Resolution No. 5775
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RESOLUTION NO. 5775
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A RESOLUTION OF THE CITY COUNCIL OF THE
CITY OF VERNON APPROVING AND AUTHORIZING
THE EXECUTION OF AN AGREEMENT FOR SALES
TAX AUDIT AND INFORMATION SERVICES BY AND
BETWEEN THE CITY OF VERNON AND
HINDERLITER, DE LLAMAS AND ASSOCIATES
PROVIDING FOR A SALES TAX MANAGEMENT
PROGRAM
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WHEREAS, retail firms in the city of Vernon collect
8 sales taxes on the sale of goods which are transmitted to the
9 State Board of Equalization, which remits to the City of Vernon
10 its share of said taxes; and
11 WHEREAS, sales tax revenues can be increased through a
12 system of continuous monitoring, identification and correction
l3 of "point of sale" allocation errors1 and
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WHEREAS, the City of Vernon desires a combination of
15 data entry, report preparation, and data analysis to effectively
16 manage the municipal sales tax base and recover revenues
17 erroneously allocated to other jurisdictions and allocation
18 pools; and
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WHEREAS, to insure the success of the city 's
20 economiclredevelopment efforts and maximize revenue potential, a
2l sales tax management program (i) will assist in measuring sales
22 and use tax revenues through the correction of miscalculations
23 by the State Board of Equalization1 (ii) will provide a
24 comprehensive data base1 (iii) will allow for routine analysis
25 of business activities throughout the City; and (iv) will assist
26 in analyzing economic trends1 and
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WHEREAS, the firm of Hinderliter, de Llamas and
28 Associates has offered to provide an effective program of sales
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tax management which will improve identification of sales tax
opportunities as they relate to economic development and provide
for more accurate sales tax forecasting1 and
WHEREAS, Hinderliter, de Llamas and Associates provides
ongoing sales tax management services to over 80 cities
throughout California and has the programs, equipment and
personnel required to deliver the sales tax services referenced
herein 1 and
WHEREAS, Bruce V. Malkenhorst, Director of Finance, by
letter dated June 7, 1990, has recommended the retention of the
firm of Hinderliter, de Llamas and Associates to assist in the
implementation of a sales tax management program in accordance
with an "Agreement for Sales Tax Audit and Information Services"
which has been furnished to the City Council concurrently
herewith 1 and
WHEREAS, the approximate cost will be six Thousand
Dollars ($6,000) to be included in the 1990-91 Fiscal Year
Budget, seventy-five percent (75%) of which will be charged to
the General Fund and twenty-five percent (25%) of which will be
charged to the Redevelopment Agency.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF
THE CITY OF VERNON AS FOLLOWS:
SECTION 1: The City Council of the City of Vernon
hereby finds and determines that the recitals contained
hereinabove are true and correct.
SECTION 2: The City Council of the City of Vernon
hereby approves the Agreement for Sales Tax Audit and
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Information Services, a copy of which has been presented to the
City Council concurrently with this resolution and the city
council hereby orders said Agreement to be received and filed by
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the City Clerk.
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SECTION 3: The City Council of the City of Vernon
hereby authorizes the Mayor and the City Clerk to execute said
Agreement for, and on behalf of, the City of Vernon.
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SECTION 4: The City Clerk of the City of Vernon shall
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certify to the passage of this resolution and thereupon and
thereafter the same shall be in full force and effect.
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APPROVED AND ADOPTED this 19th day of June, 1990.
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BRUCE V.
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THOMAS A. Y , Mayor Pro Tem
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MALKENHORST, City
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STATE OF CALIFORNIA )
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COUNTY OF LOS ANGELES )
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I, BRUCE V. MALKENHORST, City Clerk of the City of
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Vernon, do hereby certify that the foregoing Resolution, being
Resolution No. 5775, was duly adopted by the City Council of the
City of Vernon at a regular meeting of the City Council duly
held on Tuesday, June 19. 1990. and thereafter duly signed by
the Mayor of the City of Vernon.
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BRUCE V. MALKENHORST, City Clerk
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(SEAL)
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AGREEMENT FOR SALES TAX AUDIT AND INFORMATION SERVICES
This agreement is made and entered into as of the ~ day of , 1990 by and
between the CITY OF VERNON, a municipal corporation h reinafter called CITY, and
HINDERLITER, DE LLAMAS AND ASSOCIATES a California Corporation, hereinafter
called CONTRACTOR...
.RECITALS
WHEREAS,. sales tax revenues can be increased through: a system of continuous monitoring,
identification and correction of "point of sale° allocation errors and;
WHEREAS, an effective program of sales .tax. management: will improve identification. of sales
tax opportunities as they relate to economic development and provide for more accurate sales
tax forecasting,. and.
WHEREAS, City desires the combination of data entry, report preparation,. and data analysis
necessary to effectively manage the municipal sales tax base and recover revenues erroneously
allocated to other jurisdictions. and allocation.pools; and
WHEREAS, Contractor has the programs, equipment and personnel required to deliver the
sales tax services referenced herein;
THEREFORE, City and Consultant,,, for the consideration hereinafter described, mutually
agree as follows: `
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SERVICES
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The Contractorshall perform the following services:
A. Sales tax and economic analysis
1. Contractor shall establish a special data base that identifies the -name, address and
quarterly allocations of the major sales tax producers .within the City. for the most current
-and previous four quarters from the date of this agreement. Major sales tax producers.
are defined as those :businesses meeting a quarterly revenue threshold determined by
City. Since 100% of the business outlets registered -.with the -Board of Equalization are
tracked'monthly, this major producers data base is designed to highlight the`activities of
major businesses. A second data. base covering ..the same period will be established
showing total sales:-tax receipts for each business category identified by the Board of
Equalization. These data bases will be utilized to generate special reports to the City on;
major sales tax producers by rank and category, analysis of sales tax activity by category
and business districts or redevelopment .areas specified by :City, analysis of reporting
aberrations, and per capita and outlet comparisons with state wide sales.
2. Contractor shall provide up-dated reports .each .quarter. identifying changes in sales
by major outlets. and by category; area- growth and decline comparisons; and current
graphics, tables, .and tope 100 listings. Quarterly aberrations due to State audits,.. fund.
transfers,- and receivables along with late or double payments will be identified.
3. Contractor will additionally provide an analysis for the City or `its Redevelopment
.Agency to share. with Chambers of Commerce and other economic development interest
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groups that analyze City's .sales tax trends by major groups, and geographic areas without
disclosing confidential information.
4. Contractor will provide: annual reports for the.. Manager and City Council
identifying historical growth comparisons with state,. county, selected city. averages and
C.P.I. indices; top :producer listings and make up and volatility of the :economic. base.
Annual reconciliation worksheets to assist Finance Officers with budget forecasting will
also be provided.
5. Contractor .shall make available to City_Staff the HdL DATA computer program
:and data 'base containing. sellers permit information :`for all in-city business outlets
registered with the Board of Equalization, In addition, contractor shall process for City
the monthly registration and allocation files provided by the Board in magnetic media.
Printouts of registration changes. and dollars allocated by business name and number will
be provided. from. these files on a monthlybasis.
B. Allocation Audit and Recovery
1. Contractor shall conduct. an initial and on-going sales tax audit in order to identify
and correct. "point-of-sale" distribution errors and thereby generate previously unrealized
sales .tax income for the City. Common errors that will be monitored and' corrected
include: transposition errors resulting in misallocations; erroneous consolidation of
multiple outlets; misreporting of "point of .sale" .from .the wrong location; delays in
reporting new outlets; misidentifying transactions as a "use tax" rather than a "sales tax,"
and erroneous fund transfers and adjustments.
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2. Contractor will initiate contacts with the appropriate sales .management and.
accounting. officials in companies that have businesses where a probability of error exists
to verify whether. current. tax receipts accurately reflect the local:-sales activity. Such
contracts will be conducted in a manner to encourage local business retention and
expansion.
3. Contractor shall .prepare and .submit to the Board of Equalization all information
necessary to correct any allocation errors that are identified and shall follow-up with the
.individual businesses. and the State Board of Equalization to ensure that all back quarter
payments due the City are recovered.
4. If during the course of its audit, Contractor finds. businesses ocated in the City that
are properly .reporting sales tax but have the potential for modifying their- operation to
provide an even greater share to the .City, Contractor will work with those businesses ands:
the'City to encourage such' changes.
C. On Going Consultation
Contractor shall work with City and City Redevelopment .Agency Staffs on questions related to
tenant mix. alternatives for maximum sales .`tax .returns; advise City..business license staff on
utilization of reports: to enhance business license collection efforts; .provide .sales tax
projections on specific projects for redevelopment negotiation and .city budget purposes; and
provide sample reports, letters and programs `to enhance: the sales tax base through improved
economic development efforts.
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CONFIDENTIALTI'Y
Sectioa 7056 of the State of .California Revenue -and. Taxation .code specifically limits the
disclosure of confidential taxpayer. information contained in the records of the State Board of
..Equalization. This section specified the conditions under which a City may authorize persons-
other than City officers and employees to examine State Sales and Use Tax records.
The following conditions specified in Section 7056 {b), (1) of the State of California Revenue -
and Taxation Code are hereby made part of this contractual agreement.
A. Contractor is authorized. by this .agreement to examine. sales and use -tax records of the
Board of Equalization provided to City pursuant to contract under the Bradley-Burns
Uniform Sales and Use Tax'Law.
B. Contractor 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.
C. Contractor is prohibited from performing consulting services for a retailer :during the
term of this agreement.
D. Contractor is prohibited from retaining the information. contained in, or derived from
those sales and use tax records, after. this agreement has expired. Information obtained
by examination. of board records shall be used only for purposes related to collection of
local sales :and use ,tax or for other governmental functions of the City as set forth by
resolution adopted pursuant to Section 7056 (b) of the Revenue and taxation Code. The
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.resolution shall designate the Contractor as a person, authorized to examine sales and
use tax records and certify .that this agreement meets the requirements set. forth above
and in Section 7056 (b), (1) of the Revenue and Taxation Code.:
CONSIDERATION
A. Contractor shall establish the sales tax and audit data bases and shall provide the
monthly and quarterly updates referenced above for a fee of $500.00 per .month,
invoiced quarterly.
B. Contractor shall be further paid 15% of all new Sales and/or Use-tax revenue received.
by, the City as a result of audit :and recovery work performed by Contractor. Said
percentage fee will apply to fund transfers received for back quarter reallocations and.
monies received in the first eight consecutive reporting quarters following completion
of the audit by Contractor and confirmation of corrections by the State Board of
.Equalization.
Contractor shall obtain City .approval prior to beginning the .work of correcting. tax
reporting. methodology or "point of sale" .for specific businesses .where said payment of
the percentage fee will be expected.. Said approval shall be accomplished. by the City
Manager or his designated representative on the Sales Tax Audit Authorization form, a
-copy of which is attached as "Exhibit A." City shall pay audit fees upon Contractor's
submittal. of evidence of State Fund'Transfers and .payments to City from businesses:
identified in the audit and approved by the City.
C. Above sum shall constitute full reimbursement. to Contractor for all direct and indirect
expenses. incurred. by Contractor in performing audits including the salaries of
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Contractor's employees, and travel expenses connected with contacting local and out-of
state businesses and Board of Equalization representatives.
CITY MATERIALS AND SUPPORT
City shall adopt a resolution in a form acceptable to the State Board of Equalization and in
compliance with Section 7056 of the Revenue and taxation. Code, authorizing Contractor to
examine the confidential sales tax records. of City. City further agrees to provide any
information or assistance .that may readily be available. such as business within the City. and
copies of the monthly sales tax allocation reports received from the board of Equalization.
TERMINATION
Thin agreement may be terminated by either .party with 30 days written notice. Upon the:
presentation of such notice, Contractor may continue to work through the date of termination..
Upon termination, Contractor. shall be paid the value of .all tax analysis and .reporting work
performed less payments previously made. Compensation for any audit work .previously
authorized and satisfactorily performed shall be made at the. times provided in the .preceding
section. entitled "Consideration."
All documents, data, surveys and reports prepared by Contractor pursuant to this agreement
shall be considered -.the .property of the City and upon payment .for services .performed by
Contractor, such documents and other identified materials shall be ..delivered. to City by
Contractor.
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INDEPENDENT CONTRACTOR
Contractor shall perform.. the services hereunder as an .independent contractor and shall
furnish such services in his own manner and method, and under no circumstances or conditions
shall any agent, servant, or employee of Contractor be considered as an employee of City.
:NON-ASSIGNMENT
This Agreement is not assignable either in whole or in part by Contractor without the written.:
consent of City.
ATTORNEY'S FEES
In the: event a legal` action is commenced to enforce any of the provisions of this Agreement;
the prevailing -party shall be entitled to recover its costs and reasonable attorney's. fees.
`GOVERNING LAW
The laws of the State of California. shall govern the rights, obligations, duties and liabilities of
the parties to this agreement and shall also govern-the interpretation of this agreement.
INDEMNIFICATION
Contractor hereby agrees to, and .shall hold City, its elective and appointive boards officers,
agents and .employees, harmless. from- any liability for damage or claims for damage for
personal injury, including death, aswell asfrom-.claims for. breach of confidentiality or property
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damage which may arise from Contractor's negligent acts, errors or omissions under this
Agreement. Contractor agrees to and shall defend City and its elective and appointive boards,
officers, agents and employees from. any suits or actions at law or in equity for damages;caused,
or alleged to have been' caused, by reason of any of the aforesaid negligent acts,' errors- or
omissions.
City hereby agrees to, and shall hold Contractor, its officers,. agents and employees, harmless
from any liability for damage or claims for damage for personal injury, including death, as well
as from claims for breach of confidentiality or property. damage ..which may .arise .from City's
negligent acts, errors or omissions under this Agreement. City agrees to and .shall defend
Contractor and its officers, agents and employees from any suits or actions at law or in equity
for damage caused, or alleged to have been caused, by reason of any of the aforesaid negligent
acts, errors or omissions.
NOTICE
All notices required by this Agreement shall be given to City and.Contractor in writing, by first
class mail postage prepaid, addressed as follows:.
City: CITY OF VERNON
4305 Santa Fe Avenue
Vernon, California 90058.
Contractor: HINDERLITER, DE LLAMAS, & ASSOCIATES
150 West First Street, Suite 280
Claremont, California 91711-4139
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed on
the date first above written by their respective officers duly authorized in that behalf.
CITY:
CITY OF VERNON
¢r~ , yor ~
City Clerk
.CONTRACTOR:
HINDERLITER, DE LLAMAS & ASSOCIATES:
A California Corp ration
APPROVED AS TO FORM:
City Attorney
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CITYiC UNCIL OFFICERS
LEONIS C. MALBURG, Mayor BRUCE V. MALKENHORST,
THOMAS A. YBARRA, Mayor Pro-Tem City Administrator/City Clerk
Wm. "BILL" DAMS DAVID B. BREARLEY,
H. "LARRY" GONZALES ti ' , ~ City Attorney
W. MICHAEL McCORMICK
3 ~ VICTOR H. VAITS,
TELEPHONES Director of Community Services
CITY CLERK ................583-8811 LEWIS R. ADAMS,
POLICE DEPT. 587-5171 ~ Director of Water & Power
FIRE DEPT 583-4821 'I ~ ~~'~II LARRY SPADT,
BUILDING DEPT 583-8811. Fire Chief
PUBLIC WORKS DEPT........ 583-8811
HEALTH DEPT . .............583-8811 CITY HALL LOUIS ROSENKRANTZ
Police Chief
4305 SANTA FE AVENUE, VERNON, CALIFORNIA 90058 In Reply Refer to:
June 7, 1990
Finance Committee
City of Vernon
Honorable Members:
In order to insure the success of the City's Economic/Redevelopment
efforts and maximize revenue potential., a Sales Tax Management Program
would assist in measuring sales and use tax revenues through the
correction of miscalculations by the State Board of Equalization;
provide a comprehensive data base; allow for routine analysis of
business activities throughout the City; and assist in analyzing
economic trends.
It is hereby recommended that authority be granted to retain the firm
of Hnderliter, deLlamas and Associates to assist in the implementation
of the Sales Tax Management Program at an approximate cost of $6,000
to be included in the Fiscal Year 1990-91 Budget (charged 75% to the
General Fund and 25% to the Redevelopment Agency); and that a resolution
be adopted authorized same.
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Very truly yours.,
nice V. Malkenhorst
Director of Finance
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June 7, 1990
TO Bruce V. Malkenhorst, City Administrator
FROM: .Gerald W. Forde, Assistant to the City Administrator
RE: Appropriation of Funds to Implement A Sales Tax Management
Program for the City of Vernon
Discussion
In order to insure the success of our City's Economic/Redevelopment
efforts, stabilize our economic base and maximize our revenue
potential I am recommending that the City consider implementing a
Sales Tax Management Program utilizing the firm of Hinderliter
deLlamas & Associates. Ln addition to increasing the sales and use
tax revenues through the correction of miscalculations by the State
Board of Equalization the program will provide a comprehensive data
base. This info will allow for routine analysis of business
activities throughout the City and assist in analyzing economic
trends.
RECOMMENDATION
1. Appropriate the sum of $6,OOO,for implementation of the Sales Tax
Management Program ~d lih F,s~1' y~~, >990~9~ ~k,,f~'
2. That the City Clerk and City Attorney review the agreement and
that the City Attorney prepare a resolution authorizing the
firm access to the City of Vernon's sales and use tax records
and forward all appropriate documents to the City Council for
approval and implementation
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FORD:FC61190
May 24, 1990
To: Bruce V. Malkenhorst, City Administrator
From: Gerald W. Forde, Assistant to the City Administrator
Subject: Request for Approval to Retain the Services of
Hinderliter, deLlamas & Associates in Order to
Implement a Sales Tax Management Program
Objective: 1) To have the City Council approve hiring the firm
of Hinderliter, deLlamas & Associates to provide
a Sales Tax Management Program for the City of
Vernon.
2) To authorize the appropriation of funds necessary to
implement the program.
3) To have .the City Council adopt a resolution
authorizing the firm of Hinderliter, deLlamas &
Associates access to sales and use tax records for
the City of Vernon pursuant to Revenue & Taxation
Code Section 7056.
Discussion: As we have previously discussed, in order to insure the
success of our Redevelopment Program, stabilize the
City's economic base and maximize revenue potential, it
is critical that we have an accurate data base
reflecting types of businesses in Vernon. This data
base would allow us to identify firms we wish to retain/
or attract - firms that 1) are labor intensive 2) high
users of water and electricity and 3) produce signifi-
cant revenues through "point of sale" and "use tax."
Currently, the-City has data bases relative to water and
electrical uses by local businesses - we do not have any
detailed. data relative to sales and use tax revenues.
Based upon my discussions with Ed Cooney and my previous
experience in the City of Lynwood with utilizing this
program, I would recommend we retain the firm of
of Hinderliter, deLlamas & Associates to implement the
Sales Tax Management Program and complete our data base
for the City.
Summary of Benefits
- Increase sales tax revenues to City as direct result of
correcting misallocations and/or improving reporting procedures/
processes used by companies.
B.V. Malkenhorst
May 24, 1990
Page 2
- Provide data allowing for routine analysis of sales tax
activities relative to retention/loss of businesses along with
economic trends.
- Can be used to verify businesses and accuracy of issuing of
business licenses.
- Assist in preparation of .reports and analyses of revenue
projections related to sales taxes for planning of proposed
redevelopment activities.
Cost/Benefit Analysis
Cost to City - $6,000/year plus 15% of recaptured sales tax.
City's Current Sales/Use Tax Revenues - $5,400,000 FY90/91 estimate
Scenario I - Correction of a miscalculation in the amount of as little
as 1% could result in the City recapturing:
$ 54,000
( 6,000) Fees for Hindileter, deLlamas & Associates
48,000
( 8,100) 35% on New Sales Taxes
$ 39,900 Net Revenue to City
Attached to this report are the following items for your review:
Item I - Proposal package from Hinderliter, deLlamas &
Associates
Item II - Sample Resolution Authorizing Hinderliter,
deLlamas & Associates Access to Sales & Tax Use
Records for Vernon
Item III - Agreement for Services
Please advise if the attached program meets with your approval so I
may process for implementation.
GWF5/hr
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` ITEM I
" f~inderliter, de Llamas and Associates
150 W. FIRST STREET. SUITE 280 • CLAREMONT. CALIFORNIA 91 71 1-41 39 • (714 625-6736
May 15, 1990
Mr. Gerald Ford
Assistant to the City Manager
City of Vernon
4305 Santa Fe Avenue
Vernon, CA 90058
Dear Jerry:
Enclosed is the proposal for a sales tax management system. for the City of Vernon that we
discussed. The service is based on the fact that it is not .cost effective for most cities to commit
staff hours to this cyclical, specialized work.. As a result, one to five percent of potential sales
tax .revenue is lost each: year to erroneous taxpayer "point. of sale" and "use tax" designations.
Additionally, economic development efforts do not always achieve their maximum revenue
potential because of a general misunderstanding as to what types of businesses generate the
greater sales tax returns for the least public investment.
Our proposal is to serve as your staff for the following purposes:
1. Audit and correct "point-of-sale" misallocations through specialized computer analyses,
cross directory checks, field investigation, and personal, telephone, and letter contacts
with,ndividual businesses and the Board of Equalization.
2. Work with individual businesses on possible Changes in processes or procedures which
return a greater portion of the sales tax being paid back to the local community.
3. Provide specialized quarterly: and monthly reports that analyze .each city's sales tax
..activity by individual business, business category,- and designated area including special.
reports to monitor any sales tax sharing agreements.
4. Monitor aberrations in quarterly sales tax allocations and initiate correction of errors
before funds are lost.
5. Improve budget accuracy by providing special reports to reconcile Board of Equalization
advances, clean-up payments, and pool allocations with budget projections.
6. Provide ongoing assistance and data to support redevelopment negotiations, planning,
and revenue projections related to sales tax. This is where I believe we can be of most
assistance to you. ,Our reports cover every sales tax. producing business in the city.
Learning to use ahem will significantly. shorten the time it v~nll take to know the
commumty.
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Mr. Gerald Ford
Page Two
May 15, 1990
The fee for a city of Vernon's size is $500 a month billed quarterly plus 15% of any new sales
tax. that we .generate for eight quarters... There are no other charges, and our company absorbs
all costs in performing audits and in follow-u s with-the Board of Equalization and out-of--state
corporations. Percentage fees are not billed. until the .city actually receives the new revenue,
and most of .our client cities finance the monthly fees. through their redevelopment agencies.
There is no charge for the additional business license revenue that the city- recovers as a result
of the program..
We were recently asked for representative results of -audit work, and although the .lottery
aspects of this makes it a .questionable evaluation tool, you .might find .the -list of the following
cities -that have been with us over two years to be interesting:.
Approximate
87/88 Annual Increase Percentage
Cites Sales Tax from HDL-Work Increase Contact
Agoura Hills $1.3 million $140,000. 10.8% Elaine Graves
(818). 889-9114
Commerce $11 million $120,000. 1.1% John Mitsuuchi
(213) 722-4805
Livermore $3.7 million $110,000 3.0% Monica Potter
(415) 373-5100
Los Altos $1.9 million $60,000 3.2% Dianne Gershuny
(415) 948-1491
Monterey Park $3.4 million $190,000 5.6% Chris 7effers
(818) 307-1855
Mountain View $11.1 million $255,000. 2.3% Ron Beach
(415) 966-6300
Pleasanton $5.7 million $510,000 8.9% Susan Rossi
(415).484-8033
Pomona $7.7 million.. $85,000 1.1% Christine Calderon
(714) 620-2091.
Redlands $4.1 million $260,000 6.3% John Holmes
(714) 798-7510
San Carlos $2.1 million $60,000 2.8% Brian Moura
(415) 593-8011.
South El Monte $3.1 million $65,000 2.1% Raul Romero
{818)- 579-6540
The above represents ongoing annual. increases only and does not include the one-time fund
transfers and adjustments. that we recover as~ ppart of -our ongoing analysis.:- .For example, we
recently recovered one-time payments of $124,000 for Commerce, $122,000 for Pomona, and
$115,000 for Paso Robles. As mentioned, please also keep in-mind that this can be like the
lottery. For example, is Claremont. where our office is located, our audit produced no new
revenue for the-city.
In your case, I would suggest you consider the service for the value of the information. provided.
and consider any new .revenue produced a possible plus: T believe that most of the 90 cities we
now serve look at our program m this way.
Mr. Gerald Ford
Page 2
May 15, 1990
Enclosed is a copy of the standard agreement used by the majority of our clients as well as
samples of some of the various reports that we provide.
Please call if you or Bruce need any additional information.
Sincerely,
Robert Hinderliter
RH'llb
Enclosures
- HINDERLITER, DE LLAMAS AND ASSOCIATES
150 West First Street, Suite 280
Claremont, California
(714) 625-6736
Hinderliter, de Llamas .and Associates provides ongoing sales tax management services
to over 80 cities throughout California. The firm has been providing tax management
services on a full time basis since 1983. The company operates <with a .staff of ten
individuals, all -with extensive backgrounds or training in sales tax administration and
city government.
The two pprincipals are Robert Hinderliter and Lloyd de Llamas. Mr. Hinderliter .
founded the firm in 1983 and oversees the firm's ~ data analysis services. He previously
served as City Administrator and Finance Director of the City of Commerce, and his
background includes over 23 years of service in municipal government. Mr'de Llamas
oversees the firm's audit and revenue enhancement- program. He .previously served as
City Manager of the cities of Monterey Park, Lawndale, and Woodlake and as Assistant
for the Cities of Torrance and San Diego. Mr. De .Llamas was one of the founding
directors of the. California Redevelopment Agencies Association and has been involved
in a wide variety of professional activities relating to municipal finance :and economic
development.
The firm is supported by Lee T. Riblett, a former District Administrator for.' the
California State Board of Equalization, .whose background includes 37 years in
California sales tax .administration and tax attorney, Douglas Boyd who .previously
served as Staff Assistant to the Third. District of the.- State Board of Equalization.
Deborah Clements, who previously served with the finance departments of he Cities of
Lynwood and La Mirada, oversees a specially trained staff responsible for production of
the firm's analytical reports and newsletters.
CLIENT CITIES
Agoura Hills Dana Point Livermore Rancho Cucamonga
.Alameda Desert Hot Springs Loma Linda Redlands
.Alhambra. Diamond Bar Lompoc. Rialto:
Arcadia Duarte Los Alamitos Riverside County
Arcata. Dublin Los Altos Rosemead
Artesia El Cemto Lynwood San Carlos
Azusa Encinitas Martinez ~ San Dimas
Baldwin Park Fountain Valley .Millbrae San Fernando
Barstow Fremont Mission Viejo San Gabriel
Bell `Glendale .Monrovia San Leandro
Bell Gardens Glendora Montclair San Pablo
Bellflower Hawaiian Gardens Montebello Signal Hill
Benicia `Hayward Monterey Park South El Monte
Big Bear Lake Hemet" Moreno Valley Stanton.
Blythe Hermosa Beach Mountain View Temple City
Burbank Huntington Beach Newark Upland
- Chico Huntington Park Norwalk 'West Covina
.Chino Industry Oakland West Hollywood
Claremont Irwindale Pasadena Whittier
Colton La Mirada Paso Robles Yorba Linda
Commerce La Verne Pico Rivera
Covina Lawndale Pleasanton
Cudahy Lemon Grove Pomona
TOP 10 BUSINESS CATEGORIES
H"'~~~te,;a
~"'as ~ FOR VERNON -SAMPLE REPORT
3/88 <.:;>-s.:a:.:.:.. z~~
LIGHT .INDUSTRIAL EQUIPMENT 768,567 4/8s
S.B.O.E. Code 99 Count = 220 [26.7°k] X89
2/89
2/88
3/88
MANUFACTURER/WHSL-ELEC. EQUIP, 481,861 4~
S.B.O.E. Code 86 Count = 36 [16.8%] ugg
2/89
2188
HEAVY INDUSTRIAL EQUIPMENT 370,404 3/SS ~ ~''~'`M~
4/88
S.B.O.E. Code 98 Count =135 [12.9%] 1/gg
2/89. ,
i
2/88 _
CONST. CONTRACTORS, WHSLE. LUMBER 210,457 3/ss ' ~
4/88
S.B.O.E. Code 82 Count = 74 [7.3%] 1/89
2189 i
2/88
MAKER/WHSL-TEXTILES, FURNISHINGS 159,947 3/88 :n
4/88. ;
S.B.O.E. Code 91 Count = 118 [5.6%] ugg
2/89 -
i
2188 ~ _
MANUFACTURER/WHSL-OFFICE EQUIP. .74,961 3/s8
4/88 i
S.B.O.E. Code 83 Count = 28 [2.6%] 1/89
2189
2/88 <<
SPECIALTY STORES 61,460 3/ss
4/88
S.B.O.E. Code 19 Count = 31 [2.1°k] i/gg
2/89. -
2188
AUTOMOTIVE SUPPLY STORES 60,299 3/8s
S.B.O.E. Code 61 Count = 19 [2.1%] ugg \k
z189 ~
z1s8
DEPARTMENT AND DRY GOODS STORES .59,278 3/s8
4/88 i
S.B.O.E. Code 07 Count = 4 (2.1°k] ugg
2/89
2/88
MAKER/WHSL-TRAILERS, AUTO PARTS 48,712. 3/ss
4/88
S.B.O.E. Code 94 Count = 33 [1.7%] 1/89
2/89
o j t ~ ,~y r6, ;rte, cr e~ ~j
`'7b ~b ~ ~ Qb ~ ~b
RED LANDS SALES TAX
•Fourth Quarter Sales Tax Receipts
HINDERLITER DE LLAMAS & ASSOCIATEb ! RQf~@Ctlrlg Thlyd Quarter SaieS
714 - 625-6736
~~L~lYI~1Y ~LES~~X:,A,,~~R ~i.~SI~tES~ ~.~~.~EIG+Q.R.X~;~
~`33~i, o:a '3 a
`s.:.:o.:g.. x ~?,i`..iEu:'c,YjaL*zi~~~' ,a`i'M~' ~::ki~s ~h~ r„~ .3•. ice. x~ ~ 3 z,~ s. >,a\~,. >x~~ >.><;'~3°'~.
e'.~'`~cs..yh\~x~~AYi\..a2~~~ f '13avolss•s`r
~>;x~s'>S.~,ua3kf U<;;..'~n,.:..~y.~.aYt',~& ,6z:\a'#~'b~.ai;>»~~~:xas ,c„~k."~'S,~.•~ . <c.'~x;' .t
-eau` €«kx' `.'~~x'~.~3:
Adjusted .for reporting aberrations
and one-time fund transfers, ongoing tax s2o
receipts for sales in Redlands during July soo
through September of 1988 were approxi- 280
mately 7%° higher than the same quarter 2so
of 1987. The increase for all of San 2ao
Bernardino county for the same time pe- ~ 220
c AUTO GROUP
riod was 11.7% and for California, 7.2%. ~ zoo
Major sales tax categories were auto L 180
dealerships,- construction and building
Aso
supplies and .department stores which Sao
collectively generated 55% of the city's :120 RETAIL GROUP
sales tax receipts during the current quar-
ter. By individual business, the top 25 X00
FOOD AND DRU
accountedfor6l%ofRedlandstotalsales 8O RESTAURANTS
tax revenues. 6O SERVICE STATIQ
Redland's sales data was .slightly a0 INDUSTRY GRO
skewed during the current quarter. by 20
$223,000 irr one-time fund transfers that LEGEND s a i 2 s a~ 2 s a~ 2 a a ~ 2 s a
resulted from last summer's "point-of-sale" ° RECEIPTS BY sALES < isss - ~sss >
survey. This brought actual receipts 30%
higher than a year ago and made. building .lands .Glass House, and Harry Adams rial dealers and specialty retailers who.
and construction supply categories a-more. Video. enjoyed .gains of 16.4% and 11.4% re-
significant portion of the city's revenue Statewide, .the increase of 7.2% spectively.
.base than normal. The resulting new reflects a trend of generally steady mod- Service stations reported taxable
ongoing revenue from the survey offset crate advances over the last six quarters. sales of $3.5 billion in the third quarter, an
the overall sluggishness in automobile Measured. in constant value dollars, third advance of 6.4%. Gasoline consumption
and soft good sales that is currently char- quarter 1988 sales for California were up was up 3.5%, while the average price per
acterizing this segment of merchandisers 2.4% over third quarter 1987, after allow- gallon increased 4.1 % from 88.2 cents to
generally. ing .for average price increases of 4.7% 91.8 cents.
Other significant changes in this over the prior year. In the industrial categories; sales for
reporting quarter included a number of Taxable salesby department stores manufacturers of transportation equipment,
major sales tax generators that appeared totaled $4.8 billion in third quarter 1.988, leasing corporations and other compa-
on the allocation reports forthe first time. up 3.2% percent over the previous year. niesintheclass85groupgrewby15.89%.
These included: LeRoy's Clothing Com- Newcardealerslaggedothermajorretail- Sales for heavy industry categories in-
pang, Becky's Famous Hamburg-ers, ers, posting taxable sales of $6.6 billion creased 11.52%; light industry and pub-
Superior Drug Stores, Econo Car and for an increase of only 1.2%. Strong gains lisping 9.76%; and construction and con-
Truck Sales, Robertson Ready Mix, Red- were made by lumber and building mate- tractor suppliers by 7:57%;
THIRD QUARTER SALES GAINS
KEY SOUTHERN CALIFORNIA COUNTIES
(Taxable transactions in thousands of dollars)
PERCENT
INCORPORATED UNINCORPORATED CHANGE
COUNTY CITIES AREAS UNALLOCATED TOTAL YR. TO YR
Los Angeles 15;760,593. 836,610 1,414,391 18,011,594 5.0
Orange 5,504,585 362,072 532,767 6,399,424 8.8
Riverside 1,335,883 336,998 134,682. 1,807,563. 13.4
San Bernardino 1,878,823 328,948 187,527 2,395,298 11.7
San Diego 4,350,818 200,260 372,811- 4,923,889 8.8
Ventura 1,089,417 92,073 89,745 1,271,235 8.7
I~f.~~~~~,~s~T~~x~Pxonr~c~nrkB~f ~~~a~c~x,S:arxic AR~.~.s~~~~~ ,~~T~p~=~ ~ P~QD~c~RS~;,~;:.
~.,''`~tanu,~a'.z~lC~;: e:4'~x+a;.1Yi£a~:a:.~:s•r,,;~~aua.:.u ~.;.:.~X'..icQhGa'Si'?e~`s\:`~v\Sa~ftti'v\i.CU.Y~d'~'~u'Zi`fvv.Y:i'~'».'.i • i r`sreT n~~r§,~ ~saxN Rai,. \b'~~,bYtr~~x.~S4S.n
s~::?3~.u~i.&`1s4833r.35i „•su'J«
210 1 ROBERTSON READY MIX
2 C.L.PHARRIS READY MIX
200 3 JIM GLAZE INC.
190 4 REDLANDS DATSUN
180 5 K MART
170 6 MERVYN'S
iso 7 INLAND FORD
150 8 TOM BELL CHEVROLET
0 140 9 TOM BELL TOYOTA
10 THE HARRIS CO.
L 130 11 STATER BROS.
v 120 REDLANDS BLV 12 DON TURPIN DODGE
i i° TRI-CITY 13 LUCKY STORES
100 14 .HATFIELD BUICK
9o REDLANDS MAL 15 JACK FEELY MOTORS
gp 16 GERRARD'S CENTER
70 17 H & E HOMEBUILDERS
80 FREEWAY FRO AGE 18 PEP BOYS
50 19 VOWS
• 20 LONGS DRUG STORES
40 CITRUS vILLAG 21 MATICH CORPORATION
30 STATE STREET
22 SAV-ON\OSCO DRUGS
20 23 JIM SELLERS CHEVRON
LEGEND 3 4 1 2 3 4 T 2 3 4 1 2 3 4 1 2 3 4 24 MILLER'S OUTPOST
RECEIPTS BY SALES < 1985 - 1988 > 25 DILL LUMBER
4
F ,r~~ ~C~'. ~~~~~"~~`1,tr~~~~~~~~"'~~~1~~~..~i:~',~"Hf'TSY>YA`'~'S?~YSrynK•"?~"'ix4vnw,zD%x
.%;».^.r:f:t•.
'a:: ~~~iy.~' ; 'eE.u~ 3 E:r:F,.. ::.1' w ;cx i,e e:,;' <~"fir";%°~ ` r~.`.r~
x ~ :
, x
~ ?t t rr4 . ,";cafzr <re.. `r~.rr.Er:..c: . -<1x.><r. ?»s:,
ra<» .s,;.~.:Y.
:..tic : ` t'x :,.~`;>s,~.. rc.¢ •`:.:z:.: ' . s .r .
C;'s •:•za. :t.~~s\...r..x~¢r. ra~~ ~;'~'tevs~"~;~v`.~~.~:a~ r~~ ra«.m~'~Sk:~S'"~a\::..r..::..y ..,:..a;;.r,:«::n::.s~r ..,.~u-, Y~'.~>...::>:.~xi~xFa..>,. »,>vx4,~,,,ca~A.. £:o,
6.`~?an *r:4r3.>Y:
s>:r..»~.~,:..:.:,xm:
State Board of Equalization Current Quarter Same Qtr
Business Classifications # $ % Prior Year
1 DEPARTMENT AND ORY GOODS STORES 6 40,211 14.13% 57,865 19.5296
2 EATING/DRINKING PLACES NO ALCOHOL 28 28,000 9.84% 26,912 9.08%
3 SERVICE STATIONS 10 24,309 8.54% 22,458 7.58%
4 MAKER/WHSL-TEXTILES, FURNISHINGS 11 19,463 6.84% 2,946 0.99%
5 GROCERY STORES WITH LIQUOR LICENSES CONFIDENTIAL INFORMATION OMITTED
6 DRUG STORES ~ 6 13,010 4.57% • 13,266 4.48%
7 MUSIC STORES 4 11,970 4:2196 19,114 6.45%
8 SPECIALTY STORES 37 11,454 4.02% 9,839 3.32%
9 BOATS, MOTORCYCLES AND SUPPLIES CONFIDENTIAL INFORMATION OMffTED
10 REPAIR AND HAND-TRADE SHOPS 36 6,388 2:24% 5,597 1.89%
11 PUBLISHERS,LIGHT INDUSTRIAL EQUIP. 45 5,660 1.99°,6 5,218 1.76%
12 PACKAGE LIQUOR STORES- 7 b,645 1.98% 6,024 2.03%
13 AUTO REPAIR SHOPS AND GARAGES 21 5,530 1.94% 4,462 1.51%
14 MEN'S APPAREL AND CUSTOM TAILORS CONFIDENTIAL INFORMATION OMITTED
15 HOUSEHOLD AND HOME FURNISHINGS 16 5,043 1.77% 4,942 1.67%
16 SHOE STORES CONFIDENTIALINFORMATION QMITTED
17 EATINGNRINKING PLACES-LIQUOR 5 4,792 1:68% 4,756. 1.60%
18 EATING/DRINKING PLACES-BEER AND WINE 13 .4,758. 1.67% 4,851 1.64%
19 CONST: CONTRACTORS, WHSLE. LUMBER 23 4,421 1.55% 4,341 ` 1.46%
20 LUMBER AND BUILDING MATERIALS 4 4,036 1.42% 19,615. 6.62%
21 PART TIME PERMITEES 250 3,976 .1.40% 3,465 1.17%
22 PERSONAL SERVICE/AMUSEMENT-NO LIQUOR 25 3,957. 1.39% 2,923 ..0.99%
23 GROCERY STORES WITH BEER AND WINE 6 3;661 1.29% 4,051 1.37%
24 PLUMBING AND ELECTRICAL SUPPLIES CONFIDENTIAL INFORMATION OMITTED
25 .BUSINESS SERVICES 35 3,383 1.19% 1,883 0.64°,6
RETAIL STORES 216 224,974 79.14% 258,621 84.62%
PART TIME BUSINESSES 250 3,976 1.40% 3,465 1.13%
BUSINESS & PERSONAL SERVICES 90 17,149 6.03°k 14,204 4.65%
ALL OTHER OUTLETS (INDUSTRIAL) 179 38,520 13.55°,6 20,162 6.60%
TOTAL ALL ACCOUNTS 736 284,285 100.00°~ 305,627 100.00%
SAMPLE SAMPLE
RESOLUTION NO.
A RESOLUTION OF THE CITY COUNCIL OF THE
CITY OF AUTHORIZING
ACCESS TO SALES AND USE TAX RECORDS
PURSUANT TO
REVENUE AND TAXATION CODE SECTION 7056
T`HE CITY COUNCIL.OF THE CITY OF
HEREBY RESOLVES AS FOLLOWS: -
Section 1. The following City officials are hereby authorized to receive and
review sales and use tax allocation information from the State Board of Equalization:
Members of the City Council (optional)
City Manager:
Finance Officer:
Section 2. The following independent contractor for the City of
is hereby also authorized to receive and review sales and use tax data received from the
State Board ofBqualization: -
Hinderliter, de Llamas & Associates: Robert Hinderliter, Principal
Lloyd de Llamas, Principal
Section 3. The City of hereby certifies that Hinderliter, de
Llamas & Associates: '
A, Has a current confidentiality contract. with the City to receive sales
and use tax- records; and
B. Is required by that contract 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 this resolution to
examine the information; and
C. Is prohibited by that contract from performing consulting service
for a retailer during the term of that contract; and
D. Is prohibited by that contact from retaining the information
contained in, or derived from those sales tax records, after that
contract has expired.
Section 4. Information obtained by examination. of board of records shall be
used only for purposes related to the. collection of local sales and use taxes by the Board
far municipal revenue forecasting-and verification.
Section 5. This resolution supersedes all previous authorizations.
Section 6. The City Clerk shall certify to the adoption of this Resolution and
send forward a certified copy to:
State Board of Equalization
20.14 "T" Street, Suite 220
Sacramento, CA 95814.
Attention: Jim Munekawa
MAYOR
ATTEST:
CITY CLERK
AGREEMENT FOR SALES TAX AUDIT AND INFORMATION SERVICES
This agreement is made and entered into as of the day of , 1990 by and
between the CITY OF VERNON, a municipal corporation hereinafter called CITY, and
HINDERLITER, DE LLAMAS AND ASSOCIATES a California Corporation, hereinafter
called CONTRACTOR.
RECITALS
WHEREAS, sales tax revenues can be increased through: a system of continuous monitoring,
identification and correction of "point of sale" allocation errors and;
WHEREAS, an effective program of sales tax management will improve identification of sales
tax opportunities as they relate to economic development and provide for more accurate sales
tax forecasting; and
WHEREAS, City desires the combination of data entry, report preparation, and data analysis
necessary to effectively manage- the municipal sales tax base and recover revenues erroneously
allocated to other jurisdictions and allocation pools; and
WHEREAS, Contractor has the programs, equipment and personnel required to deliver the
sales tax services referenced herein;
THEREFORE, .City and Consultant, for the consideration hereinafter described, mutually
agree as follows:
1
SERVICES
The Contractor shall perform the following services:
A. Sales tax and economic analysis
1. Contractor shall establish a special data base that identifies the name, address and
quarterly allocations of the major sales tax producers within the City. for the most current
and previous four quarters from the date of this agreement. Major sales tax producers
are defined as those businesses .meeting a quarterly revenue threshold determined by
City. Since 100% of the business outlets registered with the Board of Equalization are
tracked monthly, this major producers data base is designed to highlight the .activities of
major businesses. A second data base covering the same period will be established
showing total sales tax receipts for each business category identified by the Board of
Equalization. These data bases will be utilized to generate special reports to the City on:
major sales tax producers by rank and category, analysis of sales tax activity by category
and business districts or redevelopment areas specified by City, analysis of reporting
aberrations, and per capita and outlet comparisons with state wide sales.
2. Contractor shall provide up-dated reports each quarter identifying changes in sales
by major outlets and by category; area growth and decline .comparisons; and current
graphics, tables, and top 100 listings. Quarterly aberrations due to State audits, fund
transfers, and receivables along with late or double payments will be identified.
3. .Contractor .will additionally provide an analysis for the City or its Redevelopment
Agency to share with Chambers of Commerce and other economic development interest
2
groups that analyze City's sales tax trends by major groups, and geographic areas without
disclosing confidential information.
4. Contractor will. provide annual reports for the Manager and City Council
identifying historical growth comparisons with state, county, selected city averages and
C.P.I. indices; top producer listings and make up and volatility of the economic base.
Annual reconciliation worksheets to assist Finance Officers with budget forecasting will
also be provided.
5. Contractor shall make available to City Staff the HdL DATA computer program
and data base containing sellers permit information for all in-city business outlets
registered with the Board of Equalization. In addition, contractor shall process for City
the monthly. registration and allocation files provided by the Board in magnetic media.
Printouts of registration changes and dollars allocated by business name and number will
be provided from these files. on a monthly basis.
B. Allocation Audit and Recovery
1. Contractor shall conduct an initial and on-going sales tax audit in order to identify
and correct. "point-of-sale" distribution errors and thereby generate previously unrealized
sales tax income for .the City. Common errors that will be monitored and corrected
include: transposition errors resulting in misallocations; erroneous consolidation of
multiple outlets; misreporting of "point of sale" from the .wrong location; .delays in
reporting new outlets;.misidentifying transactions as a "use tax" rather than a "salestax,"
and erroneous fund transfers and adjustments.
3
i
2. Contractor will initiate contacts with the appropriate sales management and
accounting officials in companies that have businesses where a probability of error exists
to verify whether .current tax receipts .accurately reflect the local sales activity. Such
contracts will be conducted in a manner to encourage local business retention and
expansion.
3. Contractor shall prepare and submit to the Board of Equalization all information
necessary to correct any allocation errors that are identified and shall follow-up with the
individual businesses and the State Board of Equalization to ensure that all back quarter
payments due the City are recovered..
4. If during the course of its audit, Contractor finds businesses: located in the City that
are properly reporting sales tax but have the potential for modifying their operation to
provide an even greater share to the City, Contractor will work with those :businesses and
the City to encourage such changes.
C. On Going Consultation
Contractor shall work with City and City Redevelopment Agency Staffs on questions related to
tenant mix alternatives for maximum sales tax returns; advise City business license staff on
utilization of reports to enhance business license collection efforts; provide -sales tax
projections on specific projects for redevelopment negotiation and. city budget purposes; -and
provide sample reports, letters and programs to enhance the sales tax base through improved
economic development efforts.
4
CONFIDENTTALIT'Y
Section 7056 of the State. of California Revenue .and Taxation code specifically limits the
disclosure of confidential taxpayer information contained in the. records of the State Board of
Equalization. This section specified the conditions under which a City may authorize persons
other than City officers and employees to examine State Sales and Use Tax records.
The following conditions specified in Section 7056 (b), (1) of the State of California Revenue
and Taxation Code are hereby made part of this contractual agreement. -
A. Contractor is authorized by this agreement to examine sales and use tax records of the
Board of Equalization provided to City pursuant to contract under the Bradley-Burns
Uniform Sales and Use Tax Law,
B. Contractor. 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.
C. Contractor is prohibited from performing consulting services for a retailer during the
.term of this agreement.
D. Contractor is prohibited .from retaining .the information contained in, or derived from
those sales and use tax: records,. after this agreement has expired. Information obtained
by examination of board records shall. be used only for. purposes related to collection of
local sales and use tax or for other governmental functions of the City as set forth by
resolution adopted pursuant to Section 7056 (b) of the Revenue and taxation Code. The
5
resolution shall designate the Contractor as a person, authorized to examine sales. and
use tax records and certify that this agreement meets the requirements set forth above
and in Section 7056 (b), (1) of the Revenue and Taxation Code.
CONSIDERATION
A. Contractor shall establish the sales tax and audit data bases and. shall provide the
monthly and. quarterly updates referenced above for a fee of $500.00 per month,
invoiced quarterly.
B. Contractor shall be further paid 15% of all new Sales and/or Use tax revenue received
by the City as a result of audit and recovery work performed by Contractor. Said
percentage fee will apply to fund transfers received for back quarter reallocations .and
monies received in the first eight consecutive reporting quarters following completion
of the audit by Contractor and confirmation of corrections by the State Board of
Equalization.
Contractor shall obtain City. approval prior to beginning the work of correcting tax
reporting. methodology or "point of sale" for specific businesses where said payment of
the percentage fee will be expected. Said approval shall be accomplished by the City
Manager or his designated representative on the Sales Tax Audit Authorization form, a
copy of which is attached as "Exhibit A." City shall. pay. audit fees upon Contractor's
submittal of evidence of State Fund Transfers and payments to City from businesses
identified in the audit and approved by the City.
C. Above sum shall constitute full reimbursement to Contractor. for all direct and indirect
expenses incurred by Contractor in performing audits including the. salaries. of
6
Contractor's employees, and travel expenses connected with contacting local and out-of-
state businesses and Board of Equalization representatives.
CITY MATERIALS AND SUPPORT
City shall adopt a resolution in a form acceptable to the State. Board of Equalization and in
compliance with Section 7056 of the Revenue and taxation Code, authorizing Contractor to
examine the confidential sales tax records. of City. City further agrees to provide any
information or assistance that may readily be available 'such as business within the City and
copies of the monthly sales tax allocation reports received from the board of Equalization.
TERMINATION
.This agreement may be terminated by either party with 30 days written notice. .Upon the
presentation of such notice, Contractor may continue to work through the date of termination.
Upon termination, Contractor shall be paid the value of all tax analysis and reporting work
performed less payments previously made. Compensation for any audit work previously
authorized and satisfactorily performed shall be made at the times provided in the preceding
section entitled "Consideration."
All documents, data, .surveys .and reports prepared by Contractor pursuant to this agreement
shall be considered the property of the City and upon payment for services performed by
Contractor, such documents and other identified materials shall be delivered to City by
Contractor.
7
INDEPENDENT CONTRACTOR
Contractor shall perform the services hereunder as an independent contractor and shall
furnish such services in his own manner and method, and under no circumstances or conditions
shall .any agent, servant, or employee of Contractor be considered as an employee of City.
NON-ASSIGNMENT
This Agreement is not assignable either in whole or in part by Contractor without the written
consent of City.
ATTORNEY'S FEES
In the event a legal action is commenced to enforce any of the provisions of this Agreement,
the prevailing party shall be entitled. to recover its costs and reasonable attorney's fees.
GOVERNING LAW
The laws of the State of California .shall govern the rights, obligations, duties and liabilities of
the parties to this agreement and shall also govern the interpretation of this agreement.
INDEMNIFICATION
Contractor hereby agrees.. to, and shall hold City, its elective and appointive boards officers,
agents and employees, harmless from any liability for damage or claims for damage. for.
personal injury, including death, as well as from claims for breach of confidentiality or property
8
damage which may arise from Contractor's. negligent acts, errors or omissions under this
Agreement. Contractor agrees to and shall defend City and its elective and appointive boards,
officers, agents and employees from any suits or actions at law or in equity for damages caused,
or alleged to have been caused, by reason of any of the aforesaid negligent acts, errors or
omissions.
City hereby agrees to, and shall hold Contractor, its officers, agents and employees, harmless
from any liability for damage or claims for damage for. personal injury, including death, as well
as from claims for breach of confidentiality or property damage which may arise from City's
negligent acts, errors or omissions under this Agreement. City agrees to and shall .defend
Contractor and its officers, agentsand employees from any suits or actions at law or in equity-
for damage caused, or alleged to have been caused, by reason of any of the aforesaid negligent
acts, errors or omissions.
NOTICE
All notices required by this Agreement shall be given o City and Contractor in writing, by first
class mail postage prepaid, addressed as follows:
City: CITY OF VERNON
4305 Santa Fe Avenue
Vernon, California 90058
Contractor: HINDERLITER, DE LLAMAS, & ASSOCIATES
150 West First Street, Suite 280
Claremont, California 91711-4139
9
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed on
the date first above written by their respective officers duly authorized in that behalf.
CITY:
CITY OF VERNON
Mayor
City Clerk
CONTRACTOR:
HINDERLITER, DE LLAMAS & ASSOCIATES
A California Corporation
APPROVED AS TO FORM:
City Attorney.
10
SAMPLE SAMPLE
EXHIBIT A
Sales Tax Audit
Work Authorization No.
The following business or businesses, located in the City of ,have been
identified as having the potential for generating additional sales tax revenue to the City of
. Contractor is hereby authorized to contact the given business(s) and .the
State Board of Equalization. to verify the accuracy of the current reporting methodology and
obtain the necessary documentation for the Board of Equalization, to modify allocation
formulas, and to return previous misallocated revenue that maybe due to City.
Contractor's compensation shall be 15% of the incremental growth generated by the above
business (and/or businesses) for the first eight quarters following completion of work, plus any
recovered back quarters. The base shall be the average of the last four quarters of revenue
received from the business, if any, less any amounts determined by City or Contractor to be
increment attributable to causes other than Contractor's work. Contractor shall provide City
with an itemized quarterly invoice showing all formula calculations and amounts due.
CITY OF
By:
Date
HINDERLITER, DE LLAMAS AND ASSOCIATES
By:
Date
11
1
\\\\lll~~' ;fps r k
` CITY C UNCIL x , ~ ~v~ `
.d~ OFFICERS
~ tFb~
LEONIS C. MALBURG, Mayor r ~ ~4` f ~O, BRUCE V. MALKENHORST,
THOMAS A. YBARRA, Mayor Pro-Tem City Administrator/City Clerk
Wm. "BILL" DAVIS ~ ,"s~, .f
DAVID B. BREARLEY,
H. "LARRY" GONZALES w.
W. MICHAEL McCORMICK City Attorney
~ VICTOR H. VAITS,
3' a
TELEPHONES ~ f4
~V' Director of Community Services
u os
CITY CLERK ................583-8811 : ouN°E;19,~, LEWIS R. ADAMS,
POLICE DEPT. ...587-5171 ~S~ Director of Water & Power
FIRE DEPT 583-4821 ii~~,~'a~1~9 LARRY SPADT,
BUILDING DEPT .:.........583-8811 ~ Fire Chief
PUBLIC WORKS DEPT........ 583-8811
HEALTH DEPT . .............583-8811 CITY HALL LOUIS ROSENKRANTZ
Police Chief
4305 SANTA FE AVENUE, VERNON, CALIFORNIA 90058 In Reply Refer to:
June 7, 1990
Finance Committee
City of Vernon
Honorable Membersc
In order to insure the success of the City's Economic/Redevelopment-
efforts and maximize revenue potential, a Sales Tax Management Program
would assist in measuring sales and use tax revenues through the
correction of miscalculations by the State Board of Equalization;
provide a comprehensive data base; allow for routine analysis of
business activities throughout: the City; and assist in analyzing
economic trends.
It is hereby recommended-that.authority be granted to retain the firm
of Hinderliter, deLlamas and Associates. to assist in the implementation
of the Sales Tax Management Program at an approximate cost of $6,000
to be included in the Fiscal Year 1990-91 Budget (charged 75~ to the
General. Fund and 25% to the Redevelopment Agency).; and that a resolution
be adopted authorizes same.
~hr
Very truly yours,
~~~v
race V. Malkenhorst
Director of Finance
BVM/hr
May 24, 1990
To: Bruce V. Malkenhorst, City Administrator
From: Gerald W. Forde, Assistant to the City Administrator
Subject: Request for. Approval to Retain the Services of
Hinderliter, deLlamas & Associates in Order to
Implement a Bales Tax Management Program
Objective: 1) To have the City Council approve hiring the firm
of Hinderliter, deLlamas & Associates to provide
a Sales Tax Management Program for the City of
Vernon.
2) To authorize the appropriation of funds necessary to
implement the program.
3) To have the City Council adopt a resolution
authorizing the firm of Hinderliter, deLlamas &
Associates access to sales and use tax records for
the City of Vernon pursuant to Revenue & Taxation
Code Section 7056.
Discussion: As we have. previously discussed, in order to insure the
success of our Redevelopment Program, stabilize the
City's economic base and maximize revenue potential., it
is critical that. we have an accurate data base
reflecting types of .businesses in Vernon. This data
base would allow us to identify firms we wish to retain/
or attract - firms that l) are labor intensive 2) high
users of water and electricity and 3) produce signifi-
cant revenues through "point of sale" and "use tax."
Currently,. the City has data. bases relative to water and
electrical uses by local businesses - we do not have any
detailed data relative to sales .and use tax revenues.
Based upon my discussions with Ed Cooney and my previous
experience in the City of Lynwood with utilizing this
program, I would recommend we retain the firm of
of Hinderliter, deLlamas & Associates to implement the
Sales Tax Management Program and complete our data base
for the City.
Summary of Benefits
- Increase sales tax .revenues to City as direct result of
correcting misallocations and/or improving reporting procedures/
processes used by companies.
t;
F
B.V. Malkenhorst
May 24, 1990
Page 2
- Provide data allowing for routine analysis of sales tax
activities relative to retention/loss of businesses along with.
economic trends.
- Can be used to verify businesses and accuracy of issuing of
business licenses.
- Assist in preparation of .reports and analyses of revenue
projections related to sales taxes for planning of proposed
redevelopment activities.
Cost/Benefit Analysis
Cost to City - $6,000/year plus 15~ of recaptured sales tax.
City's Current Sales/Use Tax Revenues - $5,400,000 FY90/91 estimate
Scenario I - Correction of a miscalculation in the amount of as little
as 1% could result in the. City recapturinge
$ 54,000
( 6,000) Fees for Hindileter, deLlamas & Associates
48,000
( 8,100) 150 on-New Sales Taxes
$ 39,900 Net Revenue to City
Attached to this report are the following items for your review:
Item I - Proposal package from Hinderliter, deLlamas &
Associates
Item II - Sample Resolution Authorizing Hinderliter,
deLlamas & Associates Access to Sales & Tax Use
Records for Vernon
Item III - Agreement for Services
Please advise if the attached program meets with your approval so I
may process for implementation.
GWF5/hr
1
CITY OF VERNON
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~ Hinderlter, de Llamas and Associates
150 W. FIRST STREET, SUITE 280 • CLAREMONT, CALIFORNIA 91 71 1-41 39 • (714) 625-6736
May 15, .1990
Mr. Gerald Ford
Assistant to the City Manager
City of Vernon
4305 Santa Fe Avenue
Vernon, CA 90058
Dear Jerry:
Enclosed is the .proposal for a sales tax management system -for the City of Vernon that we
discussed. 'The service is based on the fact that it is not cost effective for most cities to commit.
staffhours. to this cyclical,:specialized work. As a result, one to .five percent of potential .sales
flax revenue is lost each year to erroneous taxpayer "point of sale" .and "use: tax" .designations.
Additionally, economic development efforts do not always achieve their maximum revenue
potential because of a general misunderstanding as to what types of businesses generate the
greater sales tax returns for the least public investment.
Our proposal is to serve. as your staff for the following purposes:
L Audit and correct "point-of-sale" misallocations through specialized computer analyses,
cross directory checks, field investigation, and personal, telephone, and letter contacts
with individual-businesses and the Board of Equalization.
2. Work with individual businesses on possible changes. in processes or procedures which
return a greater portion of the sales tax being paid back to the local community.
3, Provide specialized .quarterly and monthly. reports that analyze each .city's sales tax
activity by individual business, business -category, and designated area including special
reports to monitor any sales tax baring agreements.
4. Monitor aberrations in quarterly sales tax allocations. and initiate correction of errors
before funds are lost.
5. Improve budget accuracy by providing special. reports to reconcile Board of Equalization
advances, clean-up payments, and pool allocations with budget.projections..
6. Provide ongoing assistance -.and .data to support redevelopment negotiations, planning,
- and revenue projections related to sales tax. This is where I believe we can be of most
assistance to you. .Our ..reports cover every sales tax .producing business in the city.
Learning. to use them will. significantly shorten the time it will take to know the
community..
1VIr. Gerald' Ford
Page Two
May 1S, 1990.
The <fee for a city of Vernon's size is $500 a month billed quarterly plus 1S% of any new sales
ax that we:.generate for eight quarters. There are no other charges, and our company absorbs
all costs in performing audits-and in follow-ups with the Board of Equalization and out-of-state
co orations. Percentage fees are :not billed until the city actually receives the new revenue,
and most of our client cities finance the monthly fees through .their redevelopment agencies.
There is no charge for the additional business license revenue that the city recovers as-a result
of the program:
We were recently asked for representative results of audit work, and although the lottery
.aspects of this makes it a questionable evaluation tool, you might find the Gist of -the following
cities that have been with us over two years to be interesting:
Approximate.
87/88 Annual Increase Percentage
Sales Tax from HDL Work Increase Contact
Agoura Hills $1.3 million $140,000 10.8% Elaine Graves
(818) 889-9114
Commerce $11 million $120,000. 1.1% John Mitsuuchi
(213) 722-4805-
Livermore $37 million $:110,000 3.0% Monica Potter
(415) 373-5100
Los Altos $1:9 million $60,000 3.2% Dianne Gershuny
(415) 948-1491
.Monterey Park. $3.4 million $190,000 5.6% Chris Jeffers
(818) 307-1855
Mountain View $1L1 million $255,000. 2.3% Ron Beach
(415) 966-6300.
Pleasanton $5.7 million $510,000 8.9% Susan Rossi
(415) 484-8033
Pomona $7.7 million- $85,000. 1.1% Christine Calderon
(714) 620-2091
.Redlands $4.1 million $260,000 6.3% John Holmes
(714) 798-7510
San Carlos $2.1 million ' $60,000 2.8% Brian Moura
(415) 593=8011
South El Monte $3.1 million $65,000 2.1% Raul Romero
(818) 579-654U
The above 'represents ongoing annual increases only and. -does not include the one-time fund
transfers and adjustments that we recover as part of our ongoing analysis. 'For example, we
recently recovered one-time payments of $124,000 for Commerce, $122,000 for Pomona, and
$115,000 for Paso Robles. As mentioned, please also keep in mind that this can be like the
lottery. For example,. in Claremont where our office is located., our audit produced no .new
:revenue for the city.
In your case, I would suggest you consider the ervice for the value of`the information provided
and consider any new revenue produced a possible plus. I believe that most of the 90 cities we
now serve look at our program m this way.- -
r
Mr. Gerald Ford
Page 2
May 15, 1990
Enclosed is a copy of the standard- agreement used- by the majority of our clients as well as
samples of some of the various reports that we provide.
Please call if you or Bruce need any additional information.
Sincerely,
Robert Hnderliter
RHalb
Enclosures
HINDERLITER, DE LLAMAS AND ASSOCIATES
150 West First Street, Suite 280
Claremont, California
(714) 625-6736 _ ,
Hinderliter; de Llamas and Associates provides ongoing sales tax. management services
to over 80 cities- throughout California. The firm has been- providing tax. management
services on a full time basis since 1983. The company operates. with. a staff of ten
...individuals, all.-with extensive backgrounds or training in sales tax administration and
city government.
The two principals are Robert Hinderliter and :Lloyd de Llamas. Mr. Hinderliter
founded the firm in 1983 and oversees the firm's data analysis services. He previously,
served. as City Administrator and Finance Director of the -City of Commerce, and his
background includes over 23 years of service in municipal government. 1VIr de Llamas:
oversees the firm's audit and revenue enhancement program. He previously served as
City Manager of the cities of Monterey Park, Lawndale, and Woodlake and'. as Assistant
for the Cities of Torrance and San Diego. Mr. De Llamas was one of the founding:
directors of the California Redevelopment Agencies Association and has been involved
in a wide variety of professional activities relating to municipal .finance and .economic
development. -
The firm is supported by Lee T.. Riblett, a former District Administrator for the
California State:. Board of Equalization; whose background includes 37 years. in
California -sales tax administration and tax attorney, Douglas Boyd who ...previously
:.served as Staff Assistant to the Third District of the State :Board of Equalization.
Deborah Clements, who. previously served withthe finance. departments :of the Cities of
.Lynwood and La Mirada, oversees a pecally trained staff responsible for production of
-the firm's analytical reports -and newsletters.
~
_ _
:CLIENT CITIES
Agoura Hills Dana Point Livermore Rancho Cucamonga
Alameda Desert Hot Springs Loma Linda :Redlands
Alhambra Diamond Bar Lompoc- Rialto
Arcadia Duarte Los Alamitos Riverside County
Arcata Dublin Los Altos Rosemead
Artesia ' El Cerrito Lynwood San Carlos:.'
Azusa Encinitas Martinez ~ San Dimas
Baldwin Park Fountain Valley Millbrae San Fernando
Barstow Fremont Mission Viejo > San Gabriel
Bell Glendale Monrovia San Leandro
Bell Gardens .Glendora Montclair San Pablo
Bellflower Hawaiian Gardens Montebello Signal Hill
Benicia Hayward Monterey Park South E1 Monte
-Big Bear Lake Hemet Moreno Valley Stanton
. Blythe Hermosa Beach Mountain View Temple City
Burbank Huntington Beach Newark Upland
Chico Huntington. Park Norwalk West. Covina
Chino Industry Oakland West Hollywood
Claremont.- Irwindale Pasadena Whittier
Colton La Mirada Paso Robles Yorba Linda
Commerce. La Verne Pico Rivera
Covina Lawndale Pleasanton
Cudahy Lemon Grove Pomona
SAMPLE SAMPLE
RESOLUTION NO.
A RESOLUTION OF THE CITY COUNCIL OF THE
CITY OF AUTHORIZING
ACCESS TO-SALES AND USE TAX RECORDS
PURSUANT TO
REVENUE AND TAXATION CODE SECTION 7056
TFIE CITY COUNCIL OF THE CITY OF
HEREBY RESOLVES AS FOLLOWS: -
Section 1. The following City officials are hereby authorized to receive and.
review sales and use tax allocation information from the State Board of Equalization:
Members of the City Council (optional)
City Manager:
Finance Officer:
Section 2. The following independent contractor for the City of
is hereby also authorized to receive and review sales and use tax data received from the
State Board of Equalization:- -
Hinderliter, de Llamas & Associates: Robert Hinderliter, Principal
Lloyd de Llamas, Principal
Section 3. The City of hereby certifies that Hinderliter, de
_ Llamas & Associates:
A. Has. a current confidentiality contract with the City to receive sales
and use tax records; and
B. Is required by that cortract 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 this resolution to
examine the information; and
C. Is prohibited by that contract from performing consulting service
for a retailer during the term of that contract; and
SAMPLE SAMPLE
EXHIBIT A
Sales Tax Audit
Work Authorization No.
The following business or businesses, located in the City of ,have been
identified as having the potential for :generating additional sales tax revenue to the City. of
. Contractor is hereby authorized to contact the given busines(s) .and the
State Board of Equalization to verify the accuracy of the current reporting methodology and
obtain the necessary documentation for the Board of Equalization, to modify allocation
formulas, and to return previous misallocated revenue that maybe due to City.
Contractor's compensation shall be 15% of the incremental growth generated by the above
business (and/or businesses) for the first eight quarters following completion of work, plus any
recovered back quarters. The base shall be the average of the last four quarters of revenue
received from the business, if any, less any amounts determined by City or Contractor to be
increment attributable to causes other than Contractor's work. Contractor shall provide City
with an itemized quarterly invoice showing all formula calculations and amounts due.
CITY OF
By:
Date
HINDERLITER, DE LLAMAS AND ASSOCIATES
By:
Date
11
D. Is .prohibited by that contact from retaining the information
contained in, or derived from those sales tax records, -after that
contract has expired.
Section 4. Information obtained by examination of board of records shall be
used only for purposes related to the collection of local sales and use taxes by the Board
fpr municipal revenue forecasting_and verification.
Section 5. This resolution_supersedes all previous authorizations.
Section 6. The City Clerk shall certify to the adoption of this Resolution and
send forward a certified. copy to:
State Board of Equalization
.2014 "T' Street, Suite 220
Sacramento, CA 95814.
Attention: Jim Munekawa
MAYOR
ATTEST:
CITY CLERK
CITY COUNCIL DAVID B. BREARLEY
City Attorney
r LEONIS C. MALBURG FAX: (818) 330-5818
Mayor
THOMAS A. YBARRA KEVIN WILSON
Mayor Pro-Tern Director of Community Services & Water
FAX: (213)588-2761
Wm. "BILL" DAMS
Councilman KENNETH J. DeDARIO
Director of Light & Power
H. "LARRY" GONZALES FAX: (213) 583-1983
Councilman ' ~ V
~ ~ ~ ~ DAVE TELFORD
W. MICHAEL McCORMICK Fire Chief
Councilman FAX: (213) 581-1385
BRUCE V. MALKENHORST CITY HALL LOUIS ROSENKRANTZ
City Administrator/City Clerk 4305 SANTA FE AVENUE, VERNON, CALIFORNIA 90058 Police Chief
FAX; (213) 581-7924 TELEPHONE (213) 583-8811 FAX: (213) 581-1178
May 28, 1996
Mr. Larry Micheli
Board of Equalization
450 N Street MIC 27
P.O. Box 942879
Sacramento, California 94279--0027
Dear Mr. Micheli:
In accordance with a request from Janice.. A., Cunningham, Senior Tax
Auditor, enclosed herewith is a certified copy of Resolution No.
5775 authorizing Hinderliter, dellamas & Associates to conduct
sales tax audit and information services for the City of Vernon.
Very truly yours,
CIT/Y~OF VERNON
~oria J. O sco
.Chief Depu~ City Clerk
GJO/hr
Enclosure
CERTIFICATE
STATE OF CALIFORNIA )
COUNTY OF LOS ANGELES) ~
CITY OF VERNON )
I, Gloria. J. Orosco, Chief Deputy City Clerk of the City of
Vernon, County of Los Angeles, State of California, do hereby
certify that the attached is a true and correct copy of:
Resolution No. 5775 of the City of Vernon
The original of same is on file in the office of the City Clerk of
the City of Vernon, said offices .being in the City of Vernon,
County of Los Angeles, State of California.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed
the Official Seal of the City of Vernon, County of Los Angeles,
State of California, this 25th day of June, 1996.
SEAL:
Gloria J. osco
Chief De y City Clerk