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HomeMy WebLinkAbout5/16/2007 - AGREEMENTS AMENDMENT NO. 3 TO CONSULTING SERVICES AGREEMENT FOR SALES,TRANSACTIONS AND USE TAX AUDIT(SUTA)SERVICES AND PROPERTY TAX COMPLIANCE SERVICES (AGREEMENT NO.A5482) THIS THIRD AMENDMENT to the Consulting Services Agreement No.A5482 for Sales,Transactions and Use Tax Audit (SUTA) Services is made and entered into to be effective on the date that the City Manager executes this Amendment by and between the City of Palm Springs,a California charter city and municipal corporation (hereinafter referred to as the City),and Avenu MuniServices, LLC, (hereinafter referred to as the Consultant) (collectively, the "Parties"). RECITALS A. City and Consultant entered into a Consulting Services Agreement ("Agreement") for Sales, Transactions and Use Tax Audit (SUTA) Services to detect and document misallocations of Local District Tax(also known as Transactions&Use Tax), Bradley-Burns sales tax and local use tax activity, and Property Tax Compliance Services which consists of Audit and Recovery Services, within the statute of limitations on recoverability on May 16,2007 in an amount not to exceed$175,000 for a three-year term,with automatically renewing three-year terms. The original$175,000 has recently been fully expended. B. Amendment No. 1, amends the agreement, lowering the existing compensation schedule of 25% of additional revenue collected down to 15%of additional revenue collected, and remove the not-to-exceed (NTE) cap on fees. Section 5.1, extends the term of the agreement for three (3) years, commencing on July 1, 2015 and ending on June 30, 2018, and may be terminated by either party with 30-days notice, eliminating Section 5.2 and 5.3. C. Amendment No. 2, Section 5.1, extends the term of the agreement for three (3)years, commencing on July 1, 2018 and ending on June 30, 2021, and may be terminated by either party with 30-days notice. Section 6.2, of the agreement amended the "COVENANT AGAINST DISCRIMINATION" language. D. The City adopted Transactions and Use Tax (PLSS) .50%sales tax to support the City's General Fund, which became effective on April 1, 2018 (the "District Tax"); the State Board of Equalization or its successor agency the California Department of Tax and Fee Administration (collectively, or in the alternative, the "Agency") has taken the position that general reference to "sales and use tax" are insufficient to allow access to information relating the collection of the District Tax by the Agency;the City and Avenu MuniServices, without conceding the correctness of the Agency's interpretation, deem it prudent to comply with the interpretation by amending the Agreement to specifically refer to the District Tax; section 7056 of the California Revenue and Taxation Code imposes conditions on the access to information related to the collection of sales, transaction, and use tax by the Agency. NOW,THEREFORE,in order to satisfythe requirement of section 7056,the Parties hereby amend the agreement as follows: ORIGINAL BID AND/OR AGREEMENT AGREEMENT 1. The following language is incorporated into the Consulting Services Agreement as if set forth therein. Transaction and Use Tax "MuniServices qualifies under Section 7056 of the Revenue and Taxation Code to review (Bradley-Burns) confidential taxpayer information and documentation before the State Board of Equalization (BOE)or its successor agency, the California Department of Tax and Fee Administration (collectively, or in the alternative, the "Agency"). MuniServices is hereby authorized by this Agreement to examine transaction tax,sales tax and use tax records of the Agency, including but not limited to the transaction and use tax that becomes effective on or about April 1,2018 known as the Palm Springs—City of Palm Springs 2018 Transactions and Use Tax(PLSS).50%pertaining to the ascertainment of those sales or transactions and use taxes to be collected for the City. MuniServices is required to disclose information contained in, or derived from, those transaction,sales and use tax records only to an officer or employee of the City who is authorized by resolution to examine the information. MuniServices is prohibited from performing consulting services for a retailer during the term of this Agreement. MuniServices is prohibited from retaining the information contained in, or derived from, those transaction, sales and use tax records, after this Agreement has expired." 2. The City and Avenu MuniServices agree that although the scope of work generically refers to "sales and use tax"those references are meant to include "sales, transaction, and use tax" as part of the scope of work, including but not limited to any transaction and use taxes adopted after the effective date of the Agreement. 3. The Parties agree that Agreement is applicable to all Sales, Transaction and Use Tax Ordinances currently enacted in the City and which may become enacted while the Agreement is in effect. 4. The Parties agree that the City will adopt an updated resolution in substantially the same form as the template provided as Exhibit A to this Amendment. 5. Except as herein modified, all other provisions of the Agreement, including any exhibits and subsequent amendments thereto, shall remain in full force and effect. 6. In case of a conflict between the terms of this Amendment and the terms of the Contract, the terms of this Amendment shall strictly prevail. IN WITNESS WHEREOF, the Parties have executed and entered into this Amendment as of the date first written below. "CITY" CITY OF PALM SPRINGS, ATTEST: a California charter city and municipal corporation By: By. Anthony J. keji-ta—, erk David H. Ready, City Manager I Date 6 j2-1 11ZOICI DateZ�155- APPROVED AS TO FORM: 3�.APPROVED PY nP PAIARAGER By: o1 �0 � p City Attorney Date "CONSULTANT" MUNISERV CES, LLC, By: Dou e s n, SVP Client Services CONSULTANT: Check one:_Individual_Partnership_Corporation X LLC GOVEREV-01 CSOKOLOWSKI ACORO� CERTIFICATE OF LIABILITY INSURANCE DATE(MM/DD/YYYY) ��. 3/11/2019 THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE HOLDER.THIS CERTIFICATE DOES NOT AFFIRMATIVELY OR NEGATIVELY AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW. THIS CERTIFICATE OF INSURANCE DOES NOT CONSTITUTE A CONTRACT BETWEEN THE ISSUING INSURER(S),AUTHORIZED REPRESENTATIVE OR PRODUCER,AND THE CERTIFICATE HOLDER. IMPORTANT: If the certificate holder is an ADDITIONAL INSURED,the policy(ies)must have ADDITIONAL INSURED provisions or be endorsed. If SUBROGATION IS WAIVED, subject to the terms and conditions of the policy,certain policies may require an endorsement. A statement on this certificate does not confer rights to the certificate holder in lieu of such endorsement(s). CONTACT Daniel R.Gunter PRODUCER NAME: Thompson Flanagan Executive Liability Group PHONE FAX 626 W.Jackson Blvd.5th Floor (A/C,No,Ext):(312)239-2890 (A/C,No):(312)263-1551 Chicago,IL 60661 E-MAIL SS:dgunter@thompsonflanagan.com INSURERS AFFORDING COVERAGE NAIC# INSURERA:The Continental Insurance Company 35289 INSURED INSURER B:American Casualty,Company of Reading,Pennsylvania 20427 Avenu Holdings,LLC INSURER C:RSUI Indemnity 22314 7625 Palm Ave.,Suite 108 INSURER D:Axis Insurance Company 37273 Fresno,CA 93711 INSURER E INSURER F: COVERAGES CERTIFICATE NUMBER: REVISION NUMBER: THIS IS TO CERTIFY THAT THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED. NOTWITHSTANDING ANY REQUIREMENT, TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT TO WHICH THIS CERTIFICATE MAY BE ISSUED OR MAY PERTAIN, THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS, EXCLUSIONS AND CONDITIONS OF SUCH POLICIES.LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS. INSR TYPE OF INSURANCE ADDL SUBR POLICY NUMBER POLICY EFF POLICY EXP LIMITS LTR D WVD MM/DDIYYYY MMIDDIYYYY A X COMMERCIAL GENERAL LIABILITY EACH OCCURRENCE S 1,000,000 CLAIMS-MADE OCCUR X X 6043362567 1/24/2019 1/24/2020 P°REMISET Eaoccurre occurrence) $ 1,000,000 MED EXP(Any oneperson) $ 15,000 PERSONAL&ADV INJURY $ 1,000,000 GEN'L AGGREGATE LIMIT APPLIES PER: GENERAL AGGREGATE $ 2,000,000 E LOC 2,000,000POLICY J OTHER: $ B AUTOMOBILE LIABILITY I Ea aBINEDISINGLE LIMIT $ 1,000,000 ANY AUTO 6043362570 1/24/2019 1/24/2020 BODILY INJURY Perperson) $ OWNED SCHEDULED AUTOS ONLY AUTOS BODILY INJURY Per accident $ X AUT OS ONLY X AUOTOS ONED PPe�acEcitlentDAMAGE S $ A X UMBRELLA LIAB X OCCUR EACH OCCURRENCE $ 10,000,000 EXCESS LIAB CLAIMS-MADE 6043362584 1/24/2019 1/24/2020 AGGREGATE S 10,000,000 DED. I X I RETENTION$ 10,000 - S B WORKERS COMPENSATION XTA AND EMPLOYERS'LIABILITY STUTE OERH ANY PROPRIETOR/PARTNER/EXECUTIVE YIN X 6043362536 1/24/2019 1/24/2020 1,000,000 OFFICERIMEMBER EXCLUDED? N/A E.L.EACH ACCIDENT S (Mandatory In NH) E.L.DISEASE-EA EMPLOYEE $ 1,000,000 If yes,describe under DESCRIPTIONOFOPERATIONSbelow E.L.DISEASE-POLICY LIMIT S 1,000,000 C Tech E&O/Cyber LCY774107 1/24/2019 1/24/2020 Per Claim/Agg 5,000,000 D Crime MCN62051010112019 1/2412019 1/24/2020 Limit 2,000,000 DESCRIPTION OF OPERATIONS/LOCATIONS/VEHICLES (ACORD 101,Additional Remarks Schedule maybe attached if more space is'required) Per the cancellation wording listed on this form,the policy provisions include at feast 30 days'notice of cancellation except for non-payment of premium. i The City of Palms Springs,its agents,officers,servants and employees are named as additional insureds under the General Liability policy with respect to the operations and work performed by the named insured as required by contract.The General Liability policy is Primary&Non-Contributory.Waiver of subrogation applies under the General Liability and Workers Compensation policies. CERTIFICATE HOLDER CANCELLATION SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE THE EXPIRATION DATE THEREOF, NOTICE WILL BE DELIVERED IN ACCORDANCE WITH THE POLICY PROVISIONS. City of Palm Springs AUTHORIZED REPRESENTATIVE 3Attn:200 Finance Director /�.sa 3200 E.Tahquitz Canyon Way �` , ACORD 25(2016/03) ©1988-2015 ACORD CORPORATION. All rights reserved. The ACORD name and logo are registered marks of ACORD AGENCY CUSTOMER ID:GOVEREV-01 CSOKOLOWSKI LOC#: 1 A EP® ADDITIONAL REMARKS SCHEDULE Page 1 of 1 AGENCY NAMED INSURED Thompson Flanagan Executive Liability Group 625 Palm Ave. LLC 108 POLICY NUMBER Fresno,CA 93A 1 SEE PAGE 1 CARRIER NAIC CODE EE PAGE 1 SEE P 1 EFFECTIVE DATE:SEE PAGE 1 ADDITIONAL REMARKS THIS ADDITIONAL REMARKS FORM IS A SCHEDULE TO ACORD FORM, FORM NUMBER: ACORD 25 FORM TITLE: Certificate of Liability Insurance Named Insureds: 1.Government Revenue Solutions Holdings I,LLC 2.Avenu Holdings,LLC 3.Avenu Insights&Analytics LLC 4.MuniServices,LLC d/b/a Avenu MuniServices,LLC 5.eGov Solutions,LLC 6.Ram Ware,LLC 7.Avenu Insights,LLC 8.Avenu Canada 9.Avenu AcquireCo ULC 10.Avenu Pension Administration Solutions ULC 11.CSLS Holdings,LLC 12.CGS Local Government Solutions,LLC 13.CGSLGS Holdings, LLC 14.Conduent Unclaimed Property Systems,LLC 15.Conduent Enterprise Solutuions,LLC 16.Conduent Government Systems,LLC 17.Conduent Government Record Services,LLC 18.Conduent Title Records,LLC California Workers Compensation: A separate policy number is applicable to California Workers'Compensation:01-24-19.The same insurer(American Casualty Company of Reading,Pennsylvania)and effective date(01-24-19)are applicable.Policy number is WC643362553.Workers' Compensation limits are per state statute.Employer's Liability limits are as follows: Each Accident-$1,000,000; Disease Each Employee-$1,000,000;and Disease Policy Limit-$1,000,000 ACORD 101 (2008/01) ©2008 ACORD CORPORATION. All rights reserved. The ACORD name and logo are registered marks of ACORD AMENDMENT NO. 1 TO CONSULTING SERVICES AGREEMENT FOR SALES, TRANSACTIONS AND USE TAX AUDIT (SUTA) SERVICES AND PROPERTY TAX COMPLIANCE SERVICES (Agreement No. A5482) THIS FIRST AMENDMENT to the Consulting Services Agreement No. A5482 for Sales, Transactions and Use Tax Audit (SUTA) Services is made and entered into to be effective on the date that the City Manager executes this Amendment by and between the City of Palm Springs, a California charter city and municipal corporation (hereinafter referred to as the City), and MuniServices,LLC,a Delaware limited liability company,its subsidiaries and affiliates(hereinafter referred to as the Consultant) (collectively, the "Parties"). RECITALS A. City and Consultant entered into a Consulting Services Agreement("Agreement")for Sales, Transactions and Use Tax Audit(SUTA)Services to detect and document misallocations of Local District Tax (also known as Transactions & Use Tax), Bradley-Bums sales tax and local use tax activity, and Property Tax Compliance Services which consists of Audit and Recovery Services,within the statute of limitations on recoverability on May 16,2007 in an amount not to exceed$175,000 for a three-year term,with automatically renewing three-year terms. The original $175,000 has recently been fully expended. B. City and Consultant desire to lower the existing compensation schedule of 25%of additional revenue collected down to 15% of additional revenue collected, and remove the not-to- exceed (NTE) cap on fees. C. Consultant shall be compensated and reimbursed for the services rendered under this Agreement in accordance with the Schedule of Fees as set forth in Exhibit"A". NOW, THEREFORE, in consideration of the mutual promises and covenants contained herein, the Parties agree as follows: AGREEMENT 1. Addendum Section"SUTA Compensation",of the Agreement is hereby amended to read as follows: "MuniServices' compensation for Sales and Use Tax Audit Service is a 15% contingency fee. This fee applies to revenue received for six quarters beginning with the quarter in which the Date of Correction falls and all eligible prior quarters back to and including the three quarters prior to the Date of Knowledge quarter..." References to `not-to-exceed (NTE) amounts payable' for the Services to be performed shall be removed. 2. Section 5.1 of the agreement shall be amended to read: "This agreement shall be effective for three (3)years, commencing on July 1, 2015 and ending on June 30,2018, and may be terminated by either party with 30-days notice. 3. Section 5.2 and Section 5.3 of the agreement are deleted. ORIGINAL BID AND/OR AGREEMENT IN WITNESS WHEREOF,the Parties have executed and entered into this Amendment as of the date first written above. "CITY" CITY OF PALM SPRINGS, ATTEST: a California charter city and municipal corporation B B ames Thompson, City Clerk David H. Ready, City Manager Date APPROVE AS TO FORM: APPROVED BY CITY COUNCIL Douglas H. Holland, City Attorney "CONSULTANT" MUNISERVICES, LLC, a Delaware limited liability company By: Doug n, SVP Client Services CONSULTANT: Check one:_Individual_Partnership_Corporation X LLC EXHIBIT A Sales,Transactions and Use Tax Audit Services (SUTA) Services Article 1-Objectives and Methods MuniServices' Sales and/or Transactions and Use Tax Audit Service is designed to maximize the City's income—and minimize the cost of lost revenue—by detecting and documenting misallocations of Local District Tax (also known as Transactions & Use Tax),Bradley-Burns sales tax and local use tax activity within the statute of limitations on recoverability. Article 2-Scope of Work In performing the sales,transactions and use tax audit program MuniServices shall: 1. Identify and correct the sales/transactions/use tax reporting errors of businesses that, based on the nexus of their activities,are not properly registered with the City. 2. Identify and correct the reporting of businesses that are improperly reporting tax to state and county pools (i.e. classifying sales tax as use tax)and thereby depriving the City of sales tax revenue. 3. Detect, document and correct sales/transactions/use tax reporting errors/omissions and thereby generate new, previously unrealized revenue for the City. 4. Ensure through comprehensive audit measures that the revenue information used for ongoing economic analysis includes all sales/transactions/use tax generators. 5. Assist the City with strategies to preserve and even enhance sales and use tax revenue generated by existing businesses within the City. MuniServices'proposed sales/transactions/use tax allocation audit services for the City includes five distinct types of audits: o Taxable Nexus Field audits o Permitization audits o Deficiency assessment audits o Accounts payable audits o Quarterly Distribution Report audits Taxable Nexus Field Audits MuniServices' initial and periodic taxable nexus field audits include a physical canvassing and evaluation of sales/transactions/use tax generating businesses located in the City. In the absence of this undertaking, significant misallocations will remain undetected. MuniServices'field audits focus on those businesses located in the City from which the City has not been receiving sales/transactions/use tax revenue. Permitization Audiu Wholesalers, contractors, processors, manufacturers and other non-retail businesses will frequently not have a sales tax permit properly registered to the City in which they are located because their business operations do not include a point-of- sale qualifying activity. However,these companies will often generate local sales/transactions/use tax from the State Board of Equalization (SBE)audit deficiency assessments,occasional sales (i.e.,mergers and acquisitions),and self-accrual of use tax on purchases. MuniServices' field audits facilitate the identification and correction of improperly registered permits for companies having point-of-sale operations in the City. Deficiency Assessment Audits When the California SBE audits taxpayers for sales/transactions/use tax compliance, it is not uncommon for the taxpayer to receive a substantial deficiency assessment due to underpayments and/or under-collections. In many cases, the local allocation portion of the deficiency assessment is distributed in error to the State pool, county pools, or other jurisdictions. Accordingly, MuniServices has developed proprietary criteria and techniques to detect and correct SBE deficiency assessment misallocations and thus expand the benefits produced by MuniServices'allocation audit service. Accounts Payable Audits When California taxpayers purchase tangible personal property for which title passes out-of-state,the transactions are subject to use tax (rather than sales tax) which is collected by the vendor who in turn remits it to the SBE, with the local allocation typically distributed statewide or countywide through the pools. Palm Springs CA-SUTA 102215 1 6111uN E'RinCES Under certain conditions,the seller may allocate the local tax by situs or the City may elect to self-accrue the use tax and remit it directly to the SBE,in which case the local portion will come back to the City in the same manner as sales tax. MuniServices' accounts payable audit will include a review of the City's purchases to identify opportunities for the City to capture the 1% local allocation on purchases subject to use tax and the local district tax where applicable. In this regard, MuniServices will prepare the documentation to facilitate the election, including assistance in preparing and filing the tax returns. Quarterly Distribution Report Audits Every three months, the City and MuniServices receive a Quarterly Distribution Report (QDR) from the SBE with the local allocation amount reflected by permit number. MuniServices' QDR audits detect and correct taxpayer-reporting errors and thereby generate new, previously unrealized sales/transactions/use tax revenue for the City. MuniServices' QDR audits focus on those accounts where MuniServices observes a substantial decline in the sales/ transactions/use tax revenue allocation for a particular business entity in a given quarter. In most cases, accounts showing zero balances have either relocated or simply reported late, in which case the payments will not be reflected until the next quarter's QDR. Therefore, six months must lapse before the QDRs indicate whether a zero balance account can be attributed to a late payment or a misallocation. Cities and counties may only recover misallocated Bradley-Burns sales tax revenue for three quarters prior to the SBE being notified of the reporting error and misallocated District tax revenues for between three quarters and three years. Therefore QDR audits must be conducted in a timely manner in order to preserve the opportunity for the City to recover misallocated revenue. MuniServices shall conduct the QDR audit each and every quarter to minimize the potential of lost revenue to the City. Confidentiality Provisions MuniServices is authorized by this Agreement to examine transaction tax,sales tax,and use tax records of the SBE provided to City pursuant to contract under the Bradley-Burns Uniform Sales and Use Tax Law and California Revenue & Taxation Code applicable to transactions and use taxes. If the City adopts a new transaction tax or taxes after the effective date of this Agreement the parties intend for the work under this agreement to include that tax or taxes. MuniServices is required to disclose information contained in, or derived from, those sales, transaction, and use tax records only to an officer or employee of the City who is authorized by resolution to examine the information. MuniServices is prohibited from performing consulting services for a retailer during the term of this Agreement. MuniServices is prohibited from retaining the information contained in,or derived from,those sales,transaction,and use tax records,after this Agreement has expired. This Agreement, and MuniServices' and City's obligations with respect to confidentiality of taxpayer data pursuant to the Bradley Burns Revenue and Taxation Code,shall continue until final payment for all services rendered hereunder. Article 3-Deliverables SUTA Detection and Documentation MuniServices shall represent the City for purposes of examining SBE records pertaining to sales and use tax to identify errors and omissions. MuniServices'procedures for detecting and documenting misallocations are as follows: 1. Review applicable provisions of the City's municipal code and ordinance adopted by the City to determine applicability. 2. Procure a computer tape of sales/transactions/use tax permit records from the SBE. 3. Analyze sales tax distribution reports provided by the SBE for five or more of the most recent consecutive quarters. 4. Clean-up, standardize and computerize data from City's quarterly sales tax distribution reports provided by SBE for previous quarters,current quarter and each future quarter service is provided. S. Prepare an aggregated list of business entities on electronic media;this list is derived from multiple private and public sources (hard copy and electronic), including specialized business listings and directories,the City's sales and use tax payment files,and an electronic copy of the City's Business License Tax registry,updated no less than twice per year. 6. Clean,standardize and integrate,in address-order,each entity's business name,address and payment file information, to eliminate redundancies,using MuniServices'proprietary software. Palm Springs,CA-SUTA 102215 2 OMUMSEw Es 7. Physically canvas commercial/industrial area within the City's borders. B. Develop a target list of potential point of sale/use reporting errors/omissions based on: a. An electronic comparison of MuniServices' comprehensive inventory against the SBE's quarterly distributions for the City,and b. An analysis of each potentially misallocated account based on proprietary guidelines established by MuniServices. 9. Meet with designated City official(s) to review service objectives and scope, MuniServices workplan schedule, public relations and logistical matters. 10. Contact personnel in sales,operations and/or tax accounting at each target business to determine whether a point-of- sale/use reporting error exists. (Note: this is accomplished with the highest regard to discretion and professional conduct. MuniServices' allocation audits are predicated on a non-controversial, constructive public relations approach which emphasizes the importance of each business to the City and the mutual benefits of correcting reporting errors.) 11. Provide to the City and SBE reports addressing each taxpayer reporting error individually, including the business name,address,telephone number,California sales tax permit number,individuals contacted,date(s)of contact,nature of business, reason(s) for error, recommended corrective procedure and, if available, estimated sales/transactions/use tax revenue which should be forthcoming to the City. 12. MuniServices may also provide suggested language for letters to be sent to the taxpayers and/or SBE from the City(or from MuniServices on behalf of the City)urging cooperation in promptly correcting the distribution error. 13. Respond to negative findings by SBE with timely reconfirmation documentation in order to preserve the City's original dates of knowledge. 14. Receive and process registration control record information monthly. 15, Receive and process sales tax distribution reports quarterly. 16. Coordinate with the taxpayer and SBE to make the necessary corrections and collect eligible back quarter's amounts. 17. Monitor and analyze the quarterly distribution reports with an audit focus on the following: a. Accounts with previously reported point-of-sale/use distribution errors to ensure that the corrections are made for current quarters and all eligible back quarters. b. Major accounts comprising 90% or more of the City's total sales tax revenue to identify any irregularities or unusual deviations from the normal pattern (e.g. negative fund transfers, significant decreases, unusual increases,etc.)and ensure that the City is not receiving less revenue than it is entitled to. c. Those accounts receiving deficiency assessments to ensure that the City receives its local allocation 18. Identify opportunities for the City to recover local allocation on purchase transactions subject to use tax. Prepare the necessary documentation to facilitate recovery,including assistance in preparing and filing the returns. SUTA Detection Timing Considerations For each misallocated account detected, MuniServices will coordinate with the business and SBE to make the necessary corrections plus retroactive adjustments for eligible amounts of sales/transactions/use tax improperly distributed in prior quarters. MuniServices coordinates and communicates between typically four parties; sales/operations personnel at the taxpayer's local operation,tax personnel at the company's corporate headquarters,and SBE personnel and the in-state/out-of- state district offices. Correction of the account is considered to have been made once the payments on identified taxpayer accounts are being properly allocated by the taxpayer to the City in the period in which the payment was made. As needed, MuniServices will represent the City before state officials,boards,commissions and committees for the purpose of correcting sales tax distribution errors that have deprived the City of revenue to which it is entitled. Article 4-Compensation What the City will pay MuniServices MuniServices' compensation for the Sales and Use Tax Audit Service is a 15% contingency fee. This fee applies to revenue received for six quarters beginning with the quarter in which the Date of Correction falls and all eligible prior quarters back to and including the three quarters prior to the Date of Knowledge quarter for Bradley-Burns sales tax revenues and all eligible prior quarters back to and including all corrected quarters prior to the Date of Knowledge quarter for district tax revenues.As used herein, the Date of Knowledge is the quarter during which MuniServices notifies the SBE of the existence of a misallocation. As used herein, the Date of Correction refers to the quarter in which the taxpayer has correctly reported the local tax and the SBE distributes the local tax properly to City based on the taxpayer's reporting. For QDR Misallocations detected and corrected, MuniServices' compensation shall only include the quarters for which the misallocation actually occurred. Palm Springs,CA-SUTA 102215 3 QA7nN1$ETV ES For clarification and to encourage communication and collaboration between MuniServices and the City,MuniServices shall be entitled to full payment of all compensation as provided herein even if any one or more of City, its personnel, agents, or representatives,or any third party or parties provide(s)information to MuniServices that assists or is used by MuniServices in the identification, detection, and correction of point-of-sale distribution errors or the reporting and/or misallocation of revenue. In the event that the City identifies, documents, and notifies the SBE of a point-of-sale distribution error, reporting error or misallocation as those terms are used herein, the City agrees to notify MuniServices of the City's discovery no later than ten (10) days after the Date of Knowledge as defined in Title 18 of the California Cade of Regulations, Regulation 1807 ("Date of Knowledge'). The City also agrees to notify MuniServices promptly if it is working on a local tax misallocation issue independently of MuniServices and to maintain and promptly make available to MuniServices on request contemporaneous documentation of such work and its timing so that the duplication of work can be avoided. If the City fails to so notify MuniServices as provided above and MuniServices later detects, documents,and reports the misallocation or reporting error to the State Board of Equalization,or if MuniServices has established a Date of Knowledge with the SBE prior to notification to the Board by the City,then MuniServices is entitled to full compensation for the affected account as provided herein. Invoicing/Billing MuniServices will invoice City quarterly based on past and/or prospective compliance secured on behalf of City. Invoices are due and payable upon receipt. All expenses incurred by MuniServices in providing the Sales Tax service are the sole and exclusive responsibility of MuniServices,except those expenses that receive prior written approval by City. Additional Consulting City may request that MuniServices provide additional consulting services at any time during the term of the Agreement. If MuniServices and City agree on the scope of the additional consulting services requested,then MuniServices shall provide the additional consulting on a Time and Materials basis. Depending on the personnel assigned to perform the work,MuniServices' standard hourly rates range from$75 per hour to$200 per hour. The following are sample hourly rates based on the job classification: • Principal:$200 per hour • Project Manager: $175 per hour • Client Services: $150 per hour • Information Technology(IT)support:$175 per hour • Operational Support: o Director or Manager:$175 per hour o Senior Analyst:$125 per hour o Analyst:$100 per hour o Administrative: $75 per hour These additional consulting services will be invoiced at least monthly based on actual time and expenses incurred. All reimbursable expenses shall receive prior approval from the City and shall be reimbursed at cost to MuniServices. Article 5—Completion of Services Notwithstanding any other provision of this Agreement, because Consultant's services performed hereunder result in corrections of misallocations and other revenue after cessation of services by Consultant for City,City agrees that with regards to misallocations identified to the SBE whose Date of Knowledge occurred during Consultant's performance of services for City or for other revenue resulting from Consultant's actions taken during the term of this Agreement, that City's obligation to pay Consultant in accordance with the compensation language of this Agreement shall survive expiration or termination of this Agreement for any reason. Additionally, notwithstanding any other provision of this Agreement, if this Agreement is terminated or expires, Consultant shall continue to pursue corrections of accounts identified during the term of this Agreement that have not been corrected by the SBE as of the effective date of termination or expiration. The period after termination during which Consultant is pursuing correction of accounts identified before termination is referred to as the "completion period." City shall compensate Consultant in accordance with the compensation language of this Agreement for corrected misallocations that result from Consultant's efforts during the completion period. City will also take all necessary steps to allow Consultant to continue to receive the required information from the SBE during this completion period. Palm Springs,CA—SUTA 102215 4 (l MUNr m' cES MuniServices, LLC. OAMUNISERVICES Phon North Palm 81u1fs Avenue Fresno,California 93711 Phone:800.800.8181 Fax: 559.275.0171 www.MuniServices.com August 20,2012 City of Palm Springs Attn:Geoffrey Kiehl,Finance Director 3200 E.Tahquitz Canyon Way Palm Springs,California 92262 Re: Authorization for new District Tax work Dear Mr.Kiehl: This letter is to memorialize our agreement that the contract we and the City entered on or about July 1,2006,(the "Agreement")includes authority for us to review and provide services related to the collection and payment for the local transaction and use tax adopted by the voters in the City that became effective on or about April 1,2012 (the"District tax'j. The State Board of Equalization(the"SBE")insists that although the parties referred generically to transaction and use taxes as part of the scope of the Agreement,since the District tax was enacted after the contract was signed the contract cannot authorize our work on the District tax. We disagree with the SBE's position. Nevertheless,we and the City deem it prudent to memorialize in this letter agreement our understanding that our work on the District tax is covered by the terms of the Agreement. 1. The following language is incorporated into the "SALES AND USE TAX (SUTA) ADDENDUM" to the Agreement as if set forth therein. Transaction and Use Tax "MuniServices is authorized by this Agreement to examine transaction tax, sales tax and use tax records of the State Board ofEqualization(SBE), including but not limited to the transaction and use tax that became effective on or about April 1,2012,pertaining to the ascertainment of those sales or transactions and use taxes to be collected for the City. MuniServices is required to disclose information contained in, or derived from, those transaction, sales and use tax records only to an officer or employee of the City who is authorized by resolution to examine the information. MuniServices is prohibited from performing consulting services for a retailer during the term of this Agreement. i MuniServices is prohibited from retaining the information contained in, or derived from, those transaction,sales and use tax records,after this Agreement has expired." 2. The City of Palm Springs and MuniServices agree that although the scope of work generically refers to"sales and use tax" those references are meant to include "sales, transaction, and use tax" as part of the scope of work, including but not limited to any transaction and use taxes adopted after the effective date'of'the Agreement City of Palm Springs Attn:Mr.Kiehl Page 2 3. The parties agree that Resolution 23104,adopted in March of 2012 is applicable to all transaction and use tax currently enacted in the City and which may become enacted while the Agreement is in effect. 4. Except as herein modified, all other provisions of the Agreement, including any exhibits and subsequent amendments thereto,shall remain in full force and effect. If this letter agreement correctly reflects the terms agreed by MuniServices and City of Palm Springs,please sign this letter agreement in the space provided below and return by facsimile to(559)312-2852,or by email to patricia.dunn(a)muniservices.com.By signing in the space below,you represent that you have authority to bind the City to this Agreement. Sincerely yours, r Dou en Sr.Vice President Client Services MuniServices,LLC CITY OF PALM SPRINGS By: 'Of Name: C CO FFR f''r r. /f I C H L Title: DjAccrot of Ft/'ANcE R�"D TR��Iv.CE�C f I i I i i 6/NUNISERVICES Page 1 of 2 Kathie Hart From: Geoffrey Kiehl Sent: August 20, 2012 11:10 AM To: 'Dunn, Patricia' Cc: Stark, Stephen; Myers, Eric; 'Christina M. Petteruto'; Kathie Hart; Cindy Cairns Subject: RE: Letter Agreement regarding District Tax Attachments: Palm Springs letter agreement re district tax 082012 (signed).pdf See attached Jeff Geoffrey S. Kiehl Director of Finance and Treasurer City of Palm Springs 3200 E. Tahquitz Canyon Way Palm Springs, CA 92263-2743 (760) 323-8221 (office) (760) 902-0641 (mobile) (760) 322-8320(fax) Geoffrey.K ieh I@pa Ims pri ngsca.gov .....,., ---_._.._- _ ------- From: Dunn, Patricia [mailto:Patricia.Dun n@M uniServices.com] Sent: Monday, August 20, 2012 10:44 AM To: Geoffrey Kiehl Cc: Stark, Stephen Subject: Letter Agreement regarding District Tax Geoffrey, Attached here for your signature and return to us by email or fax is the Letter Agreement referencing the District Tax. If you have any questions please do not hesitate to contact us. Thank you. Patricia A.Dunn Client Services-Operations/Contracts Manager and Safety Coordinator MuniServices, LLC 7335 N. Palm Bluffs Avenue Fresno,CA 93711 T 559,271.6852 F 559.312.2852 C 559.240.3589 untitled Sove.Paver 'P'hlnk 6e(;re vrnd 08/20/12 Page 2 of 2 CONFIDENTIALITY NOTICE: This email (including any attachmentE 08/20/12 l� 1 CONSULTANT SERVICES.AGREEMENT This Consultant Services Agreement (hereinafter "Agreement") is made as of July 1, 2006, between MuniServices, LLC, a Delaware limited liability company with an office at 7335 N. Palm Bluffs Ave, Fresno, CA 93711 (hereinafter "MuniServices"), and the City of Palm Springs, a municipal corporation of the State of California (hereinafter 1. SERVICES Subject to the terms and conditions set forth herein, MuniServices shall provide to City those services set forth in Addenda attached hereto in exchange for the fees set forth in the Addenda. Upon mutual agreement, MuniServices and City may add services to be performed by MuniServices for City under this Agreement by executing additional Addenda. Such additional Addenda shall contain, at a minimum, a description of the services to be performed, the anticipated compensation for such services, and any additional terms required to give effect to the request for services (collectively "Services'). Such additional Addenda shall be signed by representatives of City and MuniServices having authority to so bind the parties. MuniServices shall provide the Services in the manner specified in each applicable Addendum. MuniServices shall not be required to perform, nor City be required to pay for, services not contained in an applicable Addendum. 2. INDEPENDENT CONTRACTOR STATUS MuniServices is an independent contractor, and not an employee of City, who will be engaged in providing consulting services for City. Nothing in this Agreement shall be interpreted or construed as creating or establishing the relationship of employer and employee between City and MuniServices or between City and any employee or agent of MuniServices. Both parties acknowledge that MuniServices is not an employee for state or federal tax purposes. MuniServices shall retain the right to perform services for others during the term of this Agreement. Nothing in this Agreement shall be construed as creating a partnership, joint venture,or designating MuniServices as an agent of City. MuniServices shall have no authority to bind, contract, or obligate City, financially or otherwise. City shall not have any right to control the means by which MuniServices performs the Services including the facilities used, the employees, contractors, or agents assigned by MuniServices. MuniServices shall be responsible for any subcontracts entered into in the course of performance of the Services for City and MuniServices shall be solely responsible for payment to the subcontractors. 3. COMPENSATION 3.1 In consideration for the Services Lo be performed by MuniServices, City agrees to pay MuniServices the rates set forth in each applicable Addendum. 3.2 MuniServices shall submit timely invoices for all services rendered in accordance with each applicable Addendum. Payment will be made to MuniServices within thirty-days (30) of receipt of MuniServices' invoice therefore. Any amounts which remain unpaid after thirty-days (30) shall accrue interest at the rate of one and one-half percent (1.5%) per month,or the maximum amount permitted by law. 3.3 MuniServices shall be responsible for all costs and expenses incident to the performance of Services for City, including but not limited to, all costs of equipme CSAI-032807v1 1 ,MuniServices City /l)f r ORQG.Zod N 31 it provided by MuniServices, all fees, fines, licenses, bonds or taxes required of or imposed against MuniServices and all other of MuniServices' costs of doing business. City shall not be responsible for expenses incurred by MuniServices in performing Services for City, except as noted in an applicable Addendum, or such expenses that receive prior written approval from City. 3A The total fee payable for the Services to be performed under this Agreement and any outstanding amounts under the prior SIITA/STARS Agreement will be a not-to-exceed amount of one-hundred and seventy-five thousand dollars ($175,000) (the "NTE"). If Consultant determines that•within 60 days the services provided under this Agreement will result in invoices in excess of the NTE, Consultant shall notify City's Finance Director. At Consultant's request, the parties shall negotiate an increase in the NTE. If the parties reach agreement on the increased NTE, City shall enter into an amendment to this Agreement increasing the NTE. If Consultant has invoiced amounts that cumulatively equal the NTE,Consultant has no obligation to continue to perform under this Agreement. Notwithstanding the foregoing, the fees paid after the termination of this Addendum are not subject to the NTE, 4. CONFIDENTIALITY 4.1 During the term of this Agreement, each party may have access to certain confidential information of the other including such party's products, services, technical data, trade secrets, inventions, processes, and constituent information. All such information shall be deemed "Confidential Information" whether or not identified as such. Each party shall use the Confidential Information of the other solely for performance of this Agreement, and all Confidential Information shall remain the sole property of the respective parties. With regard to Confidential Information, each party shall use the same care as it uses to maintain the confidentiality of its own confidential information, which shall be no less than reasonable care, and shall not make disclosure of the Confidential Information to any third party without the written consent of the Disclosing Party, except to employees, consultants or agents to whom disclosure is necessary to the performance of this Agreement and who are bound by a duty of confidentiality. Information shall not be deemed confidential if it (a) is rightfully known to the receiving party prior to receipt from the disclosing party as reasonably evidenced by such party; (b) becomes known to the receiving party from a source other than one who is under an obligation of confidentiality to the disclosing party; or (c) becomes publicly known or otherwise ceases to be confidential other than by an unauthorized act. At all times, in accordance with Graham-Leach Bliley and other applicable State and Federal regulations, taxpayer information containing Personally Identifiable Information, as defined in applicable regulations, shall be held in the strictest confidence by MuniServices. 4.2 If a subpoena or other legal process in any way concerning Confidential Information is served upon a party to which Confidential Information has been disclosed ("Recipient"), the Recipient shall promptly notify the Disclosing Party and shall cooperate with the Disclosing Party, at the latter's expense, in any lawful effort to contest the validity of such subpoena or other legal process_ CSAI-032807v1 2 MuriiScrvices City � rfi 4.3 The parties agree that a breach of the terms of Section 4.1 or 4.2 would result in irreparable injury to the non-breaching party for which a remedy in damages would be inadequate. The parties agree that in the event of such breach or threatened breach,the non-breaching party shall be entitled to, in addition to any other remedies available at law or in equity,seek an injunction to prevent the breach or threatened breach. 4.4 The obligation of confidentiality as set forth in Section 4.1 shall continue for a period of three-years (3) from the date of disclosure of the information, provided, however, that for any information which constitutes a Trade Secret(as defined by applicable law),the obligation of confidentiality shall continue during the entire term of this Agreement and shall survive the termination of this Agreement indefinitely. This obligation of confidentiality shall not extend to any information required to be disclosed pursuant to the California Public Records Act, the United States Freedom Of Information Act, or other public disclosure acts of the United States or a state or territory thereof. 5. TERM AND TERMINATION 5.1 Term. This Agreement shall be effective as of the date of the last signature hereto and shall continue in full force and effect for a period of three-years (3). Thereafter, this Agreement shall automatically renew for successive three-year (3) periods. Notwithstanding this section (5.1), if the term set forth in any Addendum attached to this Agreement differs from the term of this Agreement, the term of the Addendum is governed by the language in the Addendum. If any Addendum attached to this Agreement is silent about the term of the Addendum then the provisions of this section (5.1) govern the term of the Addendum 5.2 Termination of Agreement. Unless terminated as per section 5.4 below, this Agreement may only be terminated upon the expiration of a three-year term. If either party desires to terminate this Agreement upon the expiration of a three-year term, the terminating party shall provide notice to the other party of its intent not to renew no less thaxL sixty- days (60) prior to the renewal date. 5.3 Termination of Addenda. Any Addendum attached to this Agreement may be terminated as follows: a. If the Addendum sets forth a method for terminating the Addendum, that Addendum may only be terminated according to that method;or b. If the Addendum is silent about the method for terminating the Addendum,that Addendum may be terminated by either party at any time and for any reason or no reason effective on no less than sixty-days (60) days notice;or c. As per section 5.4 below. 5.4 Event of Default. Any of the following shall constitute an event of default ("Event of Default") under this Agreement or any applicable Addendum: (a) City fails to pay any amount when due hereunder (after ten-days (10) prior written notice of such failure to pay), or (b) a material breach by either party of this Agreement or applicable Addendum. If an Event of Default occurs, the non-breaching party shall notify the breaching party of the Event of Default and provide the breaching party thirty-days (30) to cure (except in the case of non-payment for which the cure period shall be ten (10) days) or such amount of time as is reasonable given the circumstances. If the breaching CSAT-032807v1 3 MumSeruices City party fails to effect cure within the time allowed, then the non-breaching party may, at its option, terminate this Agreement or applicable Addendum effective immediately upon notice. 5.5 Effect of Termination. Notwithstanding non-renewal or termination of this Agreement or any attached Addendum pursuant to Sections 3.1, 5.2, 5.3 or 5.4 above, City shall be obligated to pay MuniServices for services performed through the effective date of termination for which MuniServices has not been previously paid. In addition, because the services performed by MuniServices prior to termination or non-renewal of this Agreement or attached Addendum may result in City's receipt of revenue after termination which are subject to MmnServices' fee in accordance with each applicable Addendum, City shall remain obligated after termination or non-renewal to provide to MuniServices such information as is necessary for MuniServices to calculate the compensation due as a result of this receipt of revenue by City and City shall remain obligated to pay MuniServices' invoices therefore in accordance with the terms of this Agreement. 6. EQUAL EMPLOYMENT OPPORTUNITY During performance of this Agreement, MuniServices, for itself, its assignees and successors in interest,agrees as follows: 6.1 Compliance With Regulations,: MuniServices shall comply with Executive Order 11246, "Equal Employment Opportunity" and labor regulations (41 C.P.R. Part 60), hereinafter referred to as the "Regulations." 62 Nondiscrimination: MuniServices, with regard to any work performed pursuant to this Agreement, shall not discriminate on the ground of race, color, religion, sex, national origin, or veteran status in the selection and retention of employees, subcontractors, the procurements of materials or leases of equipment. 6.3 Solicitation for Subcontractor, Including Procurements of Materials and Equpment: In all solicitations either by competitive bidding or negotiations made by MuniServices for work to be performed under any subcontract, including procurements of materials or equipment,such potential subcontractor or supplier shall be notified by MuniServices of MuniServices' obligation under this Agreement and the Regulations relative to nondiscrimination on the ground of race, color, religion, sex, national origin, or 'veteran status. 6.4 Information and Reports: MuniServices shall provide all information and reports required by the Regulations,or orders and instructions issued pursuant thereto,and will permit access to its books, records, accounts, other sources of information and its facilities as may be determined by City to be pertinent to ascertain compliance with such Regulations, orders and instructions. Where any information required of MuruServices is in the exclusive possession of another who fails or refuses to furnish this information, MuniServices shall so certify to City and shall set forth what efforts it has made to obtain the information. 6.5 Incorporation of Provisions: MuniServices shall include the provisions of paragraphs 6.1 through 6.4 in every subcontract issued pursuant to this Agreement. MuniServices shall take such action with respect to any Regulations, order or instructions issued CSA1-032807v1 4 Muui�Se7vices City pursuant thereto. MuniServices shall take such action with respect to any subcontract or procurement as City may direct as a means of enforcing such provisions, including sanctions for noncompliance; provided, however, that in the event MuniServices becomes involved in, or is threatened with, litigation with a subcontractor or supplier as a result of such direction, MuniServices may request City to enter such litigation to protect the interests of City. 7. WARRANTIES, REPRESENTATIONS AND INDEMNIFICATION 7.1 By MuniServices. MuniServices represents that all Services shall be performed by persons with the skills and abilities necessary and consistent with the standards of professionalism prevalent in the industry. The Services and deliverables shall be provided free and clear of the proprietary claims of third parties. All Services shall be provided in accordance with applicable state and federal regulations, including, without limitation, the Fair Credit Reporting Act,the Fair Debt Collection Practices Act, and applicable state regulations. Subsection 7.1 is the full and complete warranty statement of MuniServices under this Agreement. 7.2 By CITY. City represents that the information provided to MuniServices in the performance of Services by MuniServices hereunder shall be provided free and clear of the claims of third parties. City represents that City has the right to provide said information to MuniServices and that said information shall not be obscene, defamatory, or otherwise expose MuniServices to liability to third parties. City represents that it shall use reasonable and diligent efforts in the collection of moneys identified by MuniServices. City represents that in the event City elects not to proceed with diligent efforts in collection, that City shall remain liable to MuniServices in accordance with applicable Addendum as if City had proceeded with diligent efforts in collection. 7.3 Indemnification. The parties hereto agree to defend, indemnify, and hold harmless the other, its directors, officers, employees and affiliates, from any and all claims, suits, demands, losses, damages, liabilities, costs and expenses, including reasonable attorney's fees (collectively "Losses') arising from or related to a claim of injury to person or property or death arising from or caused by the negligent acts or omissions of employees, agents, or representatives of the indemnifying party which acts or omissions arise from the indemnifying party's performance (or non-performance) under this Agreement. City shall defend, indemnify, and hold MuniServices harmless from any Losses arising from or related to a claim that information provided by City to MuniServices contains any false, misleading, or defamatory information regarding a third party. MuniServices shall defend, indemnify, and hold City harmless from any claim that MuniServices negligently or intentionally falsified any information provided to City pursuant to this Agreement. 7.4 LIMHATION OF LIABILITY. To the maximum extent permitted by law, in no event shall MuniServices, its employees, contractors or agents be liable for any indirect, incidental,special, punitive or consequential damages,lost data or cost of procurement CSAI-032807vl 5 MuniServices A')�eD of substitute goods or services arising from or related to the services whether for, among other things, breach of warranty or any obligation arising therefrom, and whether liability is asserted in contract or tort (including but not limited to negligence and strict product liability) whether or not MuniServices has been advised of the possibility of any such loss or damage. MuniServices' liability hereunder shall in no event exceed an amount equal to the fees paid by city for the affected service to which the claim pertains. The foregoing sets forth City's exclusive remedy for claims arising from or out of this Agreement. The provisions of this section allocate the risks between MuniServices and City and MuniServices' pricing reflects the allocation of risk and limitation of liability specified herein. 8. GENERAL PROVISIONS 8.1 Personnel. At any time, City may request removal or replacement of personnel assigned by MuniServices and MuniServices shall promptly replace such personnel. The time for any deliverables required or any increase in costs shall be adjusted to reflect any adverse impact resulting from the change in personnel. 8.2 Gratuities, Gifts Conflict of Interest. MuniServices shall, at all times, comply with any City policies regarding gifts, gratuities, or conflicts of interest. At no time shall MuniServices, an employee, agent, director, or contractor offer or accept any gift or gratuity from a third party who may be subject to findings resulting from Services, to or from any City official, employee, contractor, or agent, or from any other party where such gift or gratuity could be construed as a conflict of interest. MuniServices, its officers, directors, employees, agents, and contractors shall avoid all conflicts of interest, financial or otherwise, or the appearance thereof, in the performance of this Agreement or the applicable Services. 8.3 Dispute resolution. Any dispute relating to this Agreement shall be submitted for binding arbitration under the Commercial Arbitration Rules of the American Arbitration Association and judgment on any award entered therein may be entered in any court of competent jurisdiction. The arbitrator's decision shall be final and binding on the parties. Such arbitration shall be held in the State of California. In all cases,the prevailing party to such dispute shall be entitled to recover costs and expenses, including reasonable attorney's fees, as the arbitrator deems appropriate. 8.4 Ownership of Work Product. MuniServices shall retain all right, title, and interest in and to the processes, procedures, models, inventions, software, ideas, know-how, and any and all other patentable or copyrightable material used, developed, or reduced to practice in the performance of this Agreement. Upon payment therefore, City shall be granted all right, title, and interest in and to the reports, charts, graphs, and other deliverables produced by MuniServices in the performance of this Agreement. 8.5 Assignment. Neither Party may assign this Agreement or any of its nights or obligations hereunder without the prior written consent of the other Party, which consent shall not be unreasonably witl-lzeld. Any assignment without such prior written consent shall be void. Notwithstanding the foregoing, the Parties hereto may assign all or part of this Agreement immediately, without the prior written consent of the non-assigning Party (a) to any successor in interest to the assigning Party who expressly assumes responsibility for the assigning Party's obligations hereunder; or (b) CSAI-0328077j1 6 MuniServices if necessary to satisfy the rules, regulations and/or orders of any federal or state governmental agency or body. Any violation of the provisions of this Section shall render this Agreement voidable at the option of the non-assigning Party. 8.6 Insurance. a. Public Liability. During the term of this Agreement, MuniServices shall maintain in full force and effect a policy of public liability insurance with minimum coverage's in accordance with the requirements provided by City to MuniServices. MuniServices shall cause City, its officials and employees to be named on all liability policies described above as insured as respects activities undertaken pursuant to the parties' respective obligations pursuant to this Agreement- b. Workers' Compensation. During the term of this Agreement, MuniServices shall fully comply with the terms of the law of California concerning workers' compensation. Said compliance shall include, but not be limited to, maintaining in full force and effect one or more policies of insurance insuring against any liability MuniServices may have for workers' compensation. 8.7 Severability. In the event that any portion of this Agreement is held to be unenforceable, the unenforceable portion shall be construed as nearly as possible to reflect the original intent of the parties and the remainder of the provisions shall remain in full force and effect. 8.8 Waiver. Either Party's failure to insist upon strict performance of any provision of this Agreement shall not be construed as a waiver of that or any other of its rights hereunder at any later date or time. 8.9 Force Majeure. Neither party shall be liable for failing to perform its obligations hereunder (other than payment obligations) where delayed or hindered by war, riots, embargoes, strikes or acts of its vendors or suppliers, accidents, acts of God, or any other event beyond its reasonable control. 810 Notices. All notices,including notices of address changes,provided hereunder shall be deemed received on the third day after mailing if sent by mail, or immediately if sent by facsimile. Notices shall be sent to the following: If to MuniServices: If to City: MuniServices,LLC City of Palm Springs 7335 N. Palm Bluffs Ave. 3200 E. Tahquitz Canyon Way Fresno,CA 93711 P.O. Box 2743 Attn: Legal Department Palm Springs, CA 92262-2743 Email: legal@muniservices.com Attn:Finance Director 8.11 Conies, This Agreement May Be Executed In Separate Counterparts Including Facsimile Copies, Each Of Which Shall Be Deemed An Original, And All Of Which Shall Be Deemed One And The Same Instrument And Legally Binding Upon. The Parties. 8.12 Entire Agreement. This Agreement, including the Addenda attached hereto and made part hereof, constitutes the entire Agreement between MuniServices and City- with respect to the Services provided. This Agreement supercedess and replaces any azid all CSA1-032807vl 7 Munt' 'Services Cih� ��nw � prior agreements, of whatever kind or nature, with respect to the Services provided hereunder and with respect to any Addendum to be added hereto at a later date. Any prior agreements, discussions, or representations not expressly set forth herein are of no force or effect. 813 No Oral Modification. No modification of this Agreement shall be effective unless set forth in writing and executed with the same formality as this Agreement. No waiver of the requirements of this Section shall be effective unless in writing and signed by the CEO for MuniServices. 8.14 Construction. Thus Agreement shall be construed in accordance with the laws of the State of California without regard to its conflict of laws principals. 8.15 Headings. The section headings herein are for convenience and reference purposes only and shall not serve as a basis for construction or interpretation. 8.16 Order of Precedence. In the event of any conflict between the terms of this Agreement and the terms of any Addenda, the terms of this Agreement shall prevail. No additional terms, PO Terms and Conditions, or oral or written representations of any kind shall be of any force and effect unless in writing and executed with the same formality as this Agreement. 8.17 Partial Payment. No receipt by MuniServices of an amount less than City's full amount due will be deemed to be other than payment "on account", nor will any endorsement or statement on any check or any accompanying letter effect or evidence an accord and satisfaction. MuniServices may accept such check or partial payment without prejudice to MuniServices' right to recover the balance or pursue any right of MuniServices. Remainder of page intentionally left blank. CSAI-032807v1 8 MuniServices Cih� The Parties are signing this Agreement as stated in the introductory clause. MuniServices, LLC City of Palm Springs a municipal corporation By: By _ Marc Herman Title: President and CEO Tide: �'� �S a li 35 ATTEST: BLd y: Kevin CeruW i Clerk = Title: C1uef Financial Officer APPROVED AS TO FORM: ZAPPROD AS FO . Eric M ers,General Counsel ey APPROVED BY CITY COUNCIL CSA1-032807vl 9 MuniServices City I � SALES AND USE TAX AUDIT (SUTA) ADDENDUM OBJECTIVES AND METHODS MurdServices's Sales and Use Tax Audit Service is designed to maximize the City's income - and minimize the cost of lost revenue - by detecting and documenting misallocation of Local District Tax (also knows as Transactions & Use Tax), Bradley-Burns sales tax and local use tax activity within the statute of limitations on recoverability. In performing the sales and use tax audit program MuniServices shall: ❑ Identify and correct the sales/use tax reporting errors of businesses that, based on the nexus of their activities, are not properly registered with the City. ❑ Identify and correct the reporting of businesses that are improperly reporting tax to state and county pools (i.e. classifying sales tax as use tax) and thereby depriving the City of sales tax revenue. ❑ Detect, document and correct sales/use tax reporting errors/omissions and thereby generate new,previously unrealized revenue for the City. ❑ Ensure through comprehensive audit measures that the revenue information used for ongoing economic analysis includes all sales/use tax generators. ❑ Assist the City with strategies to preserve and even enhance sales and use tax revenue generated by existing businesses within the City. MuniServices's proposed sales/use tax allocation audit services for the City includes five distinct types of audits: ❑ Taxable Nexus Field audits ❑ Permitization audits ❑ Deficiency assessment audits ❑ Accounts payable audits ❑ Quarterly Distribution Report audits TAXABLE NEXUS FIELD AUDITS Mun Services's initial and periodic taxable nexus field audits include a physical canvassing and evaluation of sales/use tax generating businesses located in the City. In the absence of this undertaking, significant misallocation will remain undetected. MuniServices's field audits focus on those businesses located in the City from which the City has not been receiving sales/use tax revenue. The result is new or'found' revenue for the City. PERMITIZATION AUDITS Wholesalers, contractors, processors, manufacturers and other non-retail businesses will frequently not have a sales tax permit properly registered to the City in which they are located— l SLITAI.032807vi 10 Munislr iccs Ci because their business operations do not include a point-of-sale qualifying activity. However, these companies will often generate local sales/use tax from the State Board of Equalization (SBE) audit deficiency assessments, occasional sales (i.e., mergers and acquisitions), and self- accrual of use tax on purchases- MuniServices's field audits facilitate the identification and correction of improperly registered permits for companies having point-of-sale operations in the City. DEFICIENCY ASSESSMENT AUDITS When the California SBE audits taxpayers for sales/use tax compliance, it is not uncommon for the taxpayer to receive a substantial deficiency assessment due to underpayments and/or under-collections- In many cases, the local allocation portion of the deficiency assessment is distributed in error to the Stare pool, county pools, or other jurisdictions. Accordingly, MuniServices has developed proprietary criteria and techniques to detect and correct SBE deficiency assessment misallocation and thus expand the benefits produced by MuniServices's allocation audit service. ACCOUNTS PAYABLE AUDITS When California taxpayers purchase tangible personal property for which title passes out-of- state, the transactions are subject to use tax (rather than sales tax) which is collected by the vendor who in turn remits it to the SBE, with the local allocation typically distributed statewide or countywide through the pools. Under certain conditions, the seller may allocate the local tax by situs or the City may elect to self-accrue the use tax and remit it directly to the SBE, in which case the local portion will come back to the City in the same manner as sales tax. MuniServices's accounts payable audit will include a review of the City's purchases to identify opportunities for the City to capture the 1% local allocation on purchases subject to use tax and the local district tax where applicable. In this regard, MuniServices will prepare the documentation to facilitate the election, including assistance in preparing and filing the tax returns. QUARTERLY MSTRIBUTION REPORT AUDITS Every three months, the City and Muni5ervices receive a Quarterly Distribution Report (QDR) from the SBE with the local allocation amount reflected by permit number. MuniServices's QDR audits detect and correct taxpayer-reporting errors and thereby generate new, previously unrealized sales/use tax revenue for the City. MuniServices's QDR audits focus on those accounts where MuniServices observes a substantial decline in the sales/use tax revenue allocation for a particular business entity in a given quarter. In most cases, accounts showing zero balances have either relocated or simply reported late, in which case the payments will not be reflected until the next quarter's QDR- Therefore, six months must lapse before the QDRs indicate whether a zero balance account can be attributed to a late payment or a misallocation- Cities and counties may only recover misallocated Bradley-Burns sales tax revenue for three quarters prior to the SBE being notified of the reporting error and misallocated District tax revenues for between three quarters and three years. Therefore QDR audits must be conducted SUTAI-032807vl 11 MuuiS aa� i in a timely manner in order to preserve the opportunity for the City to recover misallocated revenue. MuniServices shall conduct the QDR audit each and every quarter to minimize the potential of lost revenue to the City. SUTA DETLCTION AND DOCUMENTATION MuniServices shall represent the City for purposes of examining SBE records pertaining to sales and use tax to identify errors and omissions. MuniServices's procedures for detecting and documenting misallocation are as follows: ❑ Review applicable provisions of the City's municipal code and ordinance adopted by the City to determine applicability. ❑ Procure a computer tape of sales/use tax permit records from the SBE. ❑ Analyze sales tax distribution reports provided by the SBE for five or more of the most recent consecutive quarters. ❑ Clean-up, standardize and computerize data from City's quarterly sales tax distribution reports provided by SBE for previous quarters,current quarter and each future quarter service is provided. ❑ Prepare an aggregated list of business entities on electronic media;this list is derived from multiple private and public sources (hard copy and electronic), including specialized business listings and directories, the City's sales and use tax payment files, and an electronic copy of the City's Business License Tax registry, updated no less than twice per year. ❑ Clean, standardize and integrate, in address-order, each entity's business name, address and payment file information, to eliminate redundancies, using MuniServices's proprietary software. ❑ Physically canvas commercial/industrial area within the City's borders. 0 Develop a target list of potential point of sale/use reporting errors/omissions based on: 1) An electronic comparison of MuniServices's comprehensive inventory against the SBE's quarterly distributions for the City,and 2) An analysis of each potentially misallocated account based on proprietary guidelines established by MuniServices. ❑ Meet with designated City official(s) to review service objectives and scope, MuniServices workplan schedule, public relations and logistical matters. ❑ Contact personnel in sales, operations and/or tax accounting at each target brxsiness to determine whether a point-of-sale/use reporting error exists. (Note: this is accomplished with the highest regard to discretion and professional conduct. MuniServices's allocation audits are predicated on a non-controversial, constructive public relations approach which emphasizes the importance of each business to the City and the mutual benefits of correcting reporting errors.)) MW SUTAI-0328070 12 MuniSErvrces Cihj r 0 Provide to the City and SBE reports addressing each taxpayer reporting error individually, including the business name, address, telephone number, California sales tax permit number, individuals contacted, date(s) of contact,nature of business, reason(s) for error, recommended corrective procedure and, if available, estimated sales/use tax revenue which should be forthcoming to the City. ❑ MuniServices may also provide suggested language for letters to be sent to the taxpayers and/or SBE from the City (or from MuniServices on behalf of the City) urging cooperation in promptly correcting the distribution error. ❑ Respond to negative findings by SBE with timely reconfirmation documentation in order to preserve the City's original dates of knowledge. ❑ Receive and process registration control record information monthly. ❑ Receive and process sales tax distribution reports quarterly. ❑ Coordinate with the taxpayer and SBE to make the necessary corrections and collect eligible back quarters amounts. ❑ Monitor and analyze the quarterly distribution reports with an audit focus on the following: 1) Accounts with previously reported point-of-sale/use distribution errors to ensure that the corrections are made for current quarters and all eligible back quarters. 2) Major accounts comprising 90% or more of the City's total sales tax revenue to identify any irregularities or unusual deviations from the normal pattern (e.g. negative fund transfers, significant decreases, unusual increases,etc.) and ensure that the City is not receiving less revenue than it is entitled to. 3) Those accounts receiving deficiency assessments to ensure that the City receives its local allocation ❑ Identify opportunities for the City to recover local allocation on purchase transactions subject to use tax. MuniServices will prepare the necessary documentation to facilitate recovery, including assistance in preparing and filing the returns. SUTA D ETECPION TIMING CONSIDERATIONS For each misallocaLed account detected, MuniServices will coordinate with the business and SBE to make the necessary corrections plus retroactive adjustments for eligible amounts of sales/use tax improperly distributed in prior quarters. MuniServices coordinates and communicates between typically four parties;sales/operations personnel at the taxpayer's local operation, tax personnel at the company's corporate headquarters, and SBE personnel and the in-state/out-of-state district offices. Correction of the account is considered to have been made once the payments on identified taxpayer accounts are being properly allocated by the taxpayer to the City in the period in which the payment was made. film SUTAI-032307vl 13 MuniServices City As needed, MuniServices will represent the City before state officials, boards, commissions and committees for the purpose of correcting sales tax distribution errors that have deprived the City of revenue to which it is entitled. TIMING MuniServices shall commence auditing the sales/use tax and preparing the sales tax Query System on July 1, 2006. The Confidentiality Resolution designating MuniServices as the authorized City Consultant to examine sales and use tax records was previously signed by the City Council. CONFIDENTIALITY PROVISIONS MuniServices is authorized by this Agreement to examine district tax, sales tax and use tax records of the SBE provided to City pursuant to contract under the Bradley-burns Uniform Sales and Use Tax Law and California Revenue &Taxation Code applicable to transactions and use taxes. MuniServices is required to disclose information contained in, or derived from, those sales and use tax records only to an officer or employee of the City who is authorized by resolution to examine the information. MuniServices is prohibited from performing consulting services for a retailer during the term of this Agreement. MuniServices is prohibited from retaining the information contained in, or derived from, those sales and use tax records,after this Agreement has expired. This Agreement, and MuniServices's and CITX's obligations with respect to confidentiality of taxpayer data pursuant to the Bradley Burns Revenue and Taxation Code, shall continue until final payment for all services rendered hereunder. SUTA COMPENSATION Muni5ervices's compensation for the Sales and Use Tax Audit Service is a 25% contingency fee. This fee applies to revenue received for six quarters beginning with the quarter in which the Date of Correction falls and all eligible prior quarters back to and including the three quarters prior to the Date of Knowledge quarter for Bradley-Burns sales tax revenues and all eligible prior quarters back to and including all corrected quarters prior to the Date of knowledge quarter for district tax revenues. As used herein, the Date of Knowledge is the quarter during which MuniServices notifies the SBE of the existence of a misallocation. As used herein, the Date of Correction refers to the quarter in which the taxpayer has correctly reported the local tax and the SBT distributes the local tax properly to City based on the taxpayer's reporting.. For QDR Misallocation detected and corrected, MuniServices's compensation shall only include the quarters in which the misallocation actually occurred. The total fee payable for the Services to be performed under this Addendum will be a not-to- exceed amount of eighty-five thousand dollars ($85,000) (the "NTE"). If Consultant determines that within 60 days the services provided under this Addendum will result in invoices in excess of the NTE, Consultant shall notify City's Finance Director. At Consultanfs request, the parties 4611 SUTA1-032807v1 14 MuniServices City shall negotiate an increase in the NTE. If the parties reach agreement on the increased NTE, City shall enter into an amendment to this Agreement increasing the NTE. If Consultant has invoiced amounts that cumulatively equal the NTE, Consultant has no obligation to continue to perform under this Agreement. Notwithstanding the foregoing, the fees paid after the termination of this Addendum are not subject to the NTE. Consultant and City entered into a prior SUTA Agreement, on July 1, 2004 (the "Prior Contract"). The Prior Contract ended on June 30,2006. Notwithstanding any other provisions of this Addendum, or the Agreement to wluch it is attached, all accounts with a Date of Knowledge on or before June 30, 2006, are compensated under the terms of the Prior Contract and are not subject to the NTE in this Agreement. Accounts with a Date of Knowledge on or after July 1, 2006, are compensated under this Addendum. ADDITIONAL CONSULTING City may request that MuniServices provide additional consulting services at any time during term of the Agreement to which this addendum is attached. If MuniServices and City agree on the scope of the additional consulting services requested, then MuniServices shall provide the additional consulting services on a Time and Materials basis. Depending on the personnel assigned to perform the work, MuniServices's standard hourly rates range from$75 per hour to $300 per hour. These additional consulting services will be invoiced no less frequently than monthly based on actual lime and expenses incurred. CITY RESPONSIBILITIES MuniServices's services performed hereunder may result in corrections of misallocation after cessation of services by MuniServices for City. Therefore, City agrees that with regards to misallocation identified to the SBE whose Date of Knowledge occurred during MuniServices's performance of services for City, that City's obligation to pay MuniServices in accordance with the above compensation language shall survive expiration or termination of this Agreement for any reason. In the event that City identifies, documents, and notifies the SBE of a reporting error or misallocation as those terms are used herein, City agrees to notify MuniServices of City's discovery no later than ten (10) days after the Date of Knowledge. If City fails to so notify MuniServices and MuniServices later detects, documents, and reports the misallocation or reporting error to the SBE, or if MuniServices has established a Date of Knowledge with the SBE prior to notification to the Board by City, then MuniServices shall be entitled to compensation for the affected account in accordance with this Addendum. SLITAI-032807v1 15 MuniServices Cihj COMPLETION OF SERVICES Notwithstanding any other provision of this Agreement, because Consultant's services performed hereunder result in corrections of misallocation and other revenue after cessation of services by Consultant for City, City agrees that with regards to misallocation identified to the SBE whose Date of Knowledge occurred during Consultant's performance of services for City or for other revenue resulting from Consultant's actions taken during the term of this Agreement, that City's obligation to pay Consultant in accordance with the compensation language of this Agreement shall survive expiration or termination of finis Agreement for any reason. Additionally,notwithstanding any other provision of this Agreement,if this Agreement is terminated or expires, Consultant shall continue to pursue corrections of accounts identified during the term of this Agreement that have not been corrected by the SBE as of the effective date of termination or expiration. The period after termination during which Consultant is pursuing correction of accounts identified before termination is referred to as the "completion period." City shall compensate Consultant in accordance with the compensation language of this Agreement for corrected misallocation that result from Consultant's efforts during the completion period. City will also take all necessary steps to allow Consultant to continue to receive the required information from the SSE during this completion period- Each party is signing this Addendum on the date set forth in the introductory clause of the Consultant Services Agreement to which this Addendum is attached. MuniServices, LLC City of Palm Springs a municipal corporation J By: BY, Marc Herman Title: President and CEO AT 5T: By: - Kevin Cerutti r Clerk Title: Chief Financial Officer APPROVED BY CI,'COI NULL APPROVED AS TO FORM: APPROVED AS TO RM:-12 Z',Ix/- - ,Eric Myers, General ounsel Alto ey SUTAI-032607vl 16 Multiservice$ CiNj SALES/USE TAX ANALYSIS&REPORTING SERVICE(STARS)ADDENDUM OBJECTIVES AND METHODS MuniServices' STARS Digest provides a summary that features a general analysis regarding statewide trends that may affect the City's sales tax plus a specific analyses of the City's sales tax composition, changes and performance. Report graplucally illustrates the data and analysis presented in the Summary. Each MuniServices STARS Digest includes the Quarterly Management Summary. The MuniServices STARS Digest also includes specialized reports that provide analysis of the City's sales tax economic base and performance for the latest complete quarter and benchmark year. TIMING&REPORTS MuniServices shall: ❑ Provide the City with quarterly updated STARS Digests. ❑ Install the STARS Query System on a City designated PC ❑ Update quarterly the City's sales tax registration and allocation data from the State Board of Equalization (SBE) from MuniServices' proprietary STARS Query System on IBM compatible PCs with Microsoft Access export capacity. (note:STARS is provided in encrypted formats) • Train authorized City staff in the use of the STARS Query System. QUARTERLY STARS DIGEST MuniServices will provide the City with quarterly updated bound STARS Digests including accounts from which the City receives sales tax revenue. The primary reports included in the STARS Digest are: ❑ Allocation Summary- Reconciles SBE advances, cleanup payments and pool allocations with budget projections to assist the City with revenue forecasting and receipt monitoring. ❑ Cash Analysis- Quarterly aberrations due to SBE audits, fund transfers, and other causes are also identified and analyzed for budget planning and revenue forecasting purposes. ❑ Top 100 Five-Year - Historical performance of the top 100 accounts comparing current benchmark year ranking and sales tax produced with that of prior years. C] Top 100 Detail - Sales tax performance of the City's top 100 sales tax accounts is shown in order of sales tax produced with the results for the most recent five quarters prominently displayed. The proportion of City sales tax produced is also shown by each account. STARS-032807vl 17 MuniServices City ❑ Economic Category Performance - An analysis of the changes that occurred by economic category and segment with the specific businesses responsible for the significant changes delineated. ❑ Significant Change Analysis - A report reflecting magnitude of change, indicating which key businesses grew or declined, measured in absolute dollars and percentages. ❑ Business Code Classification -This report shows the various business codes assigned by the SBE and the accounts assigned those codes in order of sales tax produced. Five quarters of sales tax data are shown for each significant account. ❑ Historical Economic Composition - Data are summarized by economic category and segment by quarters and benchmark years. Percentage of total sales tax generated by each category and segment is also shown to indicate trends in sales tax composition as well as performance. ❑ Geo-Area Reports - Tracks sales tax performance within designated areas of the City (e.g., key shopping centers, business parks, and downtown /business districts,). Charts and printed reports are included for each geo- area. ❑ Cross-Reference Reports - These reports allow the user to look up any account shown in the STATES Digest by name,address or account number. STARS QUERY SYSTEM MurdServices shall install the STARS Query System (a software program) on a City designated, IBM-compatible PC. Each quarter, Muni5ervices shall provide the City with updated information from SBE on CD-ROM. The data shall be provided in an encrypted format allowing the City to export sales tax information from the Query System in an Access- compatible format. ❑ The Query System enables City staff to analyze the contribution of sales/use tax revenue from each taxpayer in the City on an individual, grouped or sorted-order basis by business name, business type, permit number, size ranking, street address, development, shopping center or other geographic area. Reports may be generated by any year (i.e., calendar, fiscal, benchmark) or for any particular quarter for all periods stored in the historical database. The initial STARS Digest and Sales Tax Query System shall be delivered and installed within 45 working days following receipt of a fully executed contract, confidentiality resolution and the SBE sales tax registration and payment data. Subsequent quarterly Query System updates and STARS reports will be delivered to the City within 30 days following receipt of the quarterly distribution reports from the SBE. STARS-032807v1 is MuniSemices Cihj COMPENSATION The STARS Digest and Query System are available for an annual fixed fee of$5,200 per year, paid S1,300 quarterly through December 31, 2006. For 2007 the annual fixed fee is $5,408, paid $1,352 quarterly through December 31, 2007. The Annual Fee thereafter is adjusted at the beginning of each calendar year by the percentage change in the Consumer Price Index - West Urban (CPI-WU) as reported by the Bureau of Labor Statistics. The adjustments are based on the CPI-WU from the last month of the prior calendar year. Each Annual Fee adjustment shall not be less than four percent(4%) or greater than ten percent(10%). Total fee payable for the services to be performed under this Addendum will be a not-to-exceed amount of $17,900 (the "NTH"). If Consultant determines that within 60 days the services provided under this Addendum will result in invoices in excess of the NTE, Consultant shall notify City's Finance Director. At Consultant's request,the parties shall negotiate an increase in the NTE. If the parties reach agreement on the increased NTE, City shall enter into an amendment to this Agreement increasing the NTE. If Consultant has invoiced amounts that cumulatively equal the NTE, Consultant has no obligation to continue to perform under this Agreement. LICENSE AGREEMENT The STARS Query System is licensed software provided by MuniServices. The terms and conditions of the STARS Query System License Agreement are provided to City upon installation. By installing and using the STARS Query System, City agrees to be bound by the terms of the License Agreement, STARS-032807vi 19 MuniServices Cihj r - ii Each party is signing this Addendum on the date set forth in the introductory clause of the Consultant Services Agreement to which this Addendum is attached. MuniServices,LLC City of Palm Springs a municipal corporation By: B Marc Herman Title: President and CEO Title: ATTEST: By: Kevin Cerutti ity Clerk Title: Chief financial Officer APPROVED AS TO FORM: APPROVED AS FO Eric Myers, Genera Counsel i Attorney fd+l APPROVED BY CITY COUNCIL 5TAR5-0328077)1 20 MuniServices City `�Fli PROPERTY TAX ADDENDUM MuniServices, LLC ("MuniServices") shall provide to the City of Palm Springs MuniServices's Property Tax Compliance Services which consists of Audit and Recovery Services. OBJECTIVES AND METHODS MuniServices' property tax audit assists City in recovering all of the revenue to which it is entitled from its Property Tax. Administrative errors and omissions combined with general compliance problems are inevitable given the non-standard, complex nature of state and local property taxes. Error rates rise with respect to property tax applicability, rates, exceptions, exemptions,quirks and other inconsistencies. Because there are time limitations on the City's ability to recover misallocated revenue, prompt correction of these errors and omissions is essential to maximizing revenue potential. The following steps are taken in conducting MuniServices' Property Tax Audit: o Contact City's designated staff to review service objectives, scope, workplan schedule, public relations and logistical matters. MuniServices will also establish an appropriate liaison with the City's coordinator and logical checkpoints for progress reviews- 0 Represent the City for purposes of examining records pertaining to property tax to identify and confirm any errors/omissions that are resulting in deficient payment of tax revenues to the City. o For each error/omission identified and confirmed, prepare documentation to substantiate and facilitate recovery of revenue due from prior periods plus applicable interest and penalties (collectively"Misallocation"). o Meet with designated City official(s) as necessary to review our findings and recommendations. o Prepare and forward to the appropriate parties requests for corrective action and revenue recovery for Misallocation. The date that the appropriate parties receive and acknowledge these requests is the "Date of Knowledge". o Provide additional assistance as necessary to support the City in recovering and preventing tax allocation errors/omissions. From the Date of Knowledge, the County Assessor's office will review the identified Misallocation, and for those Misallocation for which a correction is required, an Assessor's Roll Correction ("ARC") will be processed by the County correcting those Misallocation, typically triggering a reallocation. The Roll Year in which the assessments first appear corrected is the Date of Correction. Corrected assessments result in proper allocations in subsequent Roll Years ("Corrected Allocations"). PTXI-021507vl 21 MuniServices City Specifically,MuniServices shall: o Establish a comprehensive inventory of every parcel located within the City and within the RDA project(s), including the database elements needed to facilitate a comparison analysis with County secured and unsecured taxable values. n Conduct an audit of the City local secured and unsecured valuations,on a parcel- by-parcel basis to determine tax rate area ("TRA") miscoding errors and omissions. TIMING AND REPORTING MuniServices shall commence the Property Tax Compliance Services within 10 working days of authorization (unless instructed otherwise by the City) with the objective of delivering the initial audit reports witbin 90 to 120 working days. Thereafter, MuniServices shall provide the City with audit progress reports to include,but not be limited to, the following: 0 Actual revenue produced for the City by MuniServices' service on an annual and cumulative basis. 0 Projected revenue forthcoming to the City as a result of MuniServices' audit service, specified according to source, timing and one-time payment versus ongoing. 0 Listing of all errors/omissions detected for the City including, for each, the account number, correction status,payment amount received by the City, period to which payment is related and payment type (e.g. reallocation, deficiency assessment, etc.). 0 Status of the work including copies of reports provided by the County addressing each reporting error/omission individually, the Incorrect Parcel Number, Correct Parcel Number, Assessee, Correct TRA assignment, Business ID,Address,Secured and Unsecured Valuation,Exemptions,Net Total Valuation of misallocated assessments. COMPENSATION MuniServices performs this work for a 25% contingency fee. This fee applies to all reallocations for the fiscal year during which the Date of Correction falls and all eligible prior period revenues corrected. The fee also applies to Corrected Allocations for three (3) subsequent Roll Years from the Date of Correction. The total fee payable for the Services to be performed under this Addendum will be a not-to-exceed amount of thirty thousand dollars ($30,000) (the "NTE"), If Consultant determines that within 60 days the services provided under this Addendum will result in invoices in excess of the NTE, Consultant shall notify City's Finance Director. At Consultant's request, the parties shall negotiate an increase in the NTE. If the parties reach an agreement on the increased NTE, City shall enter into an amendment to this Agreement increasing the NTE. If Consultant has invoiced amounts that cumulatively equal the NTE, Consultant has no obligation to continue to perform under this Agreement. Notwithstanding the foregoing, the Corrected Allocations for three (3) subsequent Roll Years from the Date of Correction are not subject to the NTE, p_ j PM-0215070 22 MuniServices Cih ADDITIONAL CONSULTING City may request that MuniServices provide additional consulting services at any time during the term of the Agreement to which this Addendum is attached. If MuniServices and City agree on the scope of the additional consulting services requested, then MuniServices shall provide the additional consulting on a Time and Materials basis. Depending on the personnel assigned to perform the work, MuniServices' standard hourly rates range from $75 per hour to $300 per hour. These additional consulting services will be invoiced no less frequently than monthly based on actual time and expenses incurred. All reimbursable expenses shall receive prior approval from the City and shall be reimbursed at cost to MuniServices. CITY OBLIGATIONS MuniServices shall invoice City for the above fee on no less frequently than a quarterly basis, based on recoveries actually received by City. Because MuniServices' Tax Compliance Service may result in collection of deficiencies after termination of the Agreement, City's obligation to collect fees and notify MuniServices, and MuniServices' right to continue to receive payment, shall survive termination of tlus Addendum or the Agreement for any reason. PTXI-021507v1 23 MuniServices Czhj Each party is signing this Addendum on the date set forth in the introductory clause of the Consultant Services Agreement to which this Addendum is attached. MuniServices, I C City of Palm Springs A Municipal Corporation By: / I g Marc Herman C,"t = Title: President and CEO Title:' ATTEST: W•- By: _ Kevin Cerutti C-tiy Clerk _ Title: Chief Financial Officer APPROVED AS TO FORM: APPROVED AS TO FORM: Eric Myers,General kounsel ty Attorney APPROVED BY CITY COUNUL I� �A PTX1-021507vl 24 MuraServices City