Title
Recommendation to Authorize the Interim City Manager to Execute a First Amendment to the Professional Services Agreement with Hinderliter de Llamas Associates (HdL) to Include the Review and Examination of Measure F Transactions and Use Tax Records Collected by the California Department of Tax and Fee Administration and to Increase Compensation Under the Agreement by $25,000; and
Adoption of Resolution Authorizing Hinderliter de Llamas Associates (HdL) Access to the City’s Sales and Transactions and Use Tax Records. (Finance 2410)
Body
To: Honorable Mayor and Members of the City Council
From: David L. Rudat, Interim City Manager
EXECUTIVE SUMMARY
Authorize the Interim City Manager to execute amendment to the professional services agreement with Hiderliter de Llamas (HdL) for review and analysis of the newly voter approved City’s Transactions and Use tax. Additionally, it is recommended that City Council adopts a resolution authorizing HdL to access to Transactions and Use Tax records to ensure that City receives the appropriate tax.
BACKGROUND
With the adoption of Resolution 15412 on July 10, 2018, the City placed a half-cent sales tax measure on the November 6, 2018 ballot. On July 10th, the City Council also introduced Ordinance No. 3231 adding Section 3-63 to Division IX (Taxes) of Article II (Taxation) of Chapter III to the City’s Municipal Code to impose the additional transactions and use tax subject to the outcome of the election. Measure F, City of Alameda Essential Services Protection Measure, was approved by a majority of the City of Alameda voters on November 6, 2018.
Section 7056 if the Revenue and Taxation Code requires that an agency designate by resolution individuals authorized to examine confidential transaction and use tax records provided by the California Department of Tax and Fee Administration (CDTFA).
DISCUSSION
On September 5, 2017, the City awarded a five-year contract to HdL to provide auditing, projections and recovery services of Sales and Use Tax (Brandley-Burns) revenue. These services include examination of sales and use tax records to ensure that these taxes are properly attributed to the City and facilitating the process of correcting misallocations by the CDTFA so that revenue is remitted to the City. After the passage of the half-cent transactions and use tax known as “Measure F City of Alameda Essential Services Protection Measure”, staff recommends that the City Council approve an amendment to the agreement with HdL for the provision of these services for the City’s new Transactions and Use Tax. As the City’s transactions and use tax consultant, it is necessary that HdL be added to the resolution authorizing access to the transactions and use tax records provided by the CDTFA.
FINANCIAL IMPACT
The half-cent transactions and use tax will go into effect April 1, 2019. It is expected that CDTFA will have detailed transactions and use tax information available for audit and analysis in September 2019. There are adequate appropriations available in the Fiscal Year 2018-19 Finance Department Budget to fund this amendment. Going forward annual costs for the agreement will be incorporated in the future budgets.
Compensation for the additional scope of work under the first amendment is estimated not to exceed $25,000 over the remaining term of the agreement with HdL. Compensation under the contract includes a fixed fee of $100 per month plus 25% of the initial amount of the new transactions and use tax revenue received by the City as a result of audit and recovery work performed by HdL.
MUNICIPAL CODE/POLICY DOCUMENT CROSS REFERENCE
This action is in conformance with the Alameda Municipal Code and all policy documents.
ENVIRONMENTAL REVIEW
This activity is not a project and is exempt from the California Environmental Quality Act (CEQA) pursuant to Section 15378 (b) (4) of the CEQA Guidelines, because it involves governmental fiscal activities (acceptance of the third quarter financial report), which does not involve any commitment to any specific project which may result in a potentially significant physical impact on the environment.
RECOMMENDATION
Authorize the Interim City Manager to execute a First Amendment to the professional services agreement with Hinderliter de Llamas Associates (HdL) to include the review and examination of Measure F Transactions and Use Tax records collected by the California Department of Tax and Fee Administration and to increase compensation under the agreement by $25,000; and
Adopt a Resolution authorizing Hinderliter de Llamas Associates (HdL) access to all sales and transactions and use tax records
Respectfully submitted,
Elena Adair, Finance Director
Financial Impact section reviewed,
Elena Adair, Finance Director
Exhibits:
1. Agreement
2. First Amendment