200,876
UNS $1,825,084
UTIL $0
SEC $25,375,792
Roll Rate Base Year Revenue Debt Rate Debt Revenue Total Revenue SA TRAS Base Year
Value
$4,493.78
$0.00
$62,481.04

0.246223001 $66,974.81

0.246223000

0.246223007

0.000000000
$0.00
$0.00
$0.00
$0.00

0.000000

0.000000

0.000000

0.000000
$62,481.04
$4,493.78
$66,974.81
$0.00
General Fund Summary - SA TRAs
Net Value
$323,841,647
$60,010,173
$132,692
$383,984,512
+ Aircraft $0 $0 $0.00 $0.00 $0.00
+ Adjustment for AB-8 Growth (Net effective Total Revenue Loss/Gain) $1,620.86 $1,620.86 + Adjustment for ERAF (From Basic Non-Aircraft Tax Rate Revenue Only) -$16,218.11 -$16,218.11 SA TRAs Total $383,984,512 $52,377.56
General Fund Total $9,510,487,483 $9,153,703,847 0.186285785 $17,052,049.11 0.000000 $0.00 $17,052,049.11 SB 2557 County Admin Fees (Current Year Actual Amount)
-$263,422.00
Unitary Revenue $512,577.27
VLF Revenue $9,085,386.00
Homeowner Exemption revenues are included in the revenue model used for this report Data Source: Solano County Assessor 2016/17 Combined Tax Rolls This report is not to be used in support of debt issuance or continuing disclosure statements without the written consent of HdL, Coren & Cone Prepared On 2/12/2020 By MV

THE CITY OF VALLEJO
PROPERTY TAX REVENUE - 2016/17
Estimated Revenue, Assuming Zero Delinquency, County Admin Fees Not Deducted $2,984,658.55
$1,326.92
$581,850.89
Incremental Revenue Summary Total Incremental
Roll SA Taxable Value Base Year Value Incremental Value Rate Incremental Revenue Debt Rate Debt Revenue Revenue UNS
UTIL
SEC $0.00
$0.00
$0.00
$2,984,658.55
$1,326.92
$581,850.89

1.000000000

1.000000000

1.000000000

0.000000

0.000000

0.000000
TOTAL 383,984,512 27,200,876 356,783,636 1.000000000 $3,567,836.36 0.000000 $0.00 $3,567,836.36 $323,841,647
$132,692
$60,010,173
$25,375,792
$0
$1,825,084
$298,465,855
$132,692
$58,185,089
+ Aircraft $0 $0 $0 0.000000000 $0.00 0.000000 $0.00 $0.00 SA Total $383,984,512 $27,200,876 $356,783,636 $3,567,836.36 0.000000 $0.00 $3,567,836.36 SB 2557 County Admin Fees Not Available
Homeowner Exemption revenues are included in the revenue model used for this report Data Source: Solano County Assessor 2016/17 Combined Tax Rolls This report is not to be used in support of debt issuance or continuing disclosure statements without the written consent of HdL, Coren & Cone Prepared On 2/12/2020 By MV
2016/17 USE CATEGORY SUMMARY

THE CITY OF VALLEJO

BASIC PROPERTY TAX TABLE
Category Parcels Net Taxable Value G. F. Revenue Gross RPTTF Rev Residential 35,519 $7,919,436,348 (83.3%) $14,476,225.27 $1,085,736.54 Commercial 1,028 $1,004,001,598 (10.6%) $1,648,171.62 $1,510,670.16 Industrial 152 $180,961,428 (1.9%) $291,224.38 $347,227.12 Dry Farm 11 $1,100,723 (0.0%) $2,039.23 $0.00
Govt. Owned 906 $2,949,760 (0.0%) $4,667.07 $0.00
Institutional 173 $10,816,498 (0.1%) $20,734.10 $550.55 Irrigated 3 $1,003,628 (0.0%) $1,940.58 $0.00
Miscellaneous 1,097 $139,182 (0.0%) $178.51 $0.00
Recreational 14 $4,335,737 (0.0%) $8,130.87 $1,132.23
Vacant 1,053 $101,074,828 (1.1%) $161,555.54 $39,341.94 SBE Nonunitary [25] $271,792 (0.0%) $267.85 $1,326.92
Unsecured [1,877] $284,395,961 (3.0%) $436,914.10 $581,850.89 TOTALS 39,956 $9,510,487,483 $17,052,049.11 $3,567,836.36

84.9%
Residential

9.7%
Commercial

2.6%
Unsecured

1.7%
Industrial

1.2%
Others

CITY REVENUE PORTION

42.3%
Commercial

30.4%
Residential

16.3%
Unsecured

10.9%
Others

INCREMENTAL REVENUE PORTION
This report is not to be used in support of debt issuance or continuing disclosure statements without the written consent of HdL, Coren & Cone
Data Source: Solano County Assessor 2016/17 Combined Tax Rolls Prepared On 2/12/2020 By MV 2016/17 GROWTH BY USE CATEGORY

THE CITY OF VALLEJO
2015/16 to 2016/17 Value Growth by Use Category
Category 2015/16 Net Taxable Value 2016/17 Net Taxable Value $ Change % Change Residential 35,491 $7,448,045,564 35,519 $7,919,436,348 (83.3%) $471,390,784 6.3% Commercial 1,026 $952,073,751 1,028 $1,004,001,598 (10.6%) $51,927,847 5.5% Unsecured [1,655] $230,910,021 [1,877] $284,395,961 (3.0%) $53,485,940 23.2% Industrial 150 $169,936,256 152 $180,961,428 (1.9%) $11,025,172 6.5% Vacant 1,080 $106,806,091 1,053 $101,074,828 (1.1%) -$5,731,263 -5.4% Institutional 175 $8,723,821 173 $10,816,498 (0.1%) $2,092,677 24.0% Recreational 14 $4,309,600 14 $4,335,737 (0.0%) $26,137 0.6% Govt. Owned 896 $2,380,315 906 $2,949,760 (0.0%) $569,445 23.9% Dry Farm 11 $1,090,196 11 $1,100,723 (0.0%) $10,527 1.0% Irrigated 3 $988,553 3 $1,003,628 (0.0%) $15,075 1.5%
SBE Nonunitary [25] $245,962 [25] $271,792 (0.0%) $25,830 10.5% Miscellaneous 1,099 $140,050 1,097 $139,182 (0.0%) -$868 -0.6% TOTALS 39,945 $8,925,650,180 39,956 $9,510,487,483 (100.0%) $584,837,303 6.6% Numbers in blue are parcel/assessment counts
$0
$1,000,000,000
$2,000,000,000
$3,000,000,000
$4,000,000,000
$5,000,000,000
$6,000,000,000
$7,000,000,000
$8,000,000,000
Residential Commercial Unsecured Industrial Vacant Institutional Recreational Use Category
Net Value
Assessed Value by Major Use Category
2015/16
2016/17
This report is not to be used in support of debt issuance or continuing disclosure statements without the written consent of HdL, Coren & Cone Data Source: Solano County Assessor 2016/17 Combined Tax Rolls Prepared On 2/12/2020 By MV 2016/17 USE CATEGORY SUMMARY

THE CITY OF VALLEJO

BASIC PROPERTY VALUE TABLE
Category Parcels Net Taxable Value Revenue
Residential 3,901 $345,582,716 (48.0%) $709,786.25 (29.0%) Commercial 200 $274,868,034 (38.2%) $1,368,168.45 (56.0%) Industrial 40 $77,282,475 (10.7%) $311,952.98 (12.8%)
Dry Farm 8 $571,749 (0.1%) $1,010.79 (0.0%)
Govt. Owned 802 $0 (0.0%) $0.00 (0.0%)
Institutional 123 $1,928,925 (0.3%) $4,159.89 (0.2%)
Irrigated 2 $406,100 (0.1%) $789.99 (0.0%)
Miscellaneous 527 $139,182 (0.0%) $178.51 (0.0%)
Recreational 10 $1,470,771 (0.2%) $3,746.37 (0.2%)
Vacant 236 $17,653,266 (2.5%) $44,005.94 (1.8%)
TOTALS 5,849 $719,903,218 $2,443,799.17

56.0%
Commercial

29.0%
Residential

12.8%
Industrial

2.2%
Others
Revenue

48.0%
Residential

38.2%
Commercial

10.7%
Industrial

2.5%
Vacant

0.6%
Others
Net Taxable Value
This report is not to be used in support of debt issuance or continuing disclosure statements without the written consent of HdL, Coren & Cone
Data Source: Solano County Assessor 2016/17 Combined Tax Rolls Prepared On 2/12/2020 By MV TRANSFER OF OWNERSHIP (2012 - 2016)

THE CITY OF VALLEJO
Single Family Residential Multifamily, Commercial, Industrial, Vacant Totals $
Change
%
Change
Sale
Price
Original
Values
Non SFR
Sales
Total
Sales
Original
Values
Sale
Values
%
Change
%
Change
Sale
Price
Tax
Year
# SFR
Sales
Original
Values
ENTIRE CITY Valid Sales Price Analysis
2016 1,778 1,986 $451,531,198 $687,531,700 $236,000,502 1/1/16-12/31/16
$385,565,576 $565,230,200 46.6% 208 $65,965,622 $122,301,500 85.4% 52.3% 2015 1,604 1,765 $388,042,428 $563,308,262 $175,265,834 1/1/15-12/31/15
$328,210,129 $460,919,262 40.4% 161 $59,832,299 $102,389,000 71.1% 45.2% 2014 1,501 1,650 $315,531,946 $431,220,026 $115,688,080 1/1/14-12/31/14
$277,852,233 $383,510,026 38.0% 149 $37,679,713 $47,710,000 26.6% 36.7% 2013 1,603 1,764 $300,543,979 $380,035,044 $79,491,065
1/1/13-12/31/13
$264,496,089 $335,958,544 27.0% 161 $36,047,890 $44,076,500 22.3% 26.4% 2012 2,011 2,161 $347,489,333 $362,084,233 $14,594,900
1/1/12-12/31/12
$308,798,323 $329,561,097 6.7% 150 $38,691,010 $32,523,136 -15.9% 4.2% GENERAL FUND Valid Sales Price Analysis
2016 1,748 1,939 $436,862,150 $666,198,700 $229,336,550 1/1/16-12/31/16
$380,798,554 $558,073,700 46.6% 191 $56,063,596 $108,125,000 92.9% 52.5% Est. Revenue Change: $419,998.20
2015 1,580 1,733 $381,343,524 $553,092,762 $171,749,238 1/1/15-12/31/15
$325,185,993 $455,917,262 40.2% 153 $56,157,531 $97,175,500 73.0% 45.0% Est. Revenue Change: $319,083.20
2014 1,476 1,611 $307,224,662 $420,382,526 $113,157,864 1/1/14-12/31/14
$274,723,402 $379,028,526 38.0% 135 $32,501,260 $41,354,000 27.2% 36.8% Est. Revenue Change: $214,701.02
2013 1,584 1,733 $295,360,181 $374,017,544 $78,657,363
1/1/13-12/31/13
$262,701,605 $333,348,544 26.9% 149 $32,658,576 $40,669,000 24.5% 26.6% Est. Revenue Change: $146,957.08
2012 1,983 2,122 $341,374,302 $356,856,733 $15,482,431
1/1/12-12/31/12
$305,959,158 $326,796,097 6.8% 139 $35,415,144 $30,060,636 -15.1% 4.5% Est. Revenue Change: $31,043.21
VALLEJO SA Valid Sales Price Analysis
2016 30 47 $14,669,048 $21,333,000 $6,663,952
1/1/16-12/31/16
$4,767,022 $7,156,500 50.1% 17 $9,902,026 $14,176,500 43.2% 45.4% Est. Gross RPTTF Rev Change: $66,639.52^
2015 24 32 $6,698,904 $10,215,500 $3,516,596
1/1/15-12/31/15
$3,024,136 $5,002,000 65.4% 8 $3,674,768 $5,213,500 41.9% 52.5% Est. Gross RPTTF Rev Change: $35,165.96^
2014 25 39 $8,307,284 $10,837,500 $2,530,216
1/1/14-12/31/14
$3,128,831 $4,481,500 43.2% 14 $5,178,453 $6,356,000 22.7% 30.5% Est. Gross RPTTF Rev Change: $25,302.16^
2013 19 31 $5,183,798 $6,017,500 $833,702
1/1/13-12/31/13
$1,794,484 $2,610,000 45.4% 12 $3,389,314 $3,407,500 0.5% 16.1% Est. Gross RPTTF Rev Change: $8,337.02^
2012 28 39 $6,115,031 $5,227,500 -$887,531
1/1/12-12/31/12
$2,839,165 $2,765,000 -2.6% 11 $3,275,866 $2,462,500 -24.8% -14.5% Est. Gross RPTTF Rev Change: -$8,875.31^
* Sale value is a sum of all full value parcel sales (sales not included are quitclaim deeds, trust transfers, partial sales, timeshares, and non-reported document number transfers). Est Rev Change includes all assigned agencies. ^ RPPTTF revenue reflects all Incremental revenue (including qualified override rates) generated in successor project areas, excluding base year revenue.

Prepared On 2/12/2020 By MV
This report is not to be used in support of debt issuance or continuing disclosure statements without the written consent of HdL, Coren & Cone Datasource: Solano County 2012/13 - 2016/17 Secured Tax Roll And County Recorder

SALES VALUE HISTORY

THE CITY OF VALLEJO
Detached Single Family Residential Full Value Sales (01/01/2007 - 12/31/2019) Year Full Value Sales Average Price Median Price Median % Change 2007 938 $408,347 $395,000
2008 1,531 $263,170 $240,000 -39.24%
2009 2,408 $179,009 $151,000 -37.08%
2010 1,808 $183,499 $162,000 7.28%
2011 1,845 $163,144 $150,000 -7.41%
2012 1,904 $170,884 $155,000 3.33%
2013 1,499 $213,155 $190,000 22.58%
2014 1,427 $259,021 $245,000 28.95%
2015 1,520 $291,174 $275,000 12.24%
2016 1,697 $323,430 $315,000 14.55%
$0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
$400,000
$450,000
2007200820092010201120122013201420152016
Median Price Avg Price
Year
Sales Price
*Sales not included in the analysis are quitclaim deeds, trust transfers, timeshares, and partial sales.

This report is not to be used in support of debt issuance or continuing disclosure statements without the written consent of HdL, Coren & Cone
Data Source: Solano County Recorder Prepared On 2/12/2020 By MV PROP 8 POTENTIAL RECAPTURE HISTORY

THE CITY OF VALLEJO
Single Family Residential Parcels
Prop 8
Parcel
Count
Potential
Recapture
Roll
Year
% of
All Parcels
Real Value of
Prop 8 Parcels
Inflation
Adjusted Peak
Taxable Values
Prop 8 Parcels that
have Recaptured
Value
Increase in Real
AV Due to
Recaptures
Prop 8 Parcels
that have fully
Recaptured
Increase in Real
AV Due to full
Recaptures
2008 6,564 2,261,428,544 3,023,619,223 762,190,679 19.7% 7 428,833 11 513,159 2009 14,885 3,026,176,173 5,108,409,996 2,082,233,823 44.5% 151 1,962,984 3,153 59,529,194 2010 16,691 3,218,947,330 5,276,955,370 2,058,008,040 49.9% 734 11,710,069 3,965 70,153,182 2011 17,790 3,303,423,768 5,301,565,573 1,998,141,805 53.1% 141 2,250,575 1,483 21,225,680 2012 20,235 3,387,221,162 5,550,674,056 2,163,452,894 60.4% 4,778 119,445,434 18,866 514,193,015 2013 14,430 2,891,664,899 4,481,115,356 1,589,450,457 44.2% 6,511 200,686,785 13,949 617,129,159 2014 7,569 1,950,090,404 2,875,654,669 925,564,265 23.2% 1,866 55,834,148 7,158 280,188,471 2015 5,478 1,671,156,403 2,331,946,708 660,790,305 16.8% 995 27,946,983 4,987 159,152,861 2016 4,043 1,415,294,760 1,895,629,801 480,335,041 12.4% $0
$400,000,000
$800,000,000
$1,200,000,000
$1,600,000,000
$2,000,000,000
$2,400,000,000
200820092010201120122013201420152016
Recapture Potential
Recaptured Value
Fully Recaptured
Prop 8 History
0 2,000,000,000
4,000,000,000
6,000,000,000
8,000,000,000
10,000,000,000
200220032004200520062007200820092010201120122013201420152016 Potential Recapture
Net AV
Totals for Single Family Residential Parcels
The report identifies those parcels which have been granted a value reduction and are eligible for further potential of recaptured value per Proposition 8. The reductions were based on market conditions at the time of assessor review. This calculation is derived from historical transfers of ownership, Assessor applied Proposition 8 reductions and trends in the marketplace relative to median and average home sales and is an estimate of the impact of current adjustments to the assessment roll as of the 2016-17 lien date.

The Inflation Adjusted Peak Value is defined as a parcel’s highest value after its most recent sale. If a parcel is assessed for a lower value after its most recent sale, then the sales price becomes the peak value. Peak values are inflated annually according to the maximum allowed rate under proposition 13.

The count of Prop 8 Parcels that have recaptured value includes both parcels that have been fully recaptured and are no longer in the Prop 8 Parcel Count as well as parcels that have only recaptured a portion of the Inflation Adjusted Peak Values.

The Proposition 8 potential value recapturing is shown in the Potential Recapture Column and assumes no future sales transactions. As properties transfer ownership they are removed from the Prop 8 Parcel Count This report is not to be used in support of debt issuance or continuing disclosure statements without the written consent of HdL, Coren & Cone Data Source: Solano County V3.0 Prepared On 2/12/2020 By MV Assessor Combined Tax Rolls; Sales Through 12/31/2019 Top Property Owners Based On Net Values

THE CITY OF VALLEJO
2016/17 TOP TEN PROPERTY TAXPAYERS
Owner Secured Unsecured Combined Primary Use &
Parcels Value Parcels Value Value Primary Agency % of
Net AV
% of
Net AV
% of
Net AV
1) 9 $106,887,633 $106,887,633
Commercial

1.16% 1.12%
Vallejo General Fund (Pending Appeals On Parcels)

CENTRO WATT PROPERTY OWNER II
2) 2 $80,326,799 1 $1,329,800 $81,656,599
Commercial

0.87% 0.47% 0.86%
Successor Agency

PARK MANAGEMENT CORPORATION
3) 281 $59,352,261 $59,352,261
Residential

0.64% 0.62%
Vallejo General Fund

PRIME ASCOT LP
4) 3 $37,258,256 $37,258,256
Unsecured

13.10% 0.39%
Vallejo General Fund

CHEVRON USA INC
5) 294 $35,045,873 $35,045,873
Residential

0.38% 0.37%
Vallejo General Fund

SUNDANCE-VALLEJO
6) 2 $31,506,663 $31,506,663
Commercial

0.34% 0.33%
Vallejo General Fund

OGINO LLC
7) 1 $31,378,580 $31,378,580
Residential

0.34% 0.33%
Vallejo General Fund

MG STERLING VILL APARTMENTS GWP LP
8) 2 $27,248,250 $27,248,250
Residential

0.30% 0.29%
Vallejo General Fund

KW WDC VALLEJO LLC
9) 11 $26,233,437 $26,233,437
Commercial

0.28% 0.28%
Vallejo General Fund

URBAN LAND COMPANY
10) 62 $25,765,011 1 $45,030 $25,810,041
Industrial

0.28% 0.02% 0.27%
Vallejo General Fund (Pending Appeals On Parcels)

LENNAR MARE ISLAND LLC
Top Ten Total 664 $423,744,507 4.59% 5 $38,633,086 13.58% $462,377,593 4.86% City Total $9,226,091,522 $284,395,961 $9,510,487,483
Top Owners last edited on 10/7/16 by MaheaV using sales through 08/31/16 (Version R.1) This report is not to be used in support of debt issuance or continuing disclosure statements without the written consent of HdL, Coren & Cone Data Source: Solano County Assessor 2016/17 Combined Tax Rolls and the SBE Non Unitary Tax Roll Prepared On 2/12/2020 By MV

NONRESIDENTIAL NEW CONSTRUCTION

THE CITY OF VALLEJO
2015/16 TO 2016/17 TAX YEARS - IN PARCEL NUMBER ORDER
Current Year
Improvements
Prior Year
Parcel Use Category Owner Improvements
Percent
Change
0051-010-270 Commercial Gawfco Enterprises Inc 346,464 429,242 + 23.9% 0051-020-450 Commercial Lim John 17,000 30,000 + 76.5%
0051-050-200 Commercial 2200 Sacramento Street Llc 289,771 302,309 + 4.3% 0051-100-040 Commercial Sha Petro Inc 149,934 227,220 + 51.5% 0051-250-550 Industrial Extra Sp Properties Seventy Four Llc 2,530,908 2,572,902 + 1.7% 0052-052-240 Commercial Turner Clarence H And J M Trust 35,168 50,436 + 43.4% 0052-230-410 Commercial Park Management Corporation 9,845,907 10,858,172 + 10.3% 0053-010-600 Commercial Barber Vallejo Properties Lp 68,957 430,000 + 523.6% 0053-023-170 Commercial L And M Properties 1,344,310 2,258,230 + 68.0% 0053-232-180 Commercial H And S Energy Llc 226,498 377,664 + 66.7% 0054-012-100 Commercial Foster Lumber Yard Inc 212,706 218,413 + 2.7% 0054-105-180 Commercial Sutter Solano Charitable Fndtn 280,112 290,003 + 3.5% 0054-110-230 Institutional Community Bible Chrch Vj So City 7,081,034 7,300,569 + 3.1% 0055-065-010 Commercial Laylay Guillermo And L Joint Trust 5,225 235,304 + 4,403.4% 0055-092-120 Commercial Gonzalez Jose R Trust 170,000 196,000 + 15.3% 0055-160-520 Commercial Milestones Of Development Inc 571,819 665,460 + 16.4% 0056-021-310 Commercial Local Union 343 Of 139,203 143,227 + 2.9% 0056-045-290 Commercial Arriola Roberto And Maria R Joint Trust 227,352 280,000 + 23.2% 0056-085-010 Commercial Kelly-Moore Paint Company Inc 277,559 283,418 + 2.1% 0056-091-240 Commercial Jpmorgan Chase Bank Na 1,474,314 1,556,797 + 5.6% 0056-121-310 Commercial Oakwood Senior Care Llc 415,000 694,000 + 67.2% 0056-194-020 Commercial La Clinica De La Raza Inc 192,000 263,000 + 37.0% 0056-194-030 Commercial La Clinica De La Raza Inc 192,000 263,000 + 37.0% 0056-225-190 Commercial Christov Michael 25,000 30,000 + 20.0% 0056-225-200 Commercial Christov Michael 78,000 84,000 + 7.7% 0056-244-040 Commercial J And W Investments Llc 153,438 158,209 + 3.1% 0057-042-130 Commercial Hardiman Vaughn 437,445 453,048 + 3.6% 0057-111-190 Commercial Lim Ou And Line Joint Trust 122,397 309,263 + 152.7% 0057-181-030 Commercial Weir Mary A Trust 28,516 31,446 + 10.3% 0058-060-400 Industrial Meyer Cookware Industries Inc 14,633,903 14,903,488 + 1.8% 0058-082-010 Industrial Vallejo Fire Extinguisher 19,414 37,621 + 93.8% 0059-013-050 Commercial Evergreen Cemetary Association 800,000 960,000 + 20.0% 0061-080-220 Industrial Sparkletts Waters Of North Am 258,075 327,720 + 27.0% 0061-190-150 Commercial Patel Prakash D And C P Trust 332,063 338,736 + 2.0% 0061-213-030 Commercial Naran Ramesh G And K R Joint Trust 304,915 356,837 + 17.0% 0062-061-320 Commercial Patel Chambak M And Usha C 308,160 318,959 + 3.5% 0062-080-090 Commercial Safapour Iraj And Mahvash Trust 294,277 343,764 + 16.8% 0068-151-090 Commercial Awad Naim A 792,000 1,664,369 + 110.1% 0069-070-290 Commercial Callaghan Crossroads Ent Llc 743,231 774,870 + 4.3% 0069-122-060 Commercial Sull Rajinder And Sukhvinder K 316,464 530,766 + 67.7% 0069-175-110 Commercial Ebis Gasoline And Food Mart Inc 920,800 1,034,802 + 12.4% 0069-340-180 Commercial Au Energy Llc 440,137 610,025 + 38.6% 0069-441-110 Institutional Four Square Gospel Church 372,101 380,575 + 2.3% 0071-017-170 Commercial R And M Rashidy Investment Company Llc 407,300 425,860 + 4.6% 0081-010-460 Commercial Chick-Fil-A Inc 0 1,583,047 + 99,999.9% 0081-570-030 Commercial Costco Wholesale Corporation 7,783,437 8,838,606 + 13.6% 0081-800-420 Commercial Lowes Hiw Inc 9,154,175 9,488,946 + 3.7% 47 Parcels Listed 64,818,489 73,910,323 + 14.0%
Includes taxable primary parcels with known nonresidential use codes, no prior lien year transfers, and improvement value increases greater than 1.5% Change in Total Assessed Value is the assessed value change of the locally assessed secured and unsecured tax rolls .

This report is not to be used in support of debt issuance or continuing disclosure statements without the written consent of HdL, Coren & Cone Data Source: Solano County Assessor 2016/17 Secured Tax Rolls Prepared On 2/12/2020 By MV

NONRESIDENTIAL NEW CONSTRUCTION

THE CITY OF VALLEJO
2015/16 TO 2016/17 TAX YEARS - IN PARCEL NUMBER ORDER
Current Year
Improvements
Prior Year
Parcel Use Category Owner Improvements
Percent
Change
This calculation reflects the 2016/17 increase in taxable values for this city due to non-residential new construction as a percentage of the total taxable value Increase (as of the 2016/17 lien year roll date). This percentage may be used as an alternative to the change in California per-capita personal income for calculating a taxing agency's annual adjustment of its Appropriation Limit pursuant to Article XIIIB of the State Constitution as Amended by Proposition 111 in June, 1990.
9,091,834
-988,482
8,103,352
584,811,473

1.39%
Total Change in Non-Residential Valuation Due to New Development Less Automatic 1.525% Assessors's Inflation Adjustment
Actual Change in Non-Residential Valuation
Change in Total Assessed Value
= Alternate 2017/18 Appropriations Limit Factor
Includes taxable primary parcels with known nonresidential use codes, no prior lien year transfers, and improvement value increases greater than 1.5% Change in Total Assessed Value is the assessed value change of the locally assessed secured and unsecured tax rolls .

This report is not to be used in support of debt issuance or continuing disclosure statements without the written consent of HdL, Coren & Cone Data Source: Solano County Assessor 2016/17 Secured Tax Rolls Prepared On 2/12/2020 By MV

GENERAL FUND REVENUE ESTIMATE

SAMPLE CITY
2017-18 Revenue Estimate based on 2016-17 Values and Estimated Changes General Fund VLFAA
General Fund and BY Values 2016-17 $9,583,608,914
Citywide Net Taxable Value 2016-17 $10,446,959,825
Real Property Value (Incl. Prop 8 parcels) $8,762,067,328 $10,006,577,947 CPI of Non Prop 8 Parcels (2.000%) $167,775,582 $192,432,475 Transfer of Ownership Assessed Value Change $176,277,015 $186,620,940 Est. SFR Prop 8 Adj Based on Recent SFR Price $25,527,100 $28,505,889 2017-18 Estimated Real Property Value $9,131,647,025 $10,414,137,251 Base Year Values $495,792,738 Included in AV
Secured Personal Property Value (0.0% growth) $108,720,100 $119,590,651 Unsecured Personal Property Value (0.0% growth) $216,200,912 $319,435,584 Nonunitary Utility Value $827,836 $1,355,643
Enter Completed New Construction
2017-18 Estimated Net Taxable Value $9,953,188,611 $10,854,519,129 Estimated Total Percent Change 2017-18 3.86% 3.90%
Taxed @ 1% $99,531,886
Aircraft Value $24,899,889
Average City Share 0.1125343085 $11,200,752
Aircraft Rate (.01 * 0.333333333) $83,000
Enter Unitary Taxes Budgeted Flat
Net GF Estimate for 2017-18 $11,283,752
Enter Suppl. Apportionment Recd. - Avg. 3 Yrs
Enter Delinquent Apportionment Recd. - Avg. 3 Yrs
Base Value of VLFAA $10,481,820
Estimated Change to VLFAA $408,791
VLFAA Estimate for 2017-18 $10,890,611
NOTES:
● Estimated Assessor Prop 8 Adjustments: Prop 8 reductions in value are TEMPORARY reductions applied by the assessor that recognize the fact that the current market value of a property has fallen below its trended (Prop 13) assessed value. For 2017-18, properties with prior Prop 8 reductions are not included in the CPI increase. Prop 8 parcel values are projected to be increased, decreased, or projected flat depending on median sale price changes until they are sold and reset per Prop 13. ● Base Year Values Entry: With the dissolution of redevelopment, base year values are unlikely to change and are budgeted flat. ● Secured personal property and unsecured values are projected at 100% of 2016-17 levels. Unsecured escaped assessments may be included in the unsecured value. The value of escaped assessments is generally inconsistent and varies from year to year. ● Completed new construction entry: if completed new construction has resulted in a sale of the property it is likely that the new value will appear in the value increase due to transfers of ownership entry and therefore should not be also included in the completed new construction value. Enter the value of new construction completed between Nov. 2015 and Oct. 2016. ● Supplemental and delinquent revenue allocations are pooled countywide and are erratic. They should be budgeted conservatively using historical averages over a minimum of 3 years.
● General Fund Revenue Estimate does not include any ad valorem voter approved debt service revenue. ● The revenue projection assumes 100% payment of taxes. Delinquency is not considered in the projection; however, rates of between 1% and 2.5% are typical.
● Pass through and residual revenues from former redevelopment agencies are not included in this estimate. ● SB 2557 Administration Fees are not deducted from the general fund projections.

Prepared on 2/12/20 Using Sales Through 12/31/19
This report is not to be used in support of debt issuance or continuing disclosure statements without the written consent of HdL Coren & Cone

GENERAL FUND REVENUE ESTIMATE

SAMPLE CITY
2017-18 Revenue Estimate based on 2016-17 Values and Estimated Changes General Fund 2017-18 2018-19 2019-20 2020-21 2021-22
General Fund and BY Values $9,583,608,914 $9,953,188,611 $10,255,135,614 $10,563,628,489 $10,879,092,539 Real Property Value (Incl. Prop 8 parcels) $8,762,067,328 $9,131,647,025 $9,433,594,028 $9,742,086,903 $10,057,550,953 CPI of Non Prop 8 Parcels (Max 2.0%) $167,775,582 174,929,637 181,274,765 187,732,476 194,323,198 Transfer of Ownership Assessed Value Change $176,277,015 111,515,627 114,948,078 118,478,493 122,109,340 Est. SFR Prop 8 Adj Based on Recent SFR Price $25,527,100 $15,501,739 $12,270,032 $9,253,082 $6,422,734 Estimated Real Property Value $9,131,647,025 $9,433,594,028 $9,742,086,903 $10,057,550,953 $10,380,406,224 Base Year Values $495,792,738 $495,792,738 $495,792,738 $495,792,738 $495,792,738 Secured Personal Property Value (0.0% growth) $108,720,100 $108,720,100 $108,720,100 $108,720,100 $108,720,100 Unsecured Personal Property Value (0.0% growth) $216,200,912 $216,200,912 $216,200,912 $216,200,912 $216,200,912 Nonunitary Utility Value (0.0% growth) $827,836 $827,836 $827,836 $827,836 $827,836 Enter Completed New Construction
Estimated Net Taxable Value $9,953,188,611 10,255,135,614 10,563,628,489 10,879,092,539 11,201,947,810 Estimated Total Percent Change 3.86% 3.03% 3.01% 2.99% 2.97% Taxed @ 1% $99,531,886 $102,551,356 $105,636,285 $108,790,925 $112,019,478 Aircraft Value $24,899,889 $24,899,889 $24,899,889 $24,899,889 $24,899,889 Average City Share 0.1125343085 $11,200,752 $11,540,546 $11,887,706 $12,242,712 $12,606,035 Aircraft Rate (.01 * 0.333333333) $83,000 $83,000 $83,000 $83,000 $83,000 Enter Unitary Taxes Budgeted Flat
Net GF Estimate $11,283,752 $11,623,546 $11,970,706 $12,325,711 $12,689,034 Enter Suppl. Apportionment - Average 3 Yrs.

Enter Delinquent Apportionment - Average 3 Yrs.

GENERAL FUND REVENUE ESTIMATE

SAMPLE CITY
2017-18 Revenue Estimate based on 2016-17 Values and Estimated Changes VLFAA 2017-18 2018-19 2019-20 2020-21 2021-22
Citywide Net Taxable Value $10,446,959,825 $10,854,519,129 $11,197,943,996 $11,549,139,117 $11,908,572,993 Real Property Value (Incl. Prop 8 parcels) $10,006,577,947 $10,414,137,251 $10,757,562,118 $11,108,757,239 $11,468,191,115 CPI of Non Prop 8 Parcels (Max 2.0%) $192,432,475 $200,309,759 $207,487,688 $214,806,097 $222,282,546 Transfer of Ownership Assessed Value Change $186,620,940 $127,059,429 $130,988,857 $135,030,919 $139,189,098 Est. SFR Prop 8 Adj Based on Recent SFR Price $28,505,889 $16,055,679 $12,718,576 $9,596,860 $6,665,405 Estimated Real Property Value $10,414,137,251 $10,757,562,118 $11,108,757,239 $11,468,191,115 $11,836,328,164 Secured Personal Property Value (0.0% growth) $119,590,651 $119,590,651 $119,590,651 $119,590,651 $119,590,651 Unsecured Personal Property Value (0.0% growth) $319,435,584 $319,435,584 $319,435,584 $319,435,584 $319,435,584 Nonunitary Utility Value $1,355,643 $1,355,643 $1,355,643 $1,355,643 $1,355,643 Enter Completed New Construction
Estimated Net Taxable Value $10,854,519,129 $11,197,943,996 $11,549,139,117 $11,908,572,993 $12,276,710,042 Estimated Total Percent Change 3.90% 3.16% 3.14% 3.11% 3.09% Base Value of VLFAA $10,481,820 $10,890,611 $11,234,754 $11,587,526 $11,947,898 Estimated Change to VLFAA $408,791 $344,143 $352,771 $360,372 $369,190 VLFAA Estimate $10,890,611 $11,234,754 $11,587,526 $11,947,898 $12,317,088 NOTES:
● Transfer of Ownership Assessed Value Change: For years 2018-19 and later a growth rate is applied that is representative of the historical average rate of real property growth due to properties that have transferred ownership. The percentage used in Tulare County of 1.21% is applied to real property value. ● Estimated Assessor Prop 8 Adjustments: Prop 8 reductions in value are TEMPORARY reductions applied by the assessor that recognize the fact that the current market value of a property has fallen below its trended (Prop 13) assessed value. For 2017-18 and later, properties with prior Prop 8 reductions are not included in the CPI increase, they are projected flat until either the Assessor begins to recapture value as the economy improves and median sale prices begin to increase, they are further reduced, or they sell and are reset per Prop 13. ● Where they exist, Prop 8 restoration adjustments are based on projected median SFR home price growth. For this projection the following median year to year percentage changes are used for Visalia: 2018-19 @ 4.3%; 2019-20 @ 3.5%; 2020-21 @ 2.8%; 2021-22 @ 2.0%; ● Base Year Values Entry: With the dissolution of redevelopment, base year values are unlikely to change and are budgeted flat. ● Secured personal property and unsecured values are projected at 100% of 2016-17 levels. Unsecured escaped assessments may be included in the unsecured value. The value of escaped assessments is generally inconsistent and varies from year to year. ● Completed new construction entry: This data entry point allows for the inclusion of new construction projects completed annually. Due to processing delays we suggest that a time frame of November - October be selected. (i.e. Nov. 2015 - Oct. 2016 for the 2018-19 FY). If completed new construction has resulted in a sale of the property it is likely that the new value will appear in the value increase due to transfers of ownership entry and therefore should not be also included in the completed new construction value. ● Pooled Revenue Sources include supplemental allocations, redemptions for delinquent payments in Non-Teeter cities, tax payer refunds due to successful appeals, roll corrections and other adjustments applied after the release of the roll. The forecasting of these revenues should be developed based on historical averages over a minimum of 3 years. ● General Fund Revenue Estimate does not include any ad valorem voter approved debt service revenue. ● The revenue projection assumes 100% payment of taxes. Delinquency is not considered in the projection; however, rates of between 1% and 2.5% are typical. ● Pass through and residual revenues from former redevelopment agencies are not included in this estimate.

Prepared on 2/12/20 Using Sales Through 12/31/19
This report is not to be used in support of debt issuance or continuing disclosure statements without the written consent of HdL Coren & Cone

SCHEDULE A
Scope of Services and Fees
1248933.2 Page 1 of 17

SALES, USE AND TRANSACTION TAX SCOPE OF SERVICES

1. Sales, Use and Transactions Tax and Economic Analysis/Forecasting Services/Reports

1.1. Establish a special database identifying the name, address, and allocations of Client’s sales tax producers. This database will be utilized to generate special reports to Client on major sales tax producers by rank and category, sales tax activity by categories, identification of reporting aberrations, and per capita and outlet comparisons with regional and statewide sales.

1.2. Provide periodic updated reports to Client identifying changes in sales by individual businesses, business groups and categories, and by geographic area. These reports may include, without limitation, aberrations due to State audits, fund transfers, and receivables, along with late or double payments, and reconciliation worksheets to assist with budget forecasting.

1.3. Provide periodic summaries for Client to share with others if it so desires (including the general public) that analyze Client’s sales tax trends by major groups and geographic areas without disclosing confidential individual tax records.

1.4. Establish a special database with California Department of Tax and Fee Administration (“CDTFA”) registration data for businesses within applicable measure/district boundaries holding seller’s permit accounts. Endeavor to identify transactions and use tax measure/district allocations under such accounts for the most current quarter and immediately prior quarter where available.

1.5. Pursuant to MSA Section 6.3, periodically license for the limited, non-exclusive, non-transferable use by Client’s staff certain of Consultant’s web-based sales, use and/or transactions tax program(s) containing sellers permit, registration, allocation and related information for business outlets within Client’s jurisdiction registered with the CDTFA.

1.6. Provide periodic updated reports endeavoring to identify and assist with budget forecasting (i) changes in allocation totals by individual businesses, business groups and categories, and (ii) aberrations due to State audits, fund transfers, and receivables, along with late or double payments.

2. Allocation and Audit Recovery Services

2.1. Conduct (as and when mutually agreed with Client) initial and on-going sales, use and transactions tax audits of businesses to help identify and correct distribution and allocation errors, and to help effect favorable registration, reporting or formula changes thereby generating previously unrealized sales, use or transactions tax income for Client and/or recover misallocated tax from registered taxpayers. Common errors to be monitored and corrected include transposition errors resulting in misallocations; erroneous consolidation of multiple outlets; formula errors; misreporting of “point of sale” to the wrong location; delays in reporting new outlets; misallocating use tax payments to the allocation pools or wrong jurisdiction; and erroneous fund transfers and adjustments.

2.2. Initiate contacts with the CDTFA and sales management and accounting officials in companies that have businesses where a probability of error exists to endeavor to help verify whether current tax receipts accurately reflect the local sales activity.

2.3. Prepare and submit to the CDTFA information for the purpose of correcting any identified allocation errors, and follow-up with individual businesses and the CDTFA to advocate for Client recovery of back or prospective payments that may be owing.

2.4. If, during the course of its audit, Consultant finds businesses located in Client’s jurisdiction that are properly reporting sales, use or transactions taxes but have the potential for modifying their operation to provide an even greater share to Client, Consultant may so advise Client and collaborate with those businesses and Client to encourage such changes.

SCHEDULE A
Scope of Services and Fees
1248933.2 Page 2 of 17

3. Consulting and Other Optional Services
From time to time in its sole discretion, consult with Client’s staff, including without limitation, regarding (i) technical questions and other issues related to sales, use and transactions tax, (ii) utilization of reports to enhance collection efforts, (iii) sales tax projections for proposed annexations, economic development projects and budget planning, (iv) negotiating/review of tax sharing agreements, (v) establishing purchasing corporations, (vi) meeting with taxpayers to encourage self-assessment of tax obligations, and (vii) other sales, use or transactions tax revenue-related matters.

FEES

4. Sales, Use and Transactions Tax and Economic Analysis/Forecasting Services/Reports

4.1. Fees for performing the sales tax and economic analysis/forecasting Services as described above shall initially be $750 per month. Fees for performing the transactions/use tax reports Services related to a meaure/district as described above shall initially be $250 per month.

4.2. Consultant may change the non-hourly Fees established above upon at least 30 days’ prior written notice to Client (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), West Region, as reported by the U.S. Bureau of Labor Statistics (the “CPI Change”), and be equal to the greater of two percent (2%) or the actual CPI Change and the lesser of ten percent (10%) or the actual CPI Change. For example, if the actual CPI Change is

1.5%, then the annual increase will be 2%, if the actual CPI Change is 3.5%, then the annual increase will be 3.5%, and if the actual CPI Change is 12%, then the annual increase will be 10%.

5. Allocation and Audit Recovery Services

5.1. Fees for performing the allocation and audit recovery Services described above shall be (a) 15% of all new, increased and recovered sales and use tax revenue and (b) 25% of all new, increased and recovered transactions and use tax measure/district revenue received by Client as a result, in whole or in part, of such Services, including without limitation, any reimbursement or other payment from any State fund and any point of sale misallocations. These Fees shall be paid notwithstanding any related Client assistance, work in parallel, and/or incurrence of attorneys’ fees or other costs or expenses in connection, with the relevant Services.

5.2. The Fees described in Section 5.1(a) include, without limitation, State fund transfers received for back quarter reallocations and monies received in the first eight (8) consecutive reporting quarters following completion of Consultant’s allocation audit and confirmation by the CDTFA of the relevant corrections.

5.3. These Fees shall be paid by Client upon Consultant’s submittal of evidence of Consultant’s relevant Services in support thereof, including, without limitation, copies of relevant communications between Consultant and the CDTFA and/or taxpayers.

5.4. Consultant recognizes Client’s authority to waive or reduce the tax/fee-related debt of a business.

Should Client decide to do so for a business whose deficiency was identified by Consultant, Consultant shall be entitled to compensation in the amount of one half (1/2) of the Fees Consultant would have otherwise earned. Deficiencies which are uncollectable due to insolvency or dissolution of the business, or for deficiencies which are otherwise incapable of collection (i.e. statute of limitation or other legal defense) shall not be considered a Client voluntary election to waive, and thus, Consultant would not be entitled to compensation related thereto under this provision.

6. Consulting and Other Optional Services

SCHEDULE A
Scope of Services and Fees
1248933.2 Page 3 of 17

6.1. Fees for performing the consulting and other optional Services described above shall be based on the following initial hourly rates: (i) Principal - $325; (ii) Programmer - $295; (iii) Senior Analyst - $245; and (iv) Analyst - $195.

6.2. Consultant may change the rates for its hourly Fees from time to time in its sole discretion upon at least 30 days’ prior written notice to Client.

7. General Provisions Relating to Fees

7.1. Fees for travel and lodging expenses will be invoiced at cost and applied to all meetings (including implementation, training, operations and support). Travel expenses only apply to out of scope travel and must therefore be pre-approved by Client.

7.2. Fees will be invoiced monthly to Client 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 Client’s monthly revenue disbursement.

8. 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 Caifornia 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.

Notwithstanding anything to the contrary set forth in this Schedule A to the MSA, the MSA itself, or otherwise, the following conditions specified in Section 7056-(b)(1) of the R&T Code are hereby incorporated into and made part of this Schedule A to the MSA:

8.1.Consultant is hereby authorized by Client under this Schedule A to the MSA to examine sales or transactions and use tax records of the CDTFA provided to Client pursuant to the Bradley-Burns Uniform Local Sales and Use Tax Law (commencing with R&T Code Section 7200) and the Transactions and Use Tax Law (commencing with R&T Code 7251).

8.2.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 Client who is authorized by Client resolution provided to the CDTFA to examine the information.

8.3.During the term of this Schedule A to the MSA, Consultant is prohibited from performing consulting services for a retailer (as defined in R&T Code Section 6015).

8.4. After the term of this Schedule A to the MSA has expired, Consultant is prohibited from retaining the information contained in or derived from those sales or transactions and use tax records.

Information obtained by examination of CDTFA records shall be used only for purposes related to the collection of local sales or transactions and use taxes by the CDTFA pursuant to this Schedule A to the MSA, or for purposes related to other governmental functions of Client as set forth by resolution of the Client adopted pursuant to R&T Code Section 7056(b). Such resolution shall designate Consultant and its personnel as authorized to (i) examine such sales or transactions and use tax records and (ii) certify that this Section 8 to Schedule A to the MSA meets the requirements set forth in R&T Code Section 7056(b)(1).

SCHEDULE A
Scope of Services and Fees
1248933.2 Page 4 of 17

CANNABIS MANAGEMENT SCOPE OF SERVICES
STAFFING – KEY PERSONNEL
Cannabis Business Tax
HdL’s Cannabis Compliance Team has 18 employees with over 46 years’ combined experience developing and implementing cannabis regulatory and taxation programs at the state, county and local level. Our team has conducted over 16,000 cannabis compliance inspections, investigations and financial audits in California, Colorado, and Nevada. We have provided bios for those team members who will be assigned to this project. Bios for other members of our Cannabis Compliance Team will be provided upon request.

David McPherson, Compliance Director
David McPherson works with local agencies to prepare them to mitigate regulatory issues surrounding Proposition 64 and SB 94. Prior to joining HdL, David served 28 years in local government for the County of Orange and the cities of Newport Beach, San Jose and Oakland.

David’s experience as a law enforcement officer, compliance auditor, and tax administrator has provided him a wealth of experience that makes him uniquely qualified to manage HdL’s Cannabis Management Program. While working for the City of Oakland, he became the first Tax Administrator in the country to successfully tax, regulate and audit medical marijuana businesses. David has over 10 years of experience working with cannabis regulatory programs.

David is one of the state’s most recognized experts in cannabis regulatory policies, compliance implementation and tax policies. His unique knowledge in horticulture, processing and dispensary operations while working for the City of Oakland has made him one of the pioneers in creating a Cannabis Management Program. He uses his experience to assist local and state agencies in developing cannabis policies for regulation, compliance, auditing and economic development. He worked closely with the League of Cities on the development of the Medical Cannabis Regulation and Safety Act (MCRSA) and helped shape SB 94, the Medicinal Adult-Use Cannabis Regulation and Safety Act (MAUCRSA).

David provides technical support on cannabis-related matters to the League of Cities, the Police Chief’s Association, Rural County Representatives of California and the California State Association of Counties. In addition, David is working collaboratively with the Department of Consumers Affairs, Department of Food & Agriculture, Department of Health Services and the State Board of Equalization on the implementation of best practices for regulating the cannabis industry for local agencies.

David received his Bachelor’s Degree in History from California State University, Fullerton and his Master’s Degree in Public Administration from California State University, Long Beach. While at Long Beach, he was named “Future Urban Administrator of the Year”.

Matt Eaton, Deputy Compliance Director
Matt Eaton is the Deputy Compliance Director at HdL and plays a critical role in implementing the Cannabis Compliance Program for local agencies. Prior to joining the firm, he was a progressive law enforcement professional with 30 years’ experience conducting criminal/regulatory investigations, and corporate/individual background investigations.

SCHEDULE A
Scope of Services and Fees
1248933.2 Page 5 of 17
While working as a Supervisory Investigator at the Colorado Department of Revenue in the Marijuana Enforcement Division (MED), Matt managed criminal investigators and civilian staff in the Denver Metro and Longmont field offices. During his six-year tenure at the MED, he conducted approximately 10,000 criminal investigations and compliance reviews, including regulatory and financial investigations. He is a subject matter expert on track and trace systems and understands the complexity of reviewing data to ensure businesses are in compliance with state and local regulations.

Matt was responsible for planning, developing and implementing report and field inspection protocols for the agency. He also played an instrumental role in recommending changes to current regulations and identifying essential language for new legislation in Colorado. Matt is well known for his ability to maintain working relationships with cannabis industry leaders and external stakeholders in resolving issues.

Matt received his Bachelor of Science Degree from Biola University and maintained Police Officer Service Training (POST) certification for over 30 years in California and Colorado. He has also served as an adjunct instructor teaching law enforcement principle related to criminology, correctional processes, procedural law, interviews, interrogations and criminal evidence at AIMS Community College in Greeley, Colorado.

Ajay Kolluri, Deputy Director of Policy and Audits
Ajay Kolluri is the Deputy Director of Audits and Operations for HdL’s Cannabis Division. Ajay is responsible for overseeing the cannabis audit team and the daily operations of the division, which includes special projects such as community outreach, surveys, grant solicitation, revenue analysis, cost recovery fee studies, contracts, budgeting, and marketing. Ajay previously served as Program Manager for the Office of Cannabis Oversight (OCO) at City of Long Beach. Working within the City Manager’s Office, Ajay was responsible for the licensing, regulation and enforcement of all commercial cannabis activity in the City, with one of the largest legal cannabis markets in the state.

During his tenure with the OCO, Ajay oversaw the issuance over 200 cannabis business licenses, generating over $10 million in annual revenue for the City. Ajay has experience in all aspects of cannabis oversight, including public health and education, planning and zoning, building inspections, enforcement, social equity, fee development, economic analysis and revenue projections.

Prior to overseeing the OCO, Ajay worked in public finance, serving as Budget Analyst for the Department of Financial Management in the City of Long Beach. Ajay holds a Bachelor’s degree in business economics from the University of California, Santa Barbara, and a Master’s degree in public policy from the University of Michigan.

Mark Lovelace, Senior Policy Advisor
Mark Lovelace has 16 years of broad experience in public policy, community engagement and advocacy and is recognized as a leader in advancing the statewide discussion of medical and recreational cannabis as a policy issue in California.

Mark served on the Humboldt County Board of Supervisors from 2009 through 2016 where he was instrumental in developing a comprehensive approach to regulating cannabis, including a voterapproved tax on commercial cultivation and an innovative track and trace pilot program. Mark established and co-chaired the Medical Marijuana Working Group for the California State Association of Counties (CSAC) and helped draft CSAC’s legislative platform for cannabis issues.

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Mark pioneered the first regional summit on cannabis issues in 2015 which helped guide the development of SB 643 and AB 243, two components of the Medical Cannabis Regulation and Safety Act (MCRSA).

Mark has worked extensively with public agencies and statewide associations on cannabis issues, including CSAC, Rural County Representatives of California, the Association of California Water Agencies, the North Coast Resource Partnership, California Department of Fish and Wildlife, the State Water Board, the North Coast Regional Water Board, the Bureau of Cannabis Control, State legislators, and others. He has led numerous presentations, workshops and panel discussions on cannabis issues and has been a sought-after speaker on the topic for government agencies, community organizations and industry groups.

Mark received his Bachelor of Science degree in Industrial Design from San Jose State University.

Prior to his time on the Board, he worked for many years as a respected advocate on land use, planning, development and environmental issues.

Kami Miller, Senior Compliance Inspector
Kami Miller is a Senior Compliance Inspector at HdL whose primary role is to provide risk assessment to ensure compliance in cannabis supply chain processes of each permitted business. Prior to joining the firm, she served three years as a Marijuana Compliance Manager for the Department of Public Behavior and Health (DPBH) for the State of Nevada. Kami played a key role in the implementation of Nevada’s Medical Marijuana Program in which she was responsible for statewide monitoring of medical marijuana facilities including cultivation, production, testing labs and retail stores.

Kami managed compliance auditors and support staff in the Las Vegas office for DPBH. She developed inspection protocols, documents and reports, and personally conducted over 1,000 compliance and financial inspections. Kami applied her experience with cannabis track and trace systems to develop industry supply chain practices for the Department of Taxation.

Kami received her Bachelor of Business Administration in E-Commerce and Supply Chain Management from Tennessee State University.

David Ross, Senior Compliance Inspector
David Ross is a Certified Fraud Examiner with 7 years of experience conducting audits and investigations of tribal gaming facilities. David’s experience includes forensic accounting investigations into cash larceny, insider trading, payroll and expense reimbursement fraud, construction fraud, wire fraud, and check and credit card fraud, as well as litigation support.

David previously worked as Surveillance Officer and Internal Auditor for the Shingle Springs Tribal Gaming Commission, where he was responsible for analyzing financial statements for a facility with revenues exceeding $20 million per month. David established policies and procedures to ensure compliance with federal, state and local regulations. In addition, David conducted surveillance

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reviews and investigations into criminal activity including check and credit card fraud, skimming, money laundering, drug activity and other violations.

David holds a Bachelor’s Degree in Business Administration from Vanguard University in Costa Mesa and a Master’s Degree in Finance from California State University San Bernardino. He is a member of the Association of Certified Fraud Examiners.

Michelle Shaw, Compliance Inspector
Michelle is a Cannabis Compliance Inspector at HdL and is tasked with conducting onsite inspections, examinations and other actions to monitor compliance with established standards for local licensed cannabis businesses. Prior to joining HdL, she was a Compliance Officer at a large, multinational bank where she was responsible for the management and oversight of ongoing compliance within the consumer retail space. Michelle also performed onsite assessments of affiliate businesses to determine compliance with processes and procedures pursuant to bank standards and state regulations.

A graduate of Cypress College, Michelle is a certified Banking Risk Professional and holds a paralegal certificate from the Southern California College of Business and Law.

Josh Sheldon, Background Investigator
Josh Sheldon is a retired Sheriff’s Investigator who served for 20 years as a Corrections Deputy, Patrol Deputy and Narcotics/Gaming/Major Crimes Investigator. Josh spent two years assigned to a multi-jurisdictional drug task force and was a founding member of a specialized unit where he was the lead case officer for major narcotics investigations. Josh worked closely with State and Federal law enforcement, prosecutors and community groups during his career. During his law enforcement career, Mr. Sheldon was responsible for all asset forfeitures and has extensive experience in locating assets and analyzing financial information to provide evidence of money laundering and suspicious activity.

After leaving law enforcement Mr. Sheldon contracted for a company that conducts extensive financial background investigations of out-of-state investors for the cannabis industry. Josh helped to design the background investigation process for the State of Colorado, using the State’s gaming backgrounds as the blueprint.

Josh is currently the owner of Rocky Mountain Consulting Services, LLC where he focuses on providing genuine customer service in the background check industry. Rocky Mountain Consulting Services, LLC averages approximately 1000 background checks a year where he focuses on specialized background checks that include financial checks of individuals current financial situations and analysis of investors in search of dark money. Mr. Sheldon has several years’ experience in investigating backgrounds for owners and employees in both a law enforcement capacity and in a regulatory capacity.

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Jeff Burris, Background Investigator / Compliance Inspector Jeff Burris is a retired Law Enforcement Professional with over 28 years of experience. Jeff began his career with the Orange County Sheriff’s Office before moving to the Ontario Police Department, advancing to Corporal, Detective and Sergeant before retiring as a Lieutenant.

Jeff worked various investigative assignments during his career, including both criminal and noncriminal investigations. While working as a Police Detective Jeff conducted personnel background investigations for sworn, non-sworn, administrative, and confidential employees. These investigations included criminal checks, credit checks, prior employment verification, personal reference verification, driving records, pre-polygraph questioning, neighborhood canvassing, and oral interviews. Jeff also conducted annual audits for regulatory compliance.

Jeff received his Bachelor of Science degree in Occupational Management from the California State University in Long Beach. Throughout his career he has completed numerous specialized training courses in investigative techniques, including a course in background investigations by the California Commission on Peace Officer Standards and Training (CA POST), and is a former member of the California Background Investigators Association (CBIA).

Elizabeth Eumurian, Audit Supervisor
Elizabeth Eumurian is the Audit Supervisor at HdL. Her primary role is to conduct and oversee financial audits, evaluate cannabis applications and conduct background checks. As part of the audit program, she will be conducting and preparing analytical information through the CATS™ program to prepare Tax Analytical Remittance Reports (TARR) summaries to evaluate under reporting or anomalies in the remittance of tax payments to local jurisdictions.

Elizabeth previously worked as a senior auditor in the entertainment industry. In this role, she executed testing procedures for targeted audit programs, analyzed findings and prepared audit and compliance reports. She also has experience working for a large financial institution analyzing data for reporting anomalies and performing internal audits. Elizabeth has recently done work for Blythe, California City, Coachella, Cotati, Desert Hot Springs, Long Beach, Mammoth Lakes, Moreno Valley, Perris, San Bernardino, and Vallejo.

Elizabeth earned her Bachelor of Arts degree in History from California State University and holds a certificate in CannaBusiness from Oaksterdam University.

Odette Mikhail, Auditor
Odette Mikhail is an Auditor at HdL. Her primary role is to conduct financial audits. Odette previously worked as a senior auditor at public accounting firms. In this role, she executed testing procedures for audit and review engagements, identified accounting issues, reviewed internal controls, and prepared financial reports and statements.

Odette earned her Bachelor of Science degree in Accounting and Business Administration from Ain Shams University in Cairo, Egypt.

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Tao Lu, Auditor
Tao Lu works as an Auditor for HdL’s Cannabis Management Team. Tao has two and a half years’ experience as an accountant with an emphasis in information technology and food manufacturing industries. He also has public audit work experience at RSM China. Tao was born and raised in China.

Tau earned a Bachelor’s Degree in Accounting and Finance from Syracuse University in New York before relocating to Southern California with his family.

Valerie Carter, Auditor
Valerie Carter works as an Auditor for HdL’s Cannabis Management Team. Valerie has over 5 years of public sector work experience focusing on public policy, auditing and revenue tax implementation.

She was a Tax Auditor II for the City of Oakland’s Revenue Management Bureau and an Assistant Management Analyst for the City of Berkeley’s Transportation division.

Valerie earned a Bachelor’s Degree in Business Administration from Cal Poly Pomona, with an emphasis on Finance, Real Estate, and Law.

Pam Davis, Auditor
Pam Davis conducts revenue audits of licensed cannabis businesses as a member of HdL’s Cannabis Management Team. Prior to joining HdL, Pam served as the Director for the Richland County (South Carolina) Business Service Center for over 15 years, where she was responsible for auditing businesses to ensure accurate reporting and remittance of a variety of local taxes. Pam also conducted research and rate impact analyses and developed policies, procedures and user manuals to ensure business and governmental compliance.

Pam received a Master’s of Public Administration degree from the University of Georgia and a Bachelor’s Degree in Political Science from Clemson University, as well as numerous professional certifications.

Eric Magana, Auditor
Eric Magana works as an Auditor for HdL’s Cannabis Management Team, conducting revenue audits of licensed cannabis businesses to ensure they are accurately reporting their revenues and remitting the proper amount of fees or taxes. Prior to joining HdL, Eric worked as a Loan Specialist for the U.S. Small Business Administration, where he processed over 5,000 business loans and grant applications. Eric holds a Bachelor’s Degree in Economics and Administrative Studies from University of California at Riverside.

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Teresa Schneider, Background Investigator / Compliance Inspector Teresa Schneider served for 28 years with the Montclair Police Department, including 12 years in the Background Investigations Unit. In this capacity, Teresa was responsible for conducting background investigations of all City business license applicants, as well as all sworn and non-sworn positions within the police and fire departments and of civilians requesting access to police department records.

Theresa previously served 4 years in the U.S. Army’s nursing program at Fort Campbell, Kentucky.

During this time she attended college at the University of Kentucky and Austin Peay State University.

After receiving an Honorable Discharge in 1990, Teresa was hired by the Montclair Police Department. During her 28-year career, she worked numerous assignments, including patrol, K9, detective bureau, court liaison, volunteer coordinator, and red-light automated enforcement. Teresa received many awards throughout her career, including Officer of the Year.

Cheryl Lee-Steele, Business Application Reviewer
Cheryl Lee-Steele is a Business Application Reviewer at HdL whose primary role is to evaluate cannabis business applications for compliance with State law, local ordinance and industry best practices. A small business owner and bookkeeper for over 30 years, she has direct knowledge of best business practices and how to comply with regulatory requirements.

Cheryl attended Chaffee College for accounting and is a Certified Public Bookkeeper through the National Association of Certified Public Bookkeepers.

Lisa Davis, Business Application Reviewer
Lisa Davis is a Business Application Reviewer at HdL whose primary role is to evaluate cannabis business applications for compliance with State law, local ordinance and industry best practices. A small business owner and operator for 20 years prior to joining the firm, she is familiar with operational best practices, inventory control measures and compliance with government and industry regulations and standards.

Kristi Lervold, Administrative Assistant
Kristi is the Administrative Assistant for cannabis team. In this role she supports individual team members, coordinates internal processes, and assists with client requests, contracts, billing reconciliation and invoicing. Kristi’s 18-year career includes ten years as the administrative assistant to HdL’s CFO, handling various operational responsibilities and supporting financial functions, as well as experience in the occupational health industry, facilitating services for federal, state, and local government clients.

Kristi holds a Bachelor’s of Science degree in Business Management with a minor in Business Administration.

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PRICING
Cannabis Business Tax
Once under contract, prices shall be honored for the first full year, with successive years subject to an annual increase based upon the Consumer Price Index for the Los Angeles-Long Beach-Anaheim region.

A. Perform specific procedures to detect, correct and recover cannabis business tax revenues for the City.

B. Perform audit and discovery procedures for cannabis retail properties to gain tax compliance.

HdL will conduct an annual financial audit to verify the accuracy of cannabis taxes reported to the City during the review period and will recommend a tax assessment to correct and recover any unreported revenue. As part of the process, HdL will conduct a risk based analytical review of the business using the proprietary Cannabis Analytical Tracking Solution (CATS™) program to detect any diversion of product or cash. Our unique audit approach allows us to identify if a cannabis operator is under-reporting its taxes or diverting product from its facility, so as to gain increased compliance. HdL audit staff will also use information gathered by the on-site compliance inspection team (Requested Service H) to assist with the financial audit.

Service Description Cost
A, B Provide annual cannabis business tax audit of each licensed cannabis business.
$8,000
per business
per year
A, B Provide assistance with post-audit corrective actions or appeals. To be billed at HdL’s hourly rate for the
assigned staff or as
negotiated with the City
(see rate chart)
C. Assist the City in gaining increased cannabis retail business compliance.

H. Provide cannabis compliance teams, which includes inspection services in addition to audit services.

HdL will conduct one on-site compliance inspection annually (or more, as requested by the City), for each permitted cannabis business to determine compliance with State and/or local laws. If HdL identifies any non-compliant activities, we will provide the City with a recommended appropriate action to address the deficiency and to ensure future compliance by the permittee. The cost for this service assumes one inspection of each permitted cannabis business per year. Additional inspections of specific businesses or business types can be provided as needed or requested by the City and will be billed as a multiple of the same rate. The cost for this service does not include review of any supplemental documents provided to address or contest any findings of noncompliance, nor does it include any assistance with the appeal of any enforcement action by the City. Any costs associated with such additional services would be billed at HdL’s hourly rate, or at an alternate flat rate to be negotiated with the City.

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E. Provide written cannabis business tax reports on a quarterly basis to the City.

F. Provide an electronic database of the City’s cannabis business tax data to the City.

HdL has developed a quarterly revenue-monitoring system that provides a risk-based assessment of the City’s cannabis businesses to identify outliers or possible errors that may warrant further investigation. Our proprietary Tax Analytical Remittance Report (TARR) uses specially designed algorithms to analyze confidential data from each cannabis business and make recommendations to the City to address tax liability deficiencies or other financial compliance issues.

Reports shall address all cannabis business in the City. Data generated by the TARR program shall also be provided to the City in a database format that will allow the City to sort or identify each cannabis tax producer by name, address, current and historical tax payments, or other results. HdL shall work with the City to determine the desired database format and content1 .

Service Description Cost
E, F Provide quarterly Tax Analytical Remittance Report (TARR) for all licensed cannabis businesses
$2,500
per business
per year
D. Assist the City with strategies to preserve and enhance cannabis business tax revenue generated by existing businesses with the City.

G. Provide updates on legislative actions or bills that can impact or materially alter cannabis business tax revenue to the City.

HdL shall provide the City with general consulting in the form of technical assistance and subject matter expertise to be used as needed at the City’s request. Such assistance may include monitoring of changes to State laws and regulations, advising the City on industry trends, prevailing tax rates or legislation that may affect the City’s cannabis program and revenues, and recommending 1 NOTE: HdL’s Tax Analytical Remittance Report (TARR) program utilizes our proprietary Cannabis Analytical Tracking Solution (CATS™) software and includes analysis of data which may be confidential.

Service Description Cost
C, H Provide one site inspection per year of each permitted cannabis business.
$1,500
per business
per inspection
C, H Provide assistance with appeals or review of supplemental documents to contest any findings of non-compliance.

To be billed at HdL’s
hourly rate for the
assigned staff or as
negotiated with the
City
(see rate chart)

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strategies to maintain and maximize cannabis tax revenues over time. HdL shall also provide a monthly cannabis E-newsletter, along with legislative updates and issue alerts as needed.

Service Description Cost
G Provide monthly cannabis E-newsletter, legislative updates and issue alerts as needed
No Charge
D, G Provide general consulting in the form of technical assistance and subject matter expertise to be used as needed at the City’s request.

HdL shall provide up to
10 hours at no charge.

Any additional hours
shall be billed at HdL’s
hourly rate for the
assigned staff
(see rate chart)
HdL BUSINESS LICENSE ADMINISTRATION SERVICES

SCOPE OF SERVICES
Consultant will provide the following Services relative to Client’s business license tax administration.

1. Operations Management Services

1.1 Establish and maintain database of Client businesses.

1.2 Receive and process applications, renewals and payments in a timely fashion.

1.3 Send renewal notices to active businesses within 30 days of the renewal period end date or at another interval specified by Client.

1.4 Provide businesses multiple options for submitting applications, renewals, payments, or support requests (including via website, email, mail, phone, and fax. Consultant license specialists will be available for live interactions Monday through Friday, 8:00am to 5:00pm Pacific).

1.5 Remit revenue to Client no less than monthly.

1.6 Provide Client staff access to website portal offering business registry inquiry, reporting, and electronic department approval capabilities.

2. Compliance Services: 1) Identify and register businesses which are subject to licensure or taxation, 2) collect known debt as pertains to business license or tax, and 3) identify under-reported tax liability.

2.1 Discovery Services

2.1.1 Develop a list of businesses subject to Client licensure or taxation.

2.1.2 Notify non-compliant businesses of their options to comply or dispute their non-compliant status. Notification and support to businesses will be facilitated through the website, mail, email, phone and fax.

2.1.3 Review information and forms submitted by the business for completion and accuracy, inclusive of any additional required documentation (i.e., home occupation permit). All submissions are filed and stored electronically and made available to Client upon request.

2.1.4 Provide businesses with detailed invoicing and options to pay via website, mail, and phone.

2.1.5 Remit revenue to Client no less than monthly, along with all business applications and any additional documentation.

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2.2 Collection Services

2.2.1 Identify businesses subject to Client licensure or taxation which have known debt to Client and have failed to pay within an appropriate time frame.

2.2.2 Notify businesses of their options to comply or dispute their non-compliant status.

2.2.3 Provide businesses with detailed invoicing and options to pay via website, mail and phone.

2.2.4 Remit revenue to Client no less than monthly.

2.3 Audit Services

2.3.1 Identify potential under-reporting and/or misclassified businesses.

2.3.2 Audit businesses mutually agreed to by Client and Consultant that are identified as potential under-reporting businesses.

2.3.3 Submit audit summaries to Client and discuss further actions.

2.3.4 Educate businesses on proper reporting practices.

2.3.5 Invoice and collect identified delinquencies.

FEES

1. Operations Management Services

1.1. As of January 1st, 2022, fees for performing operations management Services shall be $13.85 for each processed account + CPI, which is any account for which an application or renewal/return was processed, or active account which was sent a renewal notice.

1.2. Fees will be increased as of January 1st of each calendar year with reference to the 12-month percent change in the most recently published annual Consumer Price Index for All Urban Consumers (CPI-U), West Region, as reported by the U.S. Bureau of Labor Statistics (the “CPI Change”). Each annual increase in the Fees will be equal to the greater of two percent (2%) or the actual CPI Change and the lesser of ten percent (10%) or the actual CPI Change. For example, if the actual CPI Change is 1.5%, then the annual increase will be 2%, if the actual CPI Change is

3.5%, then the annual increase will be 3.5%, and if the actual CPI Change is 12%, then the annual increase will be 10%.

1.3. Fees related to travel and lodging expenses are billed at cost and apply 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 Client.

1.4. Fees will be invoiced monthly to Client for Services performed during the prior month. Fees will be netted out of Client’s monthly revenue disbursement. Client will submit payment for any balance due to Consultant within 30 days of receiving the invoice.

2. Compliance Services

2.1. Fees for performing compliance Services apply to all monies received for the current tax/license period and any other prior period collected (including monies received for taxes, penalties, interest, and fees).

2.1.1.Fees for performing discovery Services shall be a contingency Fee of 35% of the revenues received as a result of the Services.

2.1.2.In the event that Client discovers a non-compliant business and reports the business to Consultant (including a calculation of all taxes/fees due), Consultant will categorize the business as a collection service effort and thus apply the lower collection Services contingency Fee rate.

2.1.3.Fees for performing collection Services shall be a contingency Fee of 25% of the revenues received as a result of the Services.

2.1.4.Fees for performing audit Services shall be a contingency Fee of 35% of the revenues received as a result of the Services.

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2.2. Consultant recognizes Client’s authority to waive or reduce the tax/fee debt of a business. Should Client decide to do so for a business whose deficiency was identified by Consultant, Consultant shall be entitled to compensation in the amount of one half (1/2) of the Fees Consultant would have otherwise earned. Deficiencies which are uncollectable due to insolvency or dissolution of the business, or for deficiencies which are otherwise incapable of collection (i.e., statute of limitation or other legal defense) shall not be considered a Client voluntary election to waive, and thus, Consultant would not be entitled to compensation related thereto under this provision.

2.3. Fees related to travel and lodging expenses are billed 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 Client.

2.4. Fees will be invoiced monthly to Client for Services performed during the prior month. Fees will be netted out of Client’s monthly revenue disbursement. Client will submit payment for any balance due to Consultant within 30 days of receiving the invoice.

OPTIONAL SERVICES
Transient Occupancy Tax Audit Services

SCOPE OF SERVICES
Consultant will provide the following Services relative to Client’s transient occupancy tax administration.

1. Audit Services

1.1. Analyze Client transient occupancy tax ordinance and business procedures, and recommend possible improvements or best practices for processes, form design, and ordinance.

1.2. Analyze lodging provider data and review analysis findings with Client. Analysis will include the most recent thirty-six (36) months of tax filings along with supplemental data as available (including number of rooms, occupancy rate, physical condition, and business dynamics).

1.3. Recommend lodging providers who merit additional investigation or examination to determine their compliance with Client’s ordinance.

1.4. Lodging providers identified by Consultant and approved by Client for audit are scheduled for a compliance analysis audit.

1.5. Review records of the lodging provider for information related to compliance with Client regulations (including endeavoring to validate taxable gross rents, exemptions, bank statements, daily/monthly summaries, and other relevant compliance-related information). Supporting documentation for relevant items such as exemptions will also be reviewed.

1.6. Generate lodging provider compliance report (including results of the compliance analysis audit and recommended actions). Review report with Client and determine next steps.

1.7. Notify deficient lodging providers of the findings as well as instructions for payment and appeal processes. Schedule appointments with lodging providers to review findings and educate regarding proper filing procedures in order to prevent future errors and deficiencies.

1.8. Send compliant lodging providers a letter of commendation, thanking them for their cooperation and compliance.

1.9. Invoice lodging providers found to be underreporting through the standard Client approved collections process.

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FEES

2. Audit Services

2.1. As of January 1st, 2022, fees for performing audit Services are $2,000.00 per property.

2.2. Fees will be increased as of January 1st of each calendar year with reference to the 12-month percent change in the most recently published annual Consumer Price Index for All Urban Consumers (CPI-U), West Region, as reported by the U.S. Bureau of Labor Statistics (the “CPI Change”). Each annual increase in the Fees will be equal to the greater of two percent (2%) or the actual CPI Change and the lesser of ten percent (10%) or the actual CPI Change. For example, if the actual CPI Change is 1.5%, then the annual increase will be 2%, if the actual CPI Change is

3.5%, then the annual increase will be 3.5%, and if the actual CPI Change is 12%, then the annual increase will be 10%.

2.3. Fees related to travel and lodging expenses are billed at cost and apply to all meetings (including implementation, training, operations and support).

2.4. Fees will be invoiced monthly to Client for Services performed during the prior month. Client will submit payment for any balance due to Consultant within 30 days of receiving the invoice.

Transient Occupancy Tax Administration Services
(Includes Audits)

SCOPE OF SERVICES
Consultant will provide the following Services relative to Client’s transient occupancy tax administration.

1. Operations Management Services

1.1. Establish and maintain database of Client lodging providers.

1.2. Receive and process registrations, tax returns and payments in a timely fashion.

1.3. Provide lodging providers multiple options for submitting registrations, tax returns, payments, or support requests (including via website, email, mail, phone, and fax. Consultant tax specialists will be available for live interactions Monday through Friday, 8:00am to 5:00pm Pacific).

1.4. Remit revenue to Client no less than monthly.

1.5. Provide Client staff access to website portal offering lodging provider registry inquiry and reporting capabilities.

1.6. Endeavor to ensure accurate filings of returns by consistently monitoring returns, providing compliance audits, and educating lodging providers as mutually agreed to by Client and Consultant.

1.7. Provide analysis reports monthly and annually provide revenue trends and key insights on Client lodging providers.

FEES

2. Operations Management Services

2.1. As of January 1st, 2022, fees for performing operations management Services shall be $750.00 per year + CPI for each quarterly filing property, and $800.00 per year + CPI for each monthly filing property.

2.2. Fees will be increased as of January 1st of each calendar year with reference to the 12-month percent change in the most recently published annual Consumer Price Index for All Urban Consumers (CPI-U), West Region, as reported by the U.S. Bureau of Labor Statistics (the “CPI Change”). Each annual increase in the Fees will be equal to the greater of two percent (2%) or the actual CPI Change and the lesser of ten percent (10%) or the actual CPI Change. For example, if the actual CPI Change is 1.5%, then the annual increase will be 2%, if the actual CPI Change is

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3.5%, then the annual increase will be 3.5%, and if the actual CPI Change is 12%, then the annual increase will be 10%.

2.3. Fees related to travel and lodging expenses are billed at cost and apply to all meetings (including implementation, training, operations and support).

2.4. Fees will be invoiced monthly to Client for Services performed during the prior month. Fees will be netted out of Client’s monthly revenue disbursement. Client will submit payment for any balance due to Consultant within 30 days of receiving the invoice.

Consultant and Professional Services Agreement (Revised 01.2019) Page 11 of 11

CONSULTANT AND PROFESSIONAL SERVICES AGREEMENT
This Consultant and Professional Services Agreement ("Agreement") is made at Vallejo, California, dated for reference this 9th day of May, 2022, by and between the City of Vallejo, a municipal corporation ("City"), therein referred to as “City”, and Hinderliter De Llamas and Associates, a California corporation, therein referred to as “Consultant”, who agree as follows:

1. Services. Subject to the terms and conditions set forth in this Agreement, Consultant shall provide the City professional services as specified in Exhibit A, entitled “Scope of Work.”

2. Payment. City shall pay Consultant for services rendered pursuant to this Agreement at the times and in the manner set forth in Exhibit B, entitled “Compensation.” The payments specified in Exhibit B shall be the only payments to be made to Consultant for services rendered pursuant to this Agreement.

3. Facilities and Equipment. Consultant shall, at its sole cost and expense, furnish all facilities and equipment which may be required for furnishing services pursuant to this Agreement.

4. Indemnification. Consultant shall indemnify, hold harmless, and defend City, its officers, officials, directors, employees, agents, volunteers and affiliates and each of them from any and all claims, demands, causes of action, damages, costs, expenses, actual attorney’s fees, consultant’s fees, expert fees, losses or liability, in law or in equity, of every kind and nature whatsoever arising out of or in connection with Consultant’s operations, or any subcontractor’s operations, to be performed under this agreement for Consultant’s or subcontractor’s tort negligence including active or passive, or strict negligence, including but not limited to personal injury including, but not limited to bodily injury, emotional injury, sickness or disease, or death to persons and/or damage to property of anyone, including loss of use thereof, caused or alleged to be caused by any act or omission of Consultant, or any subcontractor, or anyone directly or indirectly employed by any of them or anyone for the full period of time allowed by the law, regardless to any limitation by insurance, with the exception of the sole negligence or willful misconduct of the City.

The provisions of this section shall survive the expiration or termination of this Agreement.

ATTACHMENT 1 OF EXHIBIT A
Scope of Services
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1. SALES, USE AND TRANSACTION TAX

1.1. Sales, Use and Transactions Tax and Economic Analysis/Forecasting Services/Reports

1.1.1.Establish a special database identifying the name, address, and allocations of City’s sales tax producers. This database will be utilized to generate special reports to City on major sales tax producers by rank and category, sales tax activity by categories, identification of reporting aberrations, and per capita and outlet comparisons with regional and statewide sales.

1.1.2.Provide periodic updated reports to City identifying changes in sales by individual businesses, business groups and categories, and by geographic area. These reports may include, without limitation, aberrations due to State audits, fund transfers, and receivables, along with late or double payments, and reconciliation worksheets to assist with budget forecasting.

1.1.3.Provide periodic summaries for City to share with others if it so desires (including the general public) that analyze City’s sales tax trends by major groups and geographic areas without disclosing confidential individual tax records.

1.1.4.Establish a special database with California Department of Tax and Fee Administration (“CDTFA”) registration data for businesses within applicable measure/district boundaries holding seller’s permit accounts. Endeavor to identify transactions and use tax measure/district allocations under such accounts for the most current quarter and immediately prior quarter where available.

1.1.5.Periodically license for the limited, non-exclusive, non-transferable use by City’s staff certain of Consultant’s web-based sales, use and/or transactions tax program(s) containing sellers permit, registration, allocation and related information for business outlets within City’s jurisdiction registered with the CDTFA.

1.1.6.Provide periodic updated reports endeavoring to identify and assist with budget forecasting (i) changes in allocation totals by individual businesses, business groups and categories, and (ii) aberrations due to State audits, fund transfers, and receivables, along with late or double payments.

1.2. Allocation and Audit Recovery Services

1.2.1.Conduct (as and when mutually agreed with City) initial and on-going sales, use and transactions tax audits of businesses to help identify and correct distribution and allocation errors, and to help effect favorable registration, reporting or formula changes thereby generating previously unrealized sales, use or transactions tax income for City and/or recover misallocated tax from registered taxpayers. Common errors to be monitored and corrected include transposition errors resulting in misallocations; erroneous consolidation of multiple outlets; formula errors; misreporting of “point of sale” to the wrong location; delays in reporting new outlets; misallocating use tax payments to the allocation pools or wrong jurisdiction; and erroneous fund transfers and adjustments.

1.2.2.Initiate contacts with the CDTFA and sales management and accounting officials in companies that have businesses where a probability of error exists to endeavor to help verify whether current tax receipts accurately reflect the local sales activity.

1.2.3.Prepare and submit to the CDTFA information for the purpose of correcting any identified allocation errors, and follow-up with individual businesses and the CDTFA to advocate for City recovery of back or prospective payments that may be owing.

1.2.4.If, during the course of its audit, Consultant finds businesses located in City’s jurisdiction that are properly reporting sales, use or transactions taxes but have the potential for modifying their operation to provide an even greater share to City, Consultant may so advise City and collaborate with those businesses and City to encourage such changes.

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1.3. Consulting and Other Optional Services - From time to time in its sole discretion, consult with City’s staff, including without limitation, regarding (i) technical questions and other issues related to sales, use and transactions tax, (ii) utilization of reports to enhance collection efforts, (iii) sales tax projections for proposed annexations, economic development projects and budget planning, (iv) negotiating/review of tax sharing agreements, (v) establishing purchasing corporations, (vi) meeting with taxpayers to encourage self-assessment of tax obligations, and (vii) other sales, use or transactions tax revenue-related matters.

1.4. 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 Caifornia 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. Notwithstanding anything to the contrary set forth in this Attachment 1 of Exhibit A, the Agreement, or otherwise, the following conditions specified in Section 7056-(b)(1) of the R&T Code are hereby incorporated into and made part of this Attachment 1 of Exhibit A:

1.4.1.Consultant is hereby authorized by City under this Attachment 1 of Exhibit A to examine sales or transactions and use tax records of the CDTFA provided to City pursuant to the Bradley-Burns Uniform Local Sales and Use Tax Law (commencing with R&T Code Section 7200) and the Transactions and Use Tax Law (commencing with R&T Code 7251).

1.4.2.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.

1.4.3.During the term of this Agreement, Consultant is prohibited from performing consulting services for a retailer (as defined in R&T Code Section 6015).

1.4.4.After the term of this Agreement has expired, Consultant is prohibited from retaining the information contained in or derived from those sales or transactions and use tax records.

1.4.5.Information obtained by examination of CDTFA records shall be used only for purposes related to the collection of local sales or transactions and use taxes by the CDTFA pursuant to this Attachment 1 of Exhibit A, or for purposes related to other governmental functions of City as set forth by resolution of the City adopted pursuant to R&T Code Section 7056(b).

Such resolution shall designate Consultant and its personnel as authorized to (i) examine such sales or transactions and use tax records and (ii) certify that this Section 1.4 meets the requirements set forth in R&T Code Section 7056(b)(1).

2. CANNABIS MANAGEMENT

2.1. Cannabis Tax Audits

2.1.1.Perform specific procedures to detect, correct and recover cannabis business tax revenues for the City.

2.1.2.Perform audit and discovery procedures for cannabis retail properties to gain tax compliance.

Consultant will conduct an annual financial audit to verify the accuracy of cannabis taxes reported to the City during the review period and will recommend a tax assessment to correct and recover any unreported revenue. As part of the process, Consultant will conduct a risk based analytical review of the business using the proprietary Cannabis Analytical Tracking Solution (CATS™) program to detect any diversion of product or cash. Our unique audit approach allows us to identify if a cannabis operator is under-reporting its taxes or diverting product from its facility, so as to gain increased compliance. Consultant audit staff will also ATTACHMENT 1 OF EXHIBIT A
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use information gathered by the on-site compliance inspection team (Requested Service H) to assist with the financial audit.

2.2. Cannabis Compliance Inspections

2.2.1.Assist the City in gaining increased cannabis retail business compliance.

2.2.2.Provide cannabis compliance teams, which includes inspection services in addition to audit services. Consultant will conduct one on-site compliance inspection annually (or more, as requested by the City), for each permitted cannabis business to determine compliance with State and/or local laws. If Consultant identifies any non-compliant activities, we will provide the City with a recommended appropriate action to address the deficiency and to ensure future compliance by the permittee. The cost for this service assumes one inspection of each permitted cannabis business per year. Additional inspections of specific businesses or business types can be provided as needed or requested by the City and will be billed as a multiple of the same rate. The cost for this service does not include review of any supplemental documents provided to address or contest any findings of non-compliance, nor does it include any assistance with the appeal of any enforcement action by the City. Any costs associated with such additional services would be billed at Consultant’s hourly rate, or at an alternate flat rate to be negotiated with the City.

2.3. Quarterly Cannabis Business Tax Reports

2.3.1.Provide written cannabis business tax reports on a quarterly basis to the City. Consultant has developed a quarterly revenue-monitoring system that provides a risk-based assessment of the City’s cannabis businesses to identify outliers or possible errors that may warrant further investigation. Our proprietary Tax Analytical Remittance Report (TARR) uses specially designed algorithms to analyze confidential data from each cannabis business and make recommendations to the City to address tax liability deficiencies or other financial compliance issues. Reports shall address all cannabis business in the City.

2.3.2.Provide an electronic database of the City’s cannabis business tax data to the City. Data generated by the TARR program shall also be provided to the City in a database format that will allow the City to sort or identify each cannabis tax producer by name, address, current and historical tax payments, or other results. Consultant shall work with the City to determine the desired database format and content1.

2.4. Management Support and Legislative Updates - Consultant shall provide the City with general consulting in the form of technical assistance and subject matter expertise to be used as needed at the City’s request. Such assistance may include monitoring of changes to State laws and regulations, advising the City on industry trends, prevailing tax rates or legislation that may affect the City’s cannabis program and revenues, and recommending strategies to maintain and maximize cannabis tax revenues over time. Consultant shall also provide a monthly cannabis E-newsletter, along with legislative updates and issue alerts as needed.

3. BUSINESS LICENSE ADMINISTRATION – Consultant will provide the following Services relative to City’s business license tax administration.

3.1. Operations Management Services

3.1.1.Establish and maintain database of City businesses.

3.1.2.Receive and process applications, renewals and payments in a timely fashion.

3.1.3.Send renewal notices to active businesses within 30 days of the renewal period end date or at another interval specified by City.

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3.1.4.Provide businesses multiple options for submitting applications, renewals, payments, or support requests (including via website, email, mail, phone, and fax. Consultant license specialists will be available for live interactions Monday through Friday, 8:00am to 5:00pm Pacific).

3.1.5.Remit revenue to City no less than monthly.

3.1.6.Provide City staff access to website portal offering business registry inquiry, reporting, and electronic department approval capabilities.

3.2. Compliance Services: 1) Identify and register businesses which are subject to licensure or taxation, 2) collect known debt as pertains to business license or tax, and 3) identify under-reported tax liability.

3.2.1.Discovery Services

3.2.1.1. Develop a list of businesses subject to City licensure or taxation.

3.2.1.2. Notify non-compliant businesses of their options to comply or dispute their noncompliant status. Notification and support to businesses will be facilitated through the website, mail, email, phone and fax.

3.2.1.3. Review information and forms submitted by the business for completion and accuracy, inclusive of any additional required documentation (i.e., home occupation permit). All submissions are filed and stored electronically and made available to City upon request.

3.2.1.4. Provide businesses with detailed invoicing and options to pay via website, mail, and phone.

3.2.1.5. Remit revenue to City no less than monthly, along with all business applications and any additional documentation.

3.2.2.Collection Services

3.2.2.1. Identify businesses subject to City licensure or taxation which have known debt to City and have failed to pay within an appropriate time frame.

3.2.2.2. Notify businesses of their options to comply or dispute their non-compliant status.

3.2.2.3. Provide businesses with detailed invoicing and options to pay via website, mail and phone.

3.2.2.4. Remit revenue to City no less than monthly.

3.2.3.Audit Services

3.2.3.1. Identify potential under-reporting and/or misclassified businesses.

3.2.3.2. Audit businesses mutually agreed to by City and Consultant that are identified as potential under-reporting businesses.

3.2.3.3. Submit audit summaries to City and discuss further actions.

3.2.3.4. Educate businesses on proper reporting practices.

3.2.3.5. Invoice and collect identified delinquencies.

4. TRANSIENT OCCUPANCY TAX ADMINISTRATION - Consultant will provide the following Services relative to City’s transient occupancy tax administration.

4.1. Operations Management Services

4.1.1.Establish and maintain database of City lodging providers.

4.1.2.Receive and process registrations, tax returns and payments in a timely fashion.

4.1.3.Provide lodging providers multiple options for submitting registrations, tax returns, payments, or support requests (including via website, email, mail, phone, and fax. Consultant tax specialists will be available for live interactions Monday through Friday, 8:00am to 5:00pm Pacific).

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4.1.4.Remit revenue to City no less than monthly.

4.1.5.Provide City staff access to website portal offering lodging provider registry inquiry and reporting capabilities.

4.1.6.Endeavor to ensure accurate filings of returns by consistently monitoring returns, providing compliance audits, and educating lodging providers as mutually agreed to by City and Consultant.

4.1.7.Provide analysis reports monthly and annually provide revenue trends and key insights on City lodging providers.

4.2. Audit Services

4.2.1.Analyze City transient occupancy tax ordinance and business procedures, and recommend possible improvements or best practices for processes, form design, and ordinance.

4.2.2.Analyze lodging provider data and review analysis findings with City. Analysis will include the most recent thirty-six (36) months of tax filings along with supplemental data as available (including number of rooms, occupancy rate, physical condition, and business dynamics).

4.2.3.Recommend lodging providers who merit additional investigation or examination to determine their compliance with City’s ordinance.

4.2.4.Lodging providers identified by Consultant and approved by City for audit are scheduled for a compliance analysis audit.

4.2.5.Review records of the lodging provider for information related to compliance with City regulations (including endeavoring to validate taxable gross rents, exemptions, bank statements, daily/monthly summaries, and other relevant compliance-related information).

Supporting documentation for relevant items such as exemptions will also be reviewed.

4.2.6.Generate lodging provider compliance report (including results of the compliance analysis audit and recommended actions). Review report with City and determine next steps.

4.2.7.Notify deficient lodging providers of the findings as well as instructions for payment and appeal processes. Schedule appointments with lodging providers to review findings and educate regarding proper filing procedures in order to prevent future errors and deficiencies.

4.2.8.Send compliant lodging providers a letter of commendation, thanking them for their cooperation and compliance.

4.2.9.Invoice lodging providers found to be underreporting through the standard City approved collections process.

5. UTILITY USERS TAX AUDIT – Consultant’s work as set forth below is defined as “Agreed Upon Procedures” and is not a traditional review of financial statements as defined by Generally Accepted Reviewing Standards (“GAAS”). A traditional review includes the issuance of an opinion stating whether the financial statements are presented fairly in conformity with Generally Accepted Accounting Principles (“GAAP”). Because the procedures listed do not constitute a traditional review, Consultant will not express an opinion on the Companies’ or the City’s financial statements or any elements, accounts, or items thereof. Consultant’s analysis and reports will relate only to an analysis of Companies’ gross revenues and related elements of expenses. Consultant’s work identifies the steps performed to ensure that the Companies accurately paid utility users’ tax to City. Consultant’s work includes:

5.1. Overall Tasks

5.1.1.Contact City’s staff and obtain documentation required to kick off the project.

5.1.2.Review City’s municipal code related to utility users’ tax to understand the definition of gross revenues and the determination of utility users’ taxes.

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5.1.3.Prepare initial data requests to the Companies and the City requesting information related to the review period. During the project, if needed, prepare additional dta requests and submit them to the Companies.

5.1.4.Execute non-disclosure agreements (NDAs) with the Companies, if required.

5.1.5.Correspond with the Companies and the City, as required via phone and email, to obtain documentation, resolve issues, and obtain any appropriate assistance.

5.2. Review of Utility Users’ Taxes

5.2.1.Verify that the accounting methodologies and procedures used by the Companies accurately identify billed revenues generated within the City during the review period subject to the utility users’ taxes. Investigate any inconsistencies and provide recommendations, if applicable.

5.2.2.Review payments to the City and recalculate the utility users’ taxes for the review period.

5.2.3.On a test basis, reconcile billed revenues submitted as supporting documentation with the tax payments to revenues recorded on the audited financial statements or equivalent reporting information.

5.2.4.Identify each revenue type or source that the Companies did not include in the determination of the utility users’ taxes remitted to the City for the review period and verify correctly excluded.

5.2.5.Reconcile revenues reported to the City to the revenues on third party billing data on a test basis, depending on the findings noted and accuracy of the sample quarters tested.

5.2.6.Obtain a sample of customer bills and verify the calculation of the tax on the bill.

5.2.7.For each year, summarize every category of revenues reported to the City and reconcile these revenues to the utility users’ taxes.

5.3. Procedures specific to Telecommunication Utility Users’ Taxes

5.3.1.Review the following, as applicable: enhanced service revenues, private line revenues, equipment lease and sales revenues, installation and maintenance agreement charges, late fees, non-sufficient funds fees, E911 charges, sales taxes, and state and federal USF charges.

Determine that these items are appropriately treated in the determination of the gross revenues reported to the City.

5.3.2.Review the allocations of any bundled products consistent with accounting requirements (Accounting Standards Codifications 605 and 606) to ascertain the correct amount subject to the UUT is being determined.

5.3.3.Identify any exempt telecommunications revenues and determine if the customer meets the requirements for exempt status.

5.3.4.Determine whether gross revenues generated from Indefeasible Right of Use (“IRU”) agreements were correctly included in the revenue base to determine UUT payments to the City.

5.3.5.Obtain a list of the reseller lease agreements. Determine whether revenues from reseller lease agreements were correctly included in the telecommunications revenue base to determine the UUT payments to the City or whether the reseller self reports.

5.3.6.Review the allocation percentage and method utilized to calculate allocated revenues, such as the long-distance revenues between intrastate and interstate.

5.4. Summarize Results and Issue Reports

5.4.1.Develop spreadsheet models that include the following calculations:

5.4.1.1. Analyze utility users’ taxes reported to City by category of revenues.

5.4.1.2. Calculate under/overpayment of the amount due to City, interest charges and applicable fees on under/overpayments of the utility users’ taxes.

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5.4.2.Submit final reports to City. The reports will include Consultant findings, including a recalculation of the utility users’ taxes and determination of any deficiencies plus applicable interest due to City.

5.5. ADDITIONAL SERVICES – Consultant is available to assist in resolving with the Companies any disputed issues as to amounts owed to the City. Additional services would include assisting the City in its negotiations with the Companies. Typically, we participate in conference calls, discuss our findings with the Companies, and assist the City in negotiating a settlement with the Companies. We are also available to perform other additional services, such as: meet with the City to discuss our findings; make presentations of our report to the City; and provide support and testimony if this matter is litigated.

6. FRANCHISE FEES AUDIT – Consultant’s work as set forth below is defined as “Agreed Upon Procedures” and is not a traditional review of financial statements as defined by Generally Accepted Reviewing Standards (“GAAS”). A traditional review includes the issuance of an opinion stating whether the financial statements are presented fairly in conformity with Generally Accepted Accounting Principles (“GAAP”). Because the procedures listed do not constitute a traditional review, Consultant will not express an opinion on the Companies’ or the City’s financial statements or any elements, accounts, or items thereof. Consultant’s analysis and report will related only to an analysis of Companies’ gross revenues and related elements of expenses. Consultant’s work identifies the steps we perform to ensure that the Companies accurately paid franchise and PEG fees to City. Consultant’s work includes:

6.1. Overall Tasks

6.1.1.Contact City’s staff and obtain documentation required to kick off the project.

6.1.2.Review the franchise agreements and requirements under DIVCA to understand the definition of gross revenues and the determination of franchise and PEG fees.

6.1.3.Prepare initial data requests to the Companies and the City requesting information related to the review period. During the project, if needed, prepare additional dta requests and submit them to the Companies.

6.1.4.Execute non-disclosure agreements (NDAs) with the Companies, if required.

6.1.5.Correspond with the Companies and the City, as required via phone and email, to obtain documentation, resolve issues, and obtain any appropriate assistance.

6.2. Review of Franchise and PEG Fees

6.2.1.Recalculate the franchise and PEG fees paid to City for the review period.

6.2.2.Identify all sources of gross revenues generated during the review period for which the City is due payments, including those revenues that the Companies did not include in determining franchise and PEG fees.

6.2.3.Verify that the Companies' accounting methodologies accurately calculated the gross revenues generated within the City during the review period. Investigate any inconsistencies and provide recommendations, if applicable.

6.2.4.Ensure that the general ledger's gross revenues are included in the gross revenues reported to the City in accordance with the franchise agreements and DIVCA.

6.2.5.On a test basis, reconcile gross revenues submitted as supporting documentation with the franchise fee payments to revenues recorded on the audited financial statements or equivalent reporting information.

6.2.6.Identify each revenue type or source that the Companies did not include in determining the franchise and PEG fees remitted to the City for the review period.

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6.2.7.Ensure that gross revenues recorded on the general ledger are correctly included in the franchise fee payments in accordance with the franchise agreements and DIVCA.

6.2.8.Review other revenues consistent with the franchise agreements and DIVCA to determine whether they were correctly included in reported revenues.

6.2.9.Review non-sufficient funds fees, late fees, and administrative fees to ensure that they are correctly included in the gross revenues reported to the City.

6.2.10. Review bad debt expense and bad debt recoveries reported to the City.

6.2.11. Review and recalculate allocation of non-subscriber revenues to ensure that they are correctly included in gross revenues reported to the City.

6.2.12. Reconcile advertising revenues reported in franchise and PEG fee payments to supporting documentation provided by the Companies.

6.2.13. Review any "contra-expenses" recorded by the Companies to ensure that amounts were accurately reported to the City.

6.3. SUMMARIZE RESULTS AND ISSUE REPORTS

6.3.1.Develop spreadsheet models that include the following calculations

6.3.1.1. Analyze franchise and PEG fees reported to the City by category of revenues.

6.3.1.2. Calculate under/overpayment of the amount due to the City, interest charges and applicable fees on under/overpayments of the franchise fees.

6.3.2.Submit final reports to the City. The reports will include our findings, including a recalculation of the franchise fees and determination of any deficiencies plus applicable interest due to the City.

6.4. ADDITIONAL SERVICES – Consultant is available to assist in resolving with the Companies any disputed issues as to amounts owed to the City. Additional services would include assisting the City in its negotiations with the Companies. Typically, we participate in conference calls, discuss our findings with the Companies, and assist the City in negotiating a settlement with the Companies. We are also available to perform other additional services, such as: meet with the City to discuss our findings; make presentations of our report to the City; and provide support and testimony if this matter is litigated.

6.5. INFORMATION REQUIRED FROM THE CITY – Consultant will prepare the initial data requests to send to the Companies requesting data regarding franchise and PEG fee payments to initiate the reviews. City staff will be required to furnish Consultant with copies of the following items to proceed with the projects:

6.5.1.Quarterly franchise and PEG fee payments and all supporting documentation

6.5.2.True-up and/or settlement payments

6.5.3.Franchise agreements, transfer agreements and ordinances, settlement agreements

6.5.4.Rate cards and fee schedules

6.5.5.Any relevant correspondence related to franchise fee payments

6.5.6.Any other relevant information that may impact Consultant review Consultant and Professional Services Agreement (Revised 01.2019) Exhibit B - Compensation

EXHIBIT B

COMPENSATION

1. Consultant’s Compensation.

A. Services: City agrees to pay Consultant, at the rate(s) specified below, for those services set forth in Exhibit A of this Agreement and for all authorized reimbursable expenses, for an annual not to exceed Three Hundred and Fifty Thousand ($350,000.00) Said not-to-exceed amount shall not include payments made to the Consultant pursuant to Sections 1.2.1 and 3.2.1 of Attachment 1 of Exhibit B, which payments are contingent upon the recovery of misallocated funds and where said payments are completely and fully offset by recovered revenue.

Consultant shall notify City in writing no later than thirty (30) days prior to the estimated date when Consultant will have billed City the maximum payment amount permitted under this Agreement, and Consultant shall provide City with an estimate of the additional compensation required to complete the project.

B. Additional Services:

1. Additional Services are those services related to the scope of Services of Consultant as set forth in Exhibit A but not anticipated at the time of execution of this Agreement. Additional Services shall be provided only when a Supplemental Agreement authorizing such Additional Services is approved by the City Manager, or his or her designee. City reserves the right to perform any Additional Services with its own staff or to retain other Consultants to perform said Additional Services.

2. Consultant’s compensation for Additional Services shall be based on the total number of hours spent on Additional Services multiplied by the employees' appropriate billable hourly rate as established below. City, at its option, may negotiate a fixed fee for some or all Additional Services as the need arises. Where a fixed fee for Additional Services is established by mutual Agreement between City and Consultant, compensation to Consultant shall not exceed the fixed fee amount.

2. Appropriate Billable Hourly Rates for Services and Additional Services. Consultant’s billable rates are outlined in Attachment 1 of Exhibit B, attached hereto and incorporated herein by this reference.

3. Consultant’s Reimbursable Expenses. Reimbursable Expenses shall be limited to actual reasonable expenditures of Consultant for expenses that are necessary for the proper completion of the Services and shall only be payable if

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1. SALES, USE AND TRANSACTION TAX

1.1. Sales, Use and Transactions Tax and Economic Analysis/Forecasting Services/Reports

1.1.1.Fees for performing the sales tax and economic analysis/forecasting Services shall initially be $750 per month. Fees for performing the transactions/use tax reports Services related to a meaure/district shall initially be $250 per month.

1.2. Allocation and Audit Recovery Services

1.2.1.Fees for performing allocation and audit recovery Services shall be (a) 15% of all new, increased and recovered sales and use tax revenue and (b) 25% of all new, increased and recovered transactions and use tax measure/district revenue received by City as a result, in whole or in part, of such Services, including without limitation, any reimbursement or other payment from any State fund and any point of sale misallocations. These Fees shall be paid notwithstanding any related City assistance, work in parallel, and/or incurrence of attorneys’ fees or other costs or expenses in connection, with the relevant Services.

1.2.2.The Fees described in Section 1.2.1(a) include, without limitation, State fund transfers received for back quarter reallocations and monies received in the first eight (8) consecutive reporting quarters following completion of Consultant’s allocation audit and confirmation by the CDTFA of the relevant corrections.

1.2.3.These Fees shall be paid by City upon Consultant’s submittal of evidence of Consultant’s relevant Services in support thereof, including, without limitation, copies of relevant communications between Consultant and the CDTFA and/or taxpayers.

1.2.4.Consultant recognizes City’s authority to waive or reduce the tax/fee-related debt of a business. Should City decide to do so for a business whose deficiency was identified by Consultant, Consultant shall be entitled to compensation in the amount of one half (1/2) of the Fees Consultant would have otherwise earned. Deficiencies which are uncollectable due to insolvency or dissolution of the business, or for deficiencies which are otherwise incapable of collection (i.e. statute of limitation or other legal defense) shall not be considered a City voluntary election to waive, and thus, Consultant would not be entitled to compensation related thereto under this provision.

2. CANNABIS MANAGEMENT

2.1. Cannabis Tax Audits

2.1.1.Fees for providing an annual cannabis business tax audit of each licensed cannabis business is $8,000.00 per business per year.

2.1.2.Consultant is available to provide assistance with post-audit corrective actions or appeals at Consultant’s hourly rates.

2.2. Cannabis Compliance Inspections

2.2.1.Fees for providing one site inspection per year of each permitted cannabis business location is $1,500.00 per business location per inspection.

2.2.2.Consultant is available to provide assistance with appeals or review of supplemental documents to contest any findings of non-compliance at Consultant’s hourly rates.

2.3. Quarterly Cannabis Business Tax Reports – Fees for providing quarterly Tax Analytical Remittance Report (TARR) for all licensed cannabis businesses is $2,500.00 per quarter.

2.4. Management Support and Legislative Updates

2.4.1.Fees for providing monthly cannabis E-newsletter, legislative updates and issue alerts as needed is $0.00 (no cost).

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2.4.2.Consultant shall provide up to 10 hours of general consulting in the form of technical assistance and subject matter expertise to be used as needed by City at no cost. Any additional hours shall be billed at Consultant’s hourly rates.

3. BUSINESS LICENSE ADMINISTRATION

3.1. Operations Management - Fees for performing operations management Services shall be $13.85 for each processed account, which is any account for which an application or renewal/return was processed, or active account which was sent a renewal notice.

3.2. Compliance – Fees for performing compliance Services apply to all monies received for the current tax/license period and any other prior period collected (including monies received for taxes, penalties, interest, and fees).

3.2.1.Discovery - Fees for performing discovery Services shall be a contingency Fee of 35% of the revenues received as a result of the Services.

3.2.1.1. In the event that City discovers a non-compliant business and reports the business to Consultant (including a calculation of all taxes/fees due), Consultant will categorize the business as a collection service effort and thus apply the lower collection Services contingency Fee rate.

3.2.2.Collection - Fees for performing collection Services shall be a contingency Fee of 25% of the revenues received as a result of the Services.

3.2.3.Audit - Fees for performing audit Services shall be a contingency Fee of 35% of the revenues received as a result of the Services.

3.2.4.Consultant recognizes City’s authority to waive or reduce the tax/fee debt of a business.

Should City decide to do so for a business whose deficiency was identified by Consultant, Consultant shall be entitled to compensation in the amount of one half (1/2) of the Fees Consultant would have otherwise earned. Deficiencies which are uncollectable due to insolvency or dissolution of the business, or for deficiencies which are otherwise incapable of collection (i.e., statute of limitation or other legal defense) shall not be considered a City voluntary election to waive, and thus, Consultant would not be entitled to compensation related thereto under this provision.

4. TRANSIENT OCCUPANCY TAX ADMINISTRATION

4.1. Operations Management - Fees for performing transient occupancy tax operations management Services shall be $750.00 per year for each quarterly filing property, and $800.00 per year for each monthly filing property.

4.2. Audits - One audit per property every three (3) years is included in the operations management Services. Additional audits may be performed at City’s request at the price of $2,000.00 per property.

5. UTILITY USERS TAX AUDIT – Consultant will perform reviews of the significant cable, electric, gas and telecommunications companies (Companies) concerning the utility users’ taxes (UUT) payments to City for a contingency fee of 40% of retroactive recovered funds, and 25% of go-forward funds for a period of 24 months. As an alternative to the contingency fee pricing, City may instead select an hourly rate of $190 per hour, not to exceed $25,000.00 per provider review. It is possible for a single company to require multiple reviews (with separate budgets), i.e., Verizon/Frontier for wireline services and cellular service.

ATTACHMENT 1 OF EXHIBIT B
Compensation
1248933.2 Page 3 of 3

5.1. If City takes legal action to collect underpayments identified by Consultant, any additional services, e.g. expert testimony, by Consultant will be provided at an agreed hourly rate of $250 per hour.

5.2. If City selects contingency fee pricing, and during the course of the reviews City negotiates, abates, cancels, amends, or waives, without Consultant’s prior written consent, any Findings that were identified by Consultant and where such Findings were allowed under the law or the City’s contract with that Company at the time Findings were made, City shall pay to Consultant its fees for the refunds, credits, or error corrections at the rates set forth herein.

6. FRANCHISE FEES AUDIT – Consultant will review franchise fees and PEG fees for the most recent 3-year review period for an hourly rate of $190 per hour, not to exceed $25,000.00 per provider review.

6.1. If City takes legal action to collect underpayments identified by Consultant, any additional services, e.g. expert testimony, by Consultant will be provided at an agreed hourly rate of $250 per hour.

7. CONSULTING AND OTHER OPTIONAL SERVICES

7.1. Fees for performing the consulting and other optional Services described above shall be based on the following initial hourly rates: (i) Principal - $325; (ii) Programmer - $295; (iii) Senior Analyst - $245; and (iv) Analyst - $195.

7.2. Consultant may change the rates for its hourly Fees from time to time in its sole discretion upon at least 30 days’ prior written notice to City.

8. GENERAL PROVISIONS RELATING TO FEES

8.1. 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.

8.2. 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.

8.3. All non-hourly and non-contingent Fees detailed in this Attachment 1 of Exhibit B will be increased as of January 1st of each calendar year with reference to the 12-month percent change in the most recently published annual Consumer Price Index for All Urban Consumers (CPI-U), West Region, as reported by the U.S. Bureau of Labor Statistics (the “CPI Change”). Each annual increase in the Fees will be equal to the greater of two percent (2%) or the actual CPI Change and the lesser of ten percent (10%) or the actual CPI Change. For example, if the actual CPI Change is 1.5%, then the annual increase will be 2%, if the actual CPI Change is 3.5%, then the annual increase will be 3.5%, and if the actual CPI Change is 12%, then the annual increase will be 10%.

Approved as to form:

By: for
Veronica Nebb, City Attorney
RESOLUTION NO. __________

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF VALLEJO

APPROVING A PROFESSIONAL SERVICES AGREEMENT WITH HINDERLITER DE

LLAMAS AND ASSOCIATES FOR REVENUE DISCOVERY, AUDIT AND TAX

COMPLIANCE AND CONSULTING SERVICES WITH AN ANNUAL FIXED FEE NOT TO EXCEED $350,000 AND ADDITIONAL FEES BASED ON THE PERCENTAGE OF

NEW REVENUE COLLECTED AND AUTHORIZING THE CITY MANAGER TO

EXECUTE SAME
WHEREAS, the City of Vallejo Finance Department (“Department”), seeks to contract revenue discovery and consulting services from Hinderliter De Llamas (HDL); and WHEREAS, Vallejo Municipal Code 3.20.050 requires City Council approval to spend amounts in excess of $100,000 to a vendor in a fiscal year; and WHEREAS, the cost of professional and consulting services is estimated at $350,000 annually for three years; and
WHEREAS, the City may receive additional revenue from audit and compliances services provided by HDL; and
WHEREAS, the cost of HDL’s audit and compliance services is based on a set percentage of revenue recovered using HDL’s services and is in addition to the $350,000 annual fee; and WHEREAS, Hinderliter De Llamas and Associates is well qualified, willing and able to provide all necessary revenue discovery and consulting services

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

Section 1. The City Council hereby approves the Consultant and Professional Services Agreement between the City of Vallejo and Hinderliter De Llamas and Associates Section 2. The City Manager for the City of Vallejo is herby authorized to execute said Agreement on behalf of the City of Vallejo
Section 3. The City Council authorizes:
a. The City of Vallejo will pay an amount not to exceed of $350,000 annually for three years with an option to extend for two additional years. b. In the event that Hinderliter De Llamas and Associates recovers additional revenue for the City from audit services, the City will pay Hinderliter De Llamas an additional audit and compliance fee based upon a percentage (varies per program) of any revenue recovered during the contract period.
c. In the event the City utilizes other Hinderliter services as outlined in the agreement, the City will pay additional fees as set forth in the agreement.

Adopted by the City Council of the City of Vallejo at a regular meeting held on June 28, 2022 with the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:
_____________________________
ROBERT H. MCCONNELL, MAYOR
ATTEST: ________________________________
DAWN G. ABRAHAMSON, CITY CLERK
CONSENT CALENDAR 8.F.

DATE: June 28, 2022
TO: Mayor and Members of the City Council
FROM: Melissa Tigbao, Public Works Director
SUBJECT: ADOPT A RESOLUTION AMENDING THE FISCAL YEAR 2021-22 SOLID WASTE FUND

BUDGET AND AUTHORIZING THE CITY MANAGER TO EXECUTE TWO GRANT

AGREEMENTS WITH CALRECYCLE

RECOMMENDATION
Adopt a Resolution to amend the FY 2021-22 Solid Waste Fund (#135) budget to recognize revenue, appropriate funds, and execute grant agreements in the amount of $167,109 for the SB1383 Local Assistance Grant and $29,381 for the City/County Beverage Container Grant from the Department of Resource and Recovery (CalRecycle).

REASONS FOR RECOMMENDATION
The City applied and was awarded $167,109 for the SB1383 Local Assistance Grant and $29,381 for the City/County Beverage Container Grant from Department of Resource and Recovery (CalRecycle). A City Council approved Resolution to amend the Solid Waste Fund budget is required to recognize revenue and appropriate grant funding.

BACKGROUND AND DISCUSSION
The Department of Resources Recycling and Recovery (CalRecycle) offers various grant programs to further California’s efforts to reduce, recycle, and reuse solid waste generated in the state, thereby preserving landfill capacity and protecting public health and safety and the environment.

The SB 1383 Local Assistance Grant Program is a non-competitive grant that will provide one-time funding to help local jurisdictions implement SB 1383 organic waste programs to meet new requirements. The City’s Recycling Coordinator submitted a successful application to CalRecycle by the required deadline and on April 27, 2022, the City was awarded grant funds in the amount of $167,109.

In addition, CalRecycle distributed $10,500,000 in fiscal year 2021-22 to eligible cities and counties pursuant to the California Beverage Container Recycling and Litter Reduction Act, specifically for beverage container recycling and litter cleanup activities. These funds are generated from the California Redemption Value (CRV) tax that is placed on all beverage containers. Funds are allocated to cities and counties based on population.

The City met all the required grant criteria and on March 22, 2022, the City was notified that they were awarded these non-competitive grant funds in the amount $29,381 for fiscal year 2021-22.

Approval of the Resolution is the second step in the two-step process to amend the fiscal year 2021-22 Solid Waste Fund budget by recognizing and appropriating funds in the amount of $167,109 for the SB1383 Local Assistance Grant and $29,381 for the City/County Beverage Container Grant from CalRecycle. The notice of intent to amend the budget was presented to City Council at the regular City Council meeting held on June 14, 2022.

In closing, although the City applied for and has been awarded these funds, the Resolution will also authorize Date: June 28, 2022
Subject: ADOPT A RESOLUTION AMENDING THE FISCAL YEAR 2021-22 SOLID WASTE FUND

BUDGET AND AUTHORIZING THE CITY MANAGER TO EXECUTE TWO GRANT

AGREEMENTS WITH CALRECYCLE