West Sacramento City Council
February 19, 2025

Strategic Plan Integration
The City’s mission includes a City Government that is Financially Sound, and the Council’s goal for achieving a Financially Sound City Government is furthered by ensuring an Investment Strategy in a manner that not only ensures safety and liquidity but maximizes the overall investment performance and increases the City’s treasury balance through prudent investments and active management.

Alternatives
The City Council may choose to:

1. Approve the contract with Chandler Asset Management as recommended by staff; or

2. Elect not to approve the proposed contract with Chandler Asset Management; or

3. Manage investments utilizing City staff with the understanding there are no staff members who currently possess a Certified Public Finance Manager designation from an accredited organization; or

4. Request staff to return with additional information and/or changes to the proposed contract.

Coordination and Review
The contract language is from the City’s approved template.

Budget/Cost Impact
Both fees and investment earnings are charged to the City’s pooled cash funds and will be allocated to all appropriate funds based on average daily cash balance going forward. No appropriation adjustments are necessary for this action.

ATTACHMENT

1. FIN25-016 Chandler Asset Management Contract for Services 869
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1 CONTRACT FOR SERVICES
THIS CONTRACT is made on March 1
st
, 2025, by and between the CITY OF WEST
SACRAMENTO (“City”), and Chandler Asset Management ("Consultant").

WITNESSETH:

WHEREAS, the City desires professional investment management and advisory services, including development of an investment strategy for various types of funds.

WHEREAS, the Consultant has presented a proposal for such services to the City, dated November 4
th, 2024, (attached hereto as Exhibit “A”) and is duly licensed, qualified and experienced to perform those services.

NOW, THEREFORE, the parties hereto mutually agree as follows:

1. SCOPE OF SERVICES:

A. Consultant shall do all work, attend all meetings, produce all reports and carry out all activities necessary to completion of the services described in Exhibit “A” This Contract and its exhibits shall be known as the “Contract Documents.” Terms set forth in any Contract Document shall be deemed to be incorporated in all Contract Documents as if set forth in full therein. In the event of conflict between terms contained in these Contract Documents, the more specific term shall control. If any portion of the Contract Documents shall be in conflict with any other portion, provisions contained in the Contract shall govern over conflicting provisions contained in the exhibits to the Contract.

B. Consultant enters into this Contract as an independent contractor and not as an employee of the City. The Consultant shall have no power or authority by this Contract to bind the City in any respect. Nothing in this Contract shall be construed to be inconsistent with this relationship or status. All employees, agents, contractors or subcontractors hired or retained by the Consultant are employees, agents, contractors or subcontractors of the Consultant and not of the City. The City shall not be obligated in any way to pay any wage claims or other claims made against Consultant by any such employees, agents, contractors or subcontractors, or any other person resulting from performance of this Contract. In the event that Consultant or any employee, agent, or subcontractor of Consultant providing services under this Agreement claims or is determined by a court of competent jurisdiction or the California Public Employees Retirement System (PERS) to be eligible for enrollment in PERS as an employee of the City, Consultant shall indemnify, defend, and hold harmless City for the payment of any employee and/or employer contributions for PERS benefits on behalf of Consultant or its employees, agents, or subcontractors, as well as for the payment of any penalties and interest on such contributions, which would otherwise be the responsibility of City. Notwithstanding any other agency, state or federal policy, rule, regulation, law or ordinance to the contrary, To the greatest extent permitted by law, Consultant and its employees, agents, and subcontractors shall not qualify for or become entitled to, and hereby agree to waive any claims to, any compensation, benefit, or any incident of employment by City, including but not limited to eligibility to enroll in PERS as an employee of City and entitlement to any contribution to be paid by City for employer contribution and/or employee contributions for PERS benefits.
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2 C. The Consultant agrees it has satisfied itself by its own investigation and research regarding the conditions affecting the work to be done and labor and materials needed, and that its decision to execute this Contract is based on such independent investigation and research.

2. TERM OF CONTRACT
A. The services of Consultant are to commence upon execution of this Contract by the City, and shall be undertaken and completed in accordance with the Schedule of Performance attached hereto and incorporated herein by this reference as Exhibit “A” and terminate on February 28, 2028.

B. Consultant’s failure to complete work in accordance with the Schedule of Performance may result in delayed compensation as described in Section 3.

C. The City Manager or his or her designee may, by written instrument signed by the Parties, extend the duration of this Contract for two (2) additional one-year extensions in the manner provided in Section 5, provided that the extension does not require the payment of compensation in excess of the Council approved budget.

3. COMPENSATION:

A. The Consultant shall be paid monthly for the actual fees, costs and expenses Consultant's fees shall be as specified in the Schedule of Fees, which is attached hereto an incorporated herein as Exhibit "B".

B. Said amount shall be paid in arrears and will be debited directly from the City’s third party custody account.

C. If the work is halted at the request of the City, compensation shall be based upon the proportion that the work performed bears to the total work required by this Contract, subject to Section 4.

4. TERMINATION:

A. This Contract may be terminated by either party, provided that the other party is given not less than 30calendar days’ written notice (delivered by certified mail, return receipt requested) of intent to terminate.

B. The City may temporarily suspend this Contract, at no additional cost to City, provided that the Consultant is given written notice (delivered by certified mail, return receipt requested) of temporary suspension. If City gives such notice of temporary suspension, Consultant shall immediately suspend its activities under this Contract.

C. Notwithstanding any provisions of this Contract, Consultant shall not be relieved of liability to the City for damages sustained by the City by virtue of any breach of this Contract by Consultant, and the City may withhold any payments due to Consultant until such time as the exact amount of damages, if any, due the City from Consultant is determined.

D. In the event of termination, the Consultant shall be compensated as provided for in this Contract, except as provided in Section 4C. Upon termination, the City shall be entitled to 871
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3 all work, including but not limited to, appraisals, inventories, studies, analyses, drawings and data estimates performed to that date in accordance with Section 7 hereof.

5. AMENDMENTS, CHANGES OR MODIFICATIONS:

Amendments, changes or modifications in the terms of this Contract may be made at any time by mutual written agreement between the parties hereto and shall be signed by the persons authorized to bind the parties hereto.

6. EXTENSIONS OF TIME:

Consultant may, for good cause, request extensions of time to perform the services required hereunder. Such extensions shall be authorized in advance by the City in writing and shall be incorporated in written amendments to this Contract or the attached Work Program in the manner provided in Section 5.

7. PROPERTY OF CITY:

A. It is mutually agreed that all materials prepared by the Consultant under this Contract shall become the property of the City, and the Consultant shall have no property right therein whatsoever. Immediately upon termination, the City shall be entitled to, and the Consultant shall deliver to the City, all data, drawings, specifications, reports, estimates, summaries and other such materials as may have been prepared or accumulated to date by the Consultant in performing this Contract which is not Consultant’s privileged information, as defined by law, or Consultant’s personnel information, along with all other property belonging exclusively to the City which is in the Consultant’s possession.

B. Additionally, it is agreed that the parties intend this to be a contract for services and each considers the products and results of the services to be rendered by Consultant hereunder (the “Work”) to be a work made for hire. Consultant acknowledges and agrees that the Work (and all rights therein, including, without limitation, copyright) belongs to and shall be the sole and exclusive property of the City.

8. COMPLIANCE WITH ALL LAWS:

A. Consultant shall comply with all applicable laws, ordinances, and codes of federal, State and local governments, and shall commit no trespass on any public or private property in performing any of the work authorized by this Contract
B. Consultant warrants to the City that it is licensed by all applicable governmental bodies to perform this Contract and will remain so licensed throughout the progress of the Work, and that it has, and will have, throughout the progress of the Work, the necessary experience, skill and financial resources to enable it to perform this Contract.

9. WARRANTIES AND RESPONSIBILITIES - CONSULTANT:

A. Consultant agrees and represents that it is qualified to properly provide the services set forth in Exhibit “A” in a manner which is consistent with the generally accepted standards of Consultant’s profession.
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4 B. Consultant agrees and represents that the work performed under this Contract shall be in accordance with applicable federal, State and local law in accordance with Section 17A hereof.

C. Consultant shall designate a project manager who at all times shall represent the Consultant before the City on all matters relating to this Contract. The project manager shall continue in such capacity unless and until he or she is removed at the request of the City, is no longer employed by Consultant, or is replaced with the written approval of the City, which approval shall not be unreasonably withheld.

D. Consultant shall provide corrective services without charge to the City for services which fail to meet the above professional and legal standards and which are reported to Consultant in writing within sixty (60) days of discovery. Should Consultant fail or refuse to perform promptly its obligations, the City may render or undertake performance thereof and the Consultant shall be liable for any expenses thereby incurred.

10. SUBCONTRACTING:

None of the services covered by this Contract shall be subcontracted without the prior written consent of the City, which will not be unreasonably withheld. Consultant shall be as fully responsible to the City for the negligent acts and omissions of its contractors and subcontractors, and of persons either directly or indirectly employed by them, as it is for the negligent acts and omissions of persons directly employed by Consultant.

11. ASSIGNABILITY:

Consultant shall not assign or transfer any interest in this Contract whether by assignment or novation, without the prior written consent of the City which will not be unreasonably withheld.

However, claims for money due or to become due Consultant from the City under this Contract may be assigned to a financial institution, or to a trustee in bankruptcy, without such approval.

Notice of any assignment or transfer whether voluntary or involuntary shall be furnished promptly to the City.

12. INTEREST IN CONTRACT:

Consultant covenants that neither it, nor any of its employees, agents, contractors, subcontractors has any interest, nor shall they acquire any interest, direct or indirect, in the subject of the Contract, nor any other interest which would conflict in any manner or degree with the performance of its services hereunder. Consultant shall make all disclosures required by the City’s conflict of interest code in accordance with the category designated by the City, unless the City Manager determines in writing that Consultant’s duties are more limited in scope than is warranted by the category designated by the City code and that a narrower disclosure category should apply. Consultant also agrees to make disclosure in compliance with the City conflict of interest code if, at any time after the execution of this Contract, City determines and notifies Consultant in writing that Consultant’s duties under this Contract warrant greater disclosure by Consultant than was originally contemplated. Consultant shall make disclosures in the time, place and manner set forth in the conflict of interest code and as directed by the City.

13. MATERIALS CONFIDENTIAL:

All of the materials prepared or assembled by Consultant pursuant to performance of this 873
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5 Contract are confidential and Consultant agrees that they shall not be made available to any individual or organization without the prior written approval of the City, except by court order.

14. LIABILITY OF CONSULTANT-NEGLIGENCE:

Consultant shall be responsible for performing the work under this Contract in a manner which is consistent with the generally-accepted standards of the Consultant’s profession and shall be liable for its own negligence and the negligent acts of its employees, agents, contractors and subcontractors. The City shall have no right of control over the manner in which the work is to be done but only as to its outcome, and shall not be charged with the responsibility of preventing risk to Consultant or its employees, agents, contractors or subcontractors.

15. INDEMNITY AND LITIGATION COSTS:

Consultant shall indemnify, defend, and hold harmless the City, its officers, officials, agents, and employees against all claims, damages, demands, liability, costs, losses and expenses, including without limitation court costs and reasonable attorneys’ fees, arising from Consultant's negligent acts or negligent failure to act, errors, omissions or willful misconduct incident to the performance of this Contract except such loss or damage caused by the active negligence, sole negligence, or willful misconduct of the City. The provisions of this paragraph shall survive termination or suspension of this Contract.

16. CONSULTANT TO PROVIDE INSURANCE:

A. Consultant shall not commence any work before obtaining, and shall maintain in force at all times during the duration and performance of this Contract, the policies of insurance specified in this Section. Such insurance must have the approval of the City as to limit, form, and amount, and shall be placed with insurers with a current A.M. Best’s rating of no less than A VII (an NR rating is acceptable for Worker’s Compensation insurance written with the State Compensation Insurance Fund of California).

B. Prior to execution of this Contract and prior to commencement of any work, the Consultant shall furnish the City with certificates of insurance and copies of endorsements providing evidence of coverage for all policies required by the Contract. The Consultant and its contractors and subcontractors shall, at their expense, maintain in effect at all times during the performance of work under the Contract not less than the following coverage and limits of insurance, which shall be maintained with insurers and under forms of policy satisfactory to the City. The maintenance by Consultant and its contractors and subcontractors of the following coverage and limits of insurance is a material element of this Contract. The failure of Consultant or of any of its contractors or subcontractors to maintain or renew coverage or to provide evidence of renewal may be treated by the City as a material breach of this Contract. Approval of the insurance by the City shall not relieve or decrease any liability of Consultant.

1. Worker’s Compensation and Employer’s Liability Insurance

a. Worker’s Compensation - Insurance to protect the Consultant, its contractors and subcontractors from all claims under Worker’s Compensation and Employer’s Liability Acts, including Longshoremen’s and Harbor Worker’s Act (“Acts”), if applicable. Such coverage shall be maintained, in type and amount, in strict compliance with all applicable state and Federal statutes and regulations. 874
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6 The Consultant shall execute a certificate in compliance with Labor Code Section 1861, on the form provided in the Contract Documents.
b. Consultant shall provide a Waiver of Subrogation endorsement in favor of the City, its officers, officials, employees, agents and volunteers for losses arising from work performed by the Consultant.

2. Commercial General Liability Insurance
a. The insurance shall be provided on form CG0001, or it’s equivalent, and shall include coverage for claims for bodily injury or property damage arising out of premises/operations, products/completed operations, contractual liability, and subconsultant’s work and personal and advertising injury resulting from actions, failures to act, or operations of the insured, or by its employees or agents, or by anyone directly or indirectly employed by the insured. The amount of insurance coverage shall not be less than $1,000,000.00 per occurrence and $2,000,000 general and products/completed operations aggregates. b. The commercial general liability insurance shall also include the following:
i. Endorsement equivalent to CG 2010 0714 naming the City, its officers, officials, employees, agents, and volunteers as additional insureds. The endorsement shall contain no special limitations on the scope of protection afforded to the City, its officers, officials, employees or volunteers.
ii. Endorsement stating insurance provided to the City shall be primary as respects the City, its officers, officials, employees and any insurance or self insurance maintained by the City, its officers, officials, employees or volunteers shall be in excess of the Consultant’s insurance and shall not contribute with it, to the payment or satisfaction of any defense expenses, loss, or judgment.
iii. Provision or endorsement stating that the Consultant’s insurance shall apply separately to each insured against whom claim is made or suit is brought, except with respect to the limits of the insurer’s liability.

3. Commercial Automobile Insurance
a. The insurance shall include, but shall not be limited to, coverage for claims for bodily injury or property damage for owned, non-owned, and hired automobiles resulting from actions, failures to act, or operations of the insured, or by its employees or agents, or by anyone directly or indirectly employed by the insured. The amount of insurance coverage shall not be less than $1,000,000.00per accident.
b. The commercial automobile insurance shall include the same endorsements required for the commercial general liability policy (see Section

16.B.2.b).
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7 4. Professional Liability. The Consultant and its contractors and subcontractors shall secure and maintain in full force, during the term of this Contract and for five years thereafter, professional liability insurance policies appropriate to the respective professions and the work to be performed as specified in this Contract. The limits of such professional liability insurance coverage shall not be less than $1,000,000 per claim.

C. In addition to any other remedy the City may have, if Consultant fails to maintain the insurance coverage as required in this Section, the City may obtain such insurance coverage as is not being maintained, in form and amount substantially the same as is required herein, and the City may deduct the cost of such insurance from any amounts due or which may become due Consultant under this Contract.

D. No policy required by this Contract shall be suspended, cancelled, terminated by either party, or reduced in coverage or in limits unless Consultant has provided thirty (30) days prior written notice by certified mail, return receipt requested, to the City.

E. Any deductibles or self-insured retentions in excess of $10,000 must be declared to, and approved by, the City.

F. The requirement as to types, limits, and the City’s approval of insurance coverage to be maintained by Consultant are not intended to, and shall not in any manner, limit or qualify the liabilities and obligations assumed by Consultant under the Contract.

17. MISCELLANEOUS PROVISIONS:

A. Consultant shall keep itself fully informed of, shall observe and comply with, and shall cause any and all persons, firms or corporations employed by it or under its control to observe and comply with, applicable federal, state, county and municipal laws, ordinances, regulations, orders and decrees which in any manner affect those engaged or employed on the work described by this Contract or the materials used or which in any way affect the conduct of the work.

B. Consultant shall not engage in unlawful employment discrimination. Such unlawful employment discrimination includes, but is not limited to, employment discrimination based upon a person’s race, religious creed, color, national origin, ancestry, physical handicap, medical condition, marital status, gender, citizenship, or sexual orientation.

C. Consultant shall maintain and make available for inspection by the City and its auditors accurate records of all of its costs, disbursements and receipts with respect to any work under this Contract. Such inspections may be made during regular office hours at any time until six (6) months after the final payments under this Contract are made to the Consultant.

D. This Contract constitutes the entire agreement between the parties relative to the services specified herein and no modification hereof shall be effective unless and until such modification is evidenced by a writing signed by both parties to this Contract. There are no understandings, agreements, conditions, representations, warranties or promises, with respect to this Contract, except those contained in or referred to in the writing. 876
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8 E. All notices that are required to be given by one party to the other under this Contract shall be in writing and shall be deemed to have been given if delivered personally or enclosed in a properly addressed envelope and deposited in a United States Post Office for delivery by registered or certified mail addressed to the parties at the following addresses:

City: City of West Sacramento
Marc Rotteveel
1110 W Capitol Avenue
West Sacramento, CA 95691
[email protected]

Consultant:

Chandler Asset Management
Carlos Oblites
6225 Lusk Boulevard
San Diego, CA 92121
[email protected]

F. This Contract shall be interpreted and governed by the laws of the State of California.

G. Any action arising out of this Contract shall be brought and maintained in Yolo County California, regardless of where else venue may lie.

H. In any action brought by either party to enforce the terms of this Contract, each party shall be bear responsibility for its attorney’s fees and all costs regardless of whether one party is determined to be the prevailing party.

I. ELECTRONIC TRANSMISSION OF CONTRACT AND SIGNATURE.

By electronically signing this document in electronic form, Parties agree that this Agreement may be transmitted and signed electronically by all Parties, and that such signatures shall have the same force and effect as original signatures, in accordance with California law and regulations, including but not limited to Civil Code Section 1633.7

18. INVESTMENT MANAGEMENT PROVISIONS:

A. City Representative. In its capacity as investment manager, Consultant shall receive all instructions, directions and other communications on City’s behalf respecting City's account from Carlos Oblites, Senior Portfolio and Investment Pool Strategist (Representative).

Consultant is hereby authorized to rely and act upon all such instructions, directions and communications from such Representative or any agent of such Representative.

B. Investment Policy. In investing and reinvesting City’s assets, Consultant shall comply with City’s Investment Policy, which is attached hereto as Exhibit D. 877
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9 C. Authority of Consultant. Consultant is hereby granted full discretion to invest and reinvest all assets under its management in any type of security it deems appropriate, subject to the instructions given or guidelines set by Representative.

D. Notices. All reports and other communications required hereunder to be in writing shall be delivered in person, or sent by first-class mail postage prepaid, by overnight courier, by confirmed facsimile with original to follow or by confirmed electronic mail with proof of receipt to the addresses set forth below. Either party to this Agreement may, by written notice given at any time, designate a different address for the receipt of reports and other communications due hereunder.

E. Electronic Delivery. From time to time, Consultant may be required to deliver certain documents to City such as account information, notices and required disclosures. City hereby consents to Consultant’s use of electronic means, such as email, to make such delivery.

This delivery may include notification of the availability of such document(s) on a website, and City agrees that such notification will constitute “delivery”. City further agrees to provide Consultant with City’s email address(s) and to keep this information current at all times by promptly notifying Consultant of any change in email address(s).

F. City email address(s): [email protected], [email protected], [email protected], and [email protected].

G. Proxy Voting. Consultant will vote proxies on behalf of City unless otherwise instructed. Consultant has adopted and implemented written policies and procedures and will provide City with a description of the proxy voting procedures upon request. Consultant will provide information regarding how City’s proxies were voted upon request. To request proxy policies or other information, please contact us by mail at the address provided, by calling 800- 317-4747 or by emailing your request to [email protected].

H. Custody of Securities and Funds. Consultant shall not have custody or possession of the funds or securities that City has placed under its management. City shall appoint a custodian to take and have possession of its assets. City recognizes the importance of comparing statements received from the appointed custodian to statements received from Consultant. City recognizes that the fees expressed above do not include fees City will incur for custodial services.

I. Valuation. Consultant will value securities held in portfolios managed by Consultant no less than monthly. Securities or investments in the portfolio will be valued in a manner determined in good faith by Consultant to reflect fair market value.

J. Investment Advice. City recognizes that the opinions, recommendations and actions of Consultant will be based on information deemed by it to be reliable, but not guaranteed to or by it. Provided that Consultant acts in good faith, City agrees that Consultant will not in any way be liable for any error in judgment or for any act or omission, except as may otherwise be provided for under the Federal Securities laws or other applicable laws.

K. Payment of Commissions. Consultant may place buy and sell orders with or through such brokers or dealers as it may select. It is the policy and practice of Consultant to strive for the best price and execution and for commission and discounts which are competitive in relation to the value of the transaction and which comply with Section 28(e) of the Securities and Exchange Act. Nevertheless, it is understood that Consultant may pay a commission on 878
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10 transactions in excess of the amount another broker or dealer may charge, and that Consultant makes no warranty or representation regarding commissions paid on transactions hereunder.

L. Other Clients. It is further understood that Consultant may be acting in a similar capacity for other institutional and individual clients, and that investments and reinvestments for City’s portfolio may differ from those made or recommended with respect to other accounts and clients even though the investment objectives may be the same or similar. Accordingly, it is agreed that Consultant will have no obligation to purchase or sell for City 's account any securities which it may purchase or sell for other clients.

M. Confidential Relationship. The terms and conditions of this Agreement, and all information and advice furnished by either party to the other shall be treated as confidential and shall not be disclosed to third parties except (i) as required by law, rule, or regulation, (ii) as requested by a regulatory authority, (iii) for disclosures by either party of information that has become public by means other than wrongful conduct by such party or its officers, employees, or other personnel, (iv) for disclosures by either party to its legal counsel, accountants, or other professional advisers, (v) as necessary for Consultant to carry out its responsibilities hereunder, or (vi) as otherwise expressly agreed by the parties.

N. Severability. Any provision of this Agreement which is prohibited or unenforceable shall be ineffective only to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof.

O. Receipt of Brochure and Privacy Policy. City hereby acknowledges receipt of the disclosure statement or "brochure" and “brochure supplement” also known as Part 2A and Part 2B of Form ADV, required to be delivered pursuant to Rule 204 3 of the Investment Advisers Act of 1940 (Brochure). City further acknowledges receipt of Consultant’s Privacy Policy, as required by Regulation S-P.

P. Arbitration. It is agreed that any controversy between Consultant and the City arising out of Consultant business or this Agreement, shall be submitted to arbitration conducted under the provisions of the commercial arbitration rules of the American Arbitration Association.

Arbitration must be commenced by service upon the other party of a written demand for arbitration or a written notice of intention to arbitrate, therein electing the arbitration tribunal. In the event the City does not make such election within five (5) days of such demand or notice, then the City authorizes Consultant to do so on the City’s behalf. Judgment upon any award rendered by the arbitrators shall be final and may be entered in any court having jurisdiction thereof. This clause does not constitute a waiver of any right including the right to choose the forum, whether arbitration or adjudication, in which to seek resolution of disputes. [Signatures on following page]
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11 CITY OF WEST SACRAMENTO
By: __________________________
Amanda Berlin, Assistant City Manager
ATTEST:

By: _______________________
Jennifer Cusmir, City Clerk
APPROVED AS TO FORM:

By: _______________________
Jeffrey Mitchell, City Attorney

CHANDLER ASSET MANAGEMNT
By: _________________________
Nicole Dragoo, CEO
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EXHIBIT A
Consultant Proposal/Scope of Work
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9255 Towne Centre Drive, Suite 600, San Diego, CA 92121 | (800) 317-4747 | chandlerasset.com November 4, 2024
Marc Rotteveel
Finance Analyst
1110 West Capitol Avenue
West Sacramento, CA 95691
Submitted via https://procurement.opengov.com/portal/cityofwestsacramento Re: Response to Request for Proposal for Investment Management and Advisory Services (24-070-RFP) Dear Mr. Rotteveel and City Staff,
On behalf of Chandler Asset Management, Inc. (Chandler or the Firm), we thank you for the opportunity to submit our Firm’s proposal and present our qualifications to continue providing investment management and advisory services for the City of West Sacramento (the City).

We are proud of our partnership and accomplishments over the last five years serving as the City’s investment manager and look forward to continuing our partnership into the future. As part of your extended team, we have worked alongside you and your staff to utilize best practices, including updating the City’s investment policy to further align with California Government Code (State Code), and have invested the City’s portfolio in alignment with your policy, goals and objectives. We are dedicated to our duty as a fiduciary to our clients and understand the public role that your investment staff has in the stewardship of taxpayer funds. As you are aware, Chandler is an independent, employee-owned, SEC Registered Investment Adviser that has been providing comprehensive investment solutions for local governments in our home state of California and nationwide for 36 years.

Your assigned engagement team will remain intact, including Carlos Oblites, Senior Portfolio Strategist, Dan Delaney CFA, Senior Portfolio Manager, and Katie Yuan, Client Service Specialist. They are fully committed to meeting and exceeding your expectations for providing investment management and advisory services for the City’s funds during the engagement. Carlos is located in our Novato regional office and will be the contact person regarding this proposal and can be contacted as follows:

Primary Contact
Name: Carlos Oblites
Title: Portfolio Strategist
Office Address: 7250 Redwood Blvd, Suite 300, Novato, CA 94945 Direct Phone: 858-869-5063
Email: [email protected]
Our commitment to providing personalized client service is equal to our commitment to meeting your investment objectives and is reflected in the following:

We are experts in California public agency investing. Chandler’s investment professionals are experts in all applicable federal laws and State Code as they pertain to the investment of public funds. The City’s engagement team has decades of public sector investment experience and are active in organizations relevant to public fund investment best practices, including the Government Finance Officers Association (GFOA), the California Society of Municipal Finance Officers (CSMFO), the California Debt and Investment Advisory Commission (CDIAC), and the California Municipal Treasurers Association (CMTA). Our staff members are highly regarded industry experts and are frequent participants, speakers, and sponsors at industry conferences and events across California and nationwide. 882
9255 Towne Centre Drive, Suite 600, San Diego, CA 92121 | (800) 317-4747 | chandlerasset.com We are committed to client success. The Firm invests in technology and other resources that help our investment professionals develop both long-term and short-term strategies significant to the overall financial program. Our reports provide transparency of your entire investment program, and we commit the resources of the Firm to work towards your success.

Statement of Offer. We have reviewed the City’s scope of services and investment policy and have a thorough understanding of the City’s needs and investment objectives. This proposal is an offer to complete the Scope of Work, and the offer, including the Cost Proposal rates and budget, remains valid for at least ninety (90) business days after November 4, 2024.

Conflict of Interest. As an independent Firm, we have no other business affiliations, subsidiaries, or joint ventures, thereby avoiding any potential conflicts of interest that could interfere with our ability to provide independent and unbiased advice to our clients. We do not have any competing lines of business such as banking and trustee services, brokerage, underwriting, or municipal advisory services. Our resources are committed to managing our clients’ portfolios in separately managed accounts. As a matter of policy and practice, Chandler does not engage in any soft dollar arrangements with broker-dealers or third parties.

Chandler maintains a Code of Ethics which sets forth high ethical standards of business conduct that we require of our employees, including compliance with applicable federal securities laws. Please refer to our Form ADV, Part 2A, Item 11, which has been uploaded in Item 11 of the Questionnaire, for more information.

City Contract Terms. We have reviewed the City’s Contract for Services and we are providing Proposed Additional Terms for Agreement. We have reviewed the City’s Insurance Requirements and have confirmed the Insurance Requirements in Item 9 and uploaded our ACORD Certificate of Insurance in Item 11 of the Questionnaire.

No subcontractors will be used to complete the Scope of Work.

I certify that I am authorized to submit Chandler’s Response to your Request for Proposal and bind the organization named above. Further, I certify that all the information provided in our RFP response is accurate, firm, and irrevocable.

We look forward to discussing our qualifications to serve as the City’s investment manager in more detail.

Sincerely,
CHANDLER ASSET MANAGEMENT, INC.

Nicole Dragoo, JD
Chief Executive Officer
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CHANDLER ASSET MANAGEMENT, INC.
7250 Redwood Blvd, Suite 300
Novato, CA 94945
Direct: 858-546-3737; Toll-Free: 800-317-4747
[email protected] | chandlerasset.com
Request for Proposals
Investment Management and
Advisory Services (24-070-RFP)

CITY OF WEST

SACRAMENTO
DUE: NOVEMBER 4, 2024, 11:59 PM
884
Request for Proposals (24-070-RFP) for
Investment Management and Advisory Services

CITY OF WEST SACRAMENTO

TABLE OF CONTENTS
EXECUTIVE SUMMARY ........................................................................................................................................ 1

1. Organization............................................................................................................................................... 2

2. Experience.................................................................................................................................................. 3

3. Public Agency Experience........................................................................................................................... 6

4. Personnel.................................................................................................................................................... 8

5. References ................................................................................................................................................ 12

6. Assets Under Management...................................................................................................................... 13

7. Investment Management Approach and Discipline................................................................................. 14

8. Reporting.................................................................................................................................................. 21

9. Fees .......................................................................................................................................................... 22

10. History ...................................................................................................................................................... 24

11. Legal Challenges....................................................................................................................................... 24

12. Fiscal Viability........................................................................................................................................... 24

13. Business License....................................................................................................................................... 24

14. Technical Project Approach ..................................................................................................................... 24

15. Cost Proposal ........................................................................................................................................... 25

REQUIRED FORMS
IRS Form W-9
Assets Under Management Form
Contract for Services and Proposed Additional Terms for Agreement Certification Regarding Debarment

CHANDLER APPENDICES
Form ADV, Parts 1 and 2, and Privacy Notice Appendix A
ACORD Certificate of Liability Insurance Appendix B
Professional Biographies Appendix C
Global Investment Performance Standards (GIPS®) and Verification Letter Appendix D Important Disclosures Appendix E
The City of West Sacramento’s Client Monthly Account Statement, Quarterly Investment Report Appendix F California Business Registration Appendix G
List of Chandler Clients Appendix H
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EXECUTIVE SUMMARY
Chandler Asset Management, Inc. (Chandler or the Firm) is an SEC Registered Investment Adviser focusing on the management of high-quality fixed income portfolios for the public sector. We are privileged to be stewards of the principal our clients entrust to us. We have performed our fiduciary duty with discipline and care for over three decades. The Firm specializes in managing funds for local governments who are guided by the objectives of safety, liquidity, and return. Our risk control practices and relationship-based approach to investment management have led to our Firm’s solid growth. We currently manage $36.2 billion in client assets as of June 30, 2024, including $31.1 billion for over 200 local government clients. From our 36 years of experience, we are a Firm that understands firsthand the challenges of investing taxpayer funds in changing economic conditions.

Chandler Asset Management highly values the relationship we have with the City of West Sacramento (the City) as its investment manager since July 2019 and is delighted to have the opportunity to propose investment management services over a longer term. Carlos Oblites, Senior Portfolio Strategist, Daniel Delaney, CFA, Senior Portfolio Manager, and Katie Yuan, Client Service Specialist have worked closely with the City’s finance staff to prioritize investment advisory topics and set the foundations that now form the investment program.

Chandler has provided the tools, resources, best practices, and investment expertise to assist the City with the enhancement of its investment functions. The City has derived significant benefits from engaging Chandler as its investment manager to implement a disciplined investment program that fulfills the specific objectives of protecting principal and providing conservative asset growth within a framework that maintains conformity to state legal requirements and the investment policy. Some highlights of our collaboration with the City and its team include:
• Working with the City’s staff to update and annually review the investment policy, recommend changes to incorporate best practices, and align the policy more closely with California Government Code (State Code)
• Performing and periodically updating a comprehensive cash flow analysis based on the seasonality of revenue collection and cash outflows, and identifying funds to structure for both liquidity and enhanced returns in a reserve strategy
• Creating and implementing a long-term strategy designed to meet the City’s investment and financial goals, including the use of performance-measuring benchmarks that serve as a metric for the City’s performance
• Actively managing the City’s core reserves in a long duration strategy that has enhanced the City’s investments over the past five years
• Working with City staff to identify investment opportunities for the City’s short-term cash by investing in a temporary portfolio that netted significantly higher returns over Local Agency Investment Fund • Saving staff time by completing staff’s quarterly report to Council outlining outcomes of the City’s investment program
• Assisting in the annual audit process, including the completion of the City’s Annual Comprehensive Financial Report as it pertains to GASB disclosures and the reporting of outstanding bond funds.

It is our goal to continue empowering the City and its finance team through knowledgeable and timely support and consistent guidance in financial management. We have reviewed the City’s Request for Proposal; we meet and/or exceed the minimum qualifications you have for your investment manager. We have addressed our approach to the City’s Scope of Services in the following sections of our proposal and believe your staff will continue to find benefit in retaining Chandler as its investment manager and working collaboratively to keep the City in great fiscal shape.
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1. ORGANIZATION
a. Describe the organization, date founded, and ownership of your firm. Has your firm experienced a material change in organizational structure, ownership or management during the past three years and, if so, please describe.

Chandler Asset Management, Inc. was founded May 31, 1988 by our founder, Kay Chandler, who in the past had served as Investment Officer for the County of San Diego, followed by a similar role with the City of San Diego. From those experiences she recognized that public entities with limited time and resources could benefit from external professional expertise, technological resources, and leveraged staffing to help manage their investment programs. Martin Cassell, CFA, Ms. Chandler’s successor on the investment staff of the City of San Diego, joined the Firm in 1991. Mr. Cassell now serves as Chandler’s Chief Financial Officer. Nicole Dragoo, who has been at Chandler since 2001 and formerly served as Chief Operating Officer, became the company’s Chief Executive Officer effective January 1, 2023.

Effective December 31, 2023, Chandler’s Executive Committee, with approval from the Board of Directors, created a new entity, Chandler Investor Services, Inc. to address the needs of our growing corporation.

Chandler Investor Services, Inc. will hold all subsidiaries under the Chandler business family. Chandler is the sole subsidiary of Chandler Investor Services, Inc. The core business operations and assets of Chandler remain unchanged. The restructuring was primarily driven by financial and legal considerations to streamline the corporate structure and improve efficiency.

Chandler is an SEC Registered Investment Adviser headquartered in San Diego, with additional California offices in Marin County, Oakland, and Ventura and regional offices in Seattle, Denver, and Orlando. The Firm is an independent employee-owned California C corporation. For 36 years, Chandler has assisted public agencies with fulfilling their fiduciary duty to their constituents by providing investment solutions in a carefully managed investment framework. Our strategies conform to all applicable federal laws and State Code regarding qualified investments for public entities.

Our risk management practices and relationship-based approach to investment management have led to our Firm’s solid growth. We managed $36.2 billion in assets for clients as of June 30, 2024, including $31.1 billion for over 200 local government clients. We believe this level of expertise and focus on public agencies has given us a unique, in-depth perspective on helping local governments and other riskconscious entities achieve their financial goals. b. Describe any other business affiliations. Describe your firm’s policy on soft dollars.

As an independent Firm, we have no other business affiliations, subsidiaries, or joint ventures, thereby avoiding any potential conflicts of interest that could interfere with our ability to provide independent and unbiased advice to our clients. We do not have any competing lines of business such as banking and trustee services, brokerage, underwriting, or municipal advisory services. As a matter of policy and practice, Chandler does not engage in any soft dollar arrangements with broker-dealers or third parties. c. Describe the firms’ sources of revenue, categorized by retail and institutional accounts.

The Firm’s revenue is derived entirely from feesreceived from our clients for the investment management and/or advisory services we provide. 98.9% of assets under our management were in institutional accounts, the remaining 1.1% were in sub-advised accounts, as of June 30, 2024. d. Is your firm a registered investment advisor under the Investment Advisor’s Act of 1940 as amended? Yes, Chandler is a registered investment adviser under the Investment Adviser’s Act of 1940. A link to our Form ADV, Parts 1 and 2A, is provided in Appendix A.
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e. Describe any SEC, FINRA, or regulatory censure or litigation involving your firm or its employees within the past three years.

There has been no SEC, FINRA, or regulatory censure or litigation involving the Firm or its employees within the past three years.
f. Did you, or will you, pay a finder’s fee to any third party for business related to this account? Specify the recipients of any fee.

No. Chandler has not, nor will we, pay a finder’s fee to any third party for business related to this account. g. Outline the errors and omissions (professional liability) and fidelity bond coverage your firm carries.

Provide a valid, current Certificate of Insurance.

Chandler maintains a comprehensive, full-coverage insurance program with the relevant coverages provided by firms rated “Excellent” or better by AM Best Rating. Please refer to our ACORD Certificate of Liability Insurance, provided in Appendix B, for a list of our insurance carriers. h. Identify the types of accounts primarily sought by your firm.

Chandler’s focus is on the management of short duration, high-quality fixed income securities for public entities and other risk-conscious institutional clients who seek investment programs that prioritize safety of principal, liquidity, and return, and are similar to the City. Our clients include cities, counties, water and wastewater districts, joint powers authorities, transportation authorities, healthcare, higher education, school districts, insurance funds, foundations/endowments, not-for-profit organizations and corporations. We provide complete investment services for public entity investment programs, including:
• General Revenue Funds • Debt Service Funds
• Bond Proceeds • Reserve Funds
• Capital Project Funds • Post-Employment Benefit Trusts i. If you are hired, will your firm serve as a fiduciary in your role as an investment adviser to the City while providing the investment management services we are seeking? If no, describe your objections or limitations.

Yes, Chandler will serve as a fiduciary in our role as an investment adviser to the City while providing investment management and advisory services.

2. EXPERIENCE
a. Describe your firm’s experience in managing fixed income portfolios for public funds and governmental entities.

Chandler has significant experience in managing fixed income portfolios for public funds and governmental entities. Since 1988, Chandler has worked as a fiduciary with clients on every aspect of their investment programs, including investment policy development and maintenance, cash flow analysis and forecasting, and portfolio management through the careful mitigation of risk. We implement investment strategies that meet each client’s objectives of safety, liquidity, and return, provide comprehensive investment reporting to save staff time, and conduct education and training for staff enrichment. The result is an investment approach grounded in the management of risk that is customizable for each of our client’s specific objectives and constraints and has resulted in successful investment programs for entities similar in size and scope to the City. The Firm manages $36.2 billion as of June 30, 2024, including $31.1 billion in separately managed accounts for over 200 public agencies.

Chandler manages portfolios that are comprised mostly of U.S. fixed income securities that align with our clients’ objectives of safety, liquidity and return. In California, these are assets that are permitted by State Code section 53601 and 53635. The composition of Chandler’s portfolios includes high quality, short-term 888
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investment-grade, U.S. dollar denominated securities including but not limited to U.S. treasuries, federal agencies, municipal bonds, negotiable CDs, corporate notes, supranational securities, asset-backed securities, mortgage-backed securities, and commercial paper.

Please refer to Appendix H for a list of Chandler’s institutional clients. a. What is your firm’s experience in developing policies and portfolio management guidelines for government portfolios?
We are experts on State Code statutes that govern the investment of public funds, and are actively involved with associations in developing best practicesfor the management of public treasuries, including the California Society of Municipal Finance Officers (CSMFO), the California Municipal Treasurers Association (CMTA), and the Government Finance Officers Association (GFOA). In writing and reviewing investment policies, we look for clearly defined portfolio objectives and constraints.

Chandler actively communicates with our clients when there are changes to government code. For example, as a result of changes introduced by Senate Bill 1489, effective January 1, 2023, Chandler investment professionals collaborated with clients to update their investment policies to adhere to code.

Effective January 1, 2024, Senate Bill 882 (Local Government Omnibus Act of 2023) dictated that passthrough securities backed by treasuries or federal agencies are exempt from limitations imposed on passthrough securities backed privately or by corporations, so long as they meet the specified requirements referenced in the law and State Code.

Our policy reviews for the City will continue to include, at a minimum, the following areas:
• Scope of the policy that defines which funds are covered by the policy • Investment objectives that aim towards safety, liquidity, and return • Standard of care
• Delegation of authority
• Ethics and conflicts of interest
• Authorized investments
• Management of market and credit risk
• Safekeeping and custody of securities
• Reporting requirements
• Performance standards
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b. How is your firm compensated for the services it provides? Does your firm act as a broker/dealer, or receive any other form of additional compensation (including soft dollars) for the client transactions aside from the direct fee paid by clients?
The Firm’s compensation is derived entirely from fees received from our clients for the investment management and/or advisory services we provide. Chandler does not act as a broker/dealer and as a matter of policy and practice, Chandler does not engage in any soft dollar arrangements with brokerdealers or third parties. c. Provide the number and types of accounts, total asset value, and composition of portfolios currently being managed by your firm.

The following charts list the number and types of accounts and total asset value of portfolios managed by Chandler as of June 30, 2024. Our clients primarily invest in the Firm’s fixed income strategies.

Client Type Number of Accounts AUM ($MM)
Public Sector 458 $31,057
Corporate 6 $43
Sub-Advised 587 $367
Other 64 $4,703
Total 1115 $36,170
For the composition of our portfolios, please see data below on composites detailing our Limited Maturity, Short Term Bond, and Intermediate Bond strategies:

As of June 30, 2024 As of June 30, 2024 As of June 30, 2024 890
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3. PUBLIC AGENCY EXPERIENCE
a. A description of no more than ten (10) public sector projects completed within the last five (5) years that demonstrates Proposer's experience performing services to complete the Scope of Work, including a statement as to whether Proposer has experience working for the City of West Sacramento, or a public agency similar in size to the City. Note key personnel involved in each project and if they are proposed for this Proposal and if applicable, differentiate which work was performed by subcontractor. List any contractual relationships with the City existing now or within the past five (5) years.

Our best case study is our current engagement with City of West Sacramento (the City), which began in July 2019. At that time, City staff faced the retirement of a long-term, trusted employee who managed the City’s investment program. After his departure, the City’s investment portfolio average maturity and duration shortened as City staff had minimal capacity to reinvest maturing funds. Moreover, the City did not have robust resources dedicated to market and credit risk analysis designed to mitigate the risk of purchasing yield-advantaged, non-governmental securities. Faced with this dynamic, the City’s finance director engaged Chandler to quickly step in and provide management and oversight. Within the first month, under the leadership of Carlos Oblites, Senior Portfolio Strategist, and Jayson Schmitt, CFA, CoChief Investment Officer, Chandler collaborated with City staff to:
• Update the City’s investment policy to encompass the most recent changes to State Code • Conduct a statistical cash flow analysis to help City staff reserve enough cash to meet its short-term cash needs without the need of liquidating assets that may incur losses • Create a comprehensive investment strategy designed to meet the objectives of safety and liquidity • Move to extend duration to be in line with the ICE BofA 1-5 Year U.S. Treasury & Federal Agency Index, an index that reflected the maturity ranges allowed by State Code • Significantly increase liquidity by introducing index-eligible sized securities. Prior to this, the City purchased bonds from smaller deals, making the City majority participants, which decreased liquidity for the City.
• Significantly increase diversification by increasing the City’s medium-term corporate holdings, and by introducing asset classes allowed by State Code, but not utilized by the City’s investment program due to a lack of resources needed to properly analyze risk. Chandler introduced AAA-rated asset-backed securities with strong credit enhancements, federal agency mortgage-backed securities, as well as 144a private placement issues that the City was eligible to purchase but had not done so in the past.

Today, Daniel Delaney, CFA, Senior Portfolio Manager, collaborates with Carlos Oblites to provide daily management of the City’s funds, credit analysis, risk mitigation, opportunity identification, and rebalancing. The City has benefited significantly from Chandler’s assistance, as demonstrated in the charts below. The benchmark data demonstrates the amount of return achieved in the market relative to the amount of risk taken. The data below demonstrates the amount of outperformance our management has provided above the market return:
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Source: Bloomberg; City of
West Sacramento’s Chandler
monthly and quarterly
statements. Past
performances are not
indicative of future results.

Historical benchmark
performance data for the ICE
BofA 1-5-Year US Treasury &
Agency index is sourced from
Bloomberg AIM. Index returns
assume reinvestment of all
distributions. Historical
performance results for
investment indexes generally
do not reflect the deduction of
transaction and/or custodial
charges or the deduction of an
investment management fee,
the incurrence of which would
have the effect of decreasing
historical performance results.

It is not possible to invest
directly in an index. Past
performance is not indicative
of future results. Please see
important disclosures at the
end of this presentation.

Source: City of West
Sacramento’s Chandler
monthly and quarterly
statements. Past
performances are not
indicative of future results.

Though our work with the City is our best case study, we can also point to the work we have done with Cities of Rocklin, Citrus Heights, San Mateo, South San Francisco, Cupertino, Milpitas, San Rafael, Rohnert Park, and many others, where we have:
• Collaborated with city staff to strengthen investment policies • Introduced capabilities to expand the investment offerings to increase diversification • Provided efficient execution where lower prices/higher yields are achieved by taking advantage of our network of 45+ broker/dealer relationships to shop around 892
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• Aided in the preparation of staff reports and other documents to communicate outcomes to policy makers and other stakeholders, saving staff time
• Acted in a consultative capacity to help position investment programs to support broader financial objectives
We are proud of our record of working with local governments and stand by the work we have done for the City .

PERSONNEL
a. Identify and provide background information on the key person or personnel who take the most active role(s) in the administration and management of the firm.

Chandler’s Executive Committee comprises eight members with key administration and senior management functions in each of the Firm’s departments. The following members represent the departments responsible for Firm strategy, portfolio management, investment strategy, credit research and analysis, compliance and operations, and client service and business development:
• Nicole Dragoo, JD, Chief Executive Officer
• Martin Cassell, CFA, Chief Financial Officer
• William Dennehy, CFA, Co-Chief Investment Officer
• Scott Prickett, CTP, Co-Chief Investment Officer
• Jayson Schmitt, CFA, Co-Chief Investment Officer
• Ryan Tauber, Managing Director of Business Development • Adriana Haefner, SHRM-SCP, Human Resources Director
• Michael Rasmussen, JD, Chief Compliance Officer/General Counsel Full professional biographies are provided in Appendix C. b. Identify the investment professionals (portfolio managers, analysts, and researchers) employed by your firm, by classification, and specify the average number of accounts handled by portfolio managers. Are there any established limits on accounts or assets under management? As of June 30, 2024, Chandler had 47 employees, including 16 investment professionals, who are categorized as follows:

Chandler Investment Professional Staff
Classification # of Professionals
Co-Chief Investment Officers 3
Chief Financial Officer 1
Portfolio Management 5
Portfolio Strategists 6
Research 1
Total 16
The average number of clients for portfolio management and strategy personnel is currently 16. There are no established limits on accounts or assets under management, but we continue to add staff and other resources as needed in anticipation of future growth. Every member of the Investment Management team is responsible for providing investment advice and management of funds to our public agency clients. They are also responsible for research, analysis, strategy development, and oversight of the Firm’s investment management processes. The Firm had 230 clients comprising $36.2 billion in assets as of June 30, 2024.
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c. Provide resumes and biographical information on key investment professionals that will be directly involved in the decision-making process for the portfolio. Include the number of years at your firm, total years of experience and professional licenses and designations. Include the number of accounts managed and any limits on this.

The engagement will continue to be managed by a tenured team of senior investment management and client service professionals. Carlos Oblites, Senior Portfolio Strategist and Dan Delaney, CFA, Senior Portfolio Manager will be responsible for the overall management of the engagement, with client service support from Katie Yuan, Client Service Specialist. Carlos is based in the Firm’s Marin County regional office and will continue to serve as a local resource to the City. The Firm’s executive management team, additional investment management professionals, operations, compliance, client service, and reporting professionals will serve the City from our headquarters office in San Diego. The engagement team profiles are provided below. Full professional biographies are in Appendix C.

ContactName and Title Role in Engagement Education
Investment Management
Carlos Oblites
Senior Portfolio Strategist
Primary Investment Contact
• Develops investment strategies for client
investment programs
• Expertise in policy development and state legal
requirements
• Monitors alignment with client objectives and
policies
• Co-Chair of Multi-Asset Class Committee
B.A. History, University of
California, Santa Barbara,
M.B.A., San Francisco State
University
Series 65 Registration
Industry Tenure: 29 years | Firm Tenure: 7 years
Daniel Delaney, CFA
Senior Portfolio Manager
Primary Portfolio Manager
• Implements portfolio strategies
• Securities trading in client accounts
• Member of Credit Committee and Economic &
Market Analysis Committee; Co-chair of Sector
Committee
B.A. Business Economics,
University of Exeter, UK;
Chartered Financial Analyst®
designation
Industry Tenure: 20 years | Firm Tenure: 3 years
Engagement Management & Client Service
Katie Yuan
Client Service Specialist
Client Service Contact
• Reporting requirements and Client Portal
• Schedules training and educational
presentations
B.S. Business Administration;
Colorado State University with
dual emphasis in finance and
management
Industry Tenure: 3 years | Firm Tenure: 3 years
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ContactName and Title Role in Engagement Education
Compliance & Oversight
Nicole Dragoo, JD
Chief Executive Officer
Leads the Firm’s vision, oversight, and strategy
• Responsible for company culture, overall client
experience and achieving growth goals.

B.A. Business Economics, J.D.,
University of San Diego
Industry Tenure: 24 years | Firm Tenure: 23 years
Michael Rasmussen, JD
Chief Compliance Officer and
General Counsel
Oversees Firm’s compliance program
• Responsible for regulatory compliance, legal
matters, trade compliance, and Code of Ethics
B.S. Legal Studies, J.D., Nova
Southeastern University
Series 7, 14, 24, 51, 63, 65
Registrations
Industry Tenure: 11 years | Firm Tenure: 1 year
Carlos Oblites, Senior Portfolio Strategist, is responsible for building and maintaining client relationships with public agencies along with participating actively in the portfolio management process. Carlos has 29 years of investment and financial experience, focused largely on managing short-term fixed income and pension strategies for governmental and institutional non-profit clients. Carlos currently serves as CoChair of the firm’s Multi Asset Class Committee. He also serves as a member of the Government Finance Officers Association’s (GFOA) Committee on Retirement and Benefits Administration (CORBA), which tracks new industry practices, regulatory and legislative developments, and issues best practices to assist public pension and personnel officers effectively manage state and local retirement funds and employee benefits. Prior to joining Chandler, Carlos served as the Administrative Services Manager at Central Marin Sanitation Agency (CMSA) and was responsible for all aspects of the Agency’s financial, human resources, administrative support, and information systems activities. He also has significant expertise in serving California public agencies through his roles as Director at PFM Asset Management, and as a Principal at Wells Capital Management.

Carlos holds a Bachelor of Arts degree in History from the University of California, Santa Barbara, and earned a master’s degree in business administration from San Francisco State University.

Daniel Delaney, CFA, Senior Portfolio Manager, will serve as a portfolio manager for the City, managing fixed income portfolios. He is responsible for implementing portfolio strategy and securities trading in client accounts. He serves as Co-Chair of the Sector Committee. Prior to joining Chandler in 2021, Dan was a Senior Portfolio Manager with Allianz Global Investors, based in New York, responsible for managing Global Credit mandates. Dan also spent ten years as a Global Credit Analyst and Portfolio Manager with Rogge Global Partners, both in London and New York. Daniel earned a B.A. (Honors) degree in Business Economics from the University of Exeter, UK. He holds the designation of Chartered Financial Analyst (CFA).
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Katie Yuan, Client Service Specialist, joined Chandler in 2021. She serves as a liaison between clients and the Chandler team to maintain existing client relationships. She proactively schedules client meetings, creates and distributes client reports, and responds to client-generated requests. She also maintains the client database and assists with the Chandler Client Portal. Katie is a graduate of Colorado State University and earned her B.S. in business administration with a dual emphasis in finance and management.

Nicole Dragoo, JD, the Firm’s Chief Executive Officer, joined the Firm in 2001 in an operations role and leads the Executive committee, provides oversight of all aspects of the Firm and is responsible for the Firm’s strategy, culture and administration of resources. She is passionate about cultivating a culture of shared success by building a diverse and talented team of people dedicated to being stewards of the assets and communities entrusted to us. Over her tenure Nicole has led the expansion of the operations, compliance, legal and administrative functions as the Firm has grown. From 2008 to 2021, she served in the roles of Chief Operating and Chief Compliance Officer and as President from 2021-2022.

Nicole earned her B.A. from the University of San Diego in business economics and her J.D. from the University of San Diego School of Law. She is a member of the State Bar of California, the American Bar Association, the San Diego County Bar Association, and the Southern California Compliance Group.

Michael Rasmussen, JD, Chief Compliance Officer/General Counsel, leads the day-to-day compliance requirements, regulatory filings for the Firm, and Code of Ethics implementation and training. Michael graduated from Nova Southeastern University Shepard Broad College of Law and is a licensed attorney in Florida and a registered solicitor in the United Kingdom. He has passed the FINRA Series 7, 14, 24, 51, 63, and 65 examinations and has taught several courses on investment adviser compliance. In addition, he sits on the Education Committee for the National Society of Compliance Professionals.

All the above professionals are supported by Chandler’s investment management, client service, marketing, and operations teams to provide comprehensive service. In addition to the Firm’s SEC registration, the following members of Chandler’s team are investment adviser representatives:

Chandler Investment Adviser Representatives
Investment Adviser Representative CRD Number
Martin D. Cassell, CFA 4330905
Stephen Church 6878939
Daniel Delaney, CFA 7378402
William Dennehy II, CFA 2397527
Julie K. Hughes 5397196
Genevieve C. Lynkiewicz, CFA 4462193
Karl Meng 5198403
Aaron Nail, CFA 6761656
Carlos Oblites 5350645
John McDowell, CFA, CMT 5041432
Scott D. Prickett, CTP 1901448
Kara Hooks, CTP 7615064
Alaynè Sampson, CTP 5435009
Jayson Schmitt, CFA 4892847
Kyle Perry 7304274
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d. Describe your firm’s training and education efforts to keep portfolio managers informed of developments relevant to government investment managers.

Chandler is committed to professional development and continuous learning. Our investment team, compliance team, and client service professionals serve as committee members and are active participants, sponsors, and speakers at national and regional associations in California such as the California Society of Municipal Finance Officers (CSMFO) and California Municipal Treasurer’s Association (CMTA) that develop best practices and training curricula. Through our involvement and participation with these organizations, Chandler’s professionals remain at the forefront of current themes and relevant topics affecting the constituents of the member entities.

Chandler’s professionals are also involved on a local level. Individuals from Chandler’s investment management team support the San Diego CFA Society’s Board of Directors in serving its over 500 members. Chandler’s professionals assist the program’s Chair by planning the calendar of industry focused events and sourcing speakers from academia, government, and consultants to present at events during the year.
e. Has there been any turnover of professional staff in the firm in the last three years who were assigned to public sector clients?
In the three years ending June 30, 2024, Chandler lost two client service/relationship management professionals and one investment professional. For the same period, we gained four client service/relationship management professionals and seven investment professionals.

4. REFERENCES
a. List the name, address, telephone number, and email of references from at least three (3) current clients similar in size and scope to the City. Include a brief description of the work provided for each reference.

California municipal or county projects are preferred. You may offer more than three recent similar projects if desired. The references should include the start date of the project and the date of completion for each project.

Chandler is pleased to provide the following references for the City:

Client Contact
Information Work Provided Dates of Service AUM*
City of San Mateo
330 W 20th Ave
San Mateo, CA 94403
Karen Huang
Interim Finance Director
(650) 522-7110
[email protected]
Discretionary
management of
operating funds
2020 -
present $255 M
City of South San Francisco
400 Grand Avenue
South San Francisco, CA 94080
Karen Chang
Finance Director
(650) 829-6614
[email protected]
Discretionary
management of
operating funds
2009 -
present $274 M
City of Merced
678 W. 18th Street
Merced, CA 95340
Venus Rodriguez
Finance Officer
(209) 385-8547
[email protected]
Discretionary
management of
operating funds
2018 -
present $344 M
*As of June 30, 2024
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5. ASSETS UNDER MANAGEMENT
a. Summarize your institutional investment assets under management by category as shown in the Proposer Questionnaire section under Question #8 - Assets Under Management for your latest reporting period.

Our Assets Under Management form has been uploaded to the portal. b. Summarize your assets under management (institutional only) over the past five years and average assets per client.

Chandler assets under management as of December 31 of each year c. Provide relevant performance statistics on a comparable portfolio and compare with industry averages or benchmarks for the last one, three, five, ten-year periods and/or since inception. Note whether these performance statistics are reported based on GIPS (Global Investment Performance Standards) formerly known as AIMR (Association for Investment Management and Research).

We have included performance for Chandler’s Short Term Bond composite, (1-5 year strategy), which we currently manage for the City in compliance with the City’s investment policy. The composite is comprised of individually managed accounts with an average modified duration approximately equal to the modified duration of the ICE BofA 1-5 Year US Treasury & Agency Index. Chandler claims compliance with the Global Investment Performance Standards (GIPS®) and prepares and presents its performance in compliance with these standards. Chandler is independently verified by ACA Performance Services for Firmwide GIPS® compliance. A copy of the Firm’s most recent GIPS® Verification Letter is included in the Appendix D.

Composite Performance – Gross and Net of Fees as of June 30, 2024 Based on Chandler’s Short Term
Bond composite as of 6/30/2024.

Please see the GIPS Composite
Report in Appendix D. Past
performance is not indicative of
future results. Performance is
presented gross and net of
investment management fees.
*Net returns are for a sample fee
of 6 basis points (0.06 of 1%). All
investment strategies have the potential for profit or loss. Market conditions or economic factors may alter the performance and results of a portfolio. Performance for periods greater than one year is annualized. For one-on-one presentation. Please refer to Important Disclosures in Appendix E.

Year-End Assets Under
Management
Average Assets per Client
(# of Institutional Clients)
2023 $35,389 M $156.7 M (226)
2022 $28,210 M $133.1 M (212)
2021 $25,282 M $129.0 M (196)
2020 $21,690 M $122.5 M (177)
2019 $19,057 M $114.1 M (167)
$19.1 $21.7
$25.3
$28.2
$35.4
$-
$5
$10
$15
$20
$25
$30
$35
$40
2019 2020 2021 2022 2023
Chandler's Institutional AUM ($ billions)
2019 - 2023
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In addition, please see below the City’s returns through June 30, 2024:
*Periods over 1 year are annualized
d. How many accounts have you gained in the last 12 months? How many accounts have been lost in the last 12 months and why?
In the 12 months ending June 30, 2024, Chandler lost 8 institutional accounts and gained 22 institutional accounts. Occasionally, clients choose not to renew an investment management or advisory services contract for various reasons. These may include budgetary constraints, spending down investable assets, or internal changes in finance administration/staff. Chandler proudly has a client retention rate of 93% over the past five years as of June 30, 2024.

6. INVESTMENT MANAGEMENT APPROACH AND DISCIPLINE
a. Briefly describe your firm’s investment management philosophy, including your approach to managing governmental portfolios.

We believe that through effective risk management, we can enhance the potential for higher total returns for risk-conscious clients, while maintaining their shared primary objectives of safety and liquidity. Our approach utilizes investment processes and strategies we have developed over 35 years and focuses on:
• Safety of principal1
• Appropriate levels of liquidity
• Diversification of risk
• Compliance with policies, legal requirements, and risk/return objectives • Active management to generate investment income and total return We implement this philosophy by structuring investment portfolios with the objective of achieving performance that consistently exceeds the returns of a selected market benchmark over a market cycle, while always maintaining each client’s tolerance for risk. We reduce exposure to market risk by diversifying the portfolio by issuer and security type, and by establishing and maintaining a target portfolio duration that is consistent with the investment objectives.

Our investment approach for the City would be a continuation of our current approach. We will confirm that the investment policy continues to provide for the City’s primary investment objectives and incorporates the latest revisions to State Code. We will then conduct an analysis of historical cash flow and expected future expenditures to determine the desired allocation between the City’s liquid and core funds. By modeling the City’s historical use of cash and gaining an understanding of upcoming budgetary needs, we can develop a profile of the cash flows. With staff input, we can then forecast future balances and structure an effective investment program that will serve the City in both predictable and unexpected circumstances. Our goal is to provide enough liquidity for operations and liabilities while reducing the costly effect of maintaining excess liquidity in shorter-maturity investments that have historically paid lower yields.
1 While our conservative investment approach promotes safety, investing in securities carries varying degrees of risk and we cannot guarantee safety of principal.
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b. How frequently do you formulate and review fixed income strategy? How is that carried out and who is involved?
Chandler employs an Investment Management Committee system for effective analysis, decisionmaking, and communication. Members of the Committee meet weekly to review the findings and recommendations of the sub-committees, market conditions, and client portfolio characteristics to determine short-term strategies and any need for portfolio rebalancing. All 16 individuals may generate investment themes through their independent research to bring to the entire Committee or their subcommittee meetings, or one of the committees may collectively source an idea or theme through discussion. In addition, team members meet off-site on a semi-annual basis and discuss economic, market, and credit conditions using committee research to establish the Firm’s investment outlook, portfolio target characteristics, and sector strategy for the ensuing six months. These meetings provide a forum in which every member of the team has input on the formulation and implementation of our strategies.

Chandler’s sub-committees contributing to the investment themes and strategies implemented on behalf of our clients include:
• The Economic and Market Analysis Committee focuses on the development of economic inputs and interest rate scenarios for the Horizon Analysis Model (the HAM), the proprietary tool we employ to assist in developing portfolio structure. It also sets the macro-economic tone and investment strategy for our fixed-income investments and structuring of client portfolios given the current market climate. • The Sector Committee is tasked with sector valuation methodology, analysis of option-adjusted spreads (including opportunities both among sectors and between issuers), along with evaluation of new instruments and sectors for suitability.
• The Credit Committee is responsible for evaluating, monitoring, and possibly removing issuers from the Firm’s Approved Issuer List. The Portfolio Management team and Chief Investment Officers will review the committee’s recommendations, including additions to and deletions from the Firm’s Approved List. The committee’s output advises that the securities purchased for client portfolios are consistent with their risk profile.
• The Quantitative Analysis Committee develops and sets the structure for the HAM along with evaluating the model’s process for improved technology and methods. The results of the HAM output are used to develop general characteristics of the strategies. • The Multi-Asset Class Committee prepares the Firm’s Capital Market Assumptions. These are based on the Firm’s analysis of the global markets and our forward-looking outlook of the market environment. The Committee then develops the Efficient Frontier, and reviews and recommends initial and ongoing portfolio asset allocations and fund vehicles for our clients. c. What are the primary strategies for adding value to portfolios (e.g., market timing, credit research, trading)?
Our primary strategies for adding value include:
• Duration Management. We strive to maintain duration (the portfolio’s price sensitivity to changes in interest rates) within a defined range that reflects the City’s return requirements and acceptable volatility as indicated by a publicly available benchmark, which reflects the City’s risk parameters and expected return. We attempt to minimize the impact of the duration decision on return volatility by limiting duration to within a +/- 20% duration band around the target (benchmark) duration. We actively work with the City to position the portfolio’s duration to its target to take advantage of longer maturity investments with higher yields, while limiting volatility and providing for needed liquidity. 900
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• Sector Allocation. Our sector allocation process is based on the belief that portfolios are more robust and prepared for unforeseen events if they have a well-diversified exposure to high quality fixed income securities. Our objective is to increase total return and reduce risk by overweighting the best value sectors that are acceptable for the portfolio and underweighting those sectors with less value.

Using the output of the Sector Committee, we determine the allocation to asset classes that we believe will provide the best economic opportunities and protection for the portfolio. • Term Structure (Yield Curve Structure). Portfolio duration structure, or yield curve positioning, contributes to the value added to the portfolio by our process. Utilizing the output from the Economic and Market Analysis Committee in conjunction with the HAM, the term structure for the portfolio is determined with the objective of finding a structure that prioritizes the protection of the portfolio and performs well under both anticipated and unanticipated yield curves shifts over a six-month horizon. The portfolio may have a "laddered" structure, with equal allocations across permitted maturities; a "barbell" structure, with maturities concentrated in very short and very long (for the individual portfolio) maturities; a "bullet" structure, with maturities concentrated around the target duration; or some combination of all three. As interest rates evolve, the Chandler team will alter the duration distribution of the portfolio based on the prevailing market conditions. • Security/Issuer Selection. Once the team has determined the percentage of the portfolio in any duration range or security type, individual securities are purchased to complete the portfolio structure. Chandler’s investment team closely follows trends in the new issue market to take advantage of the cyclical swings in issuance to obtain attractive spreads over the risk-free treasury rate. The seasoned professionals at Chandler are also well versed in the technical differences between various names in the investment universe, and frequently adjust the underlying name and sector exposure to take advantage of market anomalies only a skilled investor can consistently identify. Our investment professionals recommend securities from an Approved Issuer List based on relative value considerations. In addition, our Credit Committee seeks to identify both improving and deteriorating credits so we can work to reposition client portfolios by seeking favorable and avoiding detrimental factors not yet understood by the majority of market participants. • Credit Quality. We employ a robust credit analysis process that helps us mitigate credit risk while identifying investment opportunities in securities that are appropriate for the careful investment of public funds. Moreover, we believe that each client should establish credit quality constraints that reflect the community’s risk preference. It is not uncommon that these constraints may be more conservative than state laws. Within that framework, we purchase securities that our credit and relative value analyses have identified as appropriate for the City’s portfolio. We focus our investments in corporate and passthrough securities to be consistent with the overriding tenets of safety, liquidity, and return.
• Competitive Execution. We recognize our duty to provide value to our clients and uphold the quality of our services as a fiduciary. The City’s staff is assured that through Chandler’s best execution practices, it is receiving competitive, institutional pricing on transactions, as the Firm seeks a minimum of three quotes per trade. The practice of competitively bidding for transactions results in an incremental net financial advantage for our clients over time and is an additional source of value in retaining Chandler as investment manager. This competitive process can be evidenced on daily trade tickets viewable on the Chandler Client Portal.
• Periodic Rebalancing. Due to the passage of time, fixed income portfolio characteristics drift away from the desired structure thus periodic rebalancing is required. The Chandler team utilizes multiple internal tools, including the proprietary HAM to assist in the rebalancing process. 901
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d. How are portfolios managed (e.g. by team, individual manager)? What is the back-up when the manager is away?
Portfolios are managed on a team basis. Every member of the Investment Management team is responsible for providing investment advice and management of funds to our public agency clients, as well as for research, analysis, strategy development, and oversight of the Firm’s investment management processes. The primary portfolio manager for the City will continue to be Dan Delaney, CFA, Senior Portfolio Manager. The primary investment contact will continue to be Carlos Oblites, Senior Portfolio Strategist. Dan and Carlos work closely together and with the full investment management team. They back each other up and you will keep direct access to both of them. In the event both are unavailable, other members of the investment team will be familiar with your portfolio and your client service contacts, Katie Yuan, Client Service Specialist, will assist with putting you in contact with them. e. What oversight is provided to portfolio managers?
The Firm’s Chief Compliance Officer provides oversight of portfolio compliance, trade order management, and implementation and monitoring of the Firm’s compliance policies and procedures. These duties are conducted separately from the portfolio management team under the appropriate segregation of duties.

Chandler’s Risk Committee is made up of the Chief Compliance Officer and seven of the Firm’s senior executives responsible for the Firm’s risk management practices and policies. In addition, Chandler maintains a comprehensive Compliance Manual that covers all subjects relating to our investment activities and responsibility for client assets and safety of information. The Firm’s Compliance Manual includes policies and procedures for internal controls, code of ethics, privacy and information safeguarding, cybersecurity, e-mail communications and social media, insider trading, and all matters related to our investment processes and record keeping.

We will monitor your portfolio for compliance with your investment policy, State Code, and any additional directives. When we begin our relationship with the City, Chandler’s compliance personnel will hard-code each specific element of the investment policy and any additional client directives into the system for the portfolio.

Chandler uses robust order management system (OMS) and portfolio compliance software from Bloomberg AIM to monitor compliance with client objectives, policies, and legal requirements on a pretrade, post-trade and end-of-day basis.

Since each trade originates in the system, pre-trade compliance testing is generated each time a portfolio manager prepares to execute a transaction. The system prohibits execution if the trade does not comply with your investment policy. If an “alert” is triggered for non-compliance, it cannot be overridden by an investment manager and is escalated for review by compliance professionals. 902
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This sample report is being provided for illustrative purposes to demonstrate Chandler’s compliance procedures. References to specific securities and their characteristics are examples of securities held in a portfolio and are not intended to be and should not be interpreted as an offer, solicitation, or recommendation to purchase or sell any financial instrument, an indication that the purchase of such securities was or will be profitable, or representative of the composition or performance of the portfolio.

As a part of our regular process of policy and guideline monitoring, we provide clients with a monthly detailed Statement of Compliance, based on our complete review of our clients’ investments. This report details adherence to requirements such as permitted investments, minimum credit quality, maximum maturities, and concentration limits. This Statement also serves as an effective means of reporting compliance to the governing body.
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Further procedures to maintain compliance with state laws, your investment policy, objectives, and directives include:
• A daily reconciliation of transactions and cash balances with custodian information • A month-end review of the portfolio to confirm compliance with the investment policy • A comprehensive weekly process to ensure credit quality meets your policy standards as well as our strict quality requirements
• A portfolio structure that satisfies liquidity objectives with short-maturity securities and return objectives with higher duration investments
• Frequent communication between our team and yours to help us stay informed of any new developments that may modify your objectives
• Regular meetings with your staff to provide additional opportunities for high level review of portfolio composition and performance
Through Bloomberg AIM’s integration, Chandler increases its workflow automation and improves synchronicity with our clients’ internal accounting and portfolio management systems for more centralized and efficient operations. The Bloomberg AIM system provides seamless data integration that improves trading, compliance, and post-trade automation such as trade and security master file (SMF) data automatically sent to our accounting system. Its compliance monitoring features calculates and monitors asset class exposure, issuer size, and concentration. f. Describe your firm’s in-house technical and research capabilities. Are outside sources used by the firm on a regular basis? Describe your credit review process.

Inputs from Chandler’s various committees provide several factors considered in our decision-making process. The investment team makes decisions regarding duration positioning, sector allocation, term structure, and issue selection. They then incorporate these decisions as they apply to each individual portfolio. In addition, the Investment Management team subscribes to a variety of private research providers including BCA Research, Oxford Economics, and CreditSights to augment the overall research efforts of the firm. The team also keeps abreast of sell-side research from a broad group of domestic and international investment banks. These tools not only provide data for our investment processes but provide our clients access to the most current and relevant market information. Economic dynamics and the market environment are assessed and discussed in a committee structure as to the effect key indicators have on the structuring of portfolios. Additionally, internally developed, proprietary tools such as our HAM provide a quantitative foundation for Chandler’s portfolio construction process and credit review/security selection process.

Chandler’s Proprietary Horizon Analysis Model. The HAM enables our portfolio management team to integrate their research into the portfolio management process in a quantitative, disciplined, and repeatable way. Inputs to the HAM include 1) current yields on Treasury, agency, and corporate securities; 2) specific client constraints, such as maturity restrictions and maximum sector exposure; and 3) nine probability-weighted interest rate scenarios that may occur at the six-month horizon date. Our analysis of current macroeconomic conditions is one of the factors we consider as we develop the nine scenarios that comprise the third input to the HAM.

Through an iterative process, the HAM generates a portfolio that achieves a return greater than the benchmark in each of the nine scenarios. That is, the HAM generates a portfolio structure that we expect will outperform the portfolio’s benchmark over a wide range of possible future interest rate movements. 904
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Chandler’s Investment Process
The Investment Management team then evaluates the portfolio structure and may make adjustments as they begin the construction of the portfolio. This combination of a rigorous quantitative structure and experienced qualitative oversight is a hallmark of all Chandler’s portfolio management activities.

In addition to our internal research tools and capabilities, the following external systems and software support our trading, portfolio accounting, and client reporting:
• Clearwater Analytics. Provides 24/7 web and mobile access to customizable reports, holdings, transactions, ratings, performance calculations and other data. The City will benefit from a robust performance and accounting platform that will allow for greater transparency of the City’s investment program.
• Bloomberg AIM: Order Management System – the compliance system used for pre-trade, post-trade, end-of-day compliance testing, and straight-through processing of investment transactions. The City’s internally and externally managed portfolios will be integrated into our platform to keep compliance with State Code. The City will benefit from a holistic approach to confirm compliance across LGIPs, the City’s internally managed portfolio, and the externally managed portfolio. • Bloomberg AIM: Effects of Security Purchases/Sales – Bloomberg AIM also allows the portfolio manager to test the effects that new securities will have on an existing portfolio. For example, the team can propose a trade in Bloomberg AIM and determine what impact the position will have on the portfolio’s overall duration. In addition, we can perform an analysis on how a portfolio will be affected given a specified change in interest rates to monitor that the portfolio will continue to meet the objectives of the client. We also can see the impact of security transactions on the portfolio not only from a portfolio management standpoint but also the implications to accounting such as the gain/loss of a security sale. The City will benefit from our methodical approach to investment management and will have a portfolio that consistently tracks to its strategic goals.

Credit Review Process
Chandler employs an in-house, proprietary credit research process with the objective of identifying stable and improving credits to include in client portfolios. The dynamic nature of the process also provides the team with the ability to detect weak and deteriorating credits which may be removed from client portfolios and Chandler’s approved issuer list. In determining the suitability of a particular credit security, the Credit Committee analyzes company fundamentals with a particular focus on relative balance sheet strength and the overall earnings outlook of the issuer paired with Chandler’s view of the forward-looking macro-economic environment. After the fundamental outlook of a particular issuer has been ascertained, the Credit Committee focuses on the relative value of current and historical spreads of both the issuer and its industry sector.

Although the Nationally Recognized Statistical Rating Organizations (NRSROs) typically determine the initial eligibility of a particular security, Chandler does not rely on these ratings to determine whether a 905
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security is suitable for a Chandler portfolio. Chandler’s Credit Committee, with input from the entire investment team, further vets the suitability of an investment based on our own internal research and a thorough understanding of each client’s investment objectives and risk tolerances. This combination of qualitative and quantitative analysis enables the team to identify and invest in securities consistent with our clients’ objectives of safety, liquidity, and return.

Chandler’s internal credit process is designed to identify and evaluate changing fundamentals and the current relative value of issuers versus sector peers. The Credit Committee meets weekly to rank corporate issuers into three tiers and categorizes those securities based on individual client risk tolerance and policy guidelines. Each sector and issuer is reviewed at a minimum of once per quarter. The goal is to be proactive in identifying and investing in stable and improving credits, while avoiding deteriorating credits.

In addition to the formal weekly Credit Committee meetings, all credits are monitored on a continuous basis. The Credit Committee monitors the overall news flow on each issuer on our approved list (i.e. earnings, press releases, management presentation or conferences, ratings changes, etc.). The information gathered is distributed to the entire investment management team daily. In the event the fundamentals of the underlying security change, the Credit Committee may act to add or remove the issuer from our approved credit list or move it within the appropriate tier.

7. REPORTING
a. Describe the investment accounting and reporting system used by your firm.

Chandler uses a sophisticated investment reporting and accounting platform, Clearwater Analytics, which allows clients to generate on-demand, customizable reports. Chandler’s monthly statements, quarterly reports, GASB 40/72 reports, customizable holdings, transactions, and special reports are available on this platform. Chandler does not require the City to purchase any additional programs or software that would be required for services under this engagement, relieving the need to allocate capital for portfolio structure tools, policy compliance, financial reporting, and other crucial aspects of managing your funds.

Reports are prepared in accordance with state law and the Governmental Accounting Standards Board (GASB) and are compiled to meet the needs of public agencies. Chandler claims compliance with the Global Investment Performance Standards (GIPS®) and prepares and presents its performance in compliance with these standards. Chandler is independently verified by ACA Performance Services for Firmwide GIPS® compliance.
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b. Describe the frequency and format of reports that you would provide to the City of West Sacramento.

Attach a sample.

The reports that Chandler provides the City allow City staff to monitor investments and book earnings efficiently and completely. Monthly Statements. Monthly statements include a summary of portfolio characteristics, performance, and full accounting details. Reports, holdings, trade tickets, and historical data are available via Chandler’s online reporting tool, the Chandler client portal.

Portfolio Reports Accounting Reports
• Portfolio characteristics • Security Holdings
• Account Summary Detail • Transactions
• Sector Allocation • Amortization/Accretion
• Maturity Distribution • Interest Income and Accruals
• Credit Quality • Realized & Unrealized Gains & Losses • Total Rate of Return • GASB 40 & 72 Reporting
In addition, Chandler’s reports detail the following:
• A holdings report, showing security description, par value, cost, book value, market value, accrued interest, gain/loss, book yield, duration, maturity, Moody’s, Fitch, and S&P ratings, and percent of portfolio for each holding
• A cash flow projection from upcoming investment maturities and interest payments • A transaction ledger that reports all acquisitions, dispositions, interest payments, cash contributions and withdrawals, and any other transactions for the period • An earned interest report, displaying all interest earnings, including accrued and received interest, amortization and accretion in detail form and summarized Quarterly Reports. We present quarterly investment reports in a format designed to facilitate discussion between Chandler investment professionals and the City’s staff. The report provides current economic data, portfolio characteristics, return on both an aggregate basis and for individual portfolios, compliance, and a summary of accounts under management using graphs, charts and illustrations in a format that is effective for management, elected officials and interested members of the public.

We have included the City’s Monthly Statement and Quarterly Investment Report in Appendix F. c. What performance benchmarks would you suggest for this portfolio? Provide recommendations regarding performance benchmarks for a portfolio similar to that of the City of West Sacramento. What experience has the firm had in developing benchmarks for public operating portfolios? Based on the City’s investment objectives, we have been managing the City’s funds utilizing our Short Term Bond strategy and comparing it to the ICE BofA 1-5 Year US Treasury & Agency Index, which has an average modified duration of approximately 2.5 years. This benchmark and strategy were selected after an extensive study involving staff that was designed to identify the earnings objectives of the portfolio.

We revisit the appropriateness of this strategy and benchmark at least annually, but to date, this approach has served the City well.

8. FEES
a. Provide the complete fee schedule that would apply to this account. Are fees charged in arrears? Chandler is pleased to provide comprehensive discretionary investment advisory services to the City as described herein Chandler’s proposal and in the City’s Scope of Services in accordance with the following fee schedule:
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Chandler Fees for City of West Sacramento
Assets Under Management Annual Asset Management Fee
First $150 million 0.06 of 1% (6 basis points)
Next $150 million 0.04 of 1% (4 basis points)
Assets over $300 million 0.03 of 1% (3 basis points)
The proposed fee for the continuation of our engagement represents a savings of $5,000 annually (at current assets) from the already competitive fee we currently charge. As the Firm calculates fees based on the average balance of assets under our direct management (market value including accrued interest), they will fluctuate based on portfolio value. Fees are based on the average amount of assets under management and are not based on transaction volume or number of accounts. Management fees will accrue as long as there are assets in the portfolio, even if there is no activity during the period. Fees are charged monthly in arrears and can be debited directly from your third-party custody account.

Fees are firm for the entire contract and annual renewal options and the City will not be subject to any increases during this period.

Our proposed fee schedule is all-inclusive for the services that Chandler provides, including full-time investment management services, technological resources, onboarding and implementation, online access to the Chandler Client Portal, comprehensive reporting, meetings, personal visits, educational offerings for your staff, and the additional treasury support services described herein in Chandler’s proposal. Chandler does not charge fees on funds held in vehicles not directly under our management, including Local Government Investment Pools and internally managed liquid funds.

Our fee schedule does not include charges that the City would incur for third-party custodial services, which, as an important control in the investment process, are not provided by Chandler.

An example of the fees assessed to the City at different asset levels according to the above proposed tiered fee schedule are as follows:

Total Assets Under
Management Annual Fee in Basis Points Annual Fee in $
dollars
$200 million 5.5 basis points $110,000
$250 million 5.2 basis points $130,000
b. What additional expenses not covered through the fee structure will be expected in order to implement your investment advisory services.

Chandler’s proposed fees are inclusive of all the services the City requests for full investment program management and treasury management support (cash flow analysis, investment policy review, reporting, etc.) as described in our proposal.
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9. HISTORY
a. A statement as to whether there have been any mergers, acquisitions, or sales related to Proposer's organizational structure within the last three (3) years. If so, attach an explanation providing relevant details.

There have not been any mergers, acquisitions, or sales related to Chandler’s organizational structure within the last three years.

10. LEGAL CHALLENGES
a. A statement as to whether there is any pending litigation against the Proposer. If such litigation exists, attach an opinion of counsel as to whether the pending litigation will impair the Proposer's ability to perform the Contract.

To the best of our knowledge, there is no pending litigation against Chandler.

11. FISCAL VIABILITY
a. A statement as to whether, in the last ten (10) years, the Proposer has filed (or had filed against it) any bankruptcy or insolvency proceeding, whether voluntary or involuntary, or undergone the appointment of a receiver, trustee, or assignee for the benefit of creditors. If so, attach an explanation providing relevant details.

In the last ten years, Chandler has not been involved in any bankruptcy or insolvency proceeding.

12. BUSINESS LICENSE
a. Registration with the Secretary of State to conduct business in the State of California. Attach a copy of proof of registration.

A copy of our registration with the Secretary of State to conduct business in California is provided in Appendix G.

13. TECHNICAL PROJECT APPROACH
A document detailing the operational and/or organizational approach the Proposer will take to timely fulfill the Scope of Work shall be submitted with the Proposal ("Technical Project Approach"). The Technical Project Approach shall be a comprehensive narrative describing how the Proposer will complete the Scope of Work, communicate with the City throughout the work, advance the project objectives, and provide continuity on work efforts.

The following table provides an outline of ongoing daily investment procedures and Chandler’s approach to the Scope of Services for the City:
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14. COST PROPOSAL
A document detailing all costs associated to complete the Scope of Work shall be submitted with the Proposal ("Cost Proposal"). For sealed bids, the Cost Proposal shall be opened after and separately from the rest of the Proposal. Cost Proposal shall include all applicable federal, state, and local taxes and must be all-inclusive of project expenses, as no additional charges shall be allowed, except for additional services as requested by the City, if any. There shall be no additional reimbursement for travel time or expenses, telephone costs, copying costs, etc.

If applicable, the Cost Proposal shall separately delineate costs for optional term extensions and/or optional services. Proposer agrees to maintain pricing pursuant to the Cost Proposal for the duration of the Contract, and any optional extensions.

Please see our Cost Proposal submitted as a separate document. 910
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EXHIBIT B
Schedule of Fees
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Assets Under Management Annual Asset Management Fee
First $150 million 0.06 of 1% (6 basis points)
Next $150 million 0.04 of 1% (4 basis points)
Over $300 million 0.03 of 1% (3 basis points)
Chandler would be pleased to provide comprehensive investment management services to the City in accordance with the following fee schedule:

Proposed Fee Schedule for the City of West Sacramento
We Invest in People, Not Just Portfolios
www.chandlerasset.com 9255 Towne Centre Dr., Ste 600 | San Diego, CA 92121 Chandler Asset Management is an independent adviser registered as such with Securities and Exchange Commission under the Investment Adviser’s Act of 1940.

Our proposed fee schedule is all-inclusive for the services that Chandler provides, including full time investment advisory and portfolio management services, technological resources, onboarding and implementation, online access to the Chandler Client Portal, comprehensive reporting, meetings, personal visits, and educational offerings for your staff. Chandler does not charge fees on funds held in vehicles not directly under our management. Fees are firm for the entire initial contract term and the City will not be subject to any increases during this period.

Our fee schedule does not include charges the City would incur for third-party custodial services, which, as an important control in the investment process, are not provided by Chandler.

Fees are based on the amount of assets under management and are not based on transaction volume. Management fees will accrue as long as there are assets in the portfolio, even if there is no activity during the period. Since the Firm calculates fees based on the average balance of assets under our direct management (market value including accrued interest), they will fluctuate based on portfolio value. The examples above are based on sample account sizes and should not be considered a “not to exceed” fee. Fees are charged monthly in arrears and can be debited directly from your third-party custody account.
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EXHIBIT C
CERTIFICATE OF COMPLIANCE WITH LABOR CODE § 3700
[Labor Code § 1861]
I am aware of the provisions of Section 3700 of the Labor Code which require every employer to be insured against liability for workers’ compensation or to undertake self-insurance in accordance with the provisions of that code, and I will comply with such provisions before commencing the performance of the work of this contract.

CONSULTANTS
By:

Nicole Dragoo, CEO
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FIN25-016 Investment Management and Advisory Services
Expires 2/18/2028

EXHIBIT D

INVESTMENT POLICY
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1 CITY OF WEST SACRAMENTO
ADMINISTRATIVE POLICY NUMBER: IV-C-2
DATE: September 8, 1992
Revised: February 1, 1999
Revised: October 15, 2014
Revised: November 1, 2017
Revised: August 21, 2019
Revised: June 16, 2021
Revised: May 17, 2023
Revised: June 5, 2024
SUBJECT: INVESTMENT POLICY AUTHORITY: City Council

PURPOSE
This policy sets forth the procedural regulations for investing surplus funds. The intent of the Investment Policy of the City of West Sacramento is to define the parameters within which funds are to be managed.

POLICY
In methods, procedures, and practices, the policy formalizes the framework for the City’s investment activities that must be exercised to ensure effective and judicious fiscal and investment management of the City’s funds. The guidelines are intended to be broad enough to allow the investment officer to function properly within the parameters of responsibility and authority, yet specific enough to safeguard the investment assets.

PROCEDURE
A. SCOPE
This policy applies to the investment of surplus operating and capital funds and proceeds from certain bond issues. It conforms to best practices as outlined by Government Finance Officers Association, Association of Public Treasurers of the United States and Canada, and California Municipal Treasurers’ Association.

1. Pooling of Funds: Except for cash in certain restricted and special funds, the City will consolidate cash balances from all funds to maximize investment earnings. Investment income will be allocated to the various funds based on their respective participation and in accordance with generally accepted accounting principles.

B. GENERAL OBJECTIVES
The primary objectives, in priority order, of investment activities shall be safety, liquidity, and return.

1. Safety: Safety of principal is the foremost objective of the investment program.

Investments shall be undertaken in a manner that seeks to ensure the preservation of capital in the overall portfolio. To attain this objective, the City will diversify its investments by investing funds among a variety of securities with independent returns. The objective will be to mitigate credit risk and market risk, further explained below. 915
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2 2. Liquidity: The investment portfolio shall remain sufficiently liquid to meet all operating requirements that may be reasonably anticipated. This is accomplished by structuring the portfolio so that securities mature concurrent with cash needs to meet anticipated demands (static liquidity). Furthermore, since all possible cash demands cannot be anticipated, the portfolio should consist largely of securities with active secondary or resale markets (dynamic liquidity). A portion of the portfolio also may be placed in money market mutual funds or local government investment pools which offer same-day liquidity for short-term funds.

3. Return: The investment portfolio shall be designed with the objective of attaining a market rate of return throughout budgetary and economic cycles, taking into account the investment risk constraints and liquidity needs. Return on investment is of secondary importance compared to the safety and liquidity objectives described above. The core of investments are limited to relatively low risk securities in anticipation of earning a fair return relative to the risk being assumed.

C. STANDARDS OF CARE

1. Prudence: The standard of prudence to be used by investment officials shall be the “prudent investor” standard (California Government Code section 53600.3) and shall be applied in the context of managing an overall portfolio. Pursuant to this section of Code, all persons authorized to make investment decisions on behalf of the City are trustees and therefore fiduciaries subject to the Prudent Investor Standard:
“…all governing bodies of local agencies or persons authorized to make investment decisions on behalf of those local agencies investing public funds pursuant to this chapter are trustees and therefore fiduciaries subject to the prudent investor standard. When investing, reinvesting, purchasing, acquiring, exchanging, selling, or managing public funds, a trustee shall act with care, skill, prudence, and diligence under the circumstances then prevailing, including, but not limited to, the general economic conditions and the anticipated needs of the Agency, that a prudent person acting in a like capacity and familiarity with those matters would use in the conduct of funds of a like character and with like aims, to safeguard the principal and maintain the liquidity needs of the Agency. Within the limitations of this section and considering individual investments as part of an overall strategy, investments may be acquired as authorized by law.” Investment officers acting in accordance with written procedures and this investment policy and exercising due diligence shall be relieved of personal responsibility for an individual security’s credit risk or market price changes, provided deviations from expectations are reported in a timely fashion and the liquidity and the sale of securities are carried out in accordance with the terms of this policy.

2. Ethics and Conflicts of Interest: Officers and employees involved in the investment process shall refrain from personal business activity that could conflict with the proper execution and management of the investment program, or that could impair their ability to make impartial decisions. Employees and investment officials shall disclose any material interests in financial institutions with which they conduct business. They shall further disclose any personal financial/ investment positions that could be related to the performance of the investment portfolio. Employees and officers shall refrain from undertaking personal investment transactions with the same individual with whom business is conducted on behalf of the City.

3. Delegation of Authority: Authority to manage the investment program is granted to the Director of Finance/City Treasurer, hereinafter referred to as investment officer, and derived from California Government Code, Sections 41006 and 53600 et seq as well as Ordinance 87-12. Responsibility for the operation of the investment program is hereby 916
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3 delegated to the investment officer, who shall act in accordance with established written procedures and internal controls for the operation of the investment program consistent with this investment policy. Procedures should include references to: safekeeping, delivery vs. payment, investment accounting, repurchase agreements, wire transfer agreements, and collateral/depository agreements. No person may engage in an investment transaction except as provided under the terms of this policy and the procedures established by the investment officer. The investment officer shall be responsible for all transactions undertaken and shall establish a system of controls to regulate the activities of subordinate officials. The City may engage the services of one or more external investment advisers, who are registered under the Investment Advisers Act of 1940, to assist in the management of the City’s investment portfolio in a manner consistent with the City’s objectives. External investment advisers may be granted discretion to purchase and sell investment securities in accordance with this investment policy.

The City’s overall investment program shall be designed and managed with a degree of professionalism that is worthy of the public trust. The City recognizes that in a diversified portfolio, occasional measured losses may be inevitable and must be considered within the context of the overall portfolio’s return and the cash flow requirements of the City.

D. SAFEKEEPING AND CUSTODY

1. Authorized Financial Dealers and Institutions: To the extent practicable, the investment officer shall endeavor to complete investment transactions using a competitive bid process whenever possible. The investment officer will determine which financial institutions are authorized to provide investment services to the City. It shall be the City’s policy to purchase securities only from authorized institutions and firms. A list will be maintained of financial institutions authorized to provide investment services. In addition, a list also will be maintained of approved security broker/dealers selected by creditworthiness (e.g., a minimum capital requirement of $10,000,000 and at least five years of operation). These may include “primary” dealers or regional dealers that qualify under Securities and Exchange Commission (SEC) Rule 15C3-1 (uniform net capital rule).

In accordance with Section 53601.5, institutions eligible to transact investment business with the City include:
• Primary government dealers as designated by the Federal Reserve Bank and nonprimary government dealers. • Nationally or state-chartered banks.
• The Federal Reserve Bank.
• Direct issuers of securities eligible for purchase.

Selection of financial institutions and broker/dealers authorized to engage in transactions will be at the sole discretion of the City, except where the City utilizes an external investment adviser in which case the City may rely on the adviser for selection.

All financial institutions and broker/dealers who desire to become qualified for investment transactions must supply the following as appropriate:
• Audited financial statements.
• Proof of National Association of Securities Dealers (NASD) certification. • Proof of state registration.
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4 • Completed broker/dealer questionnaire.
• Certification of having read and understood and agreeing to comply with the City’s investment policy.
• Evidence of adequate insurance coverage.

An annual review of the financial condition and registration of qualified financial institutions and broker/dealers will be conducted by the investment officer.

From time to time, the investment officer may choose to invest in instruments offered by minority and community financial institutions. In such instances, a waiver to the criteria under Paragraph 1 may be granted. All terms and relationships will be fully disclosed prior to purchase and will be reported to the appropriate entity on a consistent basis and should be consistent with state or local law. These types of investment purchases should be approved by the appropriate legislative or governing body in advance.

Public deposits will be made only in qualified public depositories as established by State law. Deposits will be insured by the Federal Deposit Insurance Corporation, or, to the extent the amount exceeds the insured maximum, will be collateralized in accordance with State law.

Selection of broker/dealers used by an external investment adviser retained by the City will be at the sole discretion of the adviser. Where possible, transactions with broker/dealers shall be selected on a competitive basis and their bid or offering prices shall be recorded. If there is no other readily available competitive offering, best efforts will be made to document quotations for comparable or alternative securities. When purchasing original issue instrumentality securities, no competitive offerings will be required as all dealers in the selling group offer those securities at the same original issue price.

2. Internal Controls: The investment officer is responsible for establishing and maintaining an internal control structure designed to ensure that the assets of the City are protected from loss, theft or misuse. Specifics for the internal controls shall be documented in an investment procedures manual that shall be reviewed and updated periodically by the Investment Officer. An example of such a procedure would include the requirement that the Director of Finance approve trades transacted by other authorized personnel. The internal control structure shall be designed to provide reasonable assurance that these objectives are met. The concept of reasonable assurance recognizes that (1) the cost of a control should not exceed the benefits likely to be derived and (2) the valuation of costs and benefits requires estimates and judgments by management.

Accordingly, the investment officer shall establish a process for an annual independent review by an external auditor to assure compliance with policies and procedures. The internal controls shall address the following points:
• Control of collusion.
• Separation of transaction authority from accounting and recordkeeping. • Custodial safekeeping.
• Avoidance of physical delivery securities.
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5 • Clear designation of authority to subordinate staff members. • Written confirmation of transactions for investments and wire transfers. • Dual authorizations of wire transfers.
• Staff training.
• Development of a wire transfer agreement with the lead bank and third-party custodian.

3. Delivery vs. Payment: All trades where applicable will be executed by delivery vs. payment (DVP) to ensure that securities are deposited in an eligible financial institution prior to the release of funds. Securities will be held by a third-party custodian as evidenced by safekeeping receipts. The only exception to the foregoing shall be depository accounts and securities purchase made with: Local Agency Investment Fund (LAIF), California Asset Management Program, time certificates of deposit and money market mutual funds, since the purchased securities are not deliverable.

4. Third-Party Safekeeping: Securities will be held by an independent third-party safekeeping institution selected by the City. All securities will be evidenced by safekeeping receipts in the City’s name. The safekeeping institution shall annually provide a copy of its most recent report on internal controls – Service Organization Control Reports (formerly 70, or SAS 70) prepared in accordance with the Statements of Standards for Attestation Engagements (SSAE) No. 16 (effective June 15, 2011).

E. SUITABLE AND AUTHORIZED INVESTMENTS

1. Investment Types: Investments shall be placed to conform to those allowable under the State of California Government Code section 53600 et seq. Within the investments permitted by the Code, the City seeks to further restrict eligible investments to the guidelines listed below. Consistent with the GFOA Policy Statement and Local Laws Concerning Investment Practices, the following investments will be permitted by this policy and are those defined by state and local law where applicable. If additional types of securities are approved for investment by public funds by state statute, they will not be eligible for investment by the City until this Policy has been amended and the amended version adopted by the City Council. In the event a discrepancy is found between this policy and the Code, the more restrictive parameters will take precedence. Percentage holding limits and minimum credit quality requirements listed in this section apply at the time the security is purchased.

Any investment currently held at the time the policy is adopted which does not meet the new policy guidelines can be held until maturity and shall be exempt from the current policy. At the time of the investment’s maturity or liquidation, such funds shall be reinvested only as provided in the current policy.

An appropriate risk level shall be maintained by primarily purchasing securities that are of high quality, liquid, and marketable. The portfolio shall be diversified by security type and institution to avoid incurring unreasonable and avoidable risks regarding specific security types or individual issuers.

Authorized securities include:
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6 A. Municipal Securities include obligations of the City, the State of California and any local agency within the State of California, provided that:

• The securities are rated in a rating category of “A” or its equivalent or better by at least one nationally recognized statistical rating organization (“NRSRO”). • No more than 5% of the portfolio may be invested in any single issuer. • No more than 30% of the portfolio may be in Municipal Securities. • The maximum maturity does not exceed five (5) years.

B. Municipal Securities (Registered Treasury Notes or Bonds) of any of the other 49 states in addition to California, including bonds payable solely out of the revenues from a revenue-producing property owned, controlled, or operated by a state or by a department, board, agency, or authority of any of the other 49 states, in addition to California.

• The securities are rated in a rating category of “A” or its equivalent or better by at least one nationally recognized statistical rating organization (“NRSRO”). • No more than 5% of the portfolio may be invested in any single issuer. • No more than 30% of the portfolio may be in Municipal Securities. • The maximum maturity does not exceed five (5) years.

C. U.S. Treasuries and other government obligations for which the full faith and credit of the United States are pledged for the payment of principal and interest. There are no limits on the dollar amount or percentage that the City may invest in U.S. Treasuries, provided that:
• The maximum maturity is five (5) years.

D. Federal Agencies or United States Government-Sponsored Enterprise obligations, participations, or other instruments, including those issued by or fully guaranteed as to principal and interest by federal agencies or United States government-sponsored enterprises. There are no limits on the dollar amount or percentage that the City may invest in Federal Agency or Government-Sponsored Enterprises (GSEs), provided that:
• No more than 30% of the portfolio may be invested in any single Agency/GSE issuer.
• The maximum maturity does not exceed five (5) years.
• The maximum percent of agency callable securities in the portfolio will be 20%.

E. Banker’s Acceptances, provided that:
• They are issued by institutions which have short-term debt obligations rated “A-1” or its equivalent or better by at least one NRSRO; or long-term debt obligations which are rated in a rating category of “A” or its equivalent or better by at least one NRSRO.
• No more than 40% of the portfolio may be invested in Banker’s Acceptances. • No more than 5% of the portfolio may be invested in any single issuer. • The maximum maturity does not exceed 180 days.
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7 F. Commercial Paper, provided that the securities are issued by an entity that meets all of the following conditions in either paragraph (a) or (b) and other requirements specified below:
i. SECURITIES issued by corporations:

1. A corporation organized and operating in the United States with assets more than $500 million.

2. The securities are rated “A-1” or its equivalent or better by at least one NRSRO.

3. If the issuer has other debt obligations, they must be rated in a rating category of “A” or its equivalent or better by at least one NRSRO. ii. SECURITIES issued by other entities:

1. The issuer is organized within the United States as a special purpose corporation, trust, or limited liability company.

2. The securities must have program-wide credit enhancements including, but not limited to, overcollateralization, letters of credit, or a surety bond.

3. The securities are rated “A-1” or its equivalent or better by at least one NRSRO. • City may purchase no more than 10% of the outstanding commercial paper of any single issuer.
• No more than 25% of the portfolio may be invested in Commercial Paper. Under a provision sunsetting on January 1, 2026, no more than 40% of the portfolio may be invested in Commercial Paper if the Agency’s investment assets under management are greater than $100,000,000.
• No more than 5% of the portfolio may be invested in any single issuer. • The maximum maturity does not exceed 270 days.

G. Negotiable Certificates of Deposit (NCDs), issued by a nationally or state-chartered bank, a savings association or a federal association, a state or federal credit union, or by a federally licensed or state-licensed branch of a foreign bank, provided that:
• The amount of the NCD insured up to the FDIC limit does not require any credit ratings.
• Any amount above the FDIC insured limit must be issued by institutions which have short-term debt obligations rated “A-1” or its equivalent or better by at least one NRSRO; or long-term obligations rated in a rating category of “A” or its equivalent or better by at least one NRSRO.
• No more than 30% of the total portfolio may be invested in NCDs (combined with CDARS).
• No more than 5% of the portfolio may be invested in any single issuer. • The maximum maturity does not exceed five (5) years.

H. Federally Insured Time Deposits (Non-Negotiable Certificates of Deposit) in state or federally chartered banks, savings and loans, or credit unions, provided that:
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8 • The amount per institution is limited to the maximum covered under federal insurance.
• No more than 20% of the portfolio will be invested in a combination of federally insured and collateralized time deposits.
• The maximum maturity does not exceed five (5) years.

I. Collateralized Time Deposits (Non-Negotiable Certificates of Deposit) in state or federally chartered banks, savings and loans, or credit unions in excess of insured amounts which are fully collateralized with securities in accordance with California law, provided that:
• No more than 20% of the portfolio will be invested in a combination of federally insured and collateralized time deposits.
• The maximum maturity does not exceed five (5) years.

J. Certificate of Deposit Placement Service (CDARS), provided that:
• No more than 30% of the total portfolio may be invested in a combination of Certificates of Deposit, including CDARS.
• The maximum maturity does not exceed five (5) years.

K. Collateralized Bank Deposits. City’s deposits with financial institutions will be collateralized with pledged securities per California Government Code, Section 53651.

There are no limits on the dollar amount or percentage that the City may invest in collateralized bank deposits.

L. Repurchase Agreements collateralized with securities authorized under California Government Code, maintained at a level of at least 102% of the market value of the Repurchase Agreement. There are no limits on the dollar amount or percentage that the City may invest, provided that:
• Securities used as collateral for Repurchase Agreements will be delivered to an acceptable third-party custodian.
• Repurchase Agreements are subject to a Master Repurchase Agreement between the City and the provider of the repurchase agreement. The Master Repurchase Agreement will be substantially in the form developed by the Securities Industry and Financial Markets Association (SIFMA).
• The maximum maturity does not exceed one (1) year.

M. State of California Local Agency Investment Fund (LAIF), provided that:
• The City may invest up to the maximum amount permitted by LAIF. • LAIF’s investments in instruments prohibited by or not specified in the City’s policy do not exclude the investment in LAIF itself from the City’s list of allowable investments, provided LAIF’s reports allow the investment officer to adequately judge the risk inherent in LAIF’s portfolio.

N. Local Government Investment Pools
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9 • Other LGIPs permitted by client.
• There is no issuer limitation for Local Government Investment Pools O. Corporate Medium-Term Notes (MTNs), provided that:
• The issuer is a corporation organized and operating within the United States or by depository institutions licensed by the United States or any state and operating within the United States.
• The securities are rated in a rating category of “A” or its equivalent or better by at least one NRSRO.
• No more than 30% of the total portfolio may be invested in MTNs. • No more than 5% of the portfolio may be invested in any single issuer. • The maximum maturity does not exceed five (5) years.

P. Asset-Backed, Mortgage-Backed, Mortgage Pass-Through Securities, and Collateralized Mortgage Obligations from issuers not defined in sections C and D of the Authorized Investments section of this policy, provided that:
• The securities are rated in a rating category of “AA” or its equivalent or better by a NRSRO.
• No more than 20% of the total portfolio may be invested in these securities. • No more than 5% of the portfolio may be invested in any single Asset-Backed or Commercial Mortgage security issuer.
• The maximum legal final maturity does not exceed five (5) years.

Q. Mutual Funds and Money Market Mutual Funds that are registered with the Securities and Exchange Commission under the Investment Company Act of 1940, provided that:
a. Mutual Funds that invest in the securities and obligations as authorized under California Government Code, Section 53601 (a) to (k) and (m) to (q) inclusive and that meet either of the following criteria:
(i) Attained the highest ranking or the highest letter and numerical rating provided by not less than two (2) NRSROs; or
(ii) Have retained an investment adviser registered or exempt from registration with the Securities and Exchange Commission with not less than five years’ experience investing in the securities and obligations authorized by California Government Code, Section 53601 and with assets under management in excess of $500 million.
• No more than 10% of the total portfolio may be invested in shares of any one mutual fund.
b. Money Market Mutual Funds registered with the Securities and Exchange Commission under the Investment Company Act of 1940 and issued by diversified management companies and meet either of the following criteria:
(i) Have attained the highest ranking or the highest letter and numerical rating provided by not less than two (2) NRSROs; or
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10 (ii) Have retained an investment adviser registered or exempt from registration with the Securities and Exchange Commission with not less than five years’ experience managing money market mutual funds with assets under management in excess of $500 million.
• No more than 20% of the total portfolio may be invested in the shares of any one Money Market Mutual Fund.
c. No more than 20% of the total portfolio may be invested in these securities.

R. Supranationals, provided that:
• Issues are US dollar denominated senior unsecured unsubordinated obligations issued or unconditionally guaranteed by the International Bank for Reconstruction and Development, International Finance Corporation, or Inter-American Development Bank.
• The securities are rated in a rating category of “AA” or its equivalent or better by a NRSRO.
• No more than 30% of the total portfolio may be invested in these securities. • No more than 10% of the portfolio may be invested in any single issuer. • The maximum maturity does not exceed five (5) years.

2. Prohibited Investment Vehicles and Practices:
• State law notwithstanding, any investments not specifically described herein are prohibited, including, but not limited to futures and options. • In accordance with Government Code, Section 53601.6, investment in inverse floaters, range notes, or mortgage derived interest-only strips is prohibited. • Investment in any security that could result in a zero-interest accrual if held to maturity is prohibited. Investment in any security that could result in a zero interest accrual if held to maturity is prohibited Under a provision sunsetting on January 1, 2026, securities backed by the U.S. Government that could result in a zero- or negativeinterest accrual if held to maturity are permitted. • Trading securities for the sole purpose of speculating on the future direction of interest rates is prohibited.
• Purchasing or selling securities on margin is prohibited. • The use of reverse repurchase agreements, securities lending or any other form of borrowing or leverage is prohibited.
• The purchase of foreign currency denominated securities is prohibited. • The purchase of securities with trade settlement periods longer than 45 days is prohibited.

3. Investment Pools/Mutual Funds:

The City shall conduct a thorough investigation of any pool or mutual fund prior to making an investment, and on a continual basis thereafter. The investment officer shall develop a questionnaire which will answer the following general questions:
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11 • A description of eligible investment securities, and a written statement of investment policy and objectives.
• A description of interest calculations and how it is distributed, and how gains and losses are treated.
• A description of how the securities are safeguarded (including the settlement processes), and how often the securities are priced and the program audited. • A description of who may invest in the program, how often, what size deposit and withdrawal are allowed.
• A schedule for receiving statements and portfolio listings. • Are reserves, retained earnings, etc. utilized by the pool/fund? • A fee schedule, and when and how is it assessed.
• Is the pool/fund eligible for bond proceeds and/or will it accept such proceeds?

4. Collateralization: Acceptable collateral shall be as follows:

Certificates of Deposit (CDs). The City shall require any commercial bank or savings and loan association to deposit eligible securities with an agency of a depository approved by the State Banking Department to secure any uninsured portion of a Non-Negotiable Certificate of Deposit. The value of eligible securities as defined pursuant to California Government Code, Section 53651, pledged against a Certificate of Deposit shall be equal to 150% of the face value of the CD if the securities are classified as mortgages and 110% of the face value of the CD for all other classes of security.

Collateralization of Bank Deposits. This is the process by which a bank or financial institution pledges securities, or other deposits for the purpose of securing repayment of deposited funds. The City shall require any bank or financial institution to comply with the collateralization criteria defined in California Government Code, Section 53651.

Repurchase Agreements. The City requires that Repurchase Agreements be collateralized only by securities authorized in accordance with California Government Code:
• The securities which collateralize the repurchase agreement shall be priced at Market Value, including any Accrued Interest plus a margin. The Market Value of the securities that underlie a repurchase agreement shall be valued at 102% or greater of the funds borrowed against those securities.
• Financial institutions shall mark the value of the collateral to market at least monthly and increase or decrease the collateral to satisfy the ratio requirement described above.
• The City shall receive monthly statements of collateral.

F. INVESTMENT PARAMETERS

1. Mitigating Credit Risk in the Portfolio: Credit risk is the risk that a security or a portfolio will lose some or all its value due to a real or perceived change in the ability of the issuer to repay its debt. The City will mitigate credit risk by adopting the following strategies:
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12 • The diversification requirements included in the “Suitable and Authorized Investments” section of this policy are designed to mitigate credit risk in the portfolio. • No more than 5% of the total portfolio may be deposited with or invested in securities issued by any single issuer unless otherwise specified in this policy. • The City may elect to sell a security prior to its maturity and record a capital gain or loss in order to manage the quality, liquidity or yield of the portfolio in response to market conditions or City’s risk preferences.
• If the credit ratings of any security owned by the City are downgraded to a level below the quality required by this investment policy, making the security ineligible for additional purchases, the following steps will be taken:
• If a security is downgraded, the investment officer will use discretion in determining whether to sell or hold the security based on its current maturity, the economic outlook for the issuer, and other relevant factors. If employing an investment manager, any actions taken related to the downgrade by the investment manager will be communicated to the investment officer in a timely manner. • If a decision is made to retain a downgraded security in the portfolio, its presence in the portfolio will be monitored and reported monthly to the City Council.

2. Mitigating Market Risk in the Portfolio: Market risk is the risk that the portfolio value will fluctuate due to changes in the general level of interest rates. The City recognizes that, over time, longer-term portfolios have the potential to achieve higher returns. Likewise, longer-term portfolios have higher volatility of return. The City will mitigate market risk by providing adequate liquidity for short-term cash needs, and by making longer-term investments only with funds that are not needed for current cash flow purposes.

The City further recognizes that certain types of securities, including variable rate securities, securities with principal paydowns prior to maturity, and securities with embedded options, will affect the market risk profile of the portfolio differently in different interest rate environments. The City, therefore, adopts the following strategies to control and mitigate its exposure to market risk:
• The City will maintain a minimum of six months of budgeted operating expenditures in short term investments to provide sufficient liquidity for expected disbursements. • The maximum stated final maturity of individual securities in the portfolio will be five (5) years as measured from the date of trade settlement, except as otherwise stated in this policy.
• The duration of the portfolio will generally be approximately equal to the duration (typically, plus or minus 20%) of a Market Benchmark, an index selected by the City based on the City’s investment objectives, constraints and risk tolerances.

3. Maximum Maturities: To the extent possible, the City shall attempt to match its investments with anticipated cash flow requirements. The City will not directly invest in securities maturing more than five years from the date of trade settlement or in accordance 926
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13 with state and local statutes and ordinances, unless the City Council has by resolution granted authority to make such an investment either specifically or as part of an investment program approved by the City Council no less than three months prior to the investment.

The City investment officer shall adopt weighted average maturity limitations, consistent with the investment objectives.

Because of inherent difficulties in accurately forecasting cash flow requirements, a portion of the portfolio should be continuously invested in readily available funds such as LGIPs, money market funds, or overnight repurchase agreements to ensure that appropriate liquidity is maintained to meet ongoing obligations.

G. INVESTMENT STRATEGIES:

The investment program shall seek to augment returns consistent with the intent of this policy, identified risk limitations and prudent investment principles. These objectives will be achieved by use of the following strategies:

The source of and purpose for surplus funds determines the goal to be accomplished by the strategy. Bond proceeds, for example, typically have three purposes: reserve funds, project funds, and debt service funds. The goal and corresponding investment strategy is different for each, as follows:
• Reserve Funds. The goal is to have these funds available in case of default while minimizing negative arbitrage. The strategy is to call for competitive bids for long-term investment agreements with a call provision for default or redemption from AAA-rated limitations.
• Project Funds. The goal is to maintain purchasing power. The strategy, assuming a normal yield curve, is to match investment agreement maturities with construction draw schedules. Funds needed within 12 months are currently placed in an AAA-rated mutual fund of U.S. Treasury Securities.
• Debt Service Funds. The goal is to maintain liquidity. Generally, funds are placed in a money market mutual fund related investment category.

Surplus funds in the City pool come from a mixed bag of services for a wide variety of purposes. This blend of funds leads to the general investment goal of earning an appropriate yield consistent with the City’s high standards for safety and liquidity.

H. INVESTMENT PERFORMANCE
The investment portfolio shall be designed to attain a market-average rate of return throughout budgetary and economic cycles, taking into account the City’s risk constraints, the cash flow characteristics of the portfolio, and state and local laws, ordinances or resolutions that restrict investments.

The investment officer shall monitor and evaluate the portfolio’s performance relative to the chosen market benchmark(s), which will be included in the investment officer’s quarterly report. The investment officer shall select an appropriate, readily available index to use as a market benchmark.

I. REPORTING
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14 1. Methods: The investment officer shall prepare an investment report at least quarterly, including a management summary that provides an analysis of the status of the current investment portfolio and the individual transactions executed over the last quarter. This report shall include the type of investment, issuer, date of maturity, and par and dollar amount invested on all securities, investments and moneys held by the City. The report shall also include a current market value as of the date of the report. It shall state compliance of the portfolio to the statement of investment policy or manner in which the portfolio is not in compliance. Finally, the report shall include a statement denoting the ability of the local agency to meet its pool’s expenditure requirements for the next six months or provide an explanation as to why sufficient money shall, or may, not be available. The report shall be provided within 45 days after the end of the quarter. Once a year, the statement of investment policy shall be included in the report.

2. Performance Standards: The investment portfolio will be managed in accordance with the parameters specified within this policy. The portfolio should obtain a market average rate of return during a market/economic environment of stable interest rates. A series of appropriate benchmarks shall be established against which portfolio performance shall be compared on a regular basis.

3. Marking to Market: The market value of the portfolio shall be calculated at least monthly and a statement of the market value of the portfolio shall be issued at least monthly. This will ensure that review of the investment portfolio, in terms of value and price volatility, has been performed consistent with the GFOA Recommended Practice on “Mark-to-Market Practices for State and Local Government Investment Portfolios and Investment Pools.” In defining market value, considerations should be given to the GASB Statement 31 pronouncement.

4. Annual Reports: The investment policy shall be reviewed at least annually within 120 days of the end of the fiscal year to ensure its consistency with the overall objectives of preservation of principal, liquidity and return, and its relevance to current law and financial and economic trends. A comprehensive annual report shall be presented in conjunction with the investment policy review. This report shall include comparisons of City’s return to the City’s benchmark return, shall suggest policies and improvements that might enhance the investment program, and shall include an investment plan for the coming year.

5. Annual Audit: Management shall establish an annual process of independent review by the external auditor to assure compliance with internal controls. Such audit will include tests deemed appropriate by the auditor.

J. PORTFOLIO AND POLICY CONSIDERATIONS

1. Portfolio Review: The investment officer shall periodically, but no less than quarterly, review the portfolio to identify investments that do not comply with this investment policy and establish protocols for reporting major and critical incidences of noncompliance to the City Council.

2. Policy Amendments: This policy shall be reviewed on an annual basis within 120 days of the end of the fiscal year to ensure its consistency with the overall objectives of preservation of principal, liquidity and return, and its relevance to current law and financial and economic trends. Any recommended modifications or changes shall be presented by the investment officer to the City Council for their consideration and adoption. 928
Administrative Policy IV-C-2
Investment Policy
(continued)
15 K. GLOSSARY OF TERMS
Agencies: Shorthand market terminology for any obligation issued by a government-sponsored entity (GSE), or a federally related institution. Most obligations of GSEs are not guaranteed by the full faith and credit of the US government. Examples are:

FFCB: The Federal Farm Credit Bank System provides credit and liquidity in the agricultural industry. FFCB issues discount notes and bonds.

FHLB: The Federal Home Loan Bank provides credit and liquidity in the housing market.

FHLB issues discount notes and bonds.

FHLMC: Like FHLB, the Federal Home Loan Mortgage Corporation provides credit and liquidity in the housing market. FHLMC, also called “FreddieMac” issues discount notes, bonds and mortgage pass-through securities.

FNMA: Like FHLB and FreddieMac, the Federal National Mortgage Association was established to provide credit and liquidity in the housing market. FNMA, also known as “FannieMae,” issues discount notes, bonds and mortgage pass-through securities.

GNMA: The Government National Mortgage Association, known as “GinnieMae,” issues mortgage pass-through securities, which are guaranteed by the full faith and credit of the US Government.

PEFCO: The Private Export Funding Corporation assists exporters. Obligations of PEFCO are not guaranteed by the full faith and credit of the US government.

TVA: The Tennessee Valley Authority provides flood control and power and promotes development in portions of the Tennessee, Ohio, and Mississippi River valleys. TVA currently issues discount notes and bonds.

Asset Backed Securities: Securities supported by pools of installment loans or leases or by pools of revolving lines of credit.

Average Life: In mortgage-related investments, including CMOs, the average time to expected receipt of principal payments, weighted by the amount of principal expected.

Banker’s Acceptance: A money market instrument created to facilitate international trade transactions. It is highly liquid and safe because the risk of the trade transaction is transferred to the bank which “accepts” the obligation to pay the investor.

Benchmark: A comparison security or portfolio. A performance benchmark is a partial market index, which reflects the mix of securities allowed under a specific investment policy.

Broker: A broker brings buyers and sellers together for a transaction for which the broker receives a commission. A broker does not sell securities from his own position.

Callable: A callable security gives the issuer the option to call it from the investor prior to its maturity. The main cause of a call is a decline in interest rates. If interest rates decline, the issuer will likely call its current securities and reissue them at a lower rate of interest.

Certificate of Deposit (CD): A time deposit with a specific maturity evidenced by a certificate.

Certificate of Deposit Account Registry SYSTEM (CDARS): A private placement service that allows local agencies to purchase more than $250,000 in CDs from a single financial institution (must be a participating institution of CDARS) while still maintaining FDIC insurance coverage. 929
Administrative Policy IV-C-2
Investment Policy
(continued)
16 CDARS is currently the only entity providing this service. CDARS facilitates the trading of deposits between the California institution and other participating institutions in amounts that are less than $250,000 each, so that FDIC coverage is maintained.

Collateral: Securities or cash pledged by a borrower to secure repayment of a loan or repurchase agreement. Also, securities pledged by a financial institution to secure deposits of public monies.

Collateralized Bank Deposit: A bank deposit that is collateralized at least 100% (principal plus interest to maturity). The deposit is collateralized using assets set aside by the issuer such as Treasury securities or other qualified collateral to secure the deposit in excess of the limit covered by the Federal Deposit Insurance Corporation.

Collateralized Mortgage Obligations (CMO): Classes of bonds that redistribute the cash flows of mortgage securities (and whole loans) to create securities that have different levels of prepayment risk, as compared to the underlying mortgage securities.

Collateralized Time Deposit: Time deposits that are collateralized at least 100% (principal plus interest to maturity). These instruments are collateralized using assets set aside by the issuer such as Treasury securities or other qualified collateral to secure the deposit in excess of the limit covered by the Federal Deposit Insurance Corporation.

Commercial Paper: The short-term unsecured debt of corporations.

Coupon: The rate of return at which interest is paid on a bond.

Credit Risk: The risk that principal and/or interest on an investment will not be paid in a timely manner due to changes in the condition of the issuer.

Dealer: A dealer acts as a principal in security transactions, selling securities from and buying securities for his own position.

Debenture: A bond secured only by the general credit of the issuer.

Delivery vs. Payment (DVP): A securities industry procedure whereby payment for a security must be made at the time the security is delivered to the purchaser’s agent.

Derivative: Any security that has principal and/or interest payments which are subject to uncertainty (but not for reasons of default or credit risk) as to timing and/or amount, or any security which represents a component of another security which has been separated from other components (“Stripped” coupons and principal). A derivative is also defined as a financial instrument the value of which is totally or partially derived from the value of another instrument, interest rate, or index.

Discount: The difference between the par value of a bond and the cost of the bond, when the cost is below par. Some short-term securities, such as T-bills and banker’s acceptances, are known as discount securities. They sell at a discount from par and return the par value to the investor at maturity without additional interest. Other securities, which have fixed coupons, trade at a discount when the coupon rate is lower than the current market rate for securities of that maturity and/or quality.

Diversification: Dividing investment funds among a variety of investments to avoid excessive exposure to any one source of risk.

Duration: The weighted average time to maturity of a bond where the weights are the present values of the future cash flows. Duration measures the price sensitivity of a security to changes interest rates.

Federal Deposit Insurance Corporation (FDIC): The Federal Deposit Insurance Corporation (FDIC) is an independent federal agency insuring deposits in U.S. banks and thrifts in the event 930
Administrative Policy IV-C-2
Investment Policy
(continued)
17 of bank failures. The FDIC was created in 1933 to maintain public confidence and encourage stability in the financial system through the promotion of sound banking practices.

Federally Insured Time Deposit: A time deposit is an interest-bearing bank deposit account that has a specified date of maturity, such as a certificate of deposit (CD). These deposits are limited to funds insured in accordance with FDIC insurance deposit limits.

Leverage: Borrowing funds in order to invest in securities that have the potential to pay earnings at a rate higher than the cost of borrowing.

Liquidity: The speed and ease with which an asset can be converted to cash.

Local Agency Investment Fund (LAIF): A voluntary investment fund open to government entities and certain non-profit organizations in California that is managed by the State Treasurer’s Office.

Local Government Investment Pool: Investment pools that range from the State Treasurer’s Office Local Agency Investment Fund (LAIF) to county pools, to Joint Powers Authorities (JPAs).

These funds are not subject to the same SEC rules applicable to money market mutual funds.

Make Whole Call: A type of call provision on a bond that allows the issuer to pay off the remaining debt early. Unlike a call option, with a make whole call provision, the issuer makes a lump sum payment that equals the net present value (NPV) of future coupon payments that will not be paid because of the call. With this type of call, an investor is compensated, or "made whole." Margin: The difference between the market value of a security and the loan a broker makes using that security as collateral.

Market Risk: The risk that the value of securities will fluctuate with changes in overall market conditions or interest rates.

Market Value: The price at which a security can be traded.

Maturity: The final date upon which the principal of a security becomes due and payable.

Medium Term Notes: Unsecured, investment-grade senior debt securities of major corporations which are sold in relatively small amounts on either a continuous or an intermittent basis. MTNs are highly flexible debt instruments that can be structured to respond to market opportunities or to investor preferences.

Modified Duration: The percent change in price for a 100-basis point change in yields. Modified duration is the best single measure of a portfolio’s or security’s exposure to market risk.

Money Market: The market in which short-term debt instruments (T-bills, discount notes, commercial paper, and banker’s acceptances) are issued and traded.

Money Market Mutual Fund: A mutual fund that invests exclusively in short-term securities.

Examples of investments in money market funds are certificates of deposit and U.S. Treasury securities. Money market funds attempt to keep their net asset values at $1 per share.

Mortgage Pass-Through Securities: A securitized participation in the interest and principal cash flows from a specified pool of mortgages. Principal and interest payments made on the mortgages are passed through to the holder of the security.

Municipal Securities: Securities issued by state and local agencies to finance capital and operating expenses.

Mutual Fund: An entity which pools the funds of investors and invests those funds in a set of securities which is specifically defined in the fund’s prospectus. Mutual funds can be invested in various types of domestic and/or international stocks, bonds, and money market instruments, as set forth in the individual fund’s prospectus. For most large, institutional investors, the costs 931
Administrative Policy IV-C-2
Investment Policy
(continued)
18 associated with investing in mutual funds are higher than the investor can obtain through an individually managed portfolio.

Nationally Recognized Statistical Rating Organization (NRSRO): A credit rating agency that the Securities and Exchange Commission in the United States uses for regulatory purposes. Credit rating agencies provide assessments of an investment's risk. The issuers of investments, especially debt securities, pay credit rating agencies to provide them with ratings. The three most prominent NRSROs are Fitch, S&P, and Moody's.

Negotiable Certificate of Deposit (CD): A short-term debt instrument that pays interest and is issued by a bank, savings or federal association, state or federal credit union, or state-licensed branch of a foreign bank. Negotiable CDs are traded in a secondary market and are payable upon order to the bearer or initial depositor (investor).

Primary Dealer: A financial institution (1) that is a trading counterparty with the Federal Reserve in its execution of market operations to carry out U.S. monetary policy, and (2) that participates for statistical reporting purposes in compiling data on activity in the U.S. Government securities market.

Prudent Person (Prudent Investor) Rule: A standard of responsibility which applies to fiduciaries.

In California, the rule is stated as “Investments shall be managed with the care, skill, prudence and diligence, under the circumstances then prevailing, that a prudent person, acting in a like capacity and familiar with such matters, would use in the conduct of an enterprise of like character and with like aims to accomplish similar purposes.”
Repurchase Agreement: Short-term purchases of securities with a simultaneous agreement to sell the securities back at a higher price. From the seller’s point of view, the same transaction is a reverse repurchase agreement.

Safekeeping: A service to bank customers whereby securities are held by the bank in the customer’s name.

Securities and Exchange Commission (SEC): The U.S. Securities and Exchange Commission (SEC) is an independent federal government agency responsible for protecting investors, maintaining fair and orderly functioning of securities markets and facilitating capital formation. It was created by Congress in 1934 as the first federal regulator of securities markets. The SEC promotes full public disclosure, protects investors against fraudulent and manipulative practices in the market, and monitors corporate takeover actions in the United States.

Securities and Exchange Commission (SEC) Rule 15c3-1: An SEC rule setting capital requirements for brokers and dealers. Under Rule 15c3-1, a broker or dealer must have sufficient liquidity in order to cover the most pressing obligations. This is defined as having a certain amount of liquidity as a percentage of the broker/dealer's total obligations. If the percentage falls below a certain point, the broker or dealer may not be allowed to take on new clients and may have restrictions placed on dealings with current client.

Structured Note: A complex, fixed income instrument, which pays interest, based on a formula tied to other interest rates, commodities or indices. Examples include inverse floating rate notes which have coupons that increase when other interest rates are falling, and which fall when other interest rates are rising, and "dual index floaters," which pay interest based on the relationship between two other interest rates - for example, the yield on the ten-year Treasury note minus the Libor rate. Issuers of such notes lock in a reduced cost of borrowing by purchasing interest rate swap agreements.
932
Administrative Policy IV-C-2
Investment Policy
(continued)
19 Supranational: A Supranational is a multi-national organization whereby member states transcend national boundaries or interests to share in the decision making to promote economic development in the member countries.

Total Rate of Return: A measure of a portfolio’s performance over time. It is the internal rate of return, which equates the beginning value of the portfolio with the ending value; it includes interest earnings, realized and unrealized gains, and losses in the portfolio.

Treasury Bills: All securities issued with initial maturities of one year or less are issued as discounted instruments and are called Treasury bills. The Treasury currently issues three- and six-month T-bills at regular weekly auctions. It also issues “cash management” bills as needed to smooth out cash flows.

Treasury Bonds: All securities issued with initial maturities greater than ten years are called Treasury bonds. Like Treasury notes, they pay interest semi-annually.

Treasury Notes: All securities issued with initial maturities of two to ten years are called Treasury notes and pay interest semi-annually.

U.S. Treasury Obligations: Securities issued by the U.S. Treasury and backed by the full faith and credit of the United States. Treasuries are considered to have no credit risk and are the benchmark for interest rates on all other securities in the US and overseas. The Treasury issues both discounted securities and fixed coupon notes and bonds.

Yield to Maturity: The annualized internal rate of return on an investment which equates the expected cash flows from the investment to its cost.
933

CITY COUNCIL AGENDA REPORT
MEETING DATE: February 19, 2025 ITEM # 14
SUBJECT:

CONSIDERATION OF THE TREASURER’S QUARTERLY FINANCIAL REPORT ON THE CITY’S INVESTMENT PORTFOLIO FOR THE PERIOD ENDING SEPTEMBER 30, 2024 INITIATED OR REQUESTED BY: REPORT COORDINATED OR PREPARED BY:
[ ] Council [X] Staff
[ ] Other
Marc Rotteveel, Senior Finance Analyst
Finance Department
ATTACHMENT [X] Yes [ ] No [X] Information [ ] Direction [ ] Action

OBJECTIVE
The purpose of this report is to provide the City Council with the treasurer’s quarterly report on the City’s investment portfolio for the quarter ending September 30, 2024 as outlined by the Government Code 53646(b) (1).

RECOMMENDED ACTION
Staff respectfully recommends that the City Council receive and file the Treasurer’s Quarterly Financial Report on the City’s investment portfolio for the period ending September 30, 2024.

BACKGROUND
All local agencies are required to file regular financial reports with their legislative body on the status of their investment portfolio. One of the roles of the City’s Finance Department, is to manage investments of the City to ensure that cash flow needs are met while maximizing the investment portfolio.

The funds invested in the City’s treasury are made up of pooled cash from all Funds in the City’s General Ledger, including funds held in Trust for other agencies (i.e., the Yolo-Sacramento Port District and West Sacramento Flood Control Agency (WSAFCA) JPA). City staff structure investment maturities in such a way to optimize return while ensuring enough liquid funds are available to meet the operating and capital needs of the City and agencies for which the City acts as Treasurer. The pooled cash also includes impact fee revenues collected from developers and set aside until sufficient funds are available to implement the capital projects for which they were collected, and reserve funds for budget stabilization to ensure fiscal stability of the City and its various services to the community.

It should be noted that the majority of the funds held in the City’s treasury are legally restricted and may only be used for the purposes for which they are collected. Moreover, the funds may only be invested in investments permitted by California Government Code 53600 (Code) et. al, and the City’s investment policy.

Under section 53646(b)(1) of the Government Code, the City Treasurer may prepare and transmit a quarterly financial report to the City Council on the City’s investment portfolio. This report includes:

1. The type of investment, issuer, date of maturity, and par and dollar amount invested on all securities, investments and funds held by the City;

2. A current market value as of the date of the report;

3. A stated compliance of the portfolio to the statement of the City’s adopted investment policy, or manner in which the portfolio is not in compliance; and

4. A statement denoting the ability of the local agency to meet its pool’s expenditure requirements for the next six months, or provide an explanation as to why sufficient money shall or may not be available. Once a year, the statement of investment policy is included in the report.

This quarterly report is produced in a format designed to provide stakeholders a broad profile of the City’s Investment Portfolio. While staff is only transmitting portions of the report with key investment results, a full report with additional detail is available upon request.
934
Quarterly Treasurer’s Report Ending September 30, 2024
February 19, 2025

ANALYSIS
This quarterly financial report summarizes the status of pooled treasury investments as of September 30, 2024.

For the quarter-end, the City’s treasury investments comprised investments with a book value of $342,344,396, and a market value of $342,927,092. These figures do not include accrued interest of $768,140, which represents interest income the City has earned but not yet received. The Book Value represents the carrying value of the securities and is based on what the City paid for the security, net of amortization of premiums or accretion of discounts to date, whereas Market Value is a constantly changing amount based on how the securities markets value our portfolio. Market values fluctuate with changes in interest rates, and price has an inverse relationship to interest rates, meaning as interest rates rise, price drops, and vice versa.

The City continues to maintain sufficient liquidity to meet its expenditure requirements for the next six months and beyond. Local Agency Investment Fund (LAIF), which is the California State Treasurer’s investment pool, and California Asset Management Program (CAMP), a local government investment pool, comprised the City’s most liquid funds, and totaled 27.2% of the investment portfolio. These funds are available to the City within one day. Additionally, the City held $56.4 million in its operating bank account, which fluctuates depending on cash needs to meet City obligations. Those funds not held in the short-duration investment pools or cash are invested in a diversified portfolio of securities as allowed by Code and the City’s investment policy. The portfolio’s duration, sector allocation, and maturity structure are actively managed throughout the quarter. In total, the City’s consolidated investments maintain an average maturity of 420 days.

The City’s portfolio is designed to provide safety and liquidity and continues to meet its goals. City staff and the City’s investment adviser continue to focus on any market dynamics that pose risks to the portfolio.

City of West Sacramento Consolidated Sector Allocation

63.6%

4.2% 6.5% 5.6%

20.1%

58.3%

5.6% 8.8% 7.2%

20.1%
0%
10%
20%
30%
40%
50%
60%
70%
0-0.50 0.50-1 1-2 2-3 3-5
6/30/2024 3/31/2024
City of West Sacramento Consolidated Maturity Distribution September 30, 2024 June 30, 2024
ABS

2.7% Agency

5.3%
Cash

19.8%
Corporate

9.8%
LAIF

24.5%
Local Gov
Investment
Pool

1.6%
Money
Market Fund

0.3%
Supranational

1.8%
US Treasury

30.0%
Agency CMBS

4.2%
Agency

4.3%
Agency
CMBS

4.8% Asset
Backed
Security

2.8%
Cash

16.4%
Corporate

10.5%
LAIF

25.5%
Local Gov
Investment
Pool

1.7%
Money
Market
Fund

0.5%
Supranational

1.9%
US Treasury

31.6%

63.0%

3.4% 5.7% 7.5%

20.4%

63.6%

4.2% 6.5% 5.6%

20.1%
0%
10%
20%
30%
40%
50%
60%
70%
0-0.50 0.50-1 1-2 2-3 3-5
9/30/2024 6/30/2024
City of West Sacramento Consolidated Maturity Distribution 935
Quarterly Treasurer’s Report Ending September 30, 2024
February 19, 2025

The City’s portfolio of securities (excluding cash, LAIF, and CAMP) maintains its duration in line with its performance-measuring benchmark. Duration is a risk measure indicating the portfolio’s fair value sensitivity to changes in interest rates. As of September 30, 2024, portfolio duration was 2.62 years, which is 104% of its duration target, as measured by the portfolio’s risk and performance-measuring benchmark (which had a duration of 2.52 years). This slightly longer duration than the benchmark means the City’s portfolio is slightly more sensitive to interest rate changes than the benchmark portfolio would be. In the case of a reduction in interest rates, this strategy protects the portfolio by locking up funds in longer-term, higher yield investments.

The portfolio continues to maintain strong diversification in sectors, issuers, and maturities.

Economic Outlook
Recent economic data suggests positive but slower growth this year fueled by consumer spending. While the consumer has been resilient, declining savings rates, growing credit card debt, higher delinquencies, and a moderating labor market pose potential headwinds to future economic growth. Inflationary trends are subsiding, but core levels remain above the Fed’s target. The labor market is showing signs of cooling, reflecting an improved balance between supply and demand for workers. Given the cumulative effects of restrictive monetary policy and tighter financial conditions, we believe the economy will gradually soften and the Fed will continue to lower rates at a measured pace through this year with the ability to move more aggressively should the employment data warrant.

The Federal Open Market Committee (FOMC) delivered the first rate cut of the easing cycle with a 50 basis point (0.5%) cut at the September meeting. Although a reduction in the Fed Funds Rate was widely anticipated, the magnitude was somewhat of a surprise, as market participants were split between whether the FOMC would cut by 25 basis points or 50 basis points. Chair Jerome Powell reiterated previous statements acknowledging that monetary policy has shifted into a more balanced approach addressing price stability and full employment in tandem. The Fed released the quarterly Summary of Economic Projections (SEP) which now forecasts a substantially lower median Fed Funds Rate expectation among Fed Governors in 2025 due to lower inflation expectations and a higher projected unemployment rate. We believe the Fed will continue to lower rates at a measured pace through this year with the ability to move more aggressively should the employment data warrant.

The US Treasury yield curve shifted higher in October on stronger economic data, and the shape of the curve continued to gradually normalize. The 2-year Treasury yield surged 53 basis points to 4.17%, the 5-year Treasury jumped 60 basis points to 4.16%, and the 10-year Treasury yield rose 50 basis points to 4.29%. The spread between the 2-year and 10-year Treasury yield points on the curve narrowed to +11 basis points at October month-end versus +14 basis points at September month-end. The spread between the 2-year Treasury and 10- year Treasury yield one year ago was -16 basis points. The inversion between 3-month and 10-year Treasuries tightened to -26 basis points in October from -85 basis points in September. This means investors are moving money away from short-term bonds and into longer-term ones, which suggests that the market as a whole is expecting elevated inflation for the near future.

Discussion of Performance
The following is a summary of the City’s holdings by investment type, including each sector’s yield to maturity.

Yield to maturity measures the interest income the City is expected to earn for the coming 12 months, assuming nothing in the portfolio changes. As of September 30, 2024, the weighted average yield to maturity of the City’s consolidated investments was 3.46%:

Investment Type Par Value Market Value Book Value % of
Portfolio
Days to
Maturity
Yield to
Maturity
Agency $15,195,000.00 $14,879,593.40 $15,186,489.31 4.34% 518 1.28% Agency CMBS $16,681,734.21 $16,351,826.34 $16,085,997.51 4.77% 1,285 4.37% Asset Backed Security $9,496,967.84 $9,567,348.09 $9,478,830.63 2.79% 1,026 4.35% Cash $56,385,835.87 $56,385,835.87 $56,385,835.87 16.44% 1 0.25% Corporate $35,923,000.00 $35,884,341.90 $35,550,725.60 10.46% 1,234 4.04% LAIF $87,520,690.39 $87,520,690.39 $87,520,690.35 25.52% 1 4.57% Local Gov Investment Pool $5,714,844.21 $5,714,844.21 $5,710,844.21 1.67% 1 5.08% Money Market Fund $1,751,855.85 $1,751,855.85 $1,751,855.85 0.51% 1 4.83% Supranational $6,775,000.00 $6,588,674.52 $6,682,704.57 1.92% 814 2.18% US Treasury $108,280,000.00 $108,282,081.06 $107,990,422.10 31.58% 515 4.08% Grand Total $343,724,928.37 $342,927,091.63 $342,344,396.00 100% 420 3.46% 936
Quarterly Treasurer’s Report Ending September 30, 2024
February 19, 2025

The portfolio’s return comprises interest income as well as fair value appreciation, both of which are a function of movements in interest rates available in the capital markets. Interest income continues to be robust (the investment portfolio of securities is expected to earn was also 3.47% (purchase yield) for the next year (up from

3.30% last quarter; when LAIF, CAMP and cash are included the expected earnings are 3.46%). The City’s reinvestment yield (market yield) has been hovering in the 3.92% range as rates in the market have moved slightly lower. Staff continued to maintain a liquidity portfolio comprising of funds previously held in LAIF, which provided an average reinvestment rate of approximately for new money. This portfolio continues to be managed as a separate liquidity portfolio. The maturities in this portfolio go no longer than six months. The purchase yield on this component of the City’s investments averaged 4.62% at month-end, and was valued at approximately $61.7 million. By comparison, LAIF’s reinvestment rate was 3.48% as of September 30, and the effective yield for the quarter was 4.56%. Staff continues to work closely with the City’s investment adviser to diversify the portfolio in order to improve safety, liquidity, and return. In the current quarter, staff will continue to evaluate liquidity needs and, where possible, continue the investment in longer-duration securities.

Environmental Considerations
Not Applicable
Commission Recommendation
Not applicable
Strategic Plan Integration
The City’s mission includes a City Government that is Financially Sound, and the Council’s goal for achieving a Financially Sound City Government is furthered by investing the City treasury in a manner that ensures safety and liquidity first, and where possible a yield on “excess cash”. The preparation of regular quarterly reports on the City’s investments supports the mission and this goal.

Alternatives
Since this agenda report transmits a quarterly financial report pursuant to Government Code section 53646(b) (1), alternatives have not been presented.

Coordination and Review
Not applicable
Budget/Cost Impact
The investment portfolio, as a whole, earned returns at least consistent with the revenue estimates contained in the budget.

ATTACHMENT

1. Excerpts from Chandler Asset Management Investment Report (September 30, 2024) 937

STATEMENT OF COMPLIANCE
City of West Sacramento Cons Portfolio | Account #10677 | As of September 30, 2024 Rules Name Limit Actual Compliance
Status Notes

AGENCY MORTGAGE SECURITIES (CMOS)
Max % (MV) 20.0 4.8 Compliant
Max % Issuer (MV) 30.0 4.8 Compliant
Max Maturity (Years) 5.0 4.4 Compliant

ASSET-BACKED SECURITIES (ABS)
Max % (MV) 20.0 2.8 Compliant
Max % Issuer (MV) 5.0 0.4 Compliant
Max Maturity (Years) 5 4 Compliant
Min Rating (AA- by 1) 0.0 0.0 Compliant

BANKERS' ACCEPTANCES
Max % (MV) 40.0 0.0 Compliant
Max % Issuer (MV) 5.0 0.0 Compliant
Max Maturity (Days) 180 0.0 Compliant
Min Rating (A-1 by 1 or A- by 1) 0.0 0.0 Compliant

CERTIFICATE OF DEPOSIT PLACEMENT SERVICE
(CDARS)
Max % (MV) 30.0 0.0 Compliant
Max Maturity (Years) 5.0 0.0 Compliant

COLLATERALIZED BANK DEPOSITS
Max % (MV) 100.0 0.0 Compliant
Max % Issuer (MV) 0.0 0.0 Compliant
COLLATERALIZED TIME DEPOSITS (NONNEGOTIABLE CD/TD)
Max % (MV) 20.0 0.0 Compliant
Max % Issuer (MV) 5.0 0.0 Compliant
Max Maturity (Years) 5.0 0.0 Compliant

COMMERCIAL PAPER
Max % (MV) 40.0 0.0 Compliant
Max % Issuer (MV) 5.0 0.0 Compliant
Max Maturity (Days) 270 0.0 Compliant
16 ATTACHMENT 1
938

STATEMENT OF COMPLIANCE
City of West Sacramento Cons Portfolio | Account #10677 | As of September 30, 2024 Rules Name Limit Actual Compliance
Status Notes
Min Rating (A-1 by 1 or A- by 1) 0.0 0.0 Compliant

CORPORATE MEDIUM TERM NOTES
Max % (MV) 30.0 10.5 Compliant
Max % Issuer (MV) 5.0 0.6 Compliant
Max Maturity (Years) 5 4 Compliant
Min Rating (A- by 1) 0.0 0.0 Compliant

FDIC INSURED TIME DEPOSITS (NON-NEGOTIABLE
CD/TD)
Max % (MV) 20.0 0.0 Compliant
Max % Issuer (MV) 5.0 0.0 Compliant
Max Maturity (Years) 5 0.0 Compliant

FEDERAL AGENCIES
Max % (MV) 100.0 4.3 Compliant
Max % Issuer (MV) 30.0 2.6 Compliant
Max Callables (MV) 20.0 0.0 Compliant
Max Maturity (Years) 5 3 Compliant

LOCAL AGENCY INVESTMENT FUND (LAIF)
Max % (MV) 100.0 25.5 Compliant

MONEY MARKET MUTUAL FUNDS
Max % (MV) 20.0 0.5 Compliant
Max % Issuer (MV) 20.0 0.5 Compliant
Min Rating (AAA by 2) 0.0 0.0 Compliant
MORTGAGE-BACKED SECURITIES, CMOS (NONAGENCY)
Max % (MV) 20.0 0.0 Compliant
Max % Issuer (MV) 5.0 0.0 Compliant
Max Maturity (Years) 5.0 0.0 Compliant
Min Rating (AA- by 1) 0.0 0.0 Compliant

MUNICIPAL SECURITIES (CA, LOCAL AGENCY)
Max % (MV) 30.0 0.0 Compliant
17 ATTACHMENT 1
939

STATEMENT OF COMPLIANCE
City of West Sacramento Cons Portfolio | Account #10677 | As of September 30, 2024 Rules Name Limit Actual Compliance
Status Notes
Max % Issuer (MV) 5.0 0.0 Compliant
Max Maturity (Years) 5 0.0 Compliant
Min Rating (A- by 1) 0.0 0.0 Compliant

MUNICIPAL SECURITIES (CA, OTHER STATES)
Max % (MV) 30.0 0.0 Compliant
Max % Issuer (MV) 5.0 0.0 Compliant
Max Maturity (Years) 5 0.0 Compliant
Min Rating (A- by 1) 0.0 0.0 Compliant

MUTUAL FUNDS
Max % (MV) 20.0 0.0 Compliant
Max % Issuer (MV) 10.0 0.0 Compliant
Min Rating (AAA by 2) 0.0 0.0 Compliant

NEGOTIABLE CERTIFICATES OF DEPOSIT (NCD)
Max % (MV) 30.0 0.0 Compliant
Max % Issuer (MV) 5.0 0.0 Compliant
Max Maturity (Years) 5 0.0 Compliant
Min Rating (A-1 by 1 or A- by 1 if > FDIC Limit) 0.0 0.0 Compliant

SUPRANATIONAL OBLIGATIONS
Max % (MV) 30.0 1.9 Compliant
Max % Issuer (MV) 10.0 1.3 Compliant
Max Maturity (Years) 5 3 Compliant
Min Rating (AA- by 1) 0.0 0.0 Compliant
U.S. TREASURIES
Max % (MV) 100.0 31.6 Compliant
Max Maturity (Years) 5 4 Compliant
18 ATTACHMENT 1
940

PORTFOLIO CHARACTERISTICS
City of West Sacramento Operating Portfolio | Account #10675 | As of September 30, 2024 Benchmark* 9/30/2024
Portfolio
6/30/2024
Portfolio
Average Maturity (yrs) 2.69 2.99 2.96
Average Modified Duration 2.52 2.62 2.58
Average Purchase Yield 3.47% 3.30%
Average Market Yield 3.66% 3.92% 4.88%
Average Quality** AA+ AA AA
Total Market Value 132,532,454 128,112,929
*Benchmark: ICE BofA 1-5 Year Unsubordinated US Treasury & Agency Index **The credit quality is a weighted average calculation of the highest of S&P, Moody’s and Fitch. 19 ATTACHMENT 1
941

DURATION DISTRIBUTION
City of West Sacramento Operating Portfolio | Account #10675 | As of September 30, 2024 Date 0-.25 .25-.5 .5-1 1-2 2-3 3-4 4-5 5-7 7+
09/30/2024 0.2% 4.6% 9.6% 18.3% 19.0% 35.6% 12.7% 0.0% 0.0% 06/30/2024 0.2% 2.1% 12.2% 19.4% 20.7% 25.7% 16.2% 0.0% 0.0% 24 ATTACHMENT 1
942

PORTFOLIO CHARACTERISTICS
West Sacramento Enhanced Cash | Account #11169 | As of September 30, 2024 9/30/2024
Portfolio
6/30/2024
Portfolio
Average Maturity (yrs) 0.01 0.13
Average Modified Duration 0.01 0.13
Average Purchase Yield 4.62% 5.31%
Average Market Yield 4.76% 5.01%
Average Quality** AAA AAA
Total Market Value 61,685,091 60,878,991
*Benchmark: NO BENCHMARK REQUIRED
**The credit quality is a weighted average calculation of the highest of S&P, Moody’s and Fitch. 27 ATTACHMENT 1
943

PORTFOLIO CHARACTERISTICS
City of West Sacramento Reporting Portfolio | Account #10676 | As of September 30, 2024 9/30/2024
Portfolio
6/30/2024
Portfolio
Average Maturity (yrs) 0.00 0.00
Average Modified Duration 0.00 0.00
Average Purchase Yield 3.57% 4.51%
Average Market Yield 3.57% 4.51%
Average Quality** AAA AAA
Total Market Value 149,511,278 160,121,445
*Benchmark: NO BENCHMARK REQUIRED
**The credit quality is a weighted average calculation of the highest of S&P, Moody’s and Fitch. 30 ATTACHMENT 1
944

PORTFOLIO CHARACTERISTICS
City of West Sacramento Cons Portfolio | Account #10677 | As of September 30, 2024 9/30/2024
Portfolio
6/30/2024
Portfolio
Average Maturity (yrs) 1.15 1.11
Average Modified Duration 1.38 0.97
Average Purchase Yield 3.73% 4.12%
Average Market Yield 3.95% 4.79%
Average Quality** AA+ AA+
Total Market Value 343,728,822 349,113,365
*Benchmark: NO BENCHMARK REQUIRED
**The credit quality is a weighted average calculation of the highest of S&P, Moody’s and Fitch. 33 ATTACHMENT 1
945

HOLDINGS REPORT
City of West Sacramento Operating Portfolio | Account #10675 | As of September 30, 2024 Cusip Security Description Par Value/
Units
Purchase
Date
Purchase
Yield
Cost Value
Book Value
Mkt
Price
Mkt
YTM
Market Value
Accrued Int.
% of Port.

Gain/Loss
Moody's/
S&P/
Fitch
Maturity
Duration
ABS
43815GAC3 HAROT 2021-4 A3 0.88
01/21/2026 95,048.86 11/16/20210.89%
95,028.82
95,043.27

98.70 5.24%
93,811.32

23.23 0.07%
(1,231.95)
Aaa/NA
AAA

1.31 0.30
47789QAC4 JDOT 2021-B A3 0.52 03/16/2026 93,327.42 07/13/2021

0.52%
93,319.10
93,325.17

98.83 4.69%
92,234.10

21.57 0.07%
(1,091.07)
Aaa/NA
AAA

1.46 0.28
89238JAC9 TAOT 2021-D A3 0.71 04/15/2026 93,529.75 11/09/2021

0.95%
93,527.76
93,529.32

98.81 4.64%
92,418.44

29.51 0.07%
(1,110.88)
NA/AAA
AAA

1.54 0.30
44935FAD6 HART 2021-C A3 0.74 05/15/2026 58,791.32 11/09/2021

0.75%
58,778.19
58,787.32

99.08 5.23%
58,249.90

19.34 0.04%
(537.42)
NA/AAA
AAA

1.62 0.20
43815BAC4 HAROT 2022-1 A3 1.88
05/15/2026 257,299.08 02/15/20221.89%
257,260.39
257,285.57

98.81 4.89%
254,231.74
214.99

0.19%
(3,053.82)
Aaa/AAA
NA

1.62 0.39
05602RAD3 BMWOT 2022-A A3 3.21
08/25/2026 168,284.06 05/10/20223.63%
168,275.31
168,281.07

99.33 4.75%
167,153.58

90.03 0.13%
(1,127.48)
Aaa/AAA
NA

1.90 0.44
47787JAC2 JDOT 2022 A3 0.36 09/15/2026 183,310.31 03/10/2022

2.34%
183,269.76
183,293.93

98.85 4.69%
181,202.01
189.01

0.14%
(2,091.92)
Aaa/NA
AAA

1.96 0.49
362554AC1 GMCAR 2021-4 A3 0.68
09/16/2026 86,403.10 10/13/20210.68%
86,400.90
86,402.56

98.52 4.96%
85,126.58

24.48 0.06%
(1,275.97)
Aaa/AAA
NA

1.96 0.34
448977AD0 HART 2022-A A3 2.22 10/15/2026 360,842.44 03/09/2022

2.23%
360,828.55
360,836.87

98.90 4.95%
356,871.91
356.03

0.27%
(3,964.96)
NA/AAA
AAA

2.04 0.40
380146AC4 GMCAR 2022-1 A3 1.26
11/16/2026 89,878.59 01/11/20221.27%
89,870.78
89,875.58

98.64 4.79%
88,658.16

47.19 0.07%
(1,217.42)
NA/AAA
AAA

2.13 0.38
47800AAC4 JDOT 2022-B A3 3.74 02/16/2027 332,913.47 07/12/2022

3.77%
332,881.68
332,897.58

99.44 4.62%
331,056.88
553.38

0.25%
(1,840.70)
Aaa/NA
AAA

2.38 0.66
44934FAD7 HALST 24B A3 5.41 05/17/2027 495,000.00 05/14/2024

5.41%
494,986.24
494,987.91
101.70

4.37%
503,418.56
1,190.20

0.38%
8,430.66
NA/AAA
AAA

2.63 1.54
02582JJT8 AMXCA 2022-2 A 3.39 05/17/2027 940,000.00 05/17/2022

3.42%
939,792.07
939,938.68

99.28 4.61%
933,232.94
1,416.27

0.71%
(6,705.74)
NA/AAA
AAA

0.62 0.60
47800BAC2 JDOT 2022-C A3 5.09 06/15/2027 642,339.44 10/12/2022

3.29%
642,289.60
642,312.78
100.44

4.58%
645,197.53
1,453.11

0.49%
2,884.75
Aaa/NA
AAA

2.71 0.79
36269WAD1 GMALT 2024-2 A3 5.39
07/20/2027 460,000.00 05/07/20245.85%
459,973.27
459,976.45
101.83

4.31%
468,417.86
757.59

0.36%
8,441.41
NA/AAA
AAA

2.80 1.59
02582JJV3 AMXCA 2022-3 A 3.75 08/15/2025 1,000,000.00 11/03/2022

5.41%
960,000.00
982,674.67

99.47 4.42%
994,654.60
1,666.67

0.75%
11,979.93
Aaa/NA
AAA

0.87 0.84
41 ATTACHMENT 1
946

HOLDINGS REPORT
City of West Sacramento Operating Portfolio | Account #10675 | As of September 30, 2024 Cusip Security Description Par Value/
Units
Purchase
Date
Purchase
Yield
Cost Value
Book Value
Mkt
Price
Mkt
YTM
Market Value
Accrued Int.
% of Port.

Gain/Loss
Moody's/
S&P/
Fitch
Maturity
Duration
58770JAD6 MBALT 2024-A A3 5.32
01/18/2028 335,000.00 05/17/20245.73%
334,960.81
334,964.66
102.19

4.33%
342,345.34
792.09

0.26%
7,380.69
Aaa/NA
AAA

3.30 2.06
161571HT4 CHAIT 2023-1 A 5.16 09/15/2028 1,350,000.00 09/07/2023

5.17%
1,349,625.78
1,349,704.02
102.17

4.04%
1,379,300.94
3,096.00

1.05%
29,596.92
NR/AAA
AAA

3.96 1.82
437930AC4 HONDO-242-A3 5.27 11/20/2028 435,000.00 05/14/2024

5.27%
434,947.15
434,951.43
102.19

4.16%
444,523.46
827.83

0.34%
9,572.03
NA/AAA
AAA

4.14 1.86
096919AD7 BMWOT 2024-A A3 5.18
02/26/2029 570,000.00 06/04/20245.24%
569,913.42
569,919.05
102.19

4.05%
582,495.94
492.10

0.44%
12,576.88
Aaa/AAA
NA

4.41 1.84
43813YAC6 HAROT 2024-3 A3 4.57
03/21/2029 805,000.00 08/09/20244.62%
804,873.53
804,876.63
100.97

4.15%
812,775.66
1,021.90

0.62%
7,899.03
Aaa/NA
AAA

4.47 2.07
05522RDJ4 BACCT 2024-1 A 4.93 03/15/2029 645,000.00 06/06/2024

4.93%
644,963.82
644,966.11
102.32

4.03%
659,970.64
1,413.27

0.50%
15,004.53
Aaa/AAA
NA

4.45 2.41
Total ABS 9,496,967.85 4.35%
9,455,766.93
9,478,830.61
100.76

4.37%
9,567,348.09
15,695.79

7.26%
88,517.49
Aaa/AAA
AAA

2.81 1.32
AGENCY
3135G0X24 FEDERAL NATIONAL MORTGAGE
ASSOCIATION 1.625 01/07/2025 750,000.00 03/04/20200.89% 776,235.00
751,454.20

99.19 4.67%
743,950.39
2,843.75

0.56%
(7,503.81)
Aaa/AA+
AA+

0.27 0.26
3135G03U5 FEDERAL NATIONAL MORTGAGE
ASSOCIATION 0.625 04/22/2025 1,795,000.00 04/22/20200.67% 1,791,302.30
1,794,588.47

97.98 4.33%
1,758,711.44
4,954.95

1.33%
(35,877.03)
Aaa/AA+
AA+

0.56 0.54
3135G04Z3 FEDERAL NATIONAL MORTGAGE
ASSOCIATION 0.5 06/17/2025 2,100,000.00 --0.51%
2,098,880.25
2,099,862.98

97.43 4.20%
2,046,094.64
3,033.33

1.55%
(53,768.34)
Aaa/AA+
AA+

0.71 0.70
3137EAEU9 FEDERAL HOME LOAN MORTGAGE
CORP 0.375 07/21/2025 1,200,000.00 07/21/20200.48%
1,194,024.00
1,199,040.04

97.12 4.04%
1,165,498.01
875.00

0.88%
(33,542.03)
Aaa/AA+
AA+

0.80 0.79
3135G05X7 FEDERAL NATIONAL MORTGAGE
ASSOCIATION 0.375 08/25/2025 2,150,000.00 --0.51%
2,136,456.52
2,147,396.84

96.87 3.95%
2,082,607.15
806.25

1.58%
(64,789.69)
Aaa/AA+
AA+

0.90 0.88
3137EAEX3 FEDERAL HOME LOAN MORTGAGE
CORP 0.375 09/23/2025 1,800,000.00 --0.44%
1,794,640.80
1,798,937.87

96.53 4.03%
1,737,600.89
150.00

1.32%
(61,336.97)
Aaa/AA+
AA+

0.98 0.96
3135G06G3 FEDERAL NATIONAL MORTGAGE
ASSOCIATION 0.5 11/07/2025 2,200,000.00 --0.56%
2,193,135.20
2,198,483.51

96.23 4.04%
2,116,988.06
4,400.00

1.61%
(81,495.45)
Aaa/AA+
AA+

1.10 1.07
880591EZ1 TENNESSEE VALLEY AUTHORITY

3.875 03/15/2028 1,200,000.00 05/01/20233.81%
1,203,612.00
1,202,560.28
100.99

3.57%
1,211,930.95
2,066.67

0.92%
9,370.68
Aaa/AA+
AA+

3.46 3.21
42 ATTACHMENT 1
947

HOLDINGS REPORT
City of West Sacramento Operating Portfolio | Account #10675 | As of September 30, 2024 Cusip Security Description Par Value/
Units
Purchase
Date
Purchase
Yield
Cost Value
Book Value
Mkt
Price
Mkt
YTM
Market Value
Accrued Int.
% of Port.

Gain/Loss
Moody's/
S&P/
Fitch
Maturity
Duration
3133EPME2 FEDERAL FARM CREDIT BANKS
FUNDING CORP 3.875 06/08/2028 2,000,000.00 06/07/20233.96% 1,992,080.00
1,994,165.12
100.81

3.64%
2,016,211.86
24,326.39

1.53%
22,046.74
Aaa/AA+
AA+

3.69 3.37
15,180,366.07 97.95 14,879,593.39 11.29% Aaa/AA+ 1.42
Total Agency 15,195,000.00 1.28% 15,186,489.31 4.02% 43,456.34 (306,895.92) AA+ 1.34

AGENCY CMBS
3137BSP72 FHMS K-058 A2 2.653 08/25/2026 500,000.00 11/12/2021

1.36%
528,808.59
511,218.24

97.49 3.99%
487,461.35
1,105.42

0.37%
(23,756.89)
Aaa/AA+
AAA

1.90 1.78
3137BSRE5 FHMS K-059 A2 3.12 09/25/2026 1,000,000.00 02/18/2022

2.08%
1,042,812.50
1,018,162.88

98.29 3.98%
982,949.20
2,600.00

0.75%
(35,213.68)
Aaa/AAA
AAA

1.99 1.80
3137BTAC5 FHMS K-060 A2 3.3 10/25/2026 1,000,000.00 10/31/2022

4.74%
946,875.00
972,842.26

98.58 3.94%
985,813.90
2,750.00

0.75%
12,971.64
Aaa/AA+
AAA

2.07 1.95
3137FBBX3 FHMS K-068 A2 3.244 08/25/2027 2,000,000.00 --

4.54%
1,887,460.94
1,933,332.34

98.16 3.88%
1,963,162.00
5,406.67

1.49%
29,829.66
Aaa/AA+
AA+

2.90 2.66
3137FBU79 FHMS K-069 A2 3.187 09/25/2027 1,494,734.21 04/13/2023

4.08%
1,441,017.19
1,458,911.65

97.89 3.92%
1,463,177.53
3,969.76

1.11%
4,265.87
Aaa/AAA
AA+

2.99 2.70
3137F4D41 FHMS K-074 A2 3.6 01/25/2028 1,000,000.00 03/14/2023

4.36%
966,757.81
977,465.17

99.01 3.88%
990,079.40
3,000.00

0.75%
12,614.23
Aaa/AA+
AAA

3.32 3.01
3137FJEH8 FHMS K-081 A2 3.9 08/25/2028 3,530,000.00 --

4.94%
3,369,780.09
3,403,607.17

99.74 3.93%
3,520,963.55
11,472.50

2.67%
117,356.38
Aaa/AA+
AAA

3.90 3.53
3137FJKE8 FHMS K-082 A2 3.92 09/25/2028 1,000,000.00 11/28/2023

4.74%
964,531.25
970,762.80

99.81 3.93%
998,144.70
3,266.67

0.76%
27,381.90
Aaa/AA+
AAA

3.99 3.57
3137FKZZ2 FHMS K-088 A2 3.69 01/25/2029 1,400,000.00 07/29/2024

4.47%
1,355,265.63
1,357,009.61

98.93 3.93%
1,385,076.28
4,305.00

1.05%
28,066.67
Aaa/AA+
AA+

4.32 3.86
3137H5YC5 FHMS K-748 A2 2.26 01/25/2029 2,237,000.00 03/25/2024

4.61%
2,014,523.35
2,038,433.20

93.32 3.97%
2,087,474.45
4,213.02

1.58%
49,041.25
Aaa/AA+
AAA

4.32 3.95
3137FLMV3 FHMS K-090 A2 3.422 02/25/2029 1,520,000.00 03/18/2024

4.70%
1,434,975.00
1,444,252.19

97.86 3.93%
1,487,523.98
4,334.53

1.13%
43,271.79
Aaa/AAA
AA+

4.41 3.96
15,952,807.35 98.06 16,351,826.34 12.41% Aaa/AA+ 3.52
Total Agency CMBS 16,681,734.21 4.37% 16,085,997.52 3.93% 46,423.56 265,828.82 AAA 3.19 CASH
43 ATTACHMENT 1
948

HOLDINGS REPORT
City of West Sacramento Operating Portfolio | Account #10675 | As of September 30, 2024 Cusip Security Description Par Value/
Units
Purchase
Date
Purchase
Yield
Cost Value
Book Value
Mkt
Price
Mkt
YTM
Market Value
Accrued Int.
% of Port.

Gain/Loss
Moody's/
S&P/
Fitch
Maturity
Duration
CCYUSD Receivable 3,483.08 --

0.00%
3,483.08
3,483.08

1.00 0.00%
3,483.08

0.00 0.00%

0.00 Aaa/AAA
AAA

0.00 0.00
Total Cash 3,483.08 0.00%
3,483.08
3,483.08

1.00 0.00%
3,483.08

0.00 0.00%

0.00 Aaa/AAA
AAA

0.00 0.00

CORPORATE
40139LBC6 GUARDIAN LIFE GLOBAL FUNDING

0.875 12/10/2025 1,100,000.00 --1.12%
1,088,890.00
1,096,835.63

96.03 4.33%
1,056,318.13
2,967.71

0.80%
(40,517.50)
Aa1/AA+
NA

1.19 1.16
66815L2A6 NORTHWESTERNMUTUAL
GLOBAL FUNDING 0.8 01/14/2026 650,000.00 12/06/20211.46% 632,755.50
644,589.51

95.86 4.14%
623,092.77
1,112.22

0.47%
(21,496.74)
Aaa/AA+
AAA

1.29 1.25
023135BX3 AMAZON.COM INC 1.0
05/12/2026 1,655,000.00 05/10/20211.09%
1,647,850.40
1,652,697.72

95.61 3.83%
1,582,370.52
6,390.14

1.20%
(70,327.20)
A1/AA
AA1.611.57
91324PEC2 UNITEDHEALTH GROUP INC 1.15
05/15/2026 275,000.00 --1.08%
275,889.15
275,285.23

95.60 3.97%
262,911.81
1,194.72

0.20%
(12,373.43)
A2/A+
A

1.62 1.57
89236TJK2 TOYOTA MOTOR CREDIT CORP

1.125 06/18/2026 1,130,000.00 06/15/20211.13%
1,129,502.80
1,129,829.82

95.34 3.96%
1,077,336.70
3,637.19

0.82%
(52,493.12)
A1/A+
A+

1.71 1.66
57629WDE7 MASSMUTUAL GLOBAL FUNDING
II 1.2 07/16/2026 772,000.00 08/10/20211.21%
771,785.72
771,922.22

95.03 4.11%
733,625.77
1,930.00

0.56%
(38,296.45)
Aa3/AA+
AA+

1.79 1.74
58989V2D5 MET TOWER GLOBAL FUNDING

1.25 09/14/2026 585,000.00 09/07/20211.27%
584,461.80
584,789.85

94.65 4.13%
553,712.88
345.31

0.42%
(31,076.97)
Aa3/AAAA1.96

1.89 931142ER0 WALMART INC 1.05 09/17/2026 265,000.00 09/08/2021

1.09%
264,499.15
264,803.61

94.97 3.74%
251,659.27
108.21

0.19%
(13,144.33)
Aa2/AA
AA

1.96 1.91
26442CAS3 DUKE ENERGY CAROLINAS LLC

2.95 12/01/2026 1,355,000.00 10/28/20224.88%
1,258,727.25
1,303,925.72

97.88 3.98%
1,326,331.70
13,324.17

1.01%
22,405.97
Aa3/A
WR

2.17 2.05
59217GER6 METROPOLITAN LIFE GLOBAL
FUNDING I 1.875 01/11/2027 845,000.00 01/03/20221.90%
844,036.70
844,561.08

95.34 4.04%
805,635.62
3,520.83

0.61%
(38,925.46)
Aa3/AAAA2.28

2.19 808513BY0 CHARLES SCHWAB CORP 2.45
03/03/2027 725,000.00 03/01/20222.46%
724,796.70
724,900.13

96.04 4.19%
696,276.51
1,381.53

0.53%
(28,623.62)
A2/AA2.42

2.31 084664CZ2 BERKSHIRE HATHAWAY FINANCE
CORP 2.3 03/15/2027 1,225,000.00 03/07/20222.30%
1,224,767.25
1,224,885.92

96.79 3.68%
1,185,685.55
1,252.22

0.90%
(39,200.37)
Aa2/AA
A+

2.45 2.35
06051GHT9 BANK OF AMERICA CORP 3.559
04/23/2027 750,000.00 --4.29%
726,688.38
737,343.38

98.75 4.98%
740,654.95
11,715.04

0.56%
3,311.57
A1/AAA2.56

1.48 44 ATTACHMENT 1
949

HOLDINGS REPORT
City of West Sacramento Operating Portfolio | Account #10675 | As of September 30, 2024 Cusip Security Description Par Value/
Units
Purchase
Date
Purchase
Yield
Cost Value
Book Value
Mkt
Price
Mkt
YTM
Market Value
Accrued Int.
% of Port.

Gain/Loss
Moody's/
S&P/
Fitch
Maturity
Duration
665859AW4 NORTHERN TRUST CORP 4.0
05/10/2027 455,000.00 05/05/20224.03%
454,262.90
454,616.11
100.16

3.93%
455,740.30
7,128.33

0.35%
1,124.19
A2/A+
A+

2.61 2.34
91324PEG3 UNITEDHEALTH GROUP INC 3.7
05/15/2027 465,000.00 05/17/20223.69%
465,220.50
465,113.95

99.53 3.89%
462,814.48
6,499.67

0.35%
(2,299.47)
A2/A+
A

2.62 2.44
61747YEC5 MORGAN STANLEY 1.512
07/20/2027 750,000.00 10/28/20225.92%
637,425.00
683,187.20

95.10 4.84%
713,225.19
2,236.50

0.54%
30,037.99
A1/AA+2.80

1.74 14913R3A3 CATERPILLAR FINANCIAL SERVICES
CORP 3.6 08/12/2027 1,000,000.00 11/02/20225.05%
938,730.00
963,245.04

99.38 3.83%
993,761.75
4,900.00

0.75%
30,516.71
A2/A
A+

2.87 2.68
756109BG8 REALTY INCOME CORP 3.95
08/15/2027 1,425,000.00 --5.41%
1,337,997.25
1,372,650.62

99.39 4.18%
1,416,279.95
7,192.29

1.07%
43,629.33
A3/ANA2.87

2.67 57636QAW4 MASTERCARD INC 4.875
03/09/2028 775,000.00 03/06/20234.90%
774,248.25
774,483.61
103.30

3.84%
800,593.65
2,308.85

0.61%
26,110.04
Aa3/A+
NA

3.44 3.07
63743HFG2

NATIONAL RURAL UTILITIES
COOPERATIVE FINANCE CORP 4.8
03/15/2028
900,000.00
04/10/2023

4.39%
915,975.00
911,119.32
102.24

4.10%
920,193.71
1,920.00

0.70%
9,074.38
A2/AA3.46

3.09 74340XCG4 PROLOGIS LP 4.875 06/15/2028 1,600,000.00 --

5.02%
1,589,759.50
1,592,297.56
102.61

4.11%
1,641,804.06
22,966.67

1.25%
49,506.51
A3/A
NA

3.71 3.26
24422EXB0 JOHN DEERE CAPITAL CORP 4.95
07/14/2028 1,000,000.00 09/12/20235.06%
995,310.00
996,327.72
103.32

4.00%
1,033,185.39
10,587.50

0.78%
36,857.67
A1/A
A+

3.79 3.40
89115A2U5 TORONTO-DOMINION BANK 5.523
07/17/2028 1,400,000.00 --5.45%
1,404,594.00
1,403,520.32
104.61

4.19%
1,464,561.77
15,893.97

1.11%
61,041.45
A1/A
AA3.803.38
78016HZS2 ROYAL BANK OF CANADA 5.2
08/01/2028 1,000,000.00 08/07/20235.31%
995,280.00
996,367.23
103.90

4.09%
1,039,030.56
8,666.67

0.79%
42,663.33
A1/A
AA3.843.43
74456QBX3 PUBLIC SERVICE ELECTRICAND
GAS CO 3.65 09/01/2028 1,000,000.00 12/07/20234.77%
953,250.00
961,240.30

98.46 4.08%
984,556.02
3,041.67

0.75%
23,315.72
A1/A
WR

3.92 3.60
91324PDP4 UNITEDHEALTH GROUP INC 3.875
12/15/2028 1,000,000.00 12/12/20234.77%
960,560.00
966,841.90

99.42 4.02%
994,248.09
11,409.72

0.75%
27,406.19
A2/A+
A

4.21 3.80
66815L2Q1

NORTHWESTERNMUTUAL
GLOBAL FUNDING 4.71
01/10/2029
800,000.00
--

4.67%
801,507.56
801,288.89
102.02

4.19%
816,194.44
8,478.00

0.62%
14,905.55
Aaa/AA+
AAA

4.28 3.81
57629W5B2 MASSMUTUAL GLOBAL FUNDING
II 4.85 01/17/2029 800,000.00 01/09/20244.85%
799,896.00
799,910.69
102.85

4.12%
822,815.46
7,975.56

0.62%
22,904.78
Aa3/AA+
AA+

4.30 3.82
46647PAM8 JPMORGAN CHASE & CO 3.509
01/23/2029 1,300,000.00 01/18/20245.07%
1,227,577.00
1,240,068.85

97.66 4.61%
1,269,601.39
8,616.54

0.96%
29,532.53
A1/AAA4.31

3.07 45 ATTACHMENT 1
950

HOLDINGS REPORT
City of West Sacramento Operating Portfolio | Account #10675 | As of September 30, 2024 Cusip Security Description Par Value/
Units
Purchase
Date
Purchase
Yield
Cost Value
Book Value
Mkt
Price
Mkt
YTM
Market Value
Accrued Int.
% of Port.

Gain/Loss
Moody's/
S&P/
Fitch
Maturity
Duration
69371RS80 PACCAR FINANCIAL CORP 4.6
01/31/2029 1,250,000.00 04/09/20244.85%
1,236,725.00
1,238,032.84
102.54

3.95%
1,281,769.95
9,743.06

0.97%
43,737.11
A1/A+
NA

4.34 3.88
17275RBR2 CISCO SYSTEMS INC 4.85
02/26/2029 685,000.00 02/21/20244.86%
684,760.25
684,788.86
103.42

3.99%
708,415.51
3,229.97

0.54%
23,626.65
A1/AANA4.41

3.86 64952WFG3 NEW YORK LIFE GLOBAL FUNDING

5.0 06/06/2029 650,000.00 06/03/20245.04%
648,752.00
648,831.97
103.75

4.11%
674,353.95
10,381.94

0.51%
25,521.98
Aaa/AA+
AAA

4.68 4.09
24422EXT1 JOHN DEERE CAPITAL CORP 4.85
06/11/2029 750,000.00 06/07/20245.04%
743,835.00
744,213.14
103.28

4.07%
774,637.08
11,114.58

0.59%
30,423.94
A1/A
A+

4.70 4.12
341081GT8 FLORIDA POWER & LIGHT CO 5.15
06/15/2029 1,000,000.00 06/13/20244.82%
1,013,864.81
1,013,031.19
104.31

4.13%
1,043,095.47
16,880.56

0.79%
30,064.28
Aa2/A+
AA4.713.97
437076DC3 HOME DEPOT INC 4.75
06/25/2029 1,000,000.00 06/20/20244.84%
995,870.00
996,091.65
103.07

4.03%
1,030,712.42
12,666.67

0.78%
34,620.77
A2/A
A

4.73 4.10
713448FX1 PEPSICO INC 4.5 07/17/2029 1,165,000.00 07/15/2024

4.53%
1,163,194.25
1,163,269.41
103.07

3.79%
1,200,716.71
10,776.25

0.91%
37,447.30
A1/A+
NA

4.79 4.19
171239AL0 CHUBB INA HOLDINGS LLC 4.65
08/15/2029 721,000.00 08/12/20244.52%
725,073.59
724,966.93
102.32

4.12%
737,749.54
5,680.88

0.56%
12,782.62
A3/A
A

4.87 4.24
30303M8S4 META PLATFORMS INC 4.3
08/15/2029 760,000.00 08/12/20244.33%
758,820.12
758,850.49
101.54

3.95%
771,715.93
4,720.44

0.59%
12,865.44
Aa3/AANA4.87

4.27 40139LBJ1 GUARDIAN LIFE GLOBAL FUNDING

4.179 09/26/2029 940,000.00 09/23/20244.18%
940,000.00
940,000.00

99.68 4.25%
936,956.94
545.59

0.71%
(3,043.06)
Aa1/AA+
NA

4.99 4.45
Total Corporate 35,923,000.00 4.04%
35,337,138.78
35,550,725.60
100.00

4.09%
35,884,341.87
264,441.16

27.23%
333,616.26
A1/A+
A+

3.38 2.99

MONEY MARKET
FUND
X9USDDGCM DREYFUS GVT CM INST 191,315.32 --

4.82%
191,315.32
191,315.32

1.00 4.82%
191,315.32

0.00 0.15%

0.00 Aaa/AAAm
NA

0.00 0.00
Total Money Market
Fund 191,315.32 4.82%
191,315.32
191,315.32

1.00 4.82%
191,315.32

0.00 0.15%

0.00 Aaa/AAAm
NA

0.00 0.00

SUPRANATIONAL
46 ATTACHMENT 1
951

HOLDINGS REPORT
City of West Sacramento Operating Portfolio | Account #10675 | As of September 30, 2024 Cusip Security Description Par Value/
Units
Purchase
Date
Purchase
Yield
Cost Value
Book Value
Mkt
Price
Mkt
YTM
Market Value
Accrued Int.
% of Port.

Gain/Loss
Moody's/
S&P/
Fitch
Maturity
Duration
459058JL8

INTERNATIONAL BANK FOR

RECONSTRUCTION AND
DEVELOPM 0.5 10/28/2025
2,150,000.00
--

0.60%
2,140,429.05
2,147,816.48

96.30 4.06%
2,070,358.04
4,568.75

1.57%
(77,458.43)
Aaa/AAA
NA

1.08 1.05
4581X0DV7 INTER-AMERICAN DEVELOPMENT
BANK 0.875 04/20/2026 2,175,000.00 04/13/20210.97%
2,165,038.50
2,171,912.26

95.52 3.87%
2,077,661.29
8,511.20

1.58%
(94,250.97)
Aaa/AAA
NA

1.55 1.51
459058KT9

INTERNATIONAL BANK FOR

RECONSTRUCTION AND
DEVELOPM 3.5 07/12/2028
2,450,000.00
08/25/2023

4.56%
2,337,814.50
2,362,975.83

99.62 3.61%
2,440,655.19
18,817.36

1.85%
77,679.35
Aaa/AAA
NA

3.78 3.48
Total Supranational 6,775,000.00 2.18%
6,643,282.05
6,682,704.58

97.28 3.83%
6,588,674.52
31,897.31

5.00%
(94,030.06)
Aaa/AAA
NA

2.23 2.10

US TREASURY
912828ZC7 UNITED STATES TREASURY 1.125
02/28/2025 2,000,000.00 03/18/20200.81%
2,030,859.38
2,002,561.65

98.65 4.45%
1,972,929.68
1,926.80

1.50%
(29,631.97)
Aaa/AA+
AA+

0.41 0.41
912828ZF0 UNITED STATES TREASURY 0.5
03/31/2025 2,000,000.00 05/28/20200.35%
2,014,140.63
2,001,448.47

98.11 4.38%
1,962,187.50

27.47 1.49%
(39,260.97)
Aaa/AA+
AA+

0.50 0.49
91282CAB7 UNITED STATES TREASURY 0.25
07/31/2025 1,100,000.00 03/12/20210.71%
1,077,828.13
1,095,798.58

96.90 4.08%
1,065,908.59
463.32

0.81%
(29,889.99)
Aaa/AA+
AA+

0.83 0.81
91282CAT8 UNITED STATES TREASURY 0.25
10/31/2025 400,000.00 03/12/20210.78%
390,265.63
397,726.15

96.13 3.94%
384,515.62
418.48

0.29%
(13,210.53)
Aaa/AA+
AA+

1.08 1.06
91282CFW6 UNITED STATES TREASURY 4.5
11/15/2025 1,400,000.00 11/10/20224.26%
1,409,132.81
1,403,416.47
100.64

3.91%
1,408,968.75
23,796.20

1.07%
5,552.28
Aaa/AA+
AA+

1.13 1.07
91282CAZ4 UNITED STATES TREASURY 0.375
11/30/2025 1,250,000.00 03/26/20210.76%
1,227,587.89
1,244,419.95

96.05 3.88%
1,200,634.76
1,575.31

0.91%
(43,785.19)
Aaa/AA+
AA+

1.17 1.14
91282CCW9 UNITED STATES TREASURY 0.75
08/31/2026 530,000.00 09/23/20210.90%
526,252.73
528,546.43

94.65 3.67%
501,657.42
340.40

0.38%
(26,889.00)
Aaa/AA+
AA+

1.92 1.87
91282CCZ2 UNITED STATES TREASURY 0.875
09/30/2026 1,060,000.00 10/18/20211.18%
1,044,141.41
1,053,602.15

94.73 3.64%
1,004,101.56

25.48 0.76%
(49,500.59)
Aaa/AA+
AA+

2.00 1.95
91282CDG3 UNITED STATES TREASURY 1.125
10/31/2026 1,060,000.00 11/15/20211.25%
1,053,540.63
1,057,286.28

94.98 3.65%
1,006,792.97
4,990.35

0.76%
(50,493.31)
Aaa/AA+
AA+

2.08 2.02
912828YQ7 UNITED STATES TREASURY 1.625
10/31/2026 2,400,000.00 11/02/20224.41%
2,156,250.00
2,272,942.39

95.98 3.65%
2,303,625.00
16,320.65

1.75%
30,682.61
Aaa/AA+
AA+

2.08 2.00
91282CET4 UNITED STATES TREASURY 2.625
05/31/2027 600,000.00 06/13/20223.40%
578,718.75
588,584.23

97.56 3.59%
585,375.00
5,293.03

0.44%
(3,209.23)
Aaa/AA+
AA+

2.67 2.52
47 ATTACHMENT 1
952

HOLDINGS REPORT
City of West Sacramento Operating Portfolio | Account #10675 | As of September 30, 2024 Cusip Security Description Par Value/
Units
Purchase
Date
Purchase
Yield
Cost Value
Book Value
Mkt
Price
Mkt
YTM
Market Value
Accrued Int.
% of Port.

Gain/Loss
Moody's/
S&P/
Fitch
Maturity
Duration
91282CEW7 UNITED STATES TREASURY 3.25
06/30/2027 1,500,000.00 --3.41%
1,490,273.44
1,494,213.90

99.16 3.57%
1,487,343.75
12,319.97

1.13%
(6,870.15)
Aaa/AA+
AA+

2.75 2.58
91282CFB2 UNITED STATES TREASURY 2.75
07/31/2027 1,180,000.00 --2.99%
1,166,739.07
1,172,427.81

97.77 3.58%
1,153,680.47
5,467.12

0.88%
(18,747.35)
Aaa/AA+
AA+

2.83 2.68
91282CFH9 UNITED STATES TREASURY 3.125
08/31/2027 3,500,000.00 --3.28%
3,474,796.89
3,485,231.78

98.76 3.58%
3,456,660.17
9,366.37

2.62%
(28,571.61)
Aaa/AA+
AA+

2.92 2.75
91282CFU0 UNITED STATES TREASURY 4.125
10/31/2027 2,400,000.00 11/03/20224.41%
2,368,968.75
2,380,839.65
101.58

3.58%
2,437,968.74
41,429.35

1.85%
57,129.09
Aaa/AA+
AA+

3.08 2.83
91282CGC9 UNITED STATES TREASURY 3.875
12/31/2027 700,000.00 01/25/20233.57%
709,679.69
706,377.84
100.95

3.56%
706,671.88
6,854.96

0.54%
294.04
Aaa/AA+
AA+

3.25 3.00
91282CGH8 UNITED STATES TREASURY 3.5
01/31/2028 1,000,000.00 03/14/20233.90%
982,578.13
988,095.22

99.77 3.57%
997,734.38
5,896.74

0.76%
9,639.16
Aaa/AA+
AA+

3.34 3.10
91282CGP0 UNITED STATES TREASURY 4.0
02/29/2028 2,900,000.00 02/23/20234.16%
2,879,269.53
2,885,861.98
101.36

3.57%
2,939,421.88
9,933.70

2.23%
53,559.90
Aaa/AA+
AA+

3.42 3.16
91282CHA2 UNITED STATES TREASURY 3.5
04/30/2028 2,100,000.00 --3.55%
2,095,664.07
2,096,830.27

99.75 3.57%
2,094,832.03
30,758.15

1.59%
(1,998.24)
Aaa/AA+
AA+

3.58 3.29
91282CHE4 UNITED STATES TREASURY 3.625
05/31/2028 1,500,000.00 06/14/20234.00%
1,475,214.84
1,481,647.73
100.16

3.58%
1,502,343.75
18,273.57

1.14%
20,696.02
Aaa/AA+
AA+

3.67 3.36
91282CHX2 UNITED STATES TREASURY 4.375
08/31/2028 550,000.00 09/25/20234.62%
544,199.22
545,394.16
102.89

3.58%
565,876.95
2,060.60

0.43%
20,482.79
Aaa/AA+
AA+

3.92 3.57
91282CJF9 UNITED STATES TREASURY 4.875
10/31/2028 750,000.00 10/27/20234.79%
752,841.80
752,319.17
104.88

3.58%
786,621.09
15,300.61

0.60%
34,301.92
Aaa/AA+
AA+

4.08 3.62
91282CJN2 UNITED STATES TREASURY 4.375
11/30/2028 900,000.00 12/28/20233.83%
921,937.50
918,557.81
103.06

3.58%
927,562.50
13,232.58

0.70%
9,004.69
Aaa/AA+
AA+

4.17 3.74
91282CJR3 UNITED STATES TREASURY 3.75
12/31/2028 2,150,000.00 --3.98%
2,127,462.89
2,130,723.70
100.67

3.58%
2,164,445.31
20,375.34

1.64%
33,721.61
Aaa/AA+
AA+

4.25 3.86
91282CJW2 UNITED STATES TREASURY 4.0
01/31/2029 3,100,000.00 --4.30%
3,058,937.50
3,063,948.07
101.69

3.58%
3,152,312.50
20,891.30

2.39%
88,364.43
Aaa/AA+
AA+

4.34 3.93
91282CKG5 UNITED STATES TREASURY 4.125
03/31/2029 2,500,000.00 --4.59%
2,448,730.47
2,453,504.23
102.27

3.57%
2,556,738.28
283.31

1.94%
103,234.05
Aaa/AA+
AA+

4.50 4.08
91282CKP5 UNITED STATES TREASURY 4.625
04/30/2029 4,000,000.00 --4.47%
4,027,509.77
4,025,372.70
104.42

3.57%
4,176,875.00
77,418.48

3.17%
151,502.30
Aaa/AA+
AA+

4.58 4.04
91282CKX8 UNITED STATES TREASURY 4.25
06/30/2029 1,250,000.00 07/18/20244.09%
1,258,837.89
1,258,475.96
102.92

3.57%
1,286,523.44
13,425.61

0.98%
28,047.48
Aaa/AA+
AA+

4.75 4.24
48 ATTACHMENT 1
953

HOLDINGS REPORT
City of West Sacramento Operating Portfolio | Account #10675 | As of September 30, 2024 Cusip Security Description Par Value/
Units
Purchase
Date
Purchase
Yield
Cost Value
Book Value
Mkt
Price
Mkt
YTM
Market Value
Accrued Int.
% of Port.

Gain/Loss
Moody's/
S&P/
Fitch
Maturity
Duration
91282CLK5 UNITED STATES TREASURY 3.625
08/31/2029 2,500,000.00 09/11/20243.45%
2,519,628.91
2,519,434.03
100.30

3.56%
2,507,421.88
7,760.70

1.90%
(12,012.15)
Aaa/AA+
AA+

4.92 4.45
Total US Treasury 48,280,000.00 3.41%
47,811,988.35
48,005,588.76
100.10

3.68%
48,297,730.83
366,225.95

36.65%
292,142.08
Aaa/AA+
AA+

3.16 2.89
Total Portfolio 132,546,500.46 3.47%
130,576,147.94
131,185,134.77

99.34 3.92%
131,764,313.44
768,140.12
100.00%
579,178.67
Aa2/AAAA2.99

2.62 Total Market Value +
Accrued 132,532,453.56
49 ATTACHMENT 1
954

HOLDINGS REPORT
West Sacramento Enhanced Cash | Account #11169 | As of September 30, 2024 Cusip Security Description Par Value/
Units
Purchase
Date
Purchase
Yield
Cost Value
Book Value
Mkt
Price
Mkt
YTM
Market Value
Accrued Int.
% of Port.

Gain/Loss
Moody's/
S&P/
Fitch
Maturity
Duration
CASH
CCYUSD Receivable 140,200.17 --

0.00%
140,200.17
140,200.17

1.00 0.00%
140,200.17

0.00 0.23%

0.00 Aaa/AAA
AAA

0.00 0.00
Total Cash 140,200.17 0.00%
140,200.17
140,200.17

1.00 0.00%
140,200.17

0.00 0.23%

0.00 Aaa/AAA
AAA

0.00 0.00

MONEY MARKET
FUND
X9USDDGCM DREYFUS GVT CM INST 1,560,540.53 --

4.82%
1,560,540.53
1,560,540.53

1.00 4.82%
1,560,540.53

0.00 2.53%

0.00 Aaa/AAAm
NA

0.00 0.00
Total Money Market
Fund 1,560,540.53 4.82%
1,560,540.53
1,560,540.53

1.00 4.82%
1,560,540.53

0.00 2.53%

0.00 Aaa/AAAm
NA

0.00 0.00

US TREASURY
912797GW1 UNITED STATES TREASURY
10/03/2024 60,000,000.00 09/30/20244.63%
59,977,250.00
59,984,833.33

99.97 4.77%
59,984,350.20

0.00 97.24%
(483.13)
P-1/A-1+
F1+

0.01 0.01
Total US Treasury 60,000,000.00 4.63%
59,977,250.00
59,984,833.33

99.97 4.77%
59,984,350.20

0.00 97.24%
(483.13)
P-1/A-1+
F1+

0.01 0.01
Total Portfolio 61,700,740.70 4.62%
61,677,990.70
61,685,574.03

97.25 4.76%
61,685,090.90

0.00 100.00%
(483.13)
Aaa/AAA
AAA

0.01 0.01
Total Market Value +
Accrued 61,685,090.90
50 ATTACHMENT 1
955

HOLDINGS REPORT
City of West Sacramento Reporting Portfolio | Account #10676 | As of September 30, 2024 Cusip Security Description Par Value/
Units
Purchase
Date
Purchase
Yield
Cost Value
Book Value
Mkt
Price
Mkt
YTM
Market Value
Accrued Int.
% of Port.

Gain/Loss
Moody's/
S&P/
Fitch
Maturity
Duration
CASH
90LAIF$00 Local Agency Investment Fund
State Pool 87,520,690.39
Total LAIF 87,520,690.39

LOCAL GOV

INVESTMENT POOL
90CAMP$00 CAMP 5,714,844.21
Total Local Gov
Investment Pool 5,714,844.21

4.57% 87,520,690.35 4.57% 0.00 0.04 NA
87,520,690.35 1.00 87,520,690.39 58.54% NA/NA 0.00

4.57% 87,520,690.35 4.57% 0.00 0.04 NA
-- 5,710,844.21 1.00 5,714,844.21 3.82% NA/AAAm 0.00

5.08% 5,710,844.21 5.08% 0.00 4,000.00 AAA
5,710,844.21 1.00 5,714,844.21 3.82% NA/AAAm 0.00

5.08% 5,710,844.21 5.08% 0.00 4,000.00 AAA
149,507,277.53 1.00 149,511,277.57 100.00% Aaa/AAA 0.00

3.57% 149,507,277.53 3.57% 0.00 4,000.04 AAA 0.00
149,511,277.57
CCYUSD Receivable 1,023,476.79
86723G1$8 Suncrest Bank 1,047,692.14
--

0.00% 1,023,476.79 0.00% 0.00 0.00 AAA 0.00
-- 1,047,692.14 1.00 1,047,692.14 0.70% NA/NA 0.00

0.02% 1,047,692.14 0.02% 0.00 0.00 NA 0.00
-- 5,527,193.35 1.00 5,527,193.35 3.70% NA/NA 0.00

2.50% 5,527,193.35 2.50% 0.00 0.00 NA 0.00
-- 23,162,068.39 1.00 23,162,068.39 15.49% Aaa/AAA 0.00

0.00% 23,162,068.39 0.00% 0.00 0.00 AAA 0.00
05/31/2024 25,515,312.30 1.00 25,515,312.30 17.07% NA/NA 0.00 25,515,312.30 0.00 0.00 NA 0.00
56,275,742.97 1.00 56,275,742.97 37.64% Aaa/AAA 0.00

0.45% 56,275,742.97 0.45% 0.00 0.00 AAA 0.00
1,023,476.79 1.00 1,023,476.79 0.68% Aaa/AAA 0.00
90JPMC$04 CASH JP MORGAN CHASE CASH
ACCT 5,527,193.35
CCYUSD Cash 23,162,068.39
90BOFA$00 Cash BOA 25,515,312.30
Total Cash 56,275,742.97
LAIF
-- 87,520,690.35 1.00 87,520,690.39 58.54% NA/NA 0.00
Total Portfolio 149,511,277.57
Total Market Value +
Accrued
51 ATTACHMENT 1
956

CITY COUNCIL AGENDA REPORT
MEETING DATE: February 19, 2024 ITEM # 15
SUBJECT:

CONSIDERATION OF APPROVAL OF CONTRACTS FOR REVENUE AUDIT AND

CONSULTING SERVICES WITH HDL COREN & CONE, HINDERLITER DE LLAMAS & ASSOCIATES (HdL COMPANIES), AND MUNISERVICES, LLC
INITIATED OR REQUESTED BY: REPORT COORDINATED OR PREPARED BY:
[ ] Council [X] Staff
[ ] Other
Susana Jackson, Finance Manager
Finance Department
ATTACHMENT [X] Yes [ ] No [ ] Information [ ] Direction [X] Action

OBJECTIVE
The objective of this report is to obtain approval from the City Council to enter into contracts with HdL Coren & Cone, Hinderliter de Llamas & Associates (HdL Companies), and Muniservices, LLC for revenue audit and consulting services for terms of three (3) years, with options to extend for two additional one-year terms.

RECOMMENDED ACTION
Staff respectfully recommends that the City Council:

1. Approve a contract with Hinderliter de Llamas or a three (3) year term, with options to extend for two additional one-year terms;

2. Approve contract with HDL Coren and Cone for a three (3) year term, with options to extend for two additional one-year terms;

3. Approve contract with Muniservices, LLC for a three (3) year term, with options to extend for two additional one-year terms;

4. Authorize the City Manager or his designee to execute the contracts;

5. Authorize the City Manager or his designee to execute non-substantive changes and modifications, with approval from the City Attorney;

6. Approve Resolution 25-25 Authorizing HdL Companies access to the City’s Sales or Use Tax information with the California Department of Tax and Fee Administration (CDTFA); and

7. Authorize the City Manager or his designee to execute amendments to extend the term of the contracts.

BACKGROUND
The City has long contracted with Muniservices, LLC (aka Avenu Insights & Analytics) for audit and consulting services related to Sales Tax, and more. The City has also contracted with HdL Companies for Cannabis Audits and other related services and HdL Coren & Cone for Property Tax audits and consulting services. As contracts were nearing their end, The City issued an RFP for revenue audit and consulting services on November 15, 2024. The overall objectives for seeking qualified consultants for this work are to:
 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 of trends and legislation impacting the City’s revenue sources  Receive assistance in understanding legislative and economic impacts to these revenue sources and projecting future revenues
 Receive written and verbal economic analyses and meaningfully organized reports  Have a partner that is available to consult on miscellaneous revenue-related questions, as needed.

ANALYSIS
The City issued 24-081-RFP for revenue audit and consulting services on November 15, 2024. The RFP was posted on OpenGov, the City’s eProcurement site.

The following four (4) firms responded with proposals:

1. HdL Coren & Cone proposed the Property Tax Services only

2. MuniServices, LLC proposed all aspects of the RFP except Property Tax

3. Hinderliter de Llamas & Associates (HdL Companies) – Proposed all services except Property Tax

4. Astute Tax and Accounting Services - Proposed sales and use tax, cannabis, franchise and licensing audits.
957
Revenue Audit & Consulting Contracts
February 19, 2025

The evaluation committee, including staff from the Finance Department, Economic Development and Housing, and Community Development Departments, carefully evaluated the proposals based on the selection criteria specified in the RFP:
 Scope of Work
 Company background/relevant experience
 Qualifications of proposed staff
 Reporting
 Cost effectiveness
 Willingness to sign a City contract “as is”
As a result of the thorough evaluation of all proposals, including contacting references for all proposing companies, staff has a desire to contract with three (3) companies for services as noted below:
 HdL Coren & Cone to provide Property Tax services only  MuniServices, LLC to provide audits of franchise/licensing agreement revenues  Hinderliter de Llamas & Associates (HdL Companies) to provide the following services:
o Sales and Use/Transaction and Use Tax services;
o Transient Occupancy Tax (including short term rentals) discovery, audits, and administration; o Audits of cannabis development agreement revenues and compliance inspections; and o Audits of franchise/license agreements;
o Parking revenue audits;
o Consulting services related to the revenue types identified above.

Staff is proposing all contracts be for initial terms of three (3) years with the option to renew for two (2) additional one-year terms. The proposed contracts would help ensure the City receives the revenues to which it is entitled.

The contracts will also provide sophisticated tax and revenue analysis and reporting as well as assistance in forecasting revenues and updates on legislative initiatives and other changes that could impact the City’s primary sources of revenue. For services related to cannabis revenues, the firms also provide legal analysis, assistance with terms in the development agreements, and services related to cash collection and development of policies and procedures to reduce or mitigate impacts of cash collection and other issues specific to cannabis businesses.

Additionally, staff has included Resolution 25-25 allowing HdL Companies Access to the City’s sales and transactions and use information with CDTFA.

Environmental Considerations
Not applicable
Commission Recommendation
Not applicable
Strategic Plan Integration
These contracts further the City’s mission to maintain a financially sound government by ensuring the City’s primary General revenue sources are accurate, reviewed appropriately, and continue to fund the services provided by the City to its residents and businesses.

Alternatives
The Council could choose not to approve the contracts, direct staff to enter into an agreement with a different firm, or to re-publish the RFP; however, none of these alternatives are recommended as the City received sufficient proposals and stands to reduce its existing cost for Sales Tax audits through the proposed agreement.

Coordination and Review
The Finance Division issued the Request for Proposal after review and input from Community Development, and Economic Development & Housing. The evaluation of the proposals and selection of firm(s) were conducted by staff in Finance, Economic Development & Housing and Community Development departments. The contract language, if changed from the City’s approved template, has been reviewed by legal counsel.

Budget/Cost Impact
Appropriations for these services are already included in the FY 24/25 O&M budget. Appropriations for future years will be requested as part of the normal budget process. 958
Revenue Audit & Consulting Contracts
February 19, 2025

As many of the services provided via the proposed contracts are based on contingency fees (the contractor would receive a percentage of the revenues recovered for the City through the audits performed), the contracts do not include not-to-exceed amounts. In these cases, staff is requesting that the Council authorize the City Manager to approve budget adjustments for contingency fees due to the contractors based on recovered revenues. In these cases, the budget adjustments would include increased revenues and a smaller increase in expenditure based on the contingency fees included in the proposed agreements and would have a positive impact on fund balance. In no case will the cost of services provided through these agreements exceed the approved budget for the fiscal year for these services.

ATTACHMENTS

1. Contract for services – Hinderliter de Llamas & Associates

2. Contract for services – HdL Coren & Cone

3. Contract for services – Muniservices, LLC

4. Resolution 25-25
959
Hinderliter, de Llamas and Associates
FIN25-021 Revenue Audit and Consulting
Expires on 2/18/2028
1 11/4/24

CONTRACT FOR SERVICES
THIS CONTRACT is made on February 19, 2025, by and between the CITY OF WEST SACRAMENTO (“City”), and Hinderliter de Llamas & Associates (“Consultant”).

WITNESSETH:

WHEREAS, the City desires revenue audit and consulting services; and WHEREAS, the Consultant has presented a proposal for such services to the City, dated December 18, 2024 (attached hereto as Exhibit “A”) and is duly licensed, qualified and experienced to perform those services;
NOW, THEREFORE, the parties hereto mutually agree as follows:

1. SCOPE OF SERVICES:

A. Consultant shall do all work, attend all meetings, produce all reports and carry out all activities necessary to completion of the services described in Exhibit “A” This Contract and its exhibits shall be known as the “Contract Documents.” Terms set forth in any Contract Document shall be deemed to be incorporated in all Contract Documents as if set forth in full therein. In the event of conflict between terms contained in these Contract Documents, the more specific term shall control. If any portion of the Contract Documents shall be in conflict with any other portion, provisions contained in the Contract shall govern over conflicting provisions contained in the exhibits to the Contract.

B. Consultant enters into this Contract as an independent contractor and not as an employee of the City. The Consultant shall have no power or authority by this Contract to bind the City in any respect. Nothing in this Contract shall be construed to be inconsistent with this relationship or status. All employees, agents, contractors or subcontractors hired or retained by the Consultant are employees, agents, contractors or subcontractors of the Consultant and not of the City. The City shall not be obligated in any way to pay any wage claims or other claims made against Consultant by any such employees, agents, contractors or subcontractors, or any other person resulting from performance of this Contract. In the event that Consultant or any employee, agent, or subcontractor of Consultant providing services under this Agreement claims or is determined by a court of competent jurisdiction or the California Public Employees Retirement System (PERS) to be eligible for enrollment in PERS as an employee of the City, Consultant shall indemnify, defend, and hold harmless City for the payment of any employee and/or employer contributions for PERS benefits on behalf of Consultant or its employees, agents, or subcontractors, as well as for the payment of any penalties and interest on such contributions, which would otherwise be the responsibility of City. Notwithstanding any other agency, state or federal policy, rule, regulation, law or ordinance to the contrary, To the greatest extent permitted by law, Consultant and its employees, agents, and subcontractors shall not qualify for or become entitled to, and hereby agree to waive any claims to, any compensation, benefit, or any incident of employment by City, including but not limited to eligibility to enroll in PERS as an employee of City and entitlement to any contribution to be paid by City for employer contribution and/or employee contributions for PERS benefits.
960
Hinderliter, de Llamas and Associates
FIN25-021 Revenue Audit and Consulting
Expires on 2/18/2028
2 11/4/24
C. The Consultant agrees it has satisfied itself by its own investigation and research regarding the conditions affecting the work to be done and labor and materials needed, and that its decision to execute this Contract is based on such independent investigation and research.

2. TERM OF CONTRACT
A. The services of Consultant are to commence upon execution of this Contract by the City, and shall be undertaken and completed in accordance with the Schedule of Performance attached hereto and incorporated herein by this reference as Exhibit “A” and terminate on February 18, 2028.

B. Consultant’s failure to complete work in accordance with the Schedule of Performance may result in delayed compensation as described in Section 3.

C. The City Manager or his or her designee may, by written instrument signed by the Parties, extend the duration of this Contract for two (2) additional one-year extensions in the manner provided in Section 5, provided that the extension does not require the payment of compensation in excess of the Council approved budget.

3. COMPENSATION:

A. The Consultant shall be paid quarterly for the actual fees, costs and expenses, Consultant's fees shall be as specified in the Schedule of Fees, which is attached hereto an incorporated herein as Exhibit "A".

B. Said amount shall be paid upon submittal of a monthly billing. Consultant shall furnish City with invoices for all expenses as well as for all materials authorized by this Contract.

The invoices shall be submitted with the monthly billings. If Consultant’s performance is not in conformity with the Schedule of Performance, “Exhibit A”, payments may be delayed or denied, unless the Consultant’s failure to perform in conformity with the Schedule of Performance is a documented result of the City’s failure to conform with the Schedule of Performance, or if the Schedule of Performance is extended pursuant to Section 5.

C. If the work is halted at the request of the City, compensation shall be based upon the proportion that the work performed bears to the total work required by this Contract, subject to Section 4.

4. TERMINATION:

A. This Contract may be terminated by either party, provided that the other party is given not less than 30 calendar days’ written notice (delivered by certified mail, return receipt requested) of intent to terminate.

B. The City may temporarily suspend this Contract, at no additional cost to City, provided that the Consultant is given written notice (delivered by certified mail, return receipt requested) of temporary suspension. If City gives such notice of temporary suspension, Consultant shall immediately suspend its activities under this Contract.

C. Notwithstanding any provisions of this Contract, Consultant shall not be relieved of liability to the City for damages sustained by the City by virtue of any breach of this Contract 961
Hinderliter, de Llamas and Associates
FIN25-021 Revenue Audit and Consulting
Expires on 2/18/2028
3 11/4/24
by Consultant, and the City may withhold any payments due to Consultant until such time as the exact amount of damages, if any, due the City from Consultant is determined.

D. In the event of termination, the Consultant shall be compensated as provided for in this Contract, except as provided in Section 4C. Upon termination, the City shall be entitled to all work, including but not limited to, appraisals, inventories, studies, analyses, drawings and data estimates performed to that date in accordance with Section 7 hereof.

5. AMENDMENTS, CHANGES OR MODIFICATIONS:

Amendments, changes or modifications in the terms of this Contract may be made at any time by mutual written agreement between the parties hereto and shall be signed by the persons authorized to bind the parties hereto.

6. EXTENSIONS OF TIME:

Consultant may, for good cause, request extensions of time to perform the services required hereunder. Such extensions shall be authorized in advance by the City in writing and shall be incorporated in written amendments to this Contract or the attached Work Program in the manner provided in Section 5.

7. PROPERTY OF CITY:

A. It is mutually agreed that all materials prepared by the Consultant under this Contract shall become the property of the City, and the Consultant shall have no property right therein whatsoever. Immediately upon termination, the City shall be entitled to, and the Consultant shall deliver to the City, all data, drawings, specifications, reports, estimates, summaries and other such materials as may have been prepared or accumulated to date by the Consultant in performing this Contract which is not Consultant’s privileged information, as defined by law, or Consultant’s personnel information, along with all other property belonging exclusively to the City which is in the Consultant’s possession.

B. Additionally, it is agreed that the parties intend this to be a contract for services and each considers the products and results of the services to be rendered by Consultant hereunder (the “Work”) to be a work made for hire. Consultant acknowledges and agrees that the Work (and all rights therein, including, without limitation, copyright) belongs to and shall be the sole and exclusive property of the City

8. COMPLIANCE WITH ALL LAWS:

A. Consultant shall comply with all applicable laws, ordinances, and codes of federal, State and local governments, and shall commit no trespass on any public or private property in performing any of the work authorized by this Contract.

B. Consultant warrants to the City that it is licensed by all applicable governmental bodies to perform this Contract and will remain so licensed throughout the progress of the Work, and that it has, and will have, throughout the progress of the Work, the necessary experience, skill and financial resources to enable it to perform this Contract.

9. WARRANTIES AND RESPONSIBILITIES - CONSULTANT:
962
Hinderliter, de Llamas and Associates
FIN25-021 Revenue Audit and Consulting
Expires on 2/18/2028
4 11/4/24
A. Consultant agrees and represents that it is qualified to properly provide the services set forth in Exhibit “A” in a manner which is consistent with the generally accepted standards of Consultant’s profession.

B. Consultant agrees and represents that the work performed under this Contract shall be in accordance with applicable federal, State and local law in accordance with Section 17A hereof.

C. Consultant shall designate a project manager who at all times shall represent the Consultant before the City on all matters relating to this Contract. The project manager shall continue in such capacity unless and until he or she is removed at the request of the City, is no longer employed by Consultant, or is replaced with the written approval of the City, which approval shall not be unreasonably withheld.

D. Consultant shall provide corrective services without charge to the City for services which fail to meet the above professional and legal standards and which are reported to Consultant in writing within sixty (60) days of discovery. Should Consultant fail or refuse to perform promptly its obligations, the City may render or undertake performance thereof and the Consultant shall be liable for any expenses thereby incurred.

10. SUBCONTRACTING:

None of the services covered by this Contract shall be subcontracted without the prior written consent of the City, which will not be unreasonably withheld. Consultant shall be as fully responsible to the City for the negligent acts and omissions of its contractors and subcontractors, and of persons either directly or indirectly employed by them, as it is for the negligent acts and omissions of persons directly employed by Consultant.

11. ASSIGNABILITY:

Consultant shall not assign or transfer any interest in this Contract whether by assignment or novation, without the prior written consent of the City which will not be unreasonably withheld.

However, claims for money due or to become due Consultant from the City under this Contract may be assigned to a financial institution, or to a trustee in bankruptcy, without such approval.

Notice of any assignment or transfer whether voluntary or involuntary shall be furnished promptly to the City.

12. INTEREST IN CONTRACT:

Consultant covenants that neither it, nor any of its employees, agents, contractors, subcontractors has any interest, nor shall they acquire any interest, direct or indirect, in the subject of the Contract, nor any other interest which would conflict in any manner or degree with the performance of its services hereunder. Consultant shall make all disclosures required by the City’s conflict of interest code in accordance with the category designated by the City, unless the City Manager determines in writing that Consultant’s duties are more limited in scope than is warranted by the category designated by the City code and that a narrower disclosure category should apply. Consultant also agrees to make disclosure in compliance with the City conflict of interest code if, at any time after the execution of this Contract, City determines and notifies Consultant in writing that Consultant’s duties under this Contract warrant greater disclosure by Consultant than was originally contemplated. Consultant shall make disclosures in the time, place and manner set forth in the conflict of interest code and as directed by the City. 963
Hinderliter, de Llamas and Associates
FIN25-021 Revenue Audit and Consulting
Expires on 2/18/2028
5 11/4/24

13. MATERIALS CONFIDENTIAL:

All of the materials prepared or assembled by Consultant pursuant to performance of this Contract are confidential and Consultant agrees that they shall not be made available to any individual or organization without the prior written approval of the City, except by court order.

14. LIABILITY OF CONSULTANT-NEGLIGENCE:

Consultant shall be responsible for performing the work under this Contract in a manner which is consistent with the generally-accepted standards of the Consultant’s profession and shall be liable for its own negligence and the negligent acts of its employees, agents, contractors and subcontractors. The City shall have no right of control over the manner in which the work is to be done but only as to its outcome, and shall not be charged with the responsibility of preventing risk to Consultant or its employees, agents, contractors or subcontractors.

15. INDEMNITY AND LITIGATION COSTS:

Consultant shall indemnify, defend, and hold harmless the City, its officers, officials, agents, and employees against all claims, damages, demands, liability, costs, losses and expenses, including without limitation court costs and reasonable attorneys’ fees, arising from Consultant's negligent acts or negligent failure to act, errors, omissions or willful misconduct incident to the performance of this Contract except such loss or damage caused by the active negligence, sole negligence, or willful misconduct of the City. The provisions of this paragraph shall survive termination or suspension of this Contract.

16. CONSULTANT TO PROVIDE INSURANCE:

A. Consultant shall not commence any work before obtaining, and shall maintain in force at all times during the duration and performance of this Contract, the policies of insurance specified in this Section. Such insurance must have the approval of the City as to limit, form, and amount, and shall be placed with insurers with a current A.M. Best’s rating of no less than A VII (an NR rating is acceptable for Worker’s Compensation insurance written with the State Compensation Insurance Fund of California).

B. Prior to execution of this Contract and prior to commencement of any work, the Consultant shall furnish the City with certificates of insurance and copies of endorsements providing evidence of coverage for all policies required by the Contract. The Consultant and its contractors and subcontractors shall, at their expense, maintain in effect at all times during the performance of work under the Contract not less than the following coverage and limits of insurance, which shall be maintained with insurers and under forms of policy satisfactory to the City. The maintenance by Consultant and its contractors and subcontractors of the following coverage and limits of insurance is a material element of this Contract. The failure of Consultant or of any of its contractors or subcontractors to maintain or renew coverage or to provide evidence of renewal may be treated by the City as a material breach of this Contract. Approval of the insurance by the City shall not relieve or decrease any liability of Consultant.

1. Worker’s Compensation and Employer’s Liability Insurance

964
Hinderliter, de Llamas and Associates
FIN25-021 Revenue Audit and Consulting
Expires on 2/18/2028
6 11/4/24
a. Worker’s Compensation - Insurance to protect the Consultant, its contractors and subcontractors from all claims under Worker’s Compensation and Employer’s Liability Acts, including Longshoremen’s and Harbor Worker’s Act (“Acts”), if applicable. Such coverage shall be maintained, in type and amount, in strict compliance with all applicable state and Federal statutes and regulations.

The Consultant shall execute a certificate in compliance with Labor Code Section 1861, on the form provided in the Contract Documents.
b. Consultant shall provide a Waiver of Subrogation endorsement in favor of the City, its officers, officials, employees, agents and volunteers for losses arising from work performed by the Consultant.

2. Commercial General Liability Insurance
a. The insurance shall be provided on form CG0001, or it’s equivalent, and shall include coverage for claims for bodily injury or property damage arising out of premises/operations, products/completed operations, contractual liability, and subconsultant’s work and personal and advertising injury resulting from actions, failures to act, or operations of the insured, or by its employees or agents, or by anyone directly or indirectly employed by the insured. The amount of insurance coverage shall not be less than $1,000,000.00 per occurrence and $2,000,000 general and products/completed operations aggregates. b. The commercial general liability insurance shall also include the following:
i. Endorsement equivalent to CG 2010 0714 naming the City, its officers, officials, employees, agents, and volunteers as additional insureds. The endorsement shall contain no special limitations on the scope of protection afforded to the City, its officers, officials, employees or volunteers.
ii. Endorsement stating insurance provided to the City shall be primary as respects the City, its officers, officials, employees and any insurance or self insurance maintained by the City, its officers, officials, employees or volunteers shall be in excess of the Consultant’s insurance and shall not contribute with it, to the payment or satisfaction of any defense expenses, loss, or judgment.
iii. Provision or endorsement stating that the Consultant’s insurance shall apply separately to each insured against whom claim is made or suit is brought, except with respect to the limits of the insurer’s liability.

3. Commercial Automobile Insurance
a. The insurance shall include, but shall not be limited to, coverage for claims for bodily injury or property damage for owned, non-owned, and hired automobiles resulting from actions, failures to act, or operations of the insured, or by its employees or agents, or by anyone directly or indirectly employed by the 965
Hinderliter, de Llamas and Associates
FIN25-021 Revenue Audit and Consulting
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insured. The amount of insurance coverage shall not be less than 1,000,000.00 per accident.
b. The commercial automobile insurance shall include the same endorsements required for the commercial general liability policy (see Section

16.B.2.b).

4. Professional Liability. The Consultant and its contractors and subcontractors shall secure and maintain in full force, during the term of this Contract and for five years thereafter, professional liability insurance policies appropriate to the respective professions and the work to be performed as specified in this Contract. The limits of such professional liability insurance coverage shall not be less than $1,000,000 per claim.

C. In addition to any other remedy the City may have, if Consultant fails to maintain the insurance coverage as required in this Section, the City may obtain such insurance coverage as is not being maintained, in form and amount substantially the same as is required herein, and the City may deduct the cost of such insurance from any amounts due or which may become due Consultant under this Contract.

D. No policy required by this Contract shall be suspended, cancelled, terminated by either party, or reduced in coverage or in limits unless Consultant has provided thirty (30) days prior written notice by certified mail, return receipt requested, to the City.

E. Any deductibles or self-insured retentions in excess of $10,000 must be declared to, and approved by, the City.

F. The requirement as to types, limits, and the City’s approval of insurance coverage to be maintained by Consultant are not intended to, and shall not in any manner, limit or qualify the liabilities and obligations assumed by Consultant under the Contract.

17. MISCELLANEOUS PROVISIONS:

A. Consultant shall keep itself fully informed of, shall observe and comply with, and shall cause any and all persons, firms or corporations employed by it or under its control to observe and comply with, applicable federal, state, county and municipal laws, ordinances, regulations, orders and decrees which in any manner affect those engaged or employed on the work described by this Contract or the materials used or which in any way affect the conduct of the work.

B. Consultant shall not engage in unlawful employment discrimination. Such unlawful employment discrimination includes, but is not limited to, employment discrimination based upon a person’s race, religious creed, color, national origin, ancestry, physical handicap, medical condition, marital status, gender, citizenship, or sexual orientation.

C. Consultant shall maintain and make available for inspection by the City and its auditors accurate records of all of its costs, disbursements and receipts with respect to any work under this Contract. Such inspections may be made during regular office hours at any time until six (6) months after the final payments under this Contract are made to the Consultant. 966
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D. This Contract constitutes the entire agreement between the parties relative to the services specified herein and no modification hereof shall be effective unless and until such modification is evidenced by a writing signed by both parties to this Contract. There are no understandings, agreements, conditions, representations, warranties or promises, with respect to this Contract, except those contained in or referred to in the writing.

E. All notices that are required to be given by one party to the other under this Contract shall be in writing and shall be deemed to have been given if delivered personally or enclosed in a properly addressed envelope and deposited in a United States Post Office for delivery by registered or certified mail addressed to the parties at the following addresses:

City:

City of West Sacramento
Attn: Roberta Raper, Director of Finance
1110 West Capitol Avenue
Third Floor
West Sacramento, CA 95691
(916) 617-4509

Consultant: Hinderliter, de Llamas & Associates
Andrew Nickerson, President/CEO
120 S. State College Blvd, Suite 200
Brea, CA 92821
[email protected]

F. This Contract shall be interpreted and governed by the laws of the State of California.

G. Any action arising out of this Contract shall be brought and maintained in Yolo County California, regardless of where else venue may lie.

H. In any action brought by either party to enforce the terms of this Contract, each party shall be bear responsibility for its attorney’s fees and all costs regardless of whether one party is determined to be the prevailing party.

I. ELECTRONIC TRANSMISSION OF CONTRACT AND SIGNATURE. By electronically signing this document in electronic form, Parties agree that this Agreement may be transmitted and signed electronically by all Parties, and that such signatures shall have the same force and effect as original signatures, in accordance with California law and regulations, including but not limited to Civil Code Section 1633.7
[Signatures on following page]
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CITY OF WEST SACRAMENTO
By: __________________________
Amanda Berlin, Assistant City Manager
ATTEST:

By: _______________________
Jennifer Cusmir, City Clerk
APPROVED AS TO FORM:

By: _______________________
Jeffrey Mitchell, City Attorney
Hinderliter, de Llamas & Associates
By: _________________________
Andrew Nickerson, President/CEO
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EXHIBIT A
Consultant Proposal/Scope of Work
969

SCOPE OF SERVICES
Transient Occupancy Tax and Tourism Improvement District 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.

2. Online Payment Processing – Consultant’s services include PCI compliant payment processing services which supports both credit card and eCheck transactions.

2.1. Client Responsibilities

2.1.1.As a condition to its receipt of the Service, Client shall execute and deliver any and all applications, agreements, certifications or other documents required by Consultant’s payment processor, Networks or other third parties whose consent or approval is necessary for the processing of Transactions by Consultant’s payment processor. “Network” is an entity or association that operates, under a common service mark, a system which permits participants to authorize, route, and settle Transactions among themselves, including, for example, networks operated by VISA USA and Mastercard, Inc., NYCE Corporation, American Express, and Discover.

2.1.2.Client hereby grants Consultant the full right, power and authority to request, receive and review any Data or records reflected in a Transaction report. Client represents and warrants that it has the full right and authority to grant these rights.

Consultant will provide the following Services relative to Client’s short-term rentals transient occupancy tax administration.

Transient Occupancy Tax Audits

3. Audit Services

3.1. Analyze Client transient occupancy tax ordinance and business procedures, and recommend possible improvements or best practices for processes, form design, and ordinance.

3.2. 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).

3.3. Recommend lodging providers who merit additional investigation or examination to determine their compliance with Client’s ordinance.
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3.4. Lodging providers identified by Consultant and approved by Client for audit are scheduled for a compliance analysis audit.

3.5. 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.

3.6. Generate lodging provider compliance report (including results of the compliance analysis audit and recommended actions). Review report with Client and determine next steps.

3.7. 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.

3.8. Send compliant lodging providers a letter of commendation, thanking them for their cooperation and compliance.

3.9. Invoice lodging providers found to be underreporting through the standard Client approved collections process.

3.10. Short-Term Rentals Transient Occupancy Tax Administration The availability of the following services is conditional on HdL providing TOT Operations Management Services.

4. Identification and Monitoring

4.1. Monitor short-term rental sites to identify new listings and closures.

4.2. Match listings to specific parcels using GIS and property tax assessor data.

4.3. Identify properties which are already registered and paying taxes.

4.4. Provide a visual map of listing locations in Client’s jurisdiction.

4.5. Record listing details (including start date, sites linked to, and other information necessary for documenting evidence of short-term rental activity).

5. Education, Registration, and Compliance

5.1. Notify non-compliant lodging providers of their status and any actions necessary to become compliant.

5.2. Provide short-term rentals website with links to FAQs, education packets, and support for registering, filing returns, and making payments.

5.3. Follow-up with non-compliant entities and assist as needed to obtain compliance.

5.4. Work with Client to identify additional requirements and ensure collection of data necessary for enforcement procedures.

6. Operations Management Services

6.1. Establish and maintain database of Client’s short-term rental lodging providers.

6.2. Receive and process registrations, tax returns and payments in a timely fashion.

6.3. 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).

6.4. Remit revenue to Client no less than monthly.

6.5. Provide Client staff access to website portal offering lodging provider registry inquiry and reporting capabilities.
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6.6. Endeavor to ensure accurate filings of returns by consistently monitoring returns and educating lodging providers.

6.7. Provide analysis reports monthly and annually provide revenue trends and key insights on Client lodging providers.

Parking Fee Audit

7. Audit Services

7.1. Review City’s agreements related to both the collection and disbursement of parking fees administered on the City’s behalf.

7.2. Analyze historical revenue remittances and review analysis findings with Client. Analysis will include the most recent thirty-six (36) months of parking fees remittances along with supplemental data as available.

7.3. Review of charges and fees collected on behalf of the City during the review period.

7.4. Audit actual Revenue Remittances received with review of detailed charges and apportionment.

7.5. Calculate and summarize any discrepancies for the City’s review.

7.6. Generate audit report upon completion of the audit and analysis summarizing audit. Review report with Client and determine recommended actions.

Franchise Fee Audit

8. Franchise Fee 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:

8.1. Overall Tasks

8.1.1.Contact City’s staff and obtain documentation required to kick off the project.

8.1.2.Review the franchise agreements and requirements under DIVCA to understand the definition of gross revenues and the determination of franchise and PEG fees.

8.1.3.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.

8.1.4.Execute non-disclosure agreements (NDAs) with the Companies, if required.

8.1.5.Correspond with the Companies and the City, as required via phone and email, to obtain documentation, resolve issues, and obtain any appropriate assistance.

8.2. Review of Franchise and PEG Fees

8.2.1.Recalculate the franchise and PEG fees paid to City for the review period.

8.2.2.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.
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8.2.3.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.

8.2.4.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.

8.2.5.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.

8.2.6.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.

8.2.7.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.

8.2.8.Review other revenues consistent with the franchise agreements and DIVCA to determine whether they were correctly included in reported revenues.

8.2.9.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.

8.2.10. Review bad debt expense and bad debt recoveries reported to the City.

8.2.11. Review and recalculate allocation of non-subscriber revenues to ensure that they are correctly included in gross revenues reported to the City.

8.2.12. Reconcile advertising revenues reported in franchise and PEG fee payments to supporting documentation provided by the Companies.

8.2.13. Review any "contra-expenses" recorded by the Companies to ensure that amounts were accurately reported to the City.

8.3. SUMMARIZE RESULTS AND ISSUE REPORTS

8.3.1.Analyze franchise and PEG fees reported to the City by category of revenues.

8.3.2.Calculate under/overpayment of the amount due to the City, interest charges and applicable fees on under/overpayments of the franchise fees.

8.3.3.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.

8.4. 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.

8.5. 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:

8.5.1.Quarterly franchise and PEG fee payments and all supporting documentation

8.5.2.True-up and/or settlement payments

8.5.3.Franchise agreements, transfer agreements and ordinances, settlement agreements

8.5.4.Rate cards and fee schedules

8.5.5.Any relevant correspondence related to franchise fee payments.

8.5.6.Any other relevant information that may impact Consultant review. 973
Sales and Use Tax Services

9. Sales and Use Tax and Economic Analysis/Forecasting Services/Reports

9.1. Establish a special database identifying the name, address, and quarterly allocations of all sales tax producers within the City. 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, or business districts, identification of reporting aberrations, and per capita and outlet comparisons with regional and statewide sales.

9.2. 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, quarterly aberrations due to State audits, fund transfers, and receivables, along with late or double payments, and quarterly reconciliation worksheets to assist with budget forecasting.

Consultant shall meet quarterly by in person or virtually with City.

9.3. Shall additionally provide following each calendar quarter a summary analysis for City to share with Council Members, Chamber of Commerce, other economic development interest groups and the public that analyze City’s sales tax trends by major groups and geographic areas without disclosing confidential individual tax records.

9.4. Establish a special database with California Department of Tax and Fee Administration (“CDTFA”) registration data for businesses within applicable district boundaries holding seller’s permit accounts.

9.5. 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.

9.6. 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.

10. Allocation and Audit Recovery Services

10.1. Conduct (when mutually agreed with City) initial and on-going sales and use tax audits of businesses to help identify and correct distribution and allocation errors, and to proactively affect favorable registration, reporting or formula changes thereby generating previously unrealized sales and use tax income for the City and/or recovering misallocated tax from registered taxpayers.

Common errors that will be monitored and corrected include but are not limited to: 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.

10.2. 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. Such contacts will be conducted in a professional and courteous manner.

10.3. 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 promote recovery by the City of back or prospective quarterly payments that may be owing. 974
If, during the course of its audit, Consultant finds businesses located in the City’s jurisdiction that are properly reporting sales and use tax 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 Transactions Tax Services

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

3.1 Consultant shall establish a database containing all applicable Department of Tax and Fee Administration (CDTFA) registration data for each business within the Measures K, V, E, O and N District boundaries holding a seller’s permit account. Said database shall also identify the quarterly transactions and use tax allocations under each account for the most current and previous quarters where available.

3.2 Consultant shall provide updated reports each quarter identifying changes in allocation totals by individual businesses, business groups and by categories. Quarterly aberrations due to State audits, fund transfers, and receivables, along with late or double payments, will also be identified.

Quarterly reconciliation worksheets to assist finance officer with budget forecasting will be included.

3.3. Consultant shall advise and work with CITY Staff on planning and economic questions related to maximizing revenues, preparation of revenue projections and general information on transactions and use tax questions.

3.4. Consultant shall make available to CITY the HdL proprietary software program and Measures K, V, E, O and N database containing all applicable registration and quarterly allocation information for CITY business outlets registered with the Department of Tax and Fee Administration. The database will be updated quarterly.

12. Deficiency/Allocation Reviews and Recovery

12.1. Consultant shall conduct on-going reviews to identify and correct unreported transactions and tax payments and distribution errors thereby generating previously unrealized revenue for the City. Reviews shall include:

12.1.(a) Comparison of county-wide local tax allocations to transactions tax for brick and mortar stores and other cash register-based businesses, where clearly all transactions are conducted on-site within the Measures K, V, E, O and N City boundaries, and therefore subject to transactions tax.

12.1.(b) Review of any significant one-time use tax allocations to ensure that there is corresponding transaction tax payments for taxpayers with nexus within the City boundaries.

12.1.(c) Review of state-wide transactions tax allocations and patterns to identify any obvious errors and omissions.

12.1.(d) Identification and follow-up with any potentially large purchasers of supplies and equipment (e.g. hospitals, universities, manufacturing plants, agricultural operations, refineries) to ensure that their major vendors are properly reporting corresponding transactions tax payments to the Measures K, V, E, O and N Transactions Tax District.

12.2. Consultant will initiate, where the probability of an error exists, contacts with the appropriate taxpayer management and accounting officials to verify whether current tax receipts accurately reflect the local sales activity. Such contacts will be conducted in a professional and courteous manner so as to enhance CITY’s relations with the business community. 975

12.3. Consultant shall prepare and submit to the Department of Tax and Fee Administration all information necessary to correct any allocation errors and deficiencies that are identified and shall follow-up with the individual businesses and the California Department of Tax and Fee Administration to ensure that all back quarter payments due the CITY are recovered.

ADDITIONAL TERMS – Sales, Use and Transactions Tax Services

13. Consulting and Other Optional Services
Consultant may 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 business license 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 revenuerelated matters.

Cannabis Development Agreement Fees

14. Cannabis Development Agreement Fees - To start the project, HdL’s team will meet with City staff to discuss the approach and expectations, to develop an implementation timeline and determine the City’s desired schedule for each of the services contemplated by this RFP. The project management team will meet and confer on a regular basis with the City’s designated contact to review the progress of any work products and to discuss any changes in direction or needed details.

Cannabis revenue audits and inspections will be scheduled in consultation with the City. HdL will endeavor to conduct compliance inspections of multiple facilities on the same day wherever possible, with a maximum of four on any one day to minimize travel costs. Inspection reports shall be provided to the City no later than two weeks after the inspection. Additional inspections requested by the City in response to complaints or previous non-compliance shall be conducted within two weeks of receiving the request.

HdL’s audits are typically completed within 60 days from receipt of all requested documentation to issuance of the draft report. This timeline assumes reasonable cooperation by the auditee, which is not within HdL’s control. Delayed responses to any requests for additional information may increase this timeline. The overall timeline from issuance of the audit notification letter to the final report averages six to nine months. This timeline may be increased or decreased depending upon cooperation and responsiveness by the permittee and completeness of the records provided.

HdL shall distribute the audit and inspection workload among our staff so as to allow for timely performance. Our workplan and staffing can accommodate additional businesses as they become licensed and functioning over time.

15. Compliance Audits and Inspections
HdL will conduct one or more on-site compliance inspections annually, as requested by the City, for each permitted cannabis business to determine compliance with State and/or local laws. If HdL 976
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.

Each on-site inspection shall ensure the licensee is compliant with all regulatory requirements. HdL will prepare 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.

The cost for this service includes all communications, scheduling and, travel costs associated with the inspection, assuming a minimum of four inspections per day. Fewer inspections may incur an additional fee to be determined in consultation with City. Facilities greater than 30,000 square feet will be subject to an additional cost at HdL’s hourly rate to account for the additional time involved in conducting and documenting inspections.

Issuance of the inspection report constitutes completion of this service. The cost for this service does not include any follow-up re-inspection or review of any documents provided to address or contest any findings of non-compliance, nor does it include any assistance with administrative appeals, litigation, cannabis tax policy questions or guidance, or other services not directly associated with conducting the inspection. Any such additional services requested by the City would be subject to agreement by HdL and would be billed at HdL’s standard hourly rate.

16. Annual Revenue Audits
HdL will conduct an annual revenue audit of each cannabis business to verify the accuracy of the revenue reported and remitted to the City during the review period and will recommend a tax adjustment should the audit reveal any variances in reported revenue.

HdL shall work with the City to determine the appropriate review period for each business and to develop a schedule for conducting all audits. HdL will prepare a notification letter informing the licensee of the impending audit and providing a list of all required records and documentation, including remote access to the business’s point-of-sale (POS) system where applicable.

The full annual audit shall include review of the Point of Sale (POS) system, inventory data (subject to METRC availability), analyzing and comparing all required records and data sources, identifying any variances or discrepancies, calculating any fees owed to the City and issuing a report. HdL will provide the draft audit report to the commercial cannabis business, which will be given an appropriate opportunity to provide supplemental information to address any disagreement with the findings. HdL will review any additional documentation provided by the business and will adjust the assessment as appropriate prior to issuing the final report to the City. Issuance of the final report constitutes completion of the audit.

The cost for this service assumes a standard 12-month review period and reasonable cooperation by the licensee. A longer review term or non-cooperation by the licensee may incur additional charges to be determined in consultation with the City. The cost does not include any review or revision to the audit after the final report has been issued to the City, nor does it include any assistance with collections or enforcement of audit findings, administrative appeals, litigation, cannabis tax policy questions or guidance, or other services not directly associated with preparing the revenue audit report. Any such additional services requested by the City would subject to agreement by HdL and would be billed at HdL’s standard hourly rate.

Discovery
HdL will provide additional hours of general consultation to be utilized on an as-needed basis at the City’s request. Such assistance may include:
 Technical assistance and subject matter expertise
 Education and presentations to the City Council
 Monitoring of changes to State laws and regulations, or other assistance as requested 977
Any such assistance will be billed at HdL’s standard hourly rate.

17. Administration of Monthly Cannabis Business License Tax Collection HdL can develop monthly self-reporting and remittance procedures that will enable cannabis businesses to report their monthly gross receipts to the City and to remit the appropriate amount of taxes due. We will develop all necessary procedures, guidelines and forms, and will administer a secure portal through which businesses can file returns and submit payments. Our revenue management services provide monthly notification to each business to inform them when payments are due. Payments can be accepted via credit card, E-check or cash. HdL will provide a report to the City each month with the total amounts collected and will provide the City with ongoing guidance and best-practices regarding cash handling policies, protocols and procedures. 978
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FIN25-021 Revenue Audit and Consulting
Expires on 2/18/2028

EXHIBIT B
Schedule of Fees
979
FEES
Transient Occupancy Tax and Tourism Improvement District Administration

18. Operations Management Services

18.1. Fees for performing Transient Occupancy Tax operations management Services shall be $950.00 per year for each filing property and a one-time $5,000.00 implementation fee.

18.2. Fees for performing Tourism Improvement District operations management Services shall be $2,500.00 per year.

18.3. 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%.

18.4. Fees for any travel and lodging expenses will be billed at cost and applied to all meetings (including implementation, training, operations and support).

18.5. 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.

19. Payment Processing – Consultant will configure payment processing services to utilize either a taxpayer funded model (convenience fee) or Client funded model, as directed by Client. Client may switch between these models upon written request to Consultant. Fees for each of these payment processing models are detailed here.

19.1. Taxpayer funded model – Client authorizes Consultant to collect each convenience fee from the taxpayer at time of payment.

19.1.1. Credit and debit card processing – 2.9% of transaction amount, minimum of $2.00

19.1.2. ACH/eCheck processing - $2.50 per transaction

19.2. Client funded

19.2.1. Credit and debit card processing – 2.9% of transaction amount

19.2.2. ACH/eCheck processing - $0.75 per transaction

19.3. Returned payments/NSF fee – Each occurrence of a card chargeback, returned payment or insufficient funds will incur a fee of $25.00, to be applied to the taxpayers account.

19.4. Consultant reserves the right to review and adjust pricing related to payment processing services on an annual basis. Consultant will communicate any such adjustment to Client in writing, with 60 days advance notice. Items that will be considered in the review of fees may include, but are not limited to: regulatory changes, card association rate adjustments, card association category changes, bank/processor dues and assessments, average consumer payment amounts, card type utilization, and costs of service.

Transient Occupancy Tax Audits
980

20. Audit Services

20.1. Fees for performing audit Services are $2,500.00 per audit or $2,250,00 when done with 10 or more properties consecutively.

20.1.1. 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%.

20.2. Fees for any travel and lodging expenses will be billed at cost and applied to all meetings (including implementation, training, operations and support).

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 Short-Term Rentals Transient Occupancy Tax Administration

21. Operations Management Services

21.1. Fees for performing operations management Services shall be $95.00 per identified property, $17 per filing processed, and $25.00 for permit application or renewal processed.

21.1.1. 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%.

21.2. Fees for any travel and lodging expenses will be billed at cost and applied to all meetings (including implementation, training, operations and support).

21.3. 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.

Parking Fees Audit

22. Audit Services

22.1. Fee for performing Parking Fees Audit Service will be not to exceed $25,000.00, at Consultant’s current hourly rates as follows:

22.1.1. Principal - $325 / hr

22.1.2. Programmer - $295 / hr

22.1.3. Senior Analyst - $245 / hr

22.1.4. Analyst - $195 / hr
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22.2. Fees for any travel and lodging expenses will be billed at cost and applied to all meetings (including implementation, training, operations and support).

22.3. 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.

Franchise Fee Audit

23. Audit Services – Consultant will review franchise fees and PEG fees (if applicable) for the most recent 3-year review period for an hourly rate of $201.025 per hour, not to exceed $27,600.00 per provider review.

23.1. If Client 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 $250.00 per hour.

23.2. Fees for any travel and lodging expenses will be billed at cost and applied to all meetings (including implementation, training, operations and support).

23.3. Client will be invoiced monthly for Services performed during the prior month.

23.4. Review not to exceed amount 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%.

23.5. 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.

Sales and Use Tax Services

24. Sales and Use Tax and Economic Analysis/Forecasting Services/Reports

24.1. Fees for performing the sales tax and economic analysis/forecasting Services as described above shall initially be $750.00 per month, commencing with the month of the Effective Date (hereafter referred to as “monthly fee”). The monthly fee shall be invoiced quarterly in arrears, and shall be paid by City no later than 30 days after the invoice date.

24.2. Consultant will increase the non-hourly Fees established above once a year with reference to the 12-month percent change in the most recently published annual Consumer Price Index for All Urban Consumers (CPI-U), as reported by the U.S. Bureau of Labor Statistics (the “CPI Change”).

25. Allocation and Audit Recovery Services

25.1. Fees for performing the allocation and audit recovery Services described above shall be 15% of all new, increased and recovered sales and use tax revenue received by the City as a result, in whole or in part, of the allocation audit and recovery services (hereafter referred to as “audit 982
fee”). The fee 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.

25.2. The Fee described above include, without limitation, State fund transfers received for back quarter reallocations and monies received in the second eight (8) consecutive reporting quarters following completion of Consultant’s allocation audit and confirmation of the corrections by the CDTFA.

25.3. 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.

Transactions Tax Services

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

26.1. Fees shall be paid $300 monthly per Measure billed quarterly for the transaction district tax reports that we include with the quarterly sales tax analyses. The monthly fee shall be invoiced quarterly in arrears and shall be paid by City no later than 30 days after the invoice date.

26.2. Consultant may change the non-hourly Fees established above once a year. Any such change must be with reference to the 12-month percent change in the most recently published annual Consumer Price Index for All Urban Consumers (CPI-U), as reported by the U.S. Bureau of Labor Statistics (the “CPI Change”).

27. Allocation and Audit Recovery Services

2.1 Fees shall be paid 25% of the initial amount of new transactions or use tax revenue received by the City because of audit and recovery work performed by Consultant, (hereafter referred to as "audit fees"). New revenue shall not include any amounts determined and verified by City or Consultant to be increment attributable to causes other than Consultant’s work pursuant to this agreement. In the event, Consultant is responsible for an increase in the tax reported by businesses already properly making tax payments to the City, it shall be Consultant’s responsibility to separate and support the incremental amount attributable to its efforts prior to the application of the audit fee. Said audit fees will apply to state fund transfers received for those specific quarters identified as being missing and/or deficient following completion of the audit by Consultant and confirmation of corrections by the California Department of Tax and Fee Administration but shall not apply prospectively to any future quarter. Consultant shall provide City with an itemized quarterly invoice showing all formula calculations and amounts due for audit fees.

ADDITIONAL TERMS – Sales, Use and Transactions Tax Services

28. Consulting and Other Optional Services

28.1. 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.

29. General Provisions Relating to Fees
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29.1. 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.

29.2. 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.

30. Confidentiality Information
Section 7056 of the State of California Revenue and Taxation Code (“R&T Code”) specifically limits the disclosure of confidential taxpayer information contained in the records of the CDTFA. Section 7056 specifies the conditions under which a city, county or district may authorize persons other than such city, county or district’s officers and employees to examine state sales and use tax records.

The following conditions specified in Section 7056-(b)(1) of the State of California R&T Code are hereby made part of this Agreement:

28.1. Consultant is authorized by this Agreement to examine sales, use or transactions and use tax records of the CDTFA provided to City pursuant to contract under the Bradley-Burns Uniform Local Sales and Use Tax Law R&T Code Section 7200 et.seq.

28.2. 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.

28.3. Consultant is prohibited from performing consulting services for a retailer (as defined in R&T Code Section 6015), during the term of this agreement.

28.4. Consultant is prohibited from retaining the information contained in or derived from those sales, use or transactions and use tax records after this agreement has expired. Information obtained by examination of the CDTFA records shall be used only for purposes related to collection of local sales and use tax or for other governmental functions of the City as set forth by resolution adopted pursuant to Section 7056 (b) of the Revenue and Taxation Code. The resolution shall designate the Consultant as a person authorized to examine sales and use tax records and certify that this agreement meets the requirements set forth above and in Section 7056 (b), (1) of the Revenue and Taxation Code.

31. Software Use and Proprietary Information
Software Use. Consultant hereby provides authorization to City to access Consultant’s Sales Tax website if City chooses to subscribe to the software and reports option. The website shall only be used by authorized City staff. No access will be granted to any third party without explicit written authorization by Consultant. City shall not sublet, duplicate, modify, decompile, reverse engineer, disassemble, or attempt to derive the source code of said software. The software use granted hereunder shall not imply ownership by City of said software, or any right of City to sell said software or the use of same, or any right to use said software for the benefit of others. This software use authorization is not transferable. Upon termination or expiration of this Agreement, the software use authorization shall expire, and all City staff website logins shall be de-activated.

Proprietary Information. As used herein, the term “proprietary information” means all information or material that has or could have commercial value or other utility in Consultant’s business, including 984
without limitation: Consultant’s (i) computer or data processing programs; (ii) data processing applications, routines, subroutines, techniques or systems; desktop or web-based software; (iii) business processes; (iv) marketing plans, analysis and strategies; and (v) materials and techniques used; as well as the terms and conditions of this Agreement. Except as otherwise required by law, City shall hold in confidence and shall not use (except as expressly authorized by this Agreement) or disclose to any other party any proprietary information provided, learned of or obtained by City in connection with this Agreement. The obligations imposed by this Section shall survive any expiration or termination of this Agreement or otherwise. The terms of this Section shall not apply to any information that is public information.

Cannabis Development Agreement Fees

32. Cannabis Development Agreement Fees - This proposal does not include any additional services that are not specifically enumerated herein. The proposal assumes HdL will not be asked to review any supplemental information provided by applicants or businesses, and that HdL will not be a part of any enforcement action, appeal, arbitration, or civil litigation resulting from the findings of an inspection and/or audit. Any such additional reports, documentation or assistance that may be required would be in addition to the costs shown in the table below and shall be billed at HdL’s hourly rate. This includes assistance with administrative hearings and/or civil litigation involving cannabis applicants or licensees. 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.

Scope of Service Objectives Estimated Cost
a) Compliance Audits/Inspections
One or more inspections per year, asrequested by the City $2,500
per inspection
b) Cannabis Revenue Audits
Assumes standard 12-month review period
$10,000
per audit
c) Discovery
Subject matter expertise to be used as needed
Hourly Rate1
d) Administration of Monthly Cannabis Tax Payments
Excludes initial setup cost
$950
per business per
year
Administration of Monthly Cannabis Tax Payments – Initial Setup One-time fee. Note: This will be waived if bundled with other services) $5,000
flat rate
Travel: As needed for site visits or in-person meetings Hourly Rate2 Plus Expenses
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1Objective billed at hourly rate - $300 Per Hour Standard Hourly Rate 2Or at a flat rate to be determined in consultation with the City All City costs may be fully recoverable from applicants or permittees

33. Hourly Rate for Additional Services Hourly Rates for Other Optional Services Not Included in this RFP
• Director: $325
• Programmer: $295
• Senior Analyst: $245
• Analyst: $195
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FIN25-021 Revenue Audit and Consulting
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EXHIBIT C
CERTIFICATE OF COMPLIANCE WITH LABOR CODE § 3700
[Labor Code § 1861]
I am aware of the provisions of Section 3700 of the Labor Code which require every employer to be insured against liability for workers’ compensation or to undertake self-insurance in accordance with the provisions of that code, and I will comply with such provisions before commencing the performance of the work of this contract.

Hinderliter, de Llamas and Associates
By:

Andrew Nickerson, President/CEO
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Hinderliter, de Llamas and Associates
FIN25-021 Revenue Audit and Consulting
Expires on 2/18/2028
(a)
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HDL Coren & Cone
FIN25-022 Property Tax Audit & Consulting Services
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CONTRACT FOR SERVICES
THIS CONTRACT is made on February 19, 2025, by and between the CITY OF WEST SACRAMENTO (“City”), and HDL Coren & Cone (“Consultant”).

WITNESSETH:

WHEREAS, the City desires a consultant for property tax audit and consulting services; WHEREAS, the Consultant has presented a proposal for such services to the City, dated December 18, 2024 (attached hereto as Exhibit “A”) and is duly licensed, qualified and experienced to perform those services;
NOW, THEREFORE, the parties hereto mutually agree as follows:

1. SCOPE OF SERVICES:

A. Consultant shall do all work, attend all meetings, produce all reports and carry out all activities necessary to completion of the services described in Exhibit “A” This Contract and its exhibits shall be known as the “Contract Documents.” Terms set forth in any Contract Document shall be deemed to be incorporated in all Contract Documents as if set forth in full therein. In the event of conflict between terms contained in these Contract Documents, the more specific term shall control. If any portion of the Contract Documents shall be in conflict with any other portion, provisions contained in the Contract shall govern over conflicting provisions contained in the exhibits to the Contract.

B. Consultant enters into this Contract as an independent contractor and not as an employee of the City. The Consultant shall have no power or authority by this Contract to bind the City in any respect. Nothing in this Contract shall be construed to be inconsistent with this relationship or status. All employees, agents, contractors or subcontractors hired or retained by the Consultant are employees, agents, contractors or subcontractors of the Consultant and not of the City. The City shall not be obligated in any way to pay any wage claims or other claims made against Consultant by any such employees, agents, contractors or subcontractors, or any other person resulting from performance of this Contract. In the event that Consultant or any employee, agent, or subcontractor of Consultant providing services under this Agreement claims or is determined by a court of competent jurisdiction or the California Public Employees Retirement System (PERS) to be eligible for enrollment in PERS as an employee of the City, Consultant shall indemnify, defend, and hold harmless City for the payment of any employee and/or employer contributions for PERS benefits on behalf of Consultant or its employees, agents, or subcontractors, as well as for the payment of any penalties and interest on such contributions, which would otherwise be the responsibility of City. Notwithstanding any other agency, state or federal policy, rule, regulation, law or ordinance to the contrary, To the greatest extent permitted by law, Consultant and its employees, agents, and subcontractors shall not qualify for or become entitled to, and hereby agree to waive any claims to, any compensation, benefit, or any incident of employment by City, including but not limited to eligibility to enroll in PERS as an employee of City and entitlement to any contribution to be paid by City for employer contribution and/or employee contributions for PERS benefits.
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C. The Consultant agrees it has satisfied itself by its own investigation and research regarding the conditions affecting the work to be done and labor and materials needed, and that its decision to execute this Contract is based on such independent investigation and research.

2. TERM OF CONTRACT
A. The services of Consultant are to commence upon execution of this Contract by the City, and shall be undertaken and completed in accordance with the Schedule of Performance attached hereto and incorporated herein by this reference as Exhibit “A” and terminate on February 18, 2028.

B. Consultant’s failure to complete work in accordance with the Schedule of Performance may result in delayed compensation as described in Section 3.

C. The City Manager or his or her designee may, by written instrument signed by the Parties, extend the duration of this Contract for two (2) additional one-year extensions in the manner provided in Section 5, provided that the extension does not require the payment of compensation in excess of the Council approved budget.

3. COMPENSATION:

A. The Consultant shall be paid quarterly for the actual fees, costs and expenses, Consultant's fees shall be as specified in the Schedule of Fees, which is attached hereto an incorporated herein as Exhibit "C".

B. Said amount shall be paid upon submittal of a quarterly billing. Consultant shall furnish City with invoices for all expenses as well as for all materials authorized by this Contract.

The invoices shall be submitted with the quarterly billings. If Consultant’s performance is not in conformity with the Schedule of Performance, “Exhibit B”, payments may be delayed or denied, unless the Consultant’s failure to perform in conformity with the Schedule of Performance is a documented result of the City’s failure to conform with the Schedule of Performance, or if the Schedule of Performance is extended pursuant to Section 5.

C. If the work is halted at the request of the City, compensation shall be based upon the proportion that the work performed bears to the total work required by this Contract, subject to Section 4.

4. TERMINATION:

A. This Contract may be terminated by either party, provided that the other party is given not less than 30 calendar days’ written notice (delivered by certified mail, return receipt requested) of intent to terminate.

B. The City may temporarily suspend this Contract, at no additional cost to City, provided that the Consultant is given written notice (delivered by certified mail, return receipt requested) of temporary suspension. If City gives such notice of temporary suspension, Consultant shall immediately suspend its activities under this Contract.

C. Notwithstanding any provisions of this Contract, Consultant shall not be relieved of liability to the City for damages sustained by the City by virtue of any breach of this Contract 990
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by Consultant, and the City may withhold any payments due to Consultant until such time as the exact amount of damages, if any, due the City from Consultant is determined.

D. In the event of termination, the Consultant shall be compensated as provided for in this Contract, except as provided in Section 4C. Upon termination, the City shall be entitled to all work, including but not limited to, appraisals, inventories, studies, analyses, drawings and data estimates performed to that date in accordance with Section 7 hereof.

5. AMENDMENTS, CHANGES OR MODIFICATIONS:

Amendments, changes or modifications in the terms of this Contract may be made at any time by mutual written agreement between the parties hereto and shall be signed by the persons authorized to bind the parties hereto.

6. EXTENSIONS OF TIME:

Consultant may, for good cause, request extensions of time to perform the services required hereunder. Such extensions shall be authorized in advance by the City in writing and shall be incorporated in written amendments to this Contract or the attached Work Program in the manner provided in Section 5.

7. PROPERTY OF CITY:

A. It is mutually agreed that all materials prepared by the Consultant under this Contract shall become the property of the City, and the Consultant shall have no property right therein whatsoever. Immediately upon termination, the City shall be entitled to, and the Consultant shall deliver to the City, all data, drawings, specifications, reports, estimates, summaries and other such materials as may have been prepared or accumulated to date by the Consultant in performing this Contract which is not Consultant’s privileged information, as defined by law, or Consultant’s personnel information, along with all other property belonging exclusively to the City which is in the Consultant’s possession.

B. Additionally, it is agreed that the parties intend this to be a contract for services and each considers the products and results of the services to be rendered by Consultant hereunder (the “Work”) to be a work made for hire. Consultant acknowledges and agrees that the Work (and all rights therein, including, without limitation, copyright) belongs to and shall be the sole and exclusive property of the City.

8. COMPLIANCE WITH ALL LAWS:

A. Consultant shall comply with all applicable laws, ordinances, and codes of federal, State and local governments, and shall commit no trespass on any public or private property in performing any of the work authorized by this Contract.

B. Consultant warrants to the City that it is licensed by all applicable governmental bodies to perform this Contract and will remain so licensed throughout the progress of the Work, and that it has, and will have, throughout the progress of the Work, the necessary experience, skill and financial resources to enable it to perform this Contract. 991
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9. WARRANTIES AND RESPONSIBILITIES - CONSULTANT:

A. Consultant agrees and represents that it is qualified to properly provide the services set forth in Exhibit “A” in a manner which is consistent with the generally accepted standards of Consultant’s profession.

B. Consultant agrees and represents that the work performed under this Contract shall be in accordance with applicable federal, State and local law in accordance with Section 17A hereof.

C. Consultant shall designate a project manager who at all times shall represent the Consultant before the City on all matters relating to this Contract. The project manager shall continue in such capacity unless and until he or she is removed at the request of the City, is no longer employed by Consultant, or is replaced with the written approval of the City, which approval shall not be unreasonably withheld.

D. Consultant shall provide corrective services without charge to the City for services which fail to meet the above professional and legal standards and which are reported to Consultant in writing within sixty (60) days of discovery. Should Consultant fail or refuse to perform promptly its obligations, the City may render or undertake performance thereof and the Consultant shall be liable for any expenses thereby incurred.

10. SUBCONTRACTING:

None of the services covered by this Contract shall be subcontracted without the prior written consent of the City, which will not be unreasonably withheld. Consultant shall be as fully responsible to the City for the negligent acts and omissions of its contractors and subcontractors, and of persons either directly or indirectly employed by them, as it is for the negligent acts and omissions of persons directly employed by Consultant.

11. ASSIGNABILITY:

Consultant shall not assign or transfer any interest in this Contract whether by assignment or novation, without the prior written consent of the City which will not be unreasonably withheld.

However, claims for money due or to become due Consultant from the City under this Contract may be assigned to a financial institution, or to a trustee in bankruptcy, without such approval.

Notice of any assignment or transfer whether voluntary or involuntary shall be furnished promptly to the City.

12. INTEREST IN CONTRACT:

Consultant covenants that neither it, nor any of its employees, agents, contractors, subcontractors has any interest, nor shall they acquire any interest, direct or indirect, in the subject of the Contract, nor any other interest which would conflict in any manner or degree with the performance of its services hereunder. Consultant shall make all disclosures required by the City’s conflict of interest code in accordance with the category designated by the City, unless the City Manager determines in writing that Consultant’s duties are more limited in scope than is warranted by the category designated by the City code and that a narrower disclosure category should apply. Consultant also agrees to make disclosure in compliance with the City conflict of interest code if, at any time after the execution of this Contract, City determines and notifies Consultant in writing that Consultant’s duties under this Contract warrant greater disclosure by 992
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Consultant than was originally contemplated. Consultant shall make disclosures in the time, place and manner set forth in the conflict of interest code and as directed by the City.

13. MATERIALS CONFIDENTIAL:

All of the materials prepared or assembled by Consultant pursuant to performance of this Contract are confidential and Consultant agrees that they shall not be made available to any individual or organization without the prior written approval of the City, except by court order.

14. LIABILITY OF CONSULTANT-NEGLIGENCE:

Consultant shall be responsible for performing the work under this Contract in a manner which is consistent with the generally-accepted standards of the Consultant’s profession and shall be liable for its own negligence and the negligent acts of its employees, agents, contractors and subcontractors. The City shall have no right of control over the manner in which the work is to be done but only as to its outcome, and shall not be charged with the responsibility of preventing risk to Consultant or its employees, agents, contractors or subcontractors.

15. INDEMNITY AND LITIGATION COSTS:

Consultant shall indemnify, defend, and hold harmless the City, its officers, officials, agents, and employees against all claims, damages, demands, liability, costs, losses and expenses, including without limitation court costs and reasonable attorneys’ fees, arising from Consultant's negligent acts or negligent failure to act, errors, omissions or willful misconduct incident to the performance of this Contract except such loss or damage caused by the active negligence, sole negligence, or willful misconduct of the City. The provisions of this paragraph shall survive termination or suspension of this Contract.

16. CONSULTANT TO PROVIDE INSURANCE:

A. Consultant shall not commence any work before obtaining, and shall maintain in force at all times during the duration and performance of this Contract, the policies of insurance specified in this Section. Such insurance must have the approval of the City as to limit, form, and amount, and shall be placed with insurers with a current A.M. Best’s rating of no less than A VII (an NR rating is acceptable for Worker’s Compensation insurance written with the State Compensation Insurance Fund of California).

B. Prior to execution of this Contract and prior to commencement of any work, the Consultant shall furnish the City with certificates of insurance and copies of endorsements providing evidence of coverage for all policies required by the Contract. The Consultant and its contractors and subcontractors shall, at their expense, maintain in effect at all times during the performance of work under the Contract not less than the following coverage and limits of insurance, which shall be maintained with insurers and under forms of policy satisfactory to the City. The maintenance by Consultant and its contractors and subcontractors of the following coverage and limits of insurance is a material element of this Contract. The failure of Consultant or of any of its contractors or subcontractors to maintain or renew coverage or to provide evidence of renewal may be treated by the City as a material breach of this Contract. Approval of the insurance by the City shall not relieve or decrease any liability of Consultant.

1. Worker’s Compensation and Employer’s Liability Insurance

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a. Worker’s Compensation - Insurance to protect the Consultant, its contractors and subcontractors from all claims under Worker’s Compensation and Employer’s Liability Acts, including Longshoremen’s and Harbor Worker’s Act (“Acts”), if applicable. Such coverage shall be maintained, in type and amount, in strict compliance with all applicable state and Federal statutes and regulations.

The Consultant shall execute a certificate in compliance with Labor Code Section 1861, on the form provided in the Contract Documents.
b. Consultant shall provide a Waiver of Subrogation endorsement in favor of the City, its officers, officials, employees, agents and volunteers for losses arising from work performed by the Consultant.

2. Commercial General Liability Insurance
a. The insurance shall be provided on form CG0001, or it’s equivalent, and shall include coverage for claims for bodily injury or property damage arising out of premises/operations, products/completed operations, contractual liability, and subconsultant’s work and personal and advertising injury resulting from actions, failures to act, or operations of the insured, or by its employees or agents, or by anyone directly or indirectly employed by the insured. The amount of insurance coverage shall not be less than $1,000,000.00 per occurrence and $2,000,000 general and products/completed operations aggregates. b. The commercial general liability insurance shall also include the following:
i. Endorsement equivalent to CG 2010 0714 naming the City, its officers, officials, employees, agents, and volunteers as additional insureds. The endorsement shall contain no special limitations on the scope of protection afforded to the City, its officers, officials, employees or volunteers.
ii. Endorsement stating insurance provided to the City shall be primary as respects the City, its officers, officials, employees and any insurance or self insurance maintained by the City, its officers, officials, employees or volunteers shall be in excess of the Consultant’s insurance and shall not contribute with it, to the payment or satisfaction of any defense expenses, loss, or judgment.
iii. Provision or endorsement stating that the Consultant’s insurance shall apply separately to each insured against whom claim is made or suit is brought, except with respect to the limits of the insurer’s liability.

3. Commercial Automobile Insurance
a. The insurance shall include, but shall not be limited to, coverage for claims for bodily injury or property damage for owned, non-owned, and hired automobiles resulting from actions, failures to act, or operations of the insured, or by its employees or agents, or by anyone directly or indirectly employed by the 994
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insured. The amount of insurance coverage shall not be less than $1,000,000.00 per accident.
b. The commercial automobile insurance shall include the same endorsements required for the commercial general liability policy (see Section

16.B.2.b).

4. Professional Liability. The Consultant and its contractors and subcontractors shall secure and maintain in full force, during the term of this Contract and for five years thereafter, professional liability insurance policies appropriate to the respective professions and the work to be performed as specified in this Contract. The limits of such professional liability insurance coverage shall not be less than $1,000,000 per claim.

C. In addition to any other remedy the City may have, if Consultant fails to maintain the insurance coverage as required in this Section, the City may obtain such insurance coverage as is not being maintained, in form and amount substantially the same as is required herein, and the City may deduct the cost of such insurance from any amounts due or which may become due Consultant under this Contract.

D. No policy required by this Contract shall be suspended, cancelled, terminated by either party, or reduced in coverage or in limits unless Consultant has provided thirty (30) days prior written notice by certified mail, return receipt requested, to the City.

E. Any deductibles or self-insured retentions in excess of $10,000 must be declared to, and approved by, the City.

F. The requirement as to types, limits, and the City’s approval of insurance coverage to be maintained by Consultant are not intended to, and shall not in any manner, limit or qualify the liabilities and obligations assumed by Consultant under the Contract.

17. MISCELLANEOUS PROVISIONS:

A. Consultant shall keep itself fully informed of, shall observe and comply with, and shall cause any and all persons, firms or corporations employed by it or under its control to observe and comply with, applicable federal, state, county and municipal laws, ordinances, regulations, orders and decrees which in any manner affect those engaged or employed on the work described by this Contract or the materials used or which in any way affect the conduct of the work.

B. Consultant shall not engage in unlawful employment discrimination. Such unlawful employment discrimination includes, but is not limited to, employment discrimination based upon a person’s race, religious creed, color, national origin, ancestry, physical handicap, medical condition, marital status, gender, citizenship, or sexual orientation.

C. Consultant shall maintain and make available for inspection by the City and its auditors accurate records of all of its costs, disbursements and receipts with respect to any work under this Contract. Such inspections may be made during regular office hours at any time until six (6) months after the final payments under this Contract are made to the Consultant. 995
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D. This Contract constitutes the entire agreement between the parties relative to the services specified herein and no modification hereof shall be effective unless and until such modification is evidenced by a writing signed by both parties to this Contract. There are no understandings, agreements, conditions, representations, warranties or promises, with respect to this Contract, except those contained in or referred to in the writing.

E. All notices that are required to be given by one party to the other under this Contract shall be in writing and shall be deemed to have been given if delivered personally or enclosed in a properly addressed envelope and deposited in a United States Post Office for delivery by registered or certified mail addressed to the parties at the following addresses:

City: City of West Sacramento
Attn: Susana Jackson, Finance Manager
1110 West Capitol Avenue, 1st Floor
West Sacramento, CA 95691
[email protected]

Consultant: HDL, Coren & Cone
Attn: Paula Cone
120 S. State College Blvd, Suite 200
Brea, CA 92821
[email protected]
714 879-5000

F. This Contract shall be interpreted and governed by the laws of the State of California.

G. Any action arising out of this Contract shall be brought and maintained in Yolo County California, regardless of where else venue may lie.

H. In any action brought by either party to enforce the terms of this Contract, each party shall be bear responsibility for its attorney’s fees and all costs regardless of whether one party is determined to be the prevailing party.

I. ELECTRONIC TRANSMISSION OF CONTRACT AND SIGNATURE. By electronically signing this document in electronic form, Parties agree that this Agreement may be transmitted and signed electronically by all Parties, and that such signatures shall have the same force and effect as original signatures, in accordance with California law and regulations, including but not limited to Civil Code Section 1633.7
[Signatures on following page]
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HDL Coren & Cone
FIN25-022 Property Tax Audit & Consulting Services
Expires on 2/18/2028
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CITY OF WEST SACRAMENTO
By: __________________________
Amanda Berlin, Assistant City Manager
ATTEST:

By: _______________________
Jennifer Cusmir, City Clerk
APPROVED AS TO FORM:

By: _______________________
Jeffrey Mitchell, City Attorney
HDL Coren & Cone
By: _________________________
Paula Cone, President
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HDL Coren & Cone
FIN25-022 Property Tax Audit & Consulting Services
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EXHIBIT A
Consultant Proposal/Scope of Work
998
Response to RFP 24-081 for Revenue Audit and Consulting Services for the City of West Sacramento

TRANSMITTAL LETTER
December 18, 2024
Susana Jackson, Finance Manager
City of West Sacramento
1110 West Capitol Avenue
1st Floor
West Sacramento, CA 95691
Dear Ms. Jackson,
In response to Request for Proposals 24-081 Revenue Audit and Consulting Services, enclosed is our firm’s proposal to provide property tax management, audit and information services for the City of West Sacramento. This proposal, including the Scope of Work, Cost Proposal rates, and budget, remains valid for at least ninety (90) business days after the proposal due date.

Founded in 1992, HdL Coren & Cone (HdLCC) developed the first computer software in California for tracking county, city and special district property tax revenues. HdLCC was the first in the State to go beyond using parcel data for allocation audits by developing specialized reports and models to assist government agencies by using the data for parcel administration, focused economic development strategies and revenue projections. The staff consists of 14 highly qualified analysts, auditors and information systems technology professionals.

HdLCC currently provides ongoing services to over 270 California agencies. The Company maintains annual property tax records for Yolo County back to 2001. HdLCC’s experienced team has worked with a number of key county staff and is thoroughly familiar with county property tax procedures in California.

Specific advantages that HdLCC has for performance of the services being sought by the City of West Sacramento include:
• HdLCC maintains property tax data for 44 California counties, including all agencies within those counties. The size of the database plus a sophisticated computer system uniquely qualifies HdLCC to provide the most comprehensive property tax analysis available in California.
• All HdLCC staff works from our centrally located headquarters in Brea, California. The decision to operate out of a single location allows the Company to minimize overhead costs and thereby lower service fees, maximize coordination of client services, protect the Company’s substantial databases and allows for immediate response to requests for information or assistance.

HdLCC has no possible conflict of interest while performing work under the contract with the City. HdLCC has accepted the City's standard contract and is capable of completing the Scope of Work, as well as all reasonably associated managerial tasks, without reservation or qualification. HdLCC does not intend to use subcontractors to complete the Scope of Work.

We look forward to reviewing this proposal with you in greater detail and demonstrating how our services and software products can benefit the City of West Sacramento.

Sincerely,
Paula Cone, President
HdL Coren & Cone
[email protected]
120 S. State College Blvd., Suite 200
Brea, CA 92821
999
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Response to RFP 24-081 for Revenue Audit and Consulting Services for the City of West Sacramento 1

TECHNICAL PROJECT APPROACH
A. Property Tax Services
Using HdLCC's custom software, a data set of all parcels in the City or Agency will be established. This data is prepared from the Yolo 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.

1. Audit Method and Approach
To achieve the highest audit and recovery results, HdLCC employs the following audit techniques and programs:
a. Identification and Correction of Errors
HdLCC has the technology, methodology and trained staff to analyze all secured parcels and unsecured assessments within the City and Successor Agency to identify costly errors resulting in the misallocation of property taxes.

The company has the ability to audit the secured and unsecured 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. To date, we have recovered in excess of $100 million in net revenue for our client agencies in 44 counties statewide. 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 continue.

Upon approval of the contract, the company will perform an analysis of the Assessor Rolls to identify all parcels on both the secured and unsecured tax rolls and verify that parcel assessed valuations and the resulting taxes are correctly allocated to the City or its Successor Agency. 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 secured and unsecured data for the current tax year as well as historical data back for a total of two (2) tax years and be performed no less than every other year. b. Reports and Analytical 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-owner occupied parcels, identification of property ownership transfers for tracking of reassessments. We also provide the City with quarterly reports of successful, pending and historical assessment appeals.

HdL Coren & Cone will reconcile the annual Auditor/Controller Assessed Valuations Report and will furnish a breakdown of assessed values within the City and Successor Agency.

The identification of escaping revenue through the use of property tax data sets has been a targeted focus for HdLCC during the past 30 years. With the reduction of tax revenues through legislated Educational Revenue Augmentation Fund (ERAF), cities, counties, agencies and special districts have been focusing on ways to increase the limited resources already stretched thin. The unsecured roll contains property owners which, when matched with a business license data set can be used to identify escaping revenues. For instance, property leased to businesses in your jurisdiction is taxed to the lessor of the property. We find that frequently, the lessors are not properly registered with a city business license. When notified and properly licensed, these businesses will generate additional revenue for the city.

The use of the secured roll will assist in identifying owners of rented residential, commercial, or industrial properties that do not have a business license with the City should one be required. 1001
Response to RFP 24-081 for Revenue Audit and Consulting Services for the City of West Sacramento 2
The company will provide the following reports based on the current year lien date rolls and will provide the reports annually, quarterly or monthly as appropriate: Reports are also available from prior years if requested. • 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 and summary of property transfers which occurred since the lien date ordered by month;
• A listing of parcels that have not changed ownership since the enactment of 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 absentee owner parcels;
• Calculate an estimate of property tax revenue anticipated to be received for the current fiscal year by the City based upon the initial information provided by the County and subject to modification. This estimate shall not be used to secure the indebtedness of the City.
• 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.
• Tracking of Proposition 8 reductions and restorations • Median sale price data for current year and prior years for comparison • One and five-year budget projections for the city general fund, Successor Agency, special districts, and Vehicle License Fee in Lieu revenues. This report is interactive for tax modeling.
• Newsletter summary for public and elected distribution.

Measure G, IFG and EIFD Property Tax Revenues
HdLCC will establish specific data bases that will identify the parcels located within the Measure G, IFD and EIFD boundaries and verify the base values and annual taxable values utilized to determine these special districts incremental growth in assessed value. Using the criteria established for these districts, we will verify the portions of total tax revenue that should be directed to the districts. HdLCC will develop district revenue projections using appropriate growth factors developed in consultation with City staff.

HdLCC will review allocations of revenue made to the districts to determine if these allocated amounts are consistent with what is expected given the annual growth in taxable value. In the event that revenues being segregated by the Auditor/Controller for these districts are found to be problematic, HdLCC will work with the City and the Auditor/Controller to establish a more accurate methodology. 1002
Response to RFP 24-081 for Revenue Audit and Consulting Services for the City of West Sacramento 3
c. Information Provided Quarterly or Monthly
• A listing of property transfers that have occurred since the last report will be available through the software provided and updated on a monthly basis. This data will include the new owner/seller of the property, new mailing address if not the situs address, the date of sale, the sale price when verified, document number, and transaction type.
• The average and median single family sale price report is sent to all clients quarterly and includes the same data for all client agencies within the same County. ci. Property Tax Application and Database
HdLCC provides a web-based software application to clients as a user-friendly tool to access the City’s property tax data. HdLCC provides updates to the data portion of the product on a monthly basis to reflect changes in ownership, updated appeals filings, and deed recordings.

As modifications and enhancements are made to the program, clients receive the enhanced version of the software at no additional cost.

Training will be provided to city staff within the first two months after the execution of the agreement for property tax management and audit services and is available annually for new staff members or staff requiring a refresher course. If additional training sessions are required, the fees in the compensation section under hourly fees will be charged.

The help manual available within the program is easy to navigate and user friendly. HdLCC staff is available Monday through Friday, 8 a.m. to 5 p.m. to answer questions and assist staff on the use of the software.

Assistance is available either by phone or via email.

The City will be granted a site license for the application, providing no limit to the number of users. HdLCC will not charge an annual maintenance fee for the software program. Periodically, as the program changes and product enhancements are developed, upgrades or new releases of the software are issued at no additional cost to the client.
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e. Successor Agency Services
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.
f. Proposed Work Plan/Staffing Schedule
The methodology that the company follows in identifying, correcting and recovering property tax errors includes the following:
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Response to RFP 24-081 for Revenue Audit and Consulting Services for the City of West Sacramento 5
Task I Establishment of County Data Set
Task II Identify and Correct Errors
Task III Prepare Reports
Task IV Ongoing Analysis
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.

Timeline for Property Tax Analysis and Audit Services
• County assessment rolls are purchased annually in July. • The property data program will be available for access via the internet within 30 days of the execution of the agreement. Parcel data will be updated monthly to include the most current ownership information due to parcel transfers.
• The first secured audit will be performed and submitted to the Assessor no later than 60 days from the date of the contract. Future audits will be performed no less than once every two years and submitted no later than March 1st.
• The unsecured audits for the City will be completed and submitted to the County Assessor for corrective action within 120 days of receipt of county rolls. The City will receive file copies of submittals simultaneous with submissions to the County Assessor.
• Data collection from the county assessor's and auditor controller's offices for reports is performed in August and September each year and preliminary reports will be delivered to the City prior to the end of January annually.
• The final tax ratio percentages are available from the auditor controller's office annually in February/March. Final reports will be prepared and delivered prior to the end of April annually. g. Legislative Updates
HdLCC monitors and reports on issues related to property tax and coordinates with City Staff in connection with passed and potential property tax legislation and regulations. h. Consultation
Annual reports presented by a principal or associate of the firm to any City staff member interested in the detailed analysis including property tax revenue estimates performed by HdLCC of the City’s annual property assessed values released by the assessor. Since property data is not confidential, these reports can be shared with staff. Understanding the budget implications of the data released in late summer and presented in late Fall is timely for mid-year budget reviews.

HdLCC also serves as the City’s property tax staff for consultation and questions related to budgeting, revenue collection, the mechanics of property tax allocation and potential changes in the legislation that may impact local agencies. Training is provided free of charge on the use of the web-based software which is updated monthly with ownership changes and appeal information where available. 1005
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FIN25-022 Property Tax Audit & Consulting Services
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EXHIBIT B
Schedule of Performance
Contract Start Date 2/19/2025
Contract End Date 2/18/2028
1006
HDL Coren & Cone
FIN25-022 Property Tax Audit & Consulting Services
Expires on 2/18/2028

EXHIBIT C
Schedule of Fees
1007
Response to RFP 24-081 for Revenue Audit and Consulting Services for the City of West Sacramento

COST PROPOSAL
Based on the number of parcels within West Sacramento (17,282), our standard fixed fee (the “Base Fixed Fee”) for property tax services is $4,875 per quarter, ($19,500 per year). The Base Fixed Fee shall be adjusted annually by the California Consumer Price Index (CCPI) California All Urban Consumers index for all items as determined by the California Department of Industrial Relations as measured from February to February.

In addition to the Base Fixed Fee, we will receive a contingent fee of 25% of net tax revenues recovered for the City through the audits we perform. Net tax revenues mean the taxes received by the City through our audit efforts.

Work that is requested by the City that is beyond the scope of services in this proposal shall be charged on a time and material basis. No work shall be performed without prior written approval by the City. Fees for these services are as follows:

Hourly Rate
Partner $250
Principal $225
Programmer $200
Associate $175
Senior Analyst $125
Analyst $90
Administrative $70
A. Property Tax Services
B. Additional Services
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HDL Coren & Cone
FIN25-022 Property Tax Audit & Consulting Services
Expires on 2/18/2028

EXHIBIT D
CERTIFICATE OF COMPLIANCE WITH LABOR CODE § 3700
[Labor Code § 1861]
I am aware of the provisions of Section 3700 of the Labor Code which require every employer to be insured against liability for workers’ compensation or to undertake self-insurance in accordance with the provisions of that code, and I will comply with such provisions before commencing the performance of the work of this contract.

HDL Coren & Cone
By:

Paula Cone, President
1009
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CONTRACT FOR SERVICES
THIS CONTRACT is made February 19, 2025, by and between the CITY OF WEST SACRAMENTO (“City”), and MuniServices, LLC (“Consultant”).

WITNESSETH:

WHEREAS, the City desires audit and consulting services related to Franchise/Licensing Agreement Revenues;
WHEREAS, the Consultant has presented a proposal for such services to the City, dated December 18,2024 (attached hereto as Exhibit “A”) and is duly licensed, qualified and experienced to perform those services;
NOW, THEREFORE, the parties hereto mutually agree as follows:

1. SCOPE OF SERVICES:

A. Consultant shall do all work, attend all meetings, produce all reports and carry out all activities necessary to completion of the services described in Exhibit “A”. This Contract and its exhibits shall be known as the “Contract Documents.” Terms set forth in any Contract Document shall be deemed to be incorporated in all Contract Documents as if set forth in full therein. In the event of conflict between terms contained in these Contract Documents, the more specific term shall control. If any portion of the Contract Documents shall be in conflict with any other portion, provisions contained in the Contract shall govern over conflicting provisions contained in the exhibits to the Contract.

B. Consultant enters into this Contract as an independent contractor and not as an employee of the City. The Consultant shall have no power or authority by this Contract to bind the City in any respect. Nothing in this Contract shall be construed to be inconsistent with this relationship or status. All employees, agents, contractors or subcontractors hired or retained by the Consultant are employees, agents, contractors or subcontractors of the Consultant and not of the City. The City shall not be obligated in any way to pay any wage claims or other claims made against Consultant by any such employees, agents, contractors or subcontractors, or any other person resulting from performance of this Contract. In the event that Consultant or any employee, agent, or subcontractor of Consultant providing services under this Agreement claims or is determined by a court of competent jurisdiction or the California Public Employees Retirement System (PERS) to be eligible for enrollment in PERS as an employee of the City, Consultant shall indemnify, defend, and hold harmless City for the payment of any employee and/or employer contributions for PERS benefits on behalf of Consultant or its employees, agents, or subcontractors, as well as for the payment of any penalties and interest on such contributions, which would otherwise be the responsibility of City. Notwithstanding any other agency, state or federal policy, rule, regulation, law or ordinance to the contrary, To the greatest extent permitted by law, Consultant and its employees, agents, and subcontractors shall not qualify for or become entitled to, and hereby agree to waive any claims to, any compensation, benefit, or any incident of employment by City, including but not limited to eligibility to enroll in PERS as an employee of City and entitlement to any contribution to be paid by City for employer contribution and/or employee contributions for PERS benefits.
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C. The Consultant agrees it has satisfied itself by its own investigation and research regarding the conditions affecting the work to be done and labor and materials needed, and that its decision to execute this Contract is based on such independent investigation and research.

2. TERM OF CONTRACT
A. The services of Consultant are to commence upon execution of this Contract by the City, and shall be undertaken and completed in accordance with the Schedule of Performance attached hereto and incorporated herein by this reference as Exhibit “A” and terminate on February 18, 2028.

B. Consultant’s failure to complete work in accordance with the Schedule of Performance may result in delayed compensation as described in Section 3.

C. The City Manager or his or her designee may, by written instrument signed by the Parties, extend the duration of this Contract in the manner provided in Section 5, provided that the extension does not require the payment of compensation in excess of the Council approved budget.

3. COMPENSATION:

A. The Consultant shall be paid quarterly for the actual fees, costs and expenses.

Consultant's fees shall be as specified in the Schedule of Fees, which is attached hereto an incorporated herein as Exhibit "B".

B. Said amount shall be paid upon submittal of a quarterly billing. Consultant shall furnish City with invoices for all expenses as well as for all materials authorized by this Contract.

The invoices shall be submitted with the quarterly billings. If Consultant’s performance is not in conformity with the Schedule of Performance, payments may be delayed or denied, unless the Consultant’s failure to perform in conformity with the Schedule of Performance is a documented result of the City’s failure to conform with the Schedule of Performance, or if the Schedule of Performance is extended pursuant to Section 5.

C. If the work is halted at the request of the City, compensation shall be based upon the proportion that the work performed bears to the total work required by this Contract, subject to Section 4.

4. TERMINATION:

A. This Contract may be terminated by either party, provided that the other party is given not less than 30 calendar days’ written notice (delivered by certified mail, return receipt requested) of intent to terminate.

B. The City may temporarily suspend this Contract, at no additional cost to City, provided that the Consultant is given written notice (delivered by certified mail, return receipt requested) of temporary suspension. If City gives such notice of temporary suspension, Consultant shall immediately suspend its activities under this Contract.

C. Notwithstanding any provisions of this Contract, Consultant shall not be relieved of liability to the City for damages sustained by the City by virtue of any breach of this Contract 1011
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by Consultant, and the City may withhold any payments due to Consultant until such time as the exact amount of damages, if any, due the City from Consultant is determined.

D. In the event of termination, the Consultant shall be compensated as provided for in this Contract, except as provided in Section 4C. Upon termination, the City shall be entitled to all work, including but not limited to, appraisals, inventories, studies, analyses, drawings and data estimates performed to that date in accordance with Section 7 hereof.

5. AMENDMENTS, CHANGES OR MODIFICATIONS:

Amendments, changes or modifications in the terms of this Contract may be made at any time by mutual written agreement between the parties hereto and shall be signed by the persons authorized to bind the parties hereto.

6. EXTENSIONS OF TIME:

Consultant may, for good cause, request extensions of time to perform the services required hereunder. Such extensions shall be authorized in advance by the City in writing and shall be incorporated in written amendments to this Contract or the attached Work Program in the manner provided in Section 5.

7. PROPERTY OF CITY:

A. It is mutually agreed that all materials prepared by the Consultant under this Contract shall become the property of the City, and the Consultant shall have no property right therein whatsoever. Immediately upon termination, the City shall be entitled to, and the Consultant shall deliver to the City, all data, drawings, specifications, reports, estimates, summaries and other such materials as may have been prepared or accumulated to date by the Consultant in performing this Contract which is not Consultant’s privileged information, as defined by law, or Consultant’s personnel information, along with all other property belonging exclusively to the City which is in the Consultant’s possession.

B. Additionally, it is agreed that the parties intend this to be a contract for services and each considers the products and results of the services to be rendered by Consultant hereunder (the “Work”) to be a work made for hire. Consultant acknowledges and agrees that the Work (and all rights therein, including, without limitation, copyright) belongs to and shall be the sole and exclusive property of the City

8. COMPLIANCE WITH ALL LAWS:

A. Consultant shall comply with all applicable laws, ordinances, and codes of federal, State and local governments, and shall commit no trespass on any public or private property in performing any of the work authorized by this Contract.

B. Consultant warrants to the City that it is licensed by all applicable governmental bodies to perform this Contract and will remain so licensed throughout the progress of the Work, and that it has, and will have, throughout the progress of the Work, the necessary experience, skill and financial resources to enable it to perform this Contract.

9. WARRANTIES AND RESPONSIBILITIES - CONSULTANT:
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A. Consultant agrees and represents that it is qualified to properly provide the services set forth in Exhibit “A” in a manner which is consistent with the generally accepted standards of Consultant’s profession.

B. Consultant agrees and represents that the work performed under this Contract shall be in accordance with applicable federal, State and local law in accordance with Section 17A hereof.

C. Consultant shall designate a project manager who at all times shall represent the Consultant before the City on all matters relating to this Contract. The project manager shall continue in such capacity unless and until he or she is removed at the request of the City, is no longer employed by Consultant, or is replaced with the written approval of the City, which approval shall not be unreasonably withheld.

D. Consultant shall provide corrective services without charge to the City for services which fail to meet the above professional and legal standards and which are reported to Consultant in writing within sixty (60) days of discovery. Should Consultant fail or refuse to perform promptly its obligations, the City may render or undertake performance thereof and the Consultant shall be liable for any expenses thereby incurred.

10. SUBCONTRACTING:

None of the services covered by this Contract shall be subcontracted without the prior written consent of the City, which will not be unreasonably withheld. Consultant shall be as fully responsible to the City for the negligent acts and omissions of its contractors and subcontractors, and of persons either directly or indirectly employed by them, as it is for the negligent acts and omissions of persons directly employed by Consultant.

11. ASSIGNABILITY:

Consultant shall not assign or transfer any interest in this Contract whether by assignment or novation, without the prior written consent of the City which will not be unreasonably withheld.

However, claims for money due or to become due Consultant from the City under this Contract may be assigned to a financial institution, or to a trustee in bankruptcy, without such approval.

Notice of any assignment or transfer whether voluntary or involuntary shall be furnished promptly to the City.

12. INTEREST IN CONTRACT:

Consultant covenants that neither it, nor any of its employees, agents, contractors, subcontractors has any interest, nor shall they acquire any interest, direct or indirect, in the subject of the Contract, nor any other interest which would conflict in any manner or degree with the performance of its services hereunder. Consultant shall make all disclosures required by the City’s conflict of interest code in accordance with the category designated by the City, unless the City Manager determines in writing that Consultant’s duties are more limited in scope than is warranted by the category designated by the City code and that a narrower disclosure category should apply. Consultant also agrees to make disclosure in compliance with the City conflict of interest code if, at any time after the execution of this Contract, City determines and notifies Consultant in writing that Consultant’s duties under this Contract warrant greater disclosure by Consultant than was originally contemplated. Consultant shall make disclosures in the time, place and manner set forth in the conflict of interest code and as directed by the City. 1013
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13. MATERIALS CONFIDENTIAL:

All of the materials prepared or assembled by Consultant pursuant to performance of this Contract are confidential and Consultant agrees that they shall not be made available to any individual or organization without the prior written approval of the City, except by court order.

14. LIABILITY OF CONSULTANT-NEGLIGENCE:

Consultant shall be responsible for performing the work under this Contract in a manner which is consistent with the generally-accepted standards of the Consultant’s profession and shall be liable for its own negligence and the negligent acts of its employees, agents, contractors and subcontractors. The City shall have no right of control over the manner in which the work is to be done but only as to its outcome, and shall not be charged with the responsibility of preventing risk to Consultant or its employees, agents, contractors or subcontractors.

15. INDEMNITY AND LITIGATION COSTS:

Consultant shall indemnify, defend, and hold harmless the City, its officers, officials, agents, and employees against all claims, damages, demands, liability, costs, losses and expenses, including without limitation court costs and reasonable attorneys’ fees, arising from Consultant's negligent acts or negligent failure to act, errors, omissions or willful misconduct incident to the performance of this Contract except such loss or damage caused by the active negligence, sole negligence, or willful misconduct of the City. The provisions of this paragraph shall survive termination or suspension of this Contract.

16. CONSULTANT TO PROVIDE INSURANCE:

A. Consultant shall not commence any work before obtaining, and shall maintain in force at all times during the duration and performance of this Contract, the policies of insurance specified in this Section. Such insurance must have the approval of the City as to limit, form, and amount, and shall be placed with insurers with a current A.M. Best’s rating of no less than A VII (an NR rating is acceptable for Worker’s Compensation insurance written with the State Compensation Insurance Fund of California).

B. Prior to execution of this Contract and prior to commencement of any work, the Consultant shall furnish the City with certificates of insurance and copies of endorsements providing evidence of coverage for all policies required by the Contract. The Consultant and its contractors and subcontractors shall, at their expense, maintain in effect at all times during the performance of work under the Contract not less than the following coverage and limits of insurance, which shall be maintained with insurers and under forms of policy satisfactory to the City. The maintenance by Consultant and its contractors and subcontractors of the following coverage and limits of insurance is a material element of this Contract. The failure of Consultant or of any of its contractors or subcontractors to maintain or renew coverage or to provide evidence of renewal may be treated by the City as a material breach of this Contract. Approval of the insurance by the City shall not relieve or decrease any liability of Consultant.

1. Worker’s Compensation and Employer’s Liability Insurance

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a. Worker’s Compensation - Insurance to protect the Consultant, its contractors and subcontractors from all claims under Worker’s Compensation and Employer’s Liability Acts, including Longshoremen’s and Harbor Worker’s Act (“Acts”), if applicable. Such coverage shall be maintained, in type and amount, in strict compliance with all applicable state and Federal statutes and regulations.

The Consultant shall execute a certificate in compliance with Labor Code Section 1861, on the form provided in the Contract Documents.
b. Consultant shall provide a Waiver of Subrogation endorsement in favor of the City, its officers, officials, employees, agents and volunteers for losses arising from work performed by the Consultant.

2. Commercial General Liability Insurance
a. The insurance shall be provided on form CG0001, or it’s equivalent, and shall include coverage for claims for bodily injury or property damage arising out of premises/operations, products/completed operations, contractual liability, and subconsultant’s work and personal and advertising injury resulting from actions, failures to act, or operations of the insured, or by its employees or agents, or by anyone directly or indirectly employed by the insured. The amount of insurance coverage shall not be less than $1,000,000.00 per occurrence and $2,000,000 general and products/completed operations aggregates. b. The commercial general liability insurance shall also include the following:
i. Endorsement equivalent to CG 2010 0714 naming the City, its officers, officials, employees, agents, and volunteers as additional insureds. The endorsement shall contain no special limitations on the scope of protection afforded to the City, its officers, officials, employees or volunteers.
ii. Endorsement stating insurance provided to the City shall be primary as respects the City, its officers, officials, employees and any insurance or self insurance maintained by the City, its officers, officials, employees or volunteers shall be in excess of the Consultant’s insurance and shall not contribute with it, to the payment or satisfaction of any defense expenses, loss, or judgment.
iii. Provision or endorsement stating that the Consultant’s insurance shall apply separately to each insured against whom claim is made or suit is brought, except with respect to the limits of the insurer’s liability.

3. Commercial Automobile Insurance
a. The insurance shall include, but shall not be limited to, coverage for claims for bodily injury or property damage for owned, non-owned, and hired automobiles resulting from actions, failures to act, or operations of the insured, or by its employees or agents, or by anyone directly or indirectly employed by the 1015
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insured. The amount of insurance coverage shall not be less than $1,000,000.00 per accident.
b. The commercial automobile insurance shall include the same endorsements required for the commercial general liability policy (see Section

16.B.2.b).

4. Professional Liability. The Consultant and its contractors and subcontractors shall secure and maintain in full force, during the term of this Contract and for five years thereafter, professional liability insurance policies appropriate to the respective professions and the work to be performed as specified in this Contract. The limits of such professional liability insurance coverage shall not be less than $1,000,000 per claim.

C. In addition to any other remedy the City may have, if Consultant fails to maintain the insurance coverage as required in this Section, the City may obtain such insurance coverage as is not being maintained, in form and amount substantially the same as is required herein, and the City may deduct the cost of such insurance from any amounts due or which may become due Consultant under this Contract.

D. No policy required by this Contract shall be suspended, cancelled, terminated by either party, or reduced in coverage or in limits unless Consultant has provided thirty (30) days prior written notice by certified mail, return receipt requested, to the City.

E. Any deductibles or self-insured retentions in excess of $10,000 must be declared to, and approved by, the City.

F. The requirement as to types, limits, and the City’s approval of insurance coverage to be maintained by Consultant are not intended to, and shall not in any manner, limit or qualify the liabilities and obligations assumed by Consultant under the Contract.

17. MISCELLANEOUS PROVISIONS:

A. Consultant shall keep itself fully informed of, shall observe and comply with, and shall cause any and all persons, firms or corporations employed by it or under its control to observe and comply with, applicable federal, state, county and municipal laws, ordinances, regulations, orders and decrees which in any manner affect those engaged or employed on the work described by this Contract or the materials used or which in any way affect the conduct of the work.

B. Consultant shall not engage in unlawful employment discrimination. Such unlawful employment discrimination includes, but is not limited to, employment discrimination based upon a person’s race, religious creed, color, national origin, ancestry, physical handicap, medical condition, marital status, gender, citizenship, or sexual orientation.

C. Consultant shall maintain and make available for inspection by the City and its auditors accurate records of all of its costs, disbursements and receipts with respect to any work under this Contract. Such inspections may be made during regular office hours at any time until six (6) months after the final payments under this Contract are made to the Consultant. 1016
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D. This Contract constitutes the entire agreement between the parties relative to the services specified herein and no modification hereof shall be effective unless and until such modification is evidenced by a writing signed by both parties to this Contract. There are no understandings, agreements, conditions, representations, warranties or promises, with respect to this Contract, except those contained in or referred to in the writing.

E. All notices that are required to be given by one party to the other under this Contract shall be in writing and shall be deemed to have been given if delivered personally or enclosed in a properly addressed envelope and deposited in a United States Post Office for delivery by registered or certified mail addressed to the parties at the following addresses:

City: City of West Sacramento
Attn: Susana Jackson, Finance Manager
1110 West Capitol Avenue, 1st Floor
West Sacramento, CA 95691
[email protected]

Consultant:

Muniservices DBA Avenu LLC
5860 Trinity Parkway, Suite 120
Centreville, VA 20120
[email protected]

F. This Contract shall be interpreted and governed by the laws of the State of California.

G. Any action arising out of this Contract shall be brought and maintained in Yolo County California, regardless of where else venue may lie.

H. In any action brought by either party to enforce the terms of this Contract, each party shall be bear responsibility for its attorney’s fees and all costs regardless of whether one party is determined to be the prevailing party.

I. ELECTRONIC TRANSMISSION OF CONTRACT AND SIGNATURE. By electronically signing this document in electronic form, Parties agree that this Agreement may be transmitted and signed electronically by all Parties, and that such signatures shall have the same force and effect as original signatures, in accordance with California law and regulations, including but not limited to Civil Code Section 1633.7
[Signatures on following page]
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CITY OF WEST SACRAMENTO
By: __________________________
Amanda Berlin, Assistant City Manager
ATTEST:

By: _______________________
Jennifer Cusmir, City Clerk
APPROVED AS TO FORM:

By: _______________________
Jeffrey Mitchell, City Attorney
MuniServices, LLC
By: _________________________
Paul Colangelo, CEO
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EXHIBIT A
Consultant Proposal/Scope of Work
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CITY OF WEST SACRAMENTO, CA

PROPOSAL FOR

REVENUE AUDIT AND CONSULTING SERVICES
24-081-RFP

TECHNICAL PROPOSAL
December 18, 2024
Submitted By:

Muniservices, LLC
7625 N. Palm Ave.

Fresno, CA 93711
Attn: Thomas Adams, Director of Sales and Use Tax Audit (916) 926-9019 
[email protected] 
www.avenuinsights.com 
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TABLE OF CONTENTS
TABLE OF CONTENTS ............................................................................................................................................................... 1 A. TRANSMITTAL LETTER ................................................................................................................................................. 3 B. QUALIFICATIONS AND EXPERIENCE............................................................................................................................. 5 B.1 PUBLIC AGENCY EXPERIENCE...................................................................................................................................... 6 B.2 KEY PERSONNEL.......................................................................................................................................................... 6 B.2.1 LEADERSHIP TEAM............................................................................................................................................. 7 B.2.2 SALES AND USE TAX AUDIT TEAM ..................................................................................................................... 8 B.2.3 SALES AND USE TAX REPORTING AND ANALYTICS TEAM.................................................................................. 9 B.2.4 TRANSIENT OCCUPANCY TAX TEAM.................................................................................................................. 9 B.2.5 FRANCHISE FEE TEAM......................................................................................................................................10 B.2.6 GOVERNMENT RELATIONS AND SUPPORT TEAM............................................................................................10 B.3 REFERENCES .............................................................................................................................................................11 B.4 LOCAL BENEFITS .......................................................................................................................................................12 B.5 HISTORY....................................................................................................................................................................12 B.6 LEGAL CHALLENGES..................................................................................................................................................12 B.7 FISCAL VIABILITY.......................................................................................................................................................12 B.8 SECRETARY OF STATE REGISTRATION.......................................................................................................................12 C. PROJECT APPROACH ................................................................................................................................................. 14 C.1 SALES & USE TAX AND TRANSACTIONS & USE TAX ...................................................................................................14 C.1.1 INTRODUCTION................................................................................................................................................14 C.1.2 OBJECTIVES AND METHODOLOGY...................................................................................................................15 C.1.3 SALES, TRANSACTION AND USE TAX AUDIT PROCESS .....................................................................................16 C.1.4 USE TAX AUDIT & RECOVERY OPPORTUNITIES................................................................................................17 C.1.5 BUSINESS COOPERATION PROGRAM (BCP).....................................................................................................17 C.1.6 SALES, TRANSACTION AND USE TAX CORRECTIONS ........................................................................................17 C.1.7 SALES, TRANSACTION AND USE TAX QUARTERLY REPORTING........................................................................18 C.1.8 ONLINE REPORTING – CLEARVIEW ANALYTICS................................................................................................18 C.2 TRANSIENT OCCUPANCY TAX (TOT)..........................................................................................................................21 C.2.1 IMPLEMENTATION PLAN ................................................................................................................................. 22 C.2.2 TOT REPORT DELIVERABLES.............................................................................................................................23 C.2.3 TRANSIENT OCCUPANCY TAX ADMINISTRATION / SHORT TERM-RENTAL ......................................................24 C.3 PARKING FEES...........................................................................................................................................................25 C.3.1 REVIEW SERVICES ............................................................................................................................................25 C.3.2 MUNISERVICES’ DELIVERABLES .......................................................................................................................25 C.3.3 CITY ASSISTANCE..............................................................................................................................................26 C.4 FRANCHISE / LICENSE FEES .......................................................................................................................................26 C.4.1 FRANCHISE FEE COMPLIANCE..........................................................................................................................26 C.4.2 FRANCHISE FEE / UUT ADMINISTRATION........................................................................................................27 C.4.3 REVENUE PROTECTION....................................................................................................................................28 C.4.4 FRANCHISE FEE / UUT ENHANCEMENT SERVICES ...........................................................................................28 C.5 CANNABIS DEVELOPMENT AGREEMENT FEES..........................................................................................................28 C.5.1 CANNABIS ADMINISTRATION SERVICES ..........................................................................................................30 C.6 OPTIONAL SERVICES .................................................................................................................................................31 C.6.1 SHORT-TERM RENTAL COMPLIANCE AND MONITORING................................................................................31 C.6.2 OPTIONAL SERVICE - BUSINESS LICENSE DISCOVERY AND RECOVERY.............................................................34 1021
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A. TRANSMITTAL LETTER
December 18, 2024
City of West Sacramento
Attn: Susana Jackson, Finance Manager
1110 W Capitol Ave
West Sacramento, CA 95691
RE: Proposal for Revenue Audit and Consulting Services
Dear Susana Jackson:

MuniServices, LLC, an Avenu Insights and Analytics company, (henceforth referred to as “MuniServices” or “Avenu/MuniServices”) is pleased to submit this proposal to the City of West Sacramento for Revenue Audit and Consulting Services. With over 40 years of experience performing sales and use tax audits, decades of experience in the other requested recovery services, 30+ years of direct experience with the City in these services, and billions of general fund revenue recovered for our state and local government customers, MuniServices believes we are the best qualified firm to provide these services. MuniServices has a proven track record, familiarity with the City, and audit expertise to deliver the requested services to the City.
► We Know the City of West Sacramento. MuniServices has provided services to the City of West Sacramento for Decades. In the last 10 years, MuniServices has recovered nearly $3,000,000 in Sales and Use Tax revenue alone. Additionally, MuniServices has recovered over $350,000 in Transient Occupancy Taxes.
► Four Decades of Experience. For over 40 years, MuniServices has been an industry leader in the City’s requested services, and our refined and proven approach and methodologies are a direct result of these decades of experience. To better meet current and future client needs, we continue to invest in people, technology and services.
► No Risk. MuniServices offers the City a continued partnership that has been built on decades of direct experience with the City, and we will leverage this direct experience and institutional knowledge to the benefit of the City to ensure a smooth continuation of services. ► Tax Audit, Analysis, and Reporting Experts. MuniServices has over 100 professional staff dedicated to these services. MuniServices submits over 3,000 corrections per year to the CDTFA and has a team of Certified Public Accountants (CPA), Certified Revenue Examiners (CRE) and audit managers, with decades of experience in the intricacies of tax regulations and anomalies to detect potential filing errors for our clients and to perform a wide variety of general fund tax audits and revenue forecasts as needed and requested by the City. ► Firmly Established throughout California. We know California. We were founded in California, and we currently provide revenue consulting services to over 250 California public agencies.

Additionally, we have strategic office locations throughout California. 1023
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On behalf of MuniServices, I represent that the information contained in this proposal is true and correct, and we can fulfil the commitments contained in this proposal. This proposal is a firm and irrevocable offer, and it will remain valid for at least 90 days. I truly appreciate your consideration of our proposal and encourage you to reach out with any questions.

MuniServices has no conflicts of interest with respect to this project and MuniServices acknowledges that the City’s standard contract and insurance have been reviewed and accepted without qualification.

Lastly, MuniServices will not be using any subcontractors on this project.

Thank you,
Paul Colangelo
Chief Executive Officer
MuniServices, LLC
[email protected]
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B. QUALIFICATIONS AND EXPERIENCE
MuniServices has over 35 years of direct experience
supporting the great City of West Sacramento. Founded in California in 1978, MuniServices is a privately-owned
consulting services company that specializes in helping public agencies across the nation to preserve, enhance, and manage their tax revenue base. In 2017, MuniServices joined forces with Avenu Insights & Analytics, LLC, and as one team
“Avenu/MuniServices” supports clients across the nation with our revenue enhancement and consulting services.

MuniServices has over 40 years of specific experience in Sales and Use Tax Auditing and over 35 years of direct
experience providing these services to the City. Over the last 10 years, MuniServices has recovered nearly $3,000,000 in Sales and Use Tax for the City. MuniServices has grown to a national footprint of over 850 employees supporting clients in all 50 states. We have a dedicated team of revenue
consulting and tax audit experts which provide concierge-level services to over 350 public agencies in California and over 900 jurisdictions throughout the nation. Additionally,
MuniServices has an in-house Government Relations team
that focuses on tax legislation that can potentially impact our customers.

MuniServices generates over $2.8 billion in new general fund revenue for our clients each year. As a reflection of our dedication to state and local governments, we are listed on the GovTech 100 list for the last five (5) years in a row. MuniServices has 10 office locations strategically dispersed across the United States, including four (4) offices in California.

Figure 1 - Map illustrating MuniServices national footprint with Red representing MuniServices’ offices and Blue representing clients.

We offer our local government clients a full range of revenue enhancement and administrative solutions, providing administration, audit, and technology services to state and local governments nationwide. We have the expertise and resources to provide all necessary services detailed in this MuniServices Qualification
Highlights
• Over 40 years of experience in all
services requested
• Provider of Services to the City
since 1989
• Recovered nearly $3M in Sales Tax
Revenue in last 10 years
• Administer and Recover over $2.8B
in general fund revenue each year
• Team of expert Certified Public
Accountants (CPAs) and Certified
Revenue Examiners (CREs)
• Nationally recognized for
supporting state and local
governments
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RFP. Our company is financially stable, and we will provide all services according to prices quoted within this proposal and deliver them in a timely manner.

B.1 PUBLIC AGENCY EXPERIENCE
MuniServices has over 45 years of demonstrated Public Agency Experience. MuniServices provides the same or similar services to over 900 customers nationwide. To demonstrate our experience with public agencies, MuniServices offers the below chart of California agencies for whom we have provided Sales and Use Tax auditing, and their respective recovery amounts. All of the below clients are active clients and have been receiving services within the last five (5) years.

Client Services Provided Recoveries
City of San Diego, CA Sales and Use Tax Auditing Services $190,000,000 City of San Jose, CA Sales and Use Tax Auditing Services $162,000,000 City of Santa Clara, CA Sales and Use Tax Auditing Services $118,000,000 City of Sacramento, CA Sales and Use Tax Auditing Services $80,000,000 City of Santa Monica, CA Sales and Use Tax Auditing Services $69,000,000 City of Hayward, CA Sales and Use Tax Auditing Services $68,000,000 City of Santa Rosa, CA Sales and Use Tax Auditing Services $53,000,000 City of Santa Ana, CA Sales and Use Tax Auditing Services $40,000,000 City of Long Beach, CA Sales and Use Tax Auditing Services $34,000,000 City of Carlsbad, CA Sales and Use Tax Auditing Services $31,000,000 City of Roseville, CA Sales and Use Tax Auditing Services $27,000,000 Orange County Trans Authority Sales and Transaction Tax Services $22,000,000 City of Santa Barbara, CA Sales and Use Tax Auditing Services $20,000,000 Los Angeles County MTA Sales and Transaction Tax Services $16,000,000 Riverside County Trans Comm Sales and Transaction Tax Services $15,700,000 City of Brea, CA Sales and Use Tax Auditing Services $12,000,000 City of El Cajon, CA Sales and Use Tax Auditing Services $9,000,000 City of Anaheim, CA Sales and Use Tax Auditing Services $6,000,000 B.2 KEY PERSONNEL
D. Personnel. A narrative description, resume, and organizational structure chart of personnel to be assigned to complete tasks within the Scope of Work, clearly indicating where Subcontractors will be used, if applicable. The narrative description or resume shall list, at least, each individual’s title, education, relevant experience and duration, professional licenses, and demonstrated accomplishments. Identify the individual who will lead the day-to-day work effort and serve as the primary contact to the City.

As the current provider of services to the City, MuniServices has all the personnel and resources needed to successfully continue supporting the City in this project. MuniServices’ Tax Auditing team is familiar with the City and the requested services in the RFP. We will continue to leverage our considerable institutional knowledge to the City’s benefit. 1026
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MuniServices will continue to allocate dedicated professionals that will ensure the City’s services meet the City’s expectations. MuniServices fully understands the importance of ensuring the City is adequately supported throughout the entire contract and will devote all resources necessary.

The individuals that comprise our team have decades of specific experience in tax auditing, analysis, forecasting, and reporting. The project management team is comprised of professionals who have been chosen based on their experience working in direct partnership with the public sector in the implementation of successful audit, analysis, and economic development programs.

MuniServices is pleased to provide the City with the following summary resumes:

B.2.1 LEADERSHIP TEAM
Paul Colangelo, Chief Executive Officer
Paul has over 20 years of executive leadership and a track record as a trusted advisor at the state and local levels. Paul not only leads the operations, strategy, and growth of MuniServices, he is directly involved in the day-to-day operations of our Sales and Use Tax teams. Paul previously served as President and COO at Library Systems & Services, as well as President of Appriss — where his strategic vision led to the portfolio revenue growth and diversification. Before Appriss, Paul was Vice President of Convergys Global Business Unit, managing client services programs in government, automotive, and transportation markets. Paul earned his bachelor’s degree from Seton Hall University and his MBA from Strayer University. And as part of his ongoing commitment to serving state and local communities nationwide, he serves as an active member on the National Center for Missing & Exploited Children Law Enforcement Advisory Board, and Blessings in a Backpack National Board.

Mike Portis, Vice President of Audit and Project Manager As MuniServices’ Vice President of Audit and Project Manager for this contract, Michael leads MuniServices’ Revenue Recovery and Enhancement Group, which consists of a full suite of compliance auditing across several tax types. Michael is a Certified Public Accountant in both Texas and North Carolina and is a U.S. Army Veteran. Mr. Portis is a Certified Fraud Examiner (CFE) and is directly responsible for the overall performance of this contract and supervising MuniServices’ Sales Tax team.

Michael has 25 years of direct experience in tax auditing and has served in several key positions for some of the largest tax firms in the United States. Prior to joining MuniServices, Michael served as a Director of Tax and Unclaimed Property and Tax Manager for Apexanaltix. Additionally, Michael served as Senior Tax Manager for EY, Revenue Field Auditor II for the North Carolina Department of Revenue, State Tax Consultant for Enron, and Supervising Senior Tax Consultant for KPMG. Education: Doctor of Law from University of Houston Law Center and Bachelor of BA in Accounting from University of Texas at San Antonio.

Alex Lake, CPA, Associate Vice President of Tax Operations As MuniServices’ Associate Vice President of Tax Operations, Alex will have direct oversight of the TOT auditing team and its execution on this project. Alex has been with MuniServices since 2000 and has over 20 years of direct experience in tax auditing. Alex is both a Certified Public Accountant (CPA) and Certified Tax Examiner (CTE). Alex has first-hand experience working with California auditing clients and a deep expertise having conducted tax compliance work for 14 different states. Her focus is managing the auditing and analyst teams to ensure all audits and reviews are done in the most efficient and effective way possible. Alex received a Bachelor of Science in Accounting from the University of Houston, Clear Lake.

Janis Varney, Senior Sales and Use Tax Advisor
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Janis is our foremost expert in Sales and Use Tax auditing services. Janis oversees the sales and use tax operations to ensure that all audit services are successfully provided to the City. Janis has been with MuniServices since 1989, and her unmatched expertise is directly responsible for the billions of dollars in sales and use tax revenue recovered for our customers. Janis has over 34 years of experience with the intricacies of California sales and use tax law, California Transit Agency operations, CDTFA administrative procedures, and taxpayer reporting procedures. She currently oversees the dayto-day operations of the sales and use tax audit service including the detection of reporting errors, preparation of the comprehensive documentation required to establish “date of knowledge”, and facilitation of the correction of the local tax allocation.

B.2.2 SALES AND USE TAX AUDIT TEAM
Thomas Adams, Director of Sales and Use Tax Audit
As the Project Manager, Tom will serve as the primary sales tax contact for the City. Tom has provided sales tax consulting for over fifty California public agencies, including work for the City of Sacramento, San Jose, Los Angeles, San Diego, and various other cities throughout California. Tom has 20 years of experience in municipal government including projects for every department within a city organization.

Tom’s areas of specialty include sales tax and revenue analysis, municipal operating and capital budgets, and strategic planning. Tom will be the primary point of contact for this project. Tom will attend quarterly meetings and provide reporting and legislative updates.

Sandra Heuer, Supervisor of Sales and Use Tax
Sandra has more than 27 years of experience with MuniServices and currently supervises our Sales & Use Tax audits, in addition to her role as a Senior Sales & Use Tax Analyst, Sandra developed many of the proprietary sales and use tax audit methods and leads the team in the identification and correction of use tax errors. Sandra is responsible for contacting targeted businesses to determine whether allocation reporting errors exist and, for each error detected, developing the substantiating documentation to support the necessary established DOK with the CDTFA. Sandra’s work for MuniServices involves interfacing with CDTFA personnel in addition to spending an extensive amount of time interfacing with high level personnel at Fortune 500 companies throughout the U.S.

Angel Rivera, Sr. Sales and Use Tax Analyst/Audit Supervisor Angel has over 25 years with MuniServices and currently supervises the Sales and Use Tax Audit team. In addition, she serves as a Senior Analyst, directly interacting with businesses to determine possible allocation reporting errors and developing substantiating documentation to establish a date of knowledge with the CDTFA. Angel’s work for MuniServices involves an extensive amount of time interfacing with high level personnel at ‘Fortune 500’ companies throughout the U.S. on behalf of MuniServices clients. Angel has a working knowledge of sales/use tax law, CDTFA administrative procedures and tax preparer reporting procedures.

Nancy Rogers, Sr. Sales and Use Tax Corrections Administrator Nancy began her career with MuniServices in 2017 as a member of the Sales and Use Tax corrections department. This department is responsible for correcting misallocations detected by MuniServices. In this capacity, she is responsible for the administration and correction of all detected and documented local and sales tax misallocations, working with the CDTFA’s Local Allocation Group. She works to facilitate the correction of misallocations submitted to the CDTFA on behalf of MuniServices client jurisdictions. Nancy and the corrections team are also responsible for recovering eligible amounts misallocated in prior quarters and preserving original dates of knowledge by responding to the CDTFA’s findings with timely reconfirmation documentation. Additionally, Nancy works closely with the billing department to ensure accounts are eligible for billing. Nancy has knowledge of sales/use tax law, 1028
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CDTFA administrative procedures and tax preparer reporting procedures. Nancy analyzes reports generated by various CDTFA departments and provides process and follow up on all data generated.

Nancy is also a liaison between the correction department and the Audit Team. Prior to joining MuniServices, Nancy spent 25 years working for various companies in the fields of Law, Real Estate, Pharmaceuticals and Technology. Education: Nancy studied Journalism and Public Relations at California State Universities Chico and Northridge.

Cheryl Sholl, Sales and Use Tax Corrections Supervisor
Cheryl has been with MuniServices for over 22 years, and she is currently the Sales and Use Tax Corrections Supervisor. Cheryl supervises the corrections department which is responsible for facilitating the corrections of sales and use tax misallocations. She works directly with the corporate tax departments in addition to working with the CDTFA. Prior to her current role as supervisor, Cheryl was MuniServices’ Audit Process Administrator, where she managed all aspects of MuniServices’ sales and use tax misallocation petitions from the point of data entry to final submission to CDTFA/SBE. Prior to joining MuniServices, Cheryl had over 16 years of experience as a business owner and a controller.

B.2.3 SALES AND USE TAX REPORTING AND ANALYTICS TEAM
Irene Reynolds, Director, Client Relations
With over 22 years with MuniServices, Irene manages the Client Relations unit. Her team provides critical and complex analytics, forecasting and reporting support to MuniServices’ sales tax and use clients. She and her team clean and standardize raw sales tax data, create and maintain Geo areas, as well as provide custom reports, charts, tables or ad hoc reports on demand. Before joining the Client Relations Team, she served as a Team Leader in the Data Intelligence Department where she assisted in directing the data processing for all of MuniServices’ clients.

Mark Bryson, Senior Economic Business Analyst
Mark has over 21 years with MuniServices. Mark’s primary role includes building and updating our proprietary sales tax forecasts and developing special analytical reports for MuniServices’ sales and use tax clients. Mark has over 25 years of experience as an accountant for small to medium sized businesses, nonprofit corporations, and government agencies. This includes extensive hands-on experience preparing budgets, financial statements, audit schedules and Income, sales and payroll tax returns.

B.2.4 TRANSIENT OCCUPANCY TAX TEAM
Gennaro DiMassa, Senior TOT Auditor
Gennaro, a Certified Public Accountant, and is responsible for MuniServices’ TOT Compliance program and is a senior auditor. Gennaro has been with MuniServices since 2006 and has been solely dedicated to TOT auditing. Gennaro has decades of experience in transient occupancy tax, Gennaro is responsible for the recoveries of millions of dollars of transient occupancy taxes, including MuniServices’ work throughout California. He is responsible for the review and analysis of the Transient Occupancy Tax paid by hotels for compliance with City ordinances. He has ten years of audit experience with a major recovery audit firm and practiced seven years as a CPA with a major CPA firm in the Los Angeles area.

Tami Nguyen, Senior TOT Auditor.

As MuniServices’ Senior TOT Auditor, Tami is responsible for the company’s TOT Compliance program and will be one of the auditors performing the work on this contract. She has served as MuniServices’ Senior TOT Auditor since 2007. She is also responsible for the review and analysis of Transient Occupancy Tax paid by hotels for compliance with City ordinances. She conducts on-site audits and 1029
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helps prepare management reports for our client contacts. Prior to joining MuniServices, she worked for a major home builder as a Treasury Analyst. Education: Tami has a B.A. in Economics with emphasis on Marketing and Finance from Rutgers University, New Jersey.

B.2.5 FRANCHISE FEE TEAM
Cody Burnett, Franchise Fee and UUT Auditor
Cody oversees operations for the Franchise Fee and User Utility Tax Audit division and has direct firsthand experience with UUT programs throughout California. He is responsible for the implementation and completion of all UUT audits as well as overseeing the auditors within the UUT division. Cody started with MuniServices in 2016 and is an auditing professional with knowledge spanning a multitude of tax types beyond UUT including business license, hotel/motel, tax by the drink, and franchise fee. Prior to his start at MuniServices, Cody worked in logistics as a fleet manager for several years at US Xpress. Cody has clear and demonstrated expertise performing UUT audits for California clients.

Education: Cody received his BS in Finance along with his MBA with an emphasis in Accounting from Auburn University.

B.2.6 GOVERNMENT RELATIONS AND SUPPORT TEAM
Francesco Mancia, Senior Advisor on Government Relations Fran is responsible for overseeing company Legislative, Regulatory, and Government Relations work at the state and federal level. Fran has a strong working knowledge of local government general fund tax laws and state and federal regulatory and legislative issues that impact local governments. He monitors, analyzes and leads company lobbying efforts related to legislation, state mandates, and regulatory changes and policies that affect client revenue streams. Fran has served as a member of the League of California Cities Revenue and Taxation Policy Committee and was the 2007 and 2008 President of the League’s Partner Program. From 2009 to 2016, Fran served as Advisor and Chairman of the California Contract Cities Association, Associate Members Program. Fran is a Regent Emeritus of the University of California and was a 14-year member of the Board of Trustees of the California City Management Foundation. Fran currently services on the Board of Trustees of the UC Santa Barbara Foundation and as an Advisor to the Office of the President of the University of California. Fran graduated from the University of California, Santa Barbara and earned a Bachelor of Arts degree in Communications, and attended the University of San Francisco where he earned an MBA.

Reva Feldman, Strategic Advisor
As one of MuniServices’ strategic advisors, Reva assists with several California based revenue recovery projects by lending her deep insight as the former City Manager of Malibu, CA, with over 25 years of experience working in state and local governments. Reva has experience working with several MuniServices clients and she is utilized to ensure that MuniServices’ strategic objectives are met and align with those of our customers. In 2005, Ms. Feldman joined the City of Malibu, first serving as the Assistant City Manager and later as City Manager. As the Chief Executive Officer for the City of Malibu, she was responsible for an iconic California coastal city with an annual visitor population of 15 million people and a propensity for natural disasters. Reva has her B.S. from UCLA. 1030
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B.3 REFERENCES
Client: City of San Jose, CA
Project Name: Revenue Enhancement and Recovery Services Description of Work
Performed:

Since 1990, Avenu/MuniServices has provided the City of San Jose with Business License, Transient Occupancy Tax, and Utility Users / Franchise Fee audit services, and Sales and Use tax services. To date, MuniServices has recovered over $142,000,000 for the City, with specific successes in Transient Occupancy Tax auditing where we have recovered over $902,000.

Period Work was Completed: Ongoing
Client Contact Information Name: Selena Ubando
Title: Coordinator
E-Mail: [email protected]
Phone: (408) 535-8138
Client: City of Sacramento, CA
Project Name: Revenue Enhancement and Compliance Auditing Services Description of Work
Performed:

Since 1992, Avenu/MuniServices has supported the City of Sacramento with our full suite of Revenue Enhancement and Consulting Services. This includes Sales and Use Tax Audit and Revenue Forecasting, Franchise Fee / Utility User Tax Audit and Consulting, Transient Occupancy Tax Audits, Cannabis Tax Audits, and other consulting services. To date, MuniServices has recovered over $136,000,000 as a result of our revenue enhancement services, with specific focus on our recovery of over $73,000,000 from our services in Franchise Fee / Utility User tax auditing.

Specific to Transient Occupancy Tax auditing, MuniServices has recovered over $440,000 with audits still ongoing.

Period Work was Completed: Ongoing
Client Contact Information Name: Jason Bader
Title: Principal Budget Analyst
E-Mail: [email protected]
Phone: (916) 808-5817
Client: City of Roseville, CA
Project Name: Tax Revenue Consulting and Auditing Services Description of Work
Performed:

Since 1996, MuniServices has provided the City of Roseville with Sales and Use Tax Auditing, Transient Occupancy Tax Auditing, Business Operations Tax Auditing, Property Tax Reporting, and Short-Term Rental Identification and Monitoring. MuniServices has had a long and fruitful partnership with the City and has recovered over $5,000,000 in Sales Tax alone for the City.

Period Work was Completed: Ongoing
Client Contact Information Name: Dennis Kaufman
Title: Assistant City Manager
E-Mail: [email protected]
Phone: 916-774-5319
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Client: City of Hayward, CA
Project Name: Sales and Use Tax Auditing and Consulting Services Description of Work
Performed:

MuniServices provides several services to the City of Hayward, which include Sales and Use Tax Auditing, Transient Occupancy Tax Auditing, Franchise Fee/Utility User Tax Auditing, Business License Tax Discovery and Recovery Services, and Sales and Use Tax Analytics and Reporting Services.

Period Work was Completed: 1995 - Ongoing
Client Contact Information Name: Dustin Claussen
Title: Assistant City Manager
Phone: (510) 583-4302
E-Mail: [email protected]
Client: City of Pittsburg, CA
Project Name: Revenue Enhancement and Compliance Auditing Services Description of Work
Performed:

MuniServices has provided Revenue Enhancement Services to the City of Pittsburg since 1991. This includes Sales and Use Tax Auditing, Reporting, and Analytics. Additionally, MuniServices provide Cannabis auditing for the City.

Period Work was Completed: 1991 - Current
Client Contact Information Name: Paul Rodriques
Title: Finance Director
E-Mail: [email protected]\
Phone: (925) 252-4848
B.4 LOCAL BENEFITS
MuniServices is not a local vendor and does not have an office in West Sacramento. However, our services render general fund revenue for critical needs of the City.

B.5 HISTORY
In October 2023, MuniServices changed ownership to Arlington Capital Partners, a Washington, DCbased private equity firm that has managed approximately $7 billion in capital commitments.

B.6 LEGAL CHALLENGES
MuniServices has no pending litigation.

B.7 FISCAL VIABILITY
MuniServices has been in continuous operation for over 40 years and has never filed for bankruptcy nor had any insolvency proceedings.

B.8 SECRETARY OF STATE REGISTRATION
MuniServices is fully authorized to do business in the State of California and has included a copy of it’s Secretary of State Certificate on the following page:
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C. PROJECT APPROACH
MuniServices has prepared in this section, our Technical Proposal for the services to be provided to the City, which include:
► Sales and Use Tax (SUTA)
► Transient Occupancy Tax (TOT)
► Utility Users Tax (UUT)
► Cannabis Tax
► Property Tax (Not Applicable – we are not proposing for this service) C.1 SALES & USE TAX AND TRANSACTIONS & USE TAX
C.1.1 INTRODUCTION
MuniServices has all the capabilities and expertise necessary to fulfill all requirements listed in the City’s scope of services. MuniServices’ approach is a result of over four decades of providing sales tax auditing services. These decades have resulted in refined methodologies and our project team are experts in detecting and correcting Sales and Use Tax misallocations. We pride ourselves in finding both the obvious errors and the far more complicated ones. MuniServices’ audit capabilities are well proven – we have recovered over $2.8 billion in Sales, Transaction and Use Tax revenue for our local government clients.

The objective of MuniServices’ Sales and Use Tax (SUTA) and Recovery service is to maximize the City’s income – and minimize the cost of lost revenue. MuniServices submits over 3,000 corrections to the CDTFA per year and we are
successful at this through the timely detection and correction of Sales, Transaction and Use Taxes misallocated to 1) another jurisdiction, 2) another city-wide pool or the statewide pool, and 3) misreported sales taxes that should be allocated to the City. We fully pursue correction of all misallocations allowable within the statute of limitations on recoverability.

MuniServices provides our Sales, Transaction and Use Tax Audit and services to nearly 150 clients in California. Over half of MuniServices’ overall revenue recoveries are from more complicated use tax errors that other firms rarely detect. MuniServices offers a more comprehensive and nuanced audit approach than our competition – we not only capture the ‘quick fix’ sales tax errors that our competitors find, but we go beyond to identify and correct more complicated errors involving the misinterpretation of or confusion of sales tax versus use tax reporting procedures. The secondary effort makes the difference.

As an example of our performance, the City of San Diego found that MuniServices generated three times as much in sales tax recoveries annually than the next closest competitor. What makes San Diego significant is its size – the results from a large jurisdiction such as San Diego are much more representative of a firm’s true audit results.

Comparing results for such a large economy over multiple years overcomes bias from one-time anomalies.

MuniServices prides itself on forming long-term trust-based relationships, and therefore delivers its solutions in the context of concierge-level service. During every stage of the process, we realize we are working with people as well as data and processes, so we take great care in our communication. As “The objective of MuniServices’
Sales and Use Tax Audit (SUTA)
and Recovery service is to
maximize the City’s income and
minimize the cost of lost revenue”
“…MuniServices generated 3
times as much in Sales Tax
Recoveries annually than the
next closes competitor.”
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representatives of the City, our staff emphasizes cooperation when contacting taxpayers and provides an educational approach as well as guidance related to California Department of Tax and Fee Administration (formerly State Board of Equalization) (CDTFA) rules that pertain to proper sales tax allocation.

We treat taxpayers with respect. MuniServices regularly engages City staff, and we hold quarterly inperson meetings with City staff, during which we provide a comprehensive update on revenues and budget forecasts. The meetings also are an opportunity for City staff to ask questions about specific businesses, economic trends, or legislative and regulatory activities. We also hold periodic training activities and collaborate closely with your staff.

C.1.2 OBJECTIVES AND METHODOLOGY
Detecting and correcting Sales & Use Tax misallocations is a foundational part of MuniServices’ value.

We capture the obvious sales tax errors and the more complicated ones that involve different interpretations of tax liability.
► Taxable Nexus Field Audit. We target City-based businesses that do not pay Sales, Transaction and Use Tax. We do this via an analysis of the City’s borders in addition to the commercial and industrial areas. We evaluate taxes paid by businesses for their products, willcall operations and other references to sales-related activities. Without this labor-intensive undertaking, misallocations may remain undetected even when electronic data mining is applied.
► Tax Area Code (TAC)/Permit Audits. We identify and correct improperly registered permits of companies with point-of-sale or use operations. We also look for businesses with an incorrect tax area code due to jurisdictional/boundary confusion. Wholesalers, contractors, manufacturers and other non-retail businesses frequently do not hold a permit registered to the City because their operations do not include a point-of-sale qualifying activity. However, these companies often generate tax from the CDTFA audit deficiency assessments, new or changed operations, or the self-accrual of use tax on purchases through direct payment permits. ► Deficiency Assessment Audit. With a CDTFA audit, taxpayers often receive a substantial deficiency assessment due to underpayments and/or under collections. Our proprietary criteria and techniques detect and correct what are often misallocations to the state or City pool.

Accordingly, we have developed proprietary criteria and techniques to detect and correct CDTFA deficiency assessment misallocations and thus expand the benefits produced by our allocation audit service.
► Quarterly Distribution Report (QDR) Audit. We conduct QDR audits when we see a substantial change in historical allocation because of declining or missing payments, negative fund transfers, and audit adjustments in the Sales, Transaction and Use Tax allocation. QDR audits have the same objective as the other audits: to detect, document and assist in correcting errors and thereby generate new, previously unrealized sales, use and transaction tax revenue for the City. To make sure the City gets the highest possible amount of misallocated revenue, we include the current economic period based on the calendar quarter and the three prior tax return periods. MuniServices reviews 100% of taxpayers reporting local tax to the City each quarter in addition to a comprehensive review of the Citywide pool to ensure all possible allocation errors and aberrations are identified and submitted for correction. ► Accounts Payable Audit Reviews. In order to identify opportunities for the City to recover the local allocation on purchase transactions subject to tax, and facilitate the recovery of such funds, MuniServices performs an accounts payable audit that enables us to prepare the documentation to facilitate the issuance of a direct payment permit (use tax) to the City. We also 1035
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provide technical assistance in preparing and filing the required tax returns. Our accounts payable audits review purchases to identify opportunities for the City to capture the 1% local use tax. They also provide the foundation necessary for cities to get a direct payment permit (use tax) and recover funds. Cities also receive our technical assistance in preparing and filing the required tax returns, which is essential because the CDTFA has specific procedures and timing for filing claims. It is important to prioritize and develop a relationship with the vendor involved as they will be instrumental throughout the process.

C.1.3 SALES, TRANSACTION AND USE TAX AUDIT PROCESS
MuniServices Sales, Transaction and Use Tax follows the following process:

Figure 2 - SUTA Process Flow

1. Data Acquisition – Data from Multiple sources is acquired and loaded into MuniServices’ data warehouse for analysis and mining.

2. Data Review and Analysis – MuniServices thoroughly reviews payment and registration data for possible registration and/or local tax reporting errors.

3. Taxpayer Investigation – MuniServices verifies taxpayer information including address verification and business activity. If a misallocation is confirmed, MuniServices will gather application documentation which includes any E-Mail Communication with taxpayer and copies of amended returns, questionnaires, contracts, and invoices.

4. Petition Preparation and Submission – MuniServices carefully documents verified misallocation errors into petitions and prepares for submission to CDTFA.

5. Correction Case Review and Follow-Up – Taxpayer confirmation and Thank You letters are delivered to facilitate corrective action. New incoming board responses are reviewed. 1036
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Additionally, case backlog is reviewed to determine those requiring follow-ups with taxpayers and/or CDTFA.

6. Client Audit Reports – MuniServices provides a Quarterly Audit Update Report, a report containing details on all now petitions filled with the CDTFA on their behalf. Large correction Letter is utilized to notify client of a case correction. Additionally, MuniServices provides an Open Account Status Report, which is a report containing all cases that remain uncorrected which reflect status and estimated revenue.

C.1.4 USE TAX AUDIT & RECOVERY OPPORTUNITIES
Our Use Tax Audit Services are designed to not only capture use tax revenue through the review of past purchase activity by the businesses in the City, but also to assist in establishing new processes and procedures designed to prevent the pooling of these revenues and increase the direct allocation to the City. The use tax audits identify taxpayers purchasing tangible personal property directly from outof-state retailers where the transactions are subject to use tax (rather than sales tax). The use tax is often collected by the vendor who in turn remits it to the CDTFA, with the local allocation typically distributed statewide or Citywide through the pools. These audits include proprietary techniques used to identify purchases made by businesses located in the City from out-of-state vendors that are in excess of $500,000. Additional use tax audits can focus on the practice of “Use Tax Accrual” in certain conditions where the purchaser may elect to self-accrue the use tax and remit it directly to the CDTFA, in which case the local portion will come back to the City in the same manner as sales tax. This can involve both purchases made by the City itself or working directly with businesses and construction contractors to establish the practice of self-accrual and direct remittance of the use tax to the CDTFA.

C.1.5 BUSINESS COOPERATION PROGRAM (BCP)
MuniServices pioneered the BCP program, which can generate significant revenues for the City. Our BCP consulting services encourage construction contractors and major vendors to obtain a direct pay permit or job site registration to encourage them to report the applicable local use tax so that the local use payments can be directly allocated to the City instead of the Citywide pool. There are many complexities associated with determining which contractors are eligible to register a job site, in addition to reviewing purchasing contracts for major fixtures, machinery and equipment from overseas manufacturers in order to provide proper instructions to the purchasers. We are the only firm with experience and verifiable results working with local jurisdictions to maximize use tax revenues on major construction projects such as large commercial and industrial projects, sports arenas, airports, ports, solar arrays –tracking and managing this use tax issues from pre-construction through project completion.

C.1.6 SALES, TRANSACTION AND USE TAX CORRECTIONS
► Correct Reporting Errors. MuniServices’ Sales/Use and Transaction Tax Audit team includes a correction/case manager responsible for correcting misallocation errors. The team gets involved after a petition has been filed with the CDTFA. The team informs the taxpayer and then performs a comprehensive review of all CDTFA responses to petitions. This ensures that all applicable tax reallocations get processed. We respond immediately to negative findings by the CDTFA to preserve the City’s Date of Knowledge (DOK). MuniServices will keep the City informed quarterly through an Open Account Status Report that will provide an updated overview of inventory/status of petitions as we work with the CDTFA and the taxpayers to ensure that corrections are processed quickly and the new revenue flows to the City. ► Documentation. Efficient corrections require a thorough investigation of the business activity, and our process meets this threshold as evidenced by documentation such as completed 1037
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questionnaires, fact timelines, website information, and email communications. We file comprehensive information petitions to the CDTFA following the guidelines set forth in Regulation 1807. As needed, we review taxpayer tax returns and obtain amended returns or any other applicable documentation.
► Corrections through the Appeals Process. MuniServices’ extensive investigation prior to submitting the petition means most problems get resolved at the first level of review thereby mitigating any need to elevate cases for appeal as described in Regulation 1807. Over 98% of all cases submitted to the CDTFA by MuniServices are resolved at the initial submission level with the remaining 2% resolved with additional follow-up to the Local Allocation Group without the need for an appeal.
► Documentation. Each quarter the City will receive an Open Account Status Report providing a comprehensive report for all petitions/inquiries filed by MuniServices on their current status and an estimate of the revenue estimated that the City will receive once the correction has been processed by the CDTFA.
► Quality Control. We carefully review all accounts for accuracy that we identify to submit to the CDTFA to ensure that all applicable documentation is obtained prior to forwarding to the CDTFA. MuniServices strives to accurately represent the facts involved with the suspected misallocation and/or deficiency to facilitate the correction and funding of the revenue to the City.

This includes an estimate of the amount of revenue at issue which is then reviewed against the fund transfers processed by the CDTFA for accuracy. Our quality submissions help ensure faster results with the CDTFA.

C.1.7 SALES, TRANSACTION AND USE TAX QUARTERLY REPORTING MuniServices provides a comprehensive set of reporting and analytics services to help you better understand all aspects of your sales tax base. Our services include sales tax revenue forecasts, local business performance, online reporting, specialized data analytics, and quarterly in-person consulting.

Unlike our competitors, our reporting services include specialized consulting to meet the specific needs of each client.

At the heart of our reporting services are our quarterly sales tax meetings. At the quarterly review meeting we cover your sales tax performance results on both a cash and economic basis. We provide sales tax reports such as cash receipts analysis, regional comparisons, Top 25 quarterly gains and declines report, historical trend analysis, top 100 businesses, and other topics pertinent to the City.

Additionally, we provide reports that demonstrate sales tax performance for specific geo-coded areas in the City, with a detailed listing of the businesses and amount of sales tax generated by each in these areas.

Included in our reporting are comprehensive five-year sales and TUT tax forecasts with multiple scenarios. Our forecasts combine city-specific business level activity with regional economic indicators and national economic trends. Our proprietary forecasting model provides a customized highly accurate revenue forecast which typically provides a forecast within a 1% to 2% variance of actual revenues received.

C.1.8 ONLINE REPORTING – CLEARVIEW ANALYTICS
MuniServices has developed state-of-the-art technology products for our clients. Our newly updated online Sales Tax Reporting software titled ‘Clearview’ is a powerful data analytics platform that allows 1038
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City staff to research local business activity and export data for further analysis. Our Clearview software includes the following key features:

Sample Landing Page:

Figure 3 - Sample Landing page.

Consolidated Economic Reports
► See key trends at the category, segment, and retailer levels. ► Access a quick view of how your key retailers are performing. ► View customized cash forecast by fiscal year.
► Search for any retailer in your jurisdiction and view their recent payment history. ► Review and export the rankings of the sales tax producers in your jurisdiction for recent periods. ► Locate potential one-time payments.
► Export the Excel data behind the reports for further analysis or export the visualization to pdf for inclusion in your internal reports.
► Access our analysts to support your use of our tools.

Cash Trends and Distribution Summaries
► Review the fiscal year-to-date totals for your cash.
► See which parts of your economy changed and the key retailers driving those cash changes. ► Compare your cash performance to other jurisdictions as a quick way of benchmarking performance.

Geo Area Reports (Economic)
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► Review trends and where the growth or declines within the geo-area are concentrated and uncover the key drivers of those changes.
► Export a 3-year history of each geo-area directly to excel for use in your internal reports.

GIS Maps
► Visualize your geo-areas and summarize by category and segment. ► Dynamically view the revenue changes in your geo-areas over time. ► Compare the performance of one geo-area to another.

Figure 4 - GIS Maps Screenshot
MuniServices will serve as the City’s resource staff on questions relating to sales tax and assist in estimating future sales tax revenues. The MuniServices team has
proven expertise across numerous tax types and
situations, and we will research and answer any questions the City may have on audit or forecasting.

In addition, MuniServices partners with UCLA Anderson Economic Forecast, one of the world's leading macroeconomic forecasters, to provide further analysis tools to better understand revenue trends.

We communicate with the Forecast regularly and meet publicly with them quarterly. Our unique partnership gives us access to their expertise in macroeconomics, which we combine with our own expertise in microeconomic data analysis to provide our clients with a truly unique and valuable perspective. With this partnership, we can help you:
► Understand the macroeconomic trends that are impacting businesses. ► Identify and mitigate risks.
► Make informed decisions about revenue management.
► Develop strategies to grow your sales tax base.
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We offer expert comparative analysis of the sales tax base to maximize per capita sales tax collected. Our services include:
► Analyzing and comparing sales reports: We will analyze and compare sales reports for the top 100 businesses in the City to identify the mix of businesses and the types of businesses that might be attracted in the future.
► Creating a capture and leakage report: We will create a capture and leakage report to determine how much sales tax is collected from residents, nonresidents, commuters, and visitors. This report will help you understand where your sales tax revenue is coming from and how you can attract more revenue from nonresidents.
► Estimating the additional annual sales tax brought by new businesses: We will estimate the additional annual sales tax that could be brought in by new businesses. We will also determine whether these new businesses will generate new revenue or simply cannibalize from existing businesses.
► Creating and analyzing GEO reports and maps: We can use GEO reports and maps to create and analyze different areas of the city. This information can be used to identify areas with high sales tax potential and identify where to target marketing and development efforts.

Our services can help you maximize your sales tax revenue and grow your economy.

Our sales tax consultants have a deep knowledge of current federal and state laws as they relate to sales and use tax in California. This knowledge is evident in their extensive experience and expertise, as well as their proven track record of success with hundreds of clients throughout California.

Our team includes:
► A Client Success Manager with over 30+ years of experience ► A Vice President of Auditing with over 30+ years of experience ► A Client Relations Manager with over 20+ years of experience ► A Sales Tax Forecaster with over 10+ years of experience This team of experts is uniquely qualified to help you navigate the complex world of sales and use tax in California. They will work with you to develop and implement a sales tax strategy that is tailored to your specific needs.

C.2 TRANSIENT OCCUPANCY TAX (TOT)
MuniServices has direct experience providing Transient Occupancy Tax services to the City.

MuniServices performed the following TOT audits for the City:

Audit Years Total Recoveries
2014 – 2016 $101,217.95
2016 – 2019 $71,598.56
2019 – 2021 $189,214.30
TOTAL $362,030.81
MuniServices offers the City the following general project outline for how MuniServices will approach the TOT audit work. MuniServices will leverage our existing institutional knowledge of the City in our approach and MuniServices will work with the City to ensure requirements and expectations continue to be met. The goal of the Transient Occupancy Tax (“TOT”) Compliance Services is to continue to ensure successful, long-term compliance for lodging properties that operate in the City’s jurisdiction. 1041
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The TOT Compliance Services include the following inventory: traditional lodging properties (hotels, motels, inns) and short-term rentals/vacation rental properties (such as Air BnB, VRBO, etc.).

The TOT Compliance Services consist of a two-phase process, as described in Phase 1 and Phase 2 below and a review of the City’s municipal code. MuniServices will initiate the TOT Compliance Services within sixty (60) days of receipt of the lodging provider “return” information from the City.

C.2.1 IMPLEMENTATION PLAN
MuniServices has audited more California hotels and lodging providers than any other company. To date, MuniServices has performed more than 10,000 audits of lodging providers. We have extensive experience in TOT regulations and hotel operations. MuniServices works closely with our clients to ensure a smooth process and maximize TOT revenues. To facilitate the audit process, the City first provides copies of returns submitted by all domiciled lodging providers for the most recent forty-eight (48) months to MuniServices prior to the start of Phase 1.

Within 90 days of receipt of lodging provider “return information” from the City, we will initiate the Compliance Program. This audit program is a single service consisting of a two-phase process. The Phase 2 portion of the project is not possible without the Phase 1 work. However, the City can elect to complete a reduced number of audits to meet any funding constraints.

Analysis - Phase 1
Figure 5 - TOT Audit - Phase 1

1. Inventory. Establish a comprehensive inventory of all lodging properties subject to taxation by the City and the database elements (public and private databases) needed to facilitate further analysis to identify and locate lodging providers not properly registered with the City and not appearing on the City rolls as TOT remitters.

2. Data collection. Conduct unobtrusive collection of information on each property, including number of rooms, occupancy rate, transient and non-transient guests, exemptions, property’s condition, business dynamics, etc.

3. Analysis. Analyze lodging provider “return information” to identify unusual or suspicious reporting and/or activities that warrant further review.

4. Reporting. Provide a detailed analysis report to the City identifying lodging providers who might require additional investigation or review to determine their compliance with the City’s TOT ordinance and coordinate with the City to review the analysis report.

5. Identify Phase 2 reviews. Work with the City to develop a list of lodging providers subject to a compliance review of lodging and tax records.

Audit and Compliance Review - Phase 2
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Based on our historical experience, an average of roughly 30% of properties reviewed in Phase 1 will be recommended for Phase 2.

Figure 6 - TOT Audit - Phase II
a. Records. Provide the City with a detailed list of all records required from lodging providers, together with a draft engagement announcement letter to be sent to each lodging provider. b. Examine & Verify. Review records pertaining to TOT for each lodging provider selected for a compliance review and verify the accuracy of filed TOT returns with daily and monthly activity summaries.
1) Review a random sample of the daily and monthly summaries to determine if the daily summaries reconcile to the monthly summaries.
2) If MuniServices believes such a review is necessary, review secondary and tertiary documentation such as bank statements to verify that deposits reconcile with the reported revenue on the TOT returns or other tax filings. 3) Review exempted revenue for proper supporting documentation. c. Compliance Report. Submit and review with the City a compliance review report that includes:
1) All review findings.
2) Documentation for each error/omission identified and confirmed by MuniServices is necessary to facilitate recovery of revenue due from lodging providers for prior periods. 3) Draft notices of deficiency determination, commendation, and warning letters as applicable.
d. Findings. Assist the City in reviewing any matters submitted in extenuation and mitigation by lodging providers in contesting a deficiency determination. Prepare and document any changes to the compliance review findings and provide revised tax, interest or penalty amounts due to the City.
e. Consulting. During the term of this Agreement, provide up to ten (10) hours of additional consulting time to assist the City in evaluating or implementing any of the proposed actions suggested by the above report.

Legislative analysis, economic impact reporting on measures, consulting and policy updates are provided timely, regularly, and year-round, and are included as part of the overall Compliance services.

C.2.2 TOT REPORT DELIVERABLES
The Compliance Program – Audit - Phase 1. MuniServices will provide the City with a detailed analysis report identifying lodging providers who might require additional investigation or review to determine their compliance with the City’s TOT ordinance.

The Compliance Program - Compliance Review - Phase 2. MuniServices will provide City staff with a detailed list of all records required to be made available by lodging providers for the reviews, together with a draft engagement announcement letter to be sent to each lodging provider. This Phase will include:
► MuniServices review findings.
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► For each identified and confirmed error/omission, we will request accompanying documentation that MuniServices believes is necessary to facilitate recovery of revenue due from lodging providers for prior periods.
► Draft notices of deficiency determination, commendation and warning letters as applicable; and recommendations.

C.2.3 TRANSIENT OCCUPANCY TAX ADMINISTRATION / SHORT TERMRENTAL Avenu/MuniServices’ Transient Occupancy Tax (TOT) Administration and Reporting Services are designed to make TOT administration simple, efficient, and cost-effective. We provide TOT administration and reporting services to hundreds of clients nationwide, and this is a service that will save the City time and money. Our years of experience and expertise in providing tax administration services allow City staff to focus on core municipal services and not the burdens of the administrative process.

To facilitate the audit process, the City will need to provide certain information: 1) existing taxpayer data, 2) authorization to act on the City’s behalf in accepting filings, payments and compliance/collection efforts, and 3) a designated City contact(s) to whom we will provide reports (via the online Client Reporting Portal) to enable responsible City oversight of the program.

Avenu/MuniServices agrees that it shall keep all information it receives concerning City taxpayers confidential and shall use it solely for tax administration and/or compliance purposes.

Avenu/MuniServices has demonstrated and proven expertise in the administration of several tax types.

Avenu/MuniServices administers and recovers over $2 billion each year across multiple tax types.

Avenu/MuniServices TOT Administration program proposed consists of an implementation phase, leading up to a live cutover from the City’s current administration at a mutually agreeable date; and a recurrent ongoing administration cycle, in which Avenu/MuniServices will serve as the City’s full-service administrator. Here’s an outline of the steps and tasks included in each phase:

C.2.3.1 IMPLEMENTATION

1. Convert and load all taxpayer records (provided by the City) to Avenu/MuniServices Revenue Administration system.

2. Verify with the City all taxpayer letters, forms, notices and any other taxpayer correspondence.

3. Configure secure web filing and payment portal for use by the City’s taxpayers.

4. Contact all taxpayers a) by mail, including introductory letter with new filing address, telephone contact for taxpayer support, and web filing instructions; and then b) by telephone follow-up.

5. Cutover from City to Avenu/MuniServices Administration system according to schedule to be developed with the City.

C.2.3.2 ONGOING TAX ADMINISTRATION CYCLE

1. Beginning on the scheduled date, Avenu/MuniServices will receive filings and payments a) by mail, and b) online.

2. All paper filings, checks and correspondence will be opened and batched in our secure facility.

3. Paper filings will be reconciled with payments and any errors, omissions or balance discrepancies logged for follow-up. Web filings are reconciled daily. Avenu/MuniServices also handles NSF check processing, returns and refunds.
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4. Avenu/MuniServices will generate and send invoices for balances due to any taxpayer underpayments or late payments.

5. Payments received will be deposited and disbursed to the City 10 – 12 times per month.

6. Avenu/MuniServices Tax Specialists will contact the taxpayer by phone to resolve any filing errors, omissions, or discrepancies.

7. Each month, the Avenu/MuniServices Administration System will flag any missed filings for follow-up. Taxpayers will receive a courtesy phone call and a late notice to let them know a filing has not been received as of the due date. We will continue to follow up with the taxpayer until payments are received and the taxpayer is in compliance.

8. Monthly, Avenu/MuniServices Tax Specialists will analyze the month’s receipts and flag significant variations for follow-up with the taxpayer and possible auditor review.

9. Avenu/MuniServices will provide complete taxpayer support via toll-free number and e-mail to taxpayers requiring assistance with filing or payment, mailing address or contact changes, and any other related issues they may have.

10. Avenu/MuniServices will register new taxpayers and assist them with all materials needed to begin and maintain filing.

C.3 PARKING FEES
MuniServices understands that the City has entered into an agreement with the City of Sacramento for the City of Sacramento to provide parking enforcement and citation management services.

MuniServices’ Parking Fee Review service is designed to assist the City in maximizing parking fee revenue due to the City through an examination of revenue-sharing agreements and related books and records to ensure the appropriate collection and remittance of parking revenues. The objective of this engagement is to provide reasonable assurance to the City that the services provided by the vendor are consistent with provisions in the agreement. In addition, because of the review, MuniServices shall provide recommendations as to whether the City should pursue amending the existing agreement during the next available renewal period, and if so, what additional terms and conditions should be sought.

C.3.1 REVIEW SERVICES
► Perform analytical and compliance review of vendor’s records to determine whether the proper amounts of fees were collected, reported, and shared with the City according to the terms of the agreements.
► In coordination with the City staff, schedule, and conduct examinations at the vendor’s locations or remotely of those identified and authorized for examination. ► Verify accuracy of fee-sharing schedules.
► Review, as needed, bank statements, tax returns, general ledger accounts, and other books and records.
► For each error/omission identified and confirmed, submit substantiating documentation to designated City staff to facilitate collection of amounts due. ► Coordinate with designated City official(s) as needed to review findings and recommendations. ► Assist the City in reviewing information submitted contesting a deficiency determination. ► Prepare and document any changes to the examination findings and provide revised amounts due to the City.

C.3.2 MUNISERVICES’ DELIVERABLES
Review Services
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► For each error/omission identified and confirmed, submit a written report substantiating documentation to the City staff to facilitate collection of amounts due together with draft Notices of Deficiency Determination, and/or credit, or other letters as applicable. ► Prepare and document any changes to the examination findings and provide revised amounts due to the City.
► Review any information submitted by others contesting a deficiency determination and prepare draft responses to the City staff; and
► Make recommendation(s) as to whether the City should consider potential efforts in seeking amendments to the existing Agreement during the next available renewal date within the Agreement.

C.3.3 CITY ASSISTANCE
Review Plan
► the City will provide MuniServices with the records required by the City for examination. ► the City agrees to return the signed authorization letter on the City letterhead within thirty (30) days of the effective date of the agreement.
► the City agrees to provide MuniServices with its agreements, ordinances, codes, and rates within thirty (30) days of the effective date of the agreement, and notice of any changes thereafter in the ordinances, codes, and tax rates levied by the City. ► the City agrees to timely sign subpoenas, as required. ► the City agrees to timely sign Final Assessments, as required.

C.4 FRANCHISE / LICENSE FEES
MuniServices’ Franchise Fee service monitors and reviews more than 70 percent of Franchise Fee / Utility Users Tax (UUT) revenues in California. To date, this service has recovered more than $300 million in revenues for our California clients. We monitor the utilities of gas, electricity, and telecommunications, (wired, wireless and Prepaid Wireless).

We accomplish this through our team of analysts, auditors, attorneys, and project managers who analyze, manage, and protect Franchise Fee revenues. Our discovery methods and enforcement tools assure that utilities and franchises comply with tax regulations and remit the correct amounts, whether they are for natural gas, electricity, or telecommunications and video utilities.

We further protect future revenue by remaining current on pending legislation, new technologies and recommending ordinance changes. Any statutory requirement for third-party review of Franchise Fee payments is met through MuniServices.

C.4.1 FRANCHISE FEE COMPLIANCE
MuniServices will provide the following Compliance Activities:

1. Application Review. MuniServices will conduct a “focused” compliance review of the major service providers on behalf of one or more cities to assure that the provider’s “tax application” matrix reflecting all the provider’s current products and service, is being taxed properly, for the benefit of City and other client cities.

2. Payment Review. Identification of possible gaps in payments, irregularities, calculation mistakes (e.g., wrong tax rate), and other payment errors to the City, provided that the City provides MuniServices with regular payment history. MuniServices will assist the City with the appropriate compliance correspondence and enforcement actions. 1046
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3. Comparative Analysis of Payments. MuniServices will periodically perform a comparative analysis of a service provider’s Franchise Fee payments to the City with other neighboring or comparable client cities, after adjusting for rate, population, and median household income. MuniServices will also perform a comparative analysis of the franchise and UUT payments for gas and electricity.

4. Detection.
► MuniServices will annually update its proprietary database of “new telecom service providers” and send out a PUC 799 notice letter to such new providers on City’s behalf.

The current list exceeds 1,500 providers.
► MuniServices will annually update its proprietary database of new “video service providers” and send out a notice letter to such new providers on City’s behalf. ► MuniServices will annually review the SB 278 lists of the major gas and electric companies to identify new non-core gas and direct access electric customers, as well as new third-party providers, and take appropriate steps to assure that the Franchise Fee /UUT is being applied to “commodity” purchases.

5. Exemption Review. MuniServices will periodically review the exemption lists of the major service providers regarding non-residential customers.

City-Specific Compliance Reviews. At City’s option, MuniServices will offer “City-Specific” reviews of UUT and/or Franchise Fees on a performance fee basis, if the above activities or other factors (e.g., non-response by utility provider) would suggest that there is a reasonable need for a focused audit.

C.4.2 FRANCHISE FEE / UUT ADMINISTRATION
Should it be requested by the City, MuniServices offers Franchise Fee / UUT Administration:

1. Franchise Fee / UUT Payment History. MuniServices will provide the City, on a monthly or otherwise mutually agreed upon basis, with a spreadsheet reflecting the City’s Franchise Fee / UUT payments by provider and utility category (based on remittance data provided by City to MuniServices).

2. Prepaid Wireless (SB1441) Monitoring and Analysis. For direct sellers, MuniServices will monitor the monthly prepaid wireless payments and perform a comparative analysis with similar cities to determine accuracy and identify any potential discrepancies. For major direct sellers, MuniServices will perform a tax application review under Item 1 above. We will identify online prepaid wireless sellers and send an annual notice letter to ensure compliance with SB1441. MuniServices will engage and follow-up with the California Department of Tax & Fee Administration (CDTFA) on any issues, problems and discrepancies affecting the City’s prepaid wireless revenue collections by retail sellers, including online sellers, to the extent that MuniServices has access to CDTFA documents through a City resolution authorizing MuniServices to have such access.

3. Franchise Fee / UUT Website. Prepare and maintain an accurate copy of the City’s UUT ordinance and its administrative rules and interpretations on the uutinfo.org website, including a link to the City’s web page (if desired). Model forms for exemptions and remittances, administrative rulings, and other tax compliance documents will be maintained on the www.uutinfo.org website.

4. Revenue Forecasts and Management Reports. MuniServices will provide an annual report that outlines the year’s activities in review, revenue forecasts, year-over-year (YOY) comparison charts and revenue generated from compliance activities. This report contains an 1047
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analysis of Franchise Fee / UUT revenues, and a five-year revenue forecast on each of the utility business segments (electric, gas, CATV, wired telecom, wireless telecom, etc.).

5. Tax Application and Geocode Inquiries. MuniServices will provide technical assistance to City staff and provide timely analysis and draft responses to tax application inquiries from utility companies and will assist in responding to citizens regarding their utility bills and the computation of the Franchise Fee / UUT. MuniServices will assist City and the utility service providers in correcting geocoding errors in response to taxpayer complaints.

C.4.3 REVENUE PROTECTION
Legislative Review Services. MuniServices will monitor proposed state and federal legislation to identify issues affecting the City’s Franchise Fee / UUT or utility franchise revenues and, make recommendations to client cities, their lobbyists, and other potential stakeholders or municipal advocates and otherwise assist in developing effective consensus positions and coordinated advocacy.

Technology and Marketing Analysis. MuniServices will identify, monitor and anticipate changes in technology, services, or marketing of services, which may have an impact on future UUT revenues.

C.4.4 FRANCHISE FEE / UUT ENHANCEMENT SERVICES
Franchise Fee / UUT Ordinance Advisory Services
► Analysis and recommendation (including drafting amendment language) on proposed state and federal legislation.
► Assistance with tax application issues, including taxation of new technologies or services; including preparation of Administrative Rulings. ► Assistance on issues involving “bundling rule” and tax allocation/apportionment. ► Assistance on nexus issues (re: tax application and collection). ► Review of city’s tax info/forms on uutinfo.org.
► Assistance on Voluntary Disclosure Agreements (offers to compromise owed taxes). ► On request, review of exemption status of individual utility user.

UUT Legislative and Regulatory Review Services
MuniServices will monitor proposed state and federal legislation to identify issues affecting the City’s UUT or utility franchise revenues, and, if justified, make recommendations to the City and its lobbyists. Our Government Relations team works in collaboration representatives from the League of California Cities, the California Society of Municipal Finance Officers, the California Municipal Revenue Tax Association, Special Districts Association, City advocates, utility providers, the Public Utilities Commission, CDTFA, BOE, and others.

Our team will work with the City for the protection of revenues including advocacy efforts on Federal bills affecting taxation of broadband telecommunication networks; taxation of wireless services; and taxation of on-line sales and certain digital goods. MuniServices is a Business Partner with the US Conference of Mayors allowing further access to policy decision makers and stakeholders on revenues issues, especially on Federal proposals. Our Government Relations team manages its communication with clients through a strong public relations program and provides crisis assistance on policy matters.

C.5 CANNABIS DEVELOPMENT AGREEMENT FEES
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MuniServices understands the City desires to ensure the registered commercial cannabis businesses that are conducting business within the guidelines provided for by the State of California related to taxation and regulatory compliance as well as local ordinances and that each maintains accurate books and records, to ensure the proper reporting to the various taxing entities and ensure the City obtains an accurate payment.

Statement of Work
In performing Cannabis Audit Services, MuniServices shall:
► Meet with designated City staff to review and discuss potential audit candidates, audit approach, and establish a mutually agreeable project timeline.
► Begin audit process.
► Audit Issues/Findings – Meet with the City on audit activities, including, but not limited to:
o Unexpected delays resulting from the business entity response or other causes. o Significant errors or issues identified during the audit process. o Cooperation issues with the business entity.
► Draft Report Presentation– Meet with the City staff to present a draft report for each business. ► Draft Final Audit Report – A written report with information about each business; those in compliance, and those not in compliance, and recommendations for corrective actions ► Prepare Audit Summary – A written report with recommendations for administrative, technical, and/or regulatory policy modifications that may improve future compliance.

Commercial Cannabis Business Audit Approach
MuniServices’ audit process has been developed to address the specific requirements of each business operation and is not a one-size-fits-all approach. We recognize that businesses have differing operating styles, expertise, and attention to detail. MuniServices will conduct an initial expedited analytical evaluation before starting a complete verification of the business operations. The results of the initial analysis will determine the extent and depth of the full examination.

MuniServices will work with the City to create an audit authorization letter to be presented to the entities selected for review giving MuniServices authorization to conduct work on the City’s behalf. This letter will provide clear expectations for timely complying with audit requests such as access to the facility, system specifications, and financial data storage and access.

MuniServices’ Deliverables
The audit analysis can include, but is not limited to the following tasks:
► Review applicable provisions of the City's municipal code and resolutions adopted by the City. ► Review business records filed with the City such as applications, operating agreements, compliance documents, and tax returns.
► Initiate communication with businesses to establish appropriate business contacts and to get an initial understanding of the business’ Point of Sales systems (POS), product inventory and tracking systems, accounting data systems, physical operation procedures, and methodology. ► Examination of business operations and financial data to verify the accuracy of reported tax returns and compliance with the City’s regulatory and administrative policies. ► Prepare a draft audit report for each business entity. The report will identify any tax deficiencies with a summary explaining how the deficiencies were discovered and suggestions on a 1049
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resolution to ensure future compliance. This report will also present to the City a regulatory compliance overview identifying any areas that need corrective action. ► The draft report will first be discussed with the City and then presented to the business entity, upon the City’s approval. The business entity will be provided with an appropriate amount of time to review the audit report and respond to any of the audit findings. ► Prepare a final audit report summarizing the findings. The audit report will include information about the specific aspects of the business in compliance, those that were not in compliance, and recommendations for corrective actions. If relevant, we will also include areas for continued monitoring.
► Prepare an audit summary report upon completion of all the initial audits. The audit summary report will provide recommendations to the City for possible administrative, technical, and/or regulatory policy modifications that may be considered to improve compliance with the City’s operating and reporting requirements.
the City Assistance
► the City will provide MuniServices with the records of those taxpayers authorized by the City for examination, including but not limited to business name, business’s physical address, mailing address, and contact person’s name, email, and phone number. ► the City agrees to return the signed authorization letter on the City letterhead within thirty (30) days of the effective date of the agreement.
► the City agrees to timely sign documents and correspondence, as required. ► the City agrees to provide MuniServices with its ordinances, codes, and tax rates within thirty (30) days of the effective date of the agreement, and notice of any changes thereafter in the ordinances, codes, and tax rates levied by the City.
► the City will provide payment history records for the taxpayers set up for examination.

C.5.1 CANNABIS ADMINISTRATION SERVICES
MuniServices understand the City seeks to enhance its cannabis tax revenue collection process by implementing a streamlined and efficient system. Our proposed Automated Cannabis Tax Collection System offers a comprehensive solution that addresses the city's goals by increasing revenue, reducing collection time, and minimizing administrative burden.

Statement of Work
In performing Cannabis Administration Services, MuniServices shall:
► Increased Revenue Generation:
o Real-time Sales Data Processing: Our system integrates with METRC, the state's cannabis track-and-trace system, to provide real-time visibility into cannabis sales data.

This ensures accurate tax calculation and eliminates underreporting, leading to increased revenue collection.
o Reduced Errors: By automating the tax calculation process based on verified sales data, our system eliminates manual errors associated with self-reporting, maximizing tax collection accuracy.
o Improved Compliance: The system automatically notifies licensees of upcoming tax deadlines and provides easy-to-use payment options, promoting timely payments and reducing the risk of penalties and interest.
► Reduced Collection Time:
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o Automated Payment Processing: Our system supports various payment methods, including ACH, cash pickup, wires, and checks, allowing licensees to choose the most convenient option and accelerating the collection process. o Elimination of Manual Data Entry: By ingesting sales data from the major cannabis POS systems, our system eliminates the need for manual data entry, reducing administrative time and minimizing the risk of errors.
o Real-time Reporting and Reconciliation: The system provides real-time reports on tax collection progress, enabling city officials to monitor revenue streams and reconcile payments efficiently.
► Minimized Administrative Burden:
o Fully Outsourced Solution: Our system acts as a fully outsourced solution, relieving city staff from the time-consuming tasks of manual data entry, payment processing, and reconciliation.
o Dedicated Support Team: Our experienced support team provides ongoing assistance to both city officials and licensees, ensuring smooth operation and prompt resolution of any issues.
o Reduced Paperwork: The system eliminates the need for paper-based reporting and record-keeping, reducing administrative overhead and promoting environmental sustainability.

Conclusion
Our Automated Cannabis Tax Collection System offers a comprehensive and efficient solution to address the City’s cannabis tax collection challenges. By automating key processes, integrating with existing systems, and providing a user-friendly platform, our system will enable the City to increase revenue, reduce collection time, and minimize administrative burden. We are confident that our solution will significantly enhance the city's cannabis tax administration and contribute to its overall financial health.

C.6 OPTIONAL SERVICES
MuniServices offers several services that may be of benefit to the City. These services are listed in the City’s Scope of Services, so these services should be considered optional.

C.6.1 SHORT-TERM RENTAL COMPLIANCE AND MONITORING
MuniServices offers a comprehensive and full fledge service where MuniServices provides a state-ofthe-art reporting platform along with the following services to run West Sacramento’s STR enforcement program:

1. Monitoring Module - 100+ Websites Multiple Times A Week Including Localized Websites

2. Identification Module - Exact Property Address and Owner/Operator Details

3. Permitting Module - Fully Configurable Short Term Rental Permitting Portal

4. Compliance Module – In House Case Management System

5. Print Mail Notification Letter Service - 2 Printed/Stamped Letters Per STR Per Year

6. 24/7 Hotline - Fully Customizable Short Term Rental Complaint Line

7. Revenues Module – Revenue Estimation Based On Exclusive Third-Party Data and Scraping

8. Tax Portal - Fully Configurable Short Term Rental Tax Remittance Portal

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10. Hotel/Motel Tax Administration –Full Admin With Remittance, Compliance, and Exemption Review

11. Customer Support – Dedicated Customer Success Associate Servicing City Staff and Citizens MuniServices/MuniServices offers several options which are outlined below. Please note, MuniServices is a sister company to MuniServices Insights & Analytics, which work together as a team to provide comprehensive solutions to state and local governments across the Country. 1052
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C.6.2 OPTIONAL SERVICE - BUSINESS LICENSE DISCOVERY AND

RECOVERY
Should the City desire this service, MuniServices will identify non-compliant businesses that have not paid their licensing fees.

MuniServices understands that we will initially contact these non-compliant businesses, and any additional contact will be made by the City. If we contact the business by mail, MuniServices will use a template letter from the City. Additionally, MuniServices will inform the City on a monthly basis by providing a database report of all non-compliant businesses contacted with the results of all research.

MuniServices’ approach and methodologies are a direct result of decades of experience and improvements. MuniServices used these decades of experience to refine and develop a discovery/recovery process that will identify businesses not on the City current taxpayer list(s).

MuniServices has found that we can produce significant added revenues for our clients, both immediately and in future years, when fees for the discovered businesses are collected. When implemented on behalf of the City, MuniServices’ proven Discovery and Revenue Recovery Program will:
► Compare the City existing taxpayer list(s) against various databases aggregated from disparate systems and resources to identify previously unknown businesses operating within the City without paying the appropriate fees.
► Send notices to those businesses including an application packet approved by the City advising them of their legal obligation to register and pay the appropriate fees in accordance with the City’s ordinance.
► Provide taxpayer support for taxpayers who may have questions regarding these forms, and pro-actively contact taxpayers until forms are returned or account status is resolved. ► Verify information on each form received to ensure that all required information has been provided, that the fees due have been correctly calculated, and that payment in full has been made.
► Perform preliminary research to verify that the gross receipts, number of employees, and number of locations declared on each application appear to be reasonable and appropriate for each business. Flag questionable applications for further contact, which may include telephone query, site visits, or referral of the taxpayer for detailed audit. 1054
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► Promptly disburse to the City all payments received, less our percentage fee. If applications are returned without payment or with insufficient payment, invoice the taxpayer, monitor and pursue payment, and promptly disburse to the City amounts received.

Our proposed Revenue Discovery and Recovery process is organized into three phases:

Figure 7 - Business License Discovery and Recovery Flow

1. Implementation Phase, in which MuniServices and the City will consult and cooperate to ensure our mutual agreement on project specifications and procedures.

2. Discovery Phase, in which MuniServices will use data mining techniques to compare lists of known taxpayers received from the City and with data from other relevant databases to be obtained by MuniServices to identify additional businesses that may have outstanding business license liabilities, report these to the City in a form that will enable follow-up and collection, notify taxpayers of these potential liabilities, and provide assistance to such taxpayers in filing the appropriate returns.

3. Recovery Phase, in which MuniServices will notify both the City and the individual taxpayers of these potential liabilities. In this phase, MuniServices will assist taxpayers in filing the appropriate returns and will follow-up with each such taxpayer as needed until the appropriate return is filed and all fees due are paid in full.
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Muniservices, LLC
FIN25-020 Revenue Audit and Consulting Services
Expires on 02/18/2028

EXHIBIT B
Schedule of Fees
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EXHIBIT C
CERTIFICATE OF COMPLIANCE WITH LABOR CODE § 3700
[Labor Code § 1861]
I am aware of the provisions of Section 3700 of the Labor Code which require every employer to be insured against liability for workers’ compensation or to undertake self-insurance in accordance with the provisions of that code, and I will comply with such provisions before commencing the performance of the work of this contract.

MuniServices, LLC
By:

Paul Colangelo, CEO
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Attachment 4
RESOLUTION 25-25

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF WEST SACRAMENTO

AUTHORIZING EXAMINATION OF LOCAL SALES AND USE TAX AND TRANACTION AND

USE TAX RECORDS
WHEREAS, pursuant to Ordinance No. 87-9 and Resolution 87-13, The City of West Sacramento entered into a contract with the California Department of Tax and Fee Administration (CDTFA or Department) to perform all functions incident to the administration and collection of local sales and use taxes; and
WHEREAS, pursuant to Ordinance Nos. 02-12, 16-6, 18-12 and 24-7, the City of West Sacramento (City) entered into contracts with the California Department of Tax and Fee Administration to perform all functions incident to the administration and collection of local transactions and use taxes; and
WHEREAS, Section 7056 of the California Revenue and Taxation Code sets forth certain requirements and conditions for the disclosure of CDTFA records and establishes criminal penalties for the unlawful disclosure of information contained in, or derived from sales or transactions and use tax records of the CDTFA; and
WHEREAS, Section 7056 of the California Revenue and Taxation Code requires that any person designated by the City shall have an existing contract to examine the City’s sales and transactions and use tax records; and
WHEREAS, the City Council of the City of West Sacramento deems it desirable and necessary for authorized officers, employees and representatives of the City to examine confidential sales or transactions and use tax records of the Department pertaining to sales or transactions and use taxes collected by the Department for the City pursuant to that contract; and NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of West Sacramento as follows:

Section 1. That the City Manager or designee (Assistant City Manager, Finance Director, Finance Manager, Economic Development & Housing Director, Economic Development Manager, Community Investment Manager, Finance Analyst, Senior Finance Analyst, IT Specialist (GIS)), or other officer or employee of the City designated in writing by the City Manager to the California Department of Tax and Fee Administration is hereby appointed to represent the City with authority to examine sales or transactions and use tax records of the Department pertaining to sales or transactions and use taxes collected for the City by the Department pursuant to the contract between the City and the Department.

Section 2.

The information obtained by examination of Department records shall be used only for purposes related to the collection of City sales and use taxes and local transactions and use taxes by the Department pursuant to that contract, and for purposes related to the following governmental functions of the City:
(a) Budget preparation; long range forecasting
(b) Future tax and revenue planning
(c) Economic development purposes
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Resolution 25-25 Authorizing Examination of CDTFA Records