20-0901_HDL COMPANIES_Agenda Report_E7City of San Juan Capistrano
Agenda Report
TO: Honorable Mayor and Members of the City Council
FROM: Benjamin Siegel, City Manager
SUBMITTED BY: Ken Al-Imam, Chief Financial Officer
DATE: September 1, 2020
SUBJECT: Resolution Authorizing Access to Sales Tax Information
RECOMMENDATION:
Approve the resolution that authorizes Hinderliter, de Llamas & Associates to access
records of the California Department of Tax and Fee Administration for purposes of
analyzing the sales tax revenue of the City.
EXECUTIVE SUMMARY:
The City recently solicited competitive proposals for sales tax consulting services. As a
result of that procurement, Hinderliter, de Llamas & Associates (HdL) was retained as the
City’s sales tax consultant. The California Department of Tax and Fee Administration
(CDTFA) requires that at the inception of a contract for sales tax consulting services, a
public agency provide to the CDTFA a resolution authorizing the consultant to access the
sensitive private business information that is obtained by the CDTFA and needed by the
consultant to perform their services. Staff is seeking City Council approval of the
accompanying resolution which provides the required authorization.
DISCUSSION/ANALYSIS:
The City uses a sales tax consultant to analyze economic activity associated with local
businesses in order to understand how the various business sectors of the City are
performing and to provide projections of sales tax revenue. Because sales tax revenue is
the second largest funding source for General Fund operations, the resultant revenue
projections are important inputs into the City’s biennial budget process.
On June 30, 2020, the City’s contract with its sales tax consultant (HdL) expired. The City
solicited proposals from qualified firms to provide sales tax consulting services to the City.
As a result of this process, the City selected HdL to provide sales tax services for the next
five years.
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City Council Agenda Report
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State law requires that retailers provide private financial information to the CDTFA when
they file their quarterly sales tax returns with the CDTFA. It is this information that is
analyzed by the City’s sales tax consultant so that the City can be informed about how
different sectors of its revenue base are performing. Because of the sensitivity of the
private business data that must be accessed by the consultant, the CDTFA requires that
upon entering into a sales tax consulting contract, whether a new contract or a renewed
contract, the City Council approve a resolution that authorizes the consulting firm to
access this sensitive business data on behalf of the City.
FISCAL IMPACT:
There is no cost to the City to obtain information from the CDTFA or to authorize HdL to
act on the City’s behalf in accessing this information.
ENVIRONMENTAL IMPACT:
Not applicable.
PRIOR CITY COUNCIL REVIEW:
Not applicable.
COMMISSION/COMMITTEE/BOARD REVIEW AND RECOMMENDATIONS:
This item does not go through the Commission/Committee review process.
NOTIFICATION:
• Andy Nickerson, President, Hinderliter, de Llamas & Associates
ATTACHMENT:
Attachment 1 – Resolution Authorizing Access to Sales Tax Information
RESOLUTION NO. 20-09-01-XX
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN JUAN
CAPISTRANO AUTHORIZING EXAMINATION OF SALES, USE AND
TRANSACTIONS TAX RECORDS
WHEREAS, the City of San Juan Capistrano entered into a contract with the
California Department of Tax and Fee Administration (Department) to perform all functions
incident to the administration and collection of local sales, use and transactions taxes; and
WHEREAS, the City Council of the City of San Juan Capistrano deems it desirable
and necessary for authorized representatives of the City to examine the Department’s
confidential sales, use and transactions tax records pertaining to sales, use and transactions
taxes collected by the Department for the City pursuant to that contract; and
WHEREAS, Section 7056 of the California Revenue and Taxation Code sets forth
certain requirements and conditions for the disclosure of Department records, and
establishes criminal penalties for the unlawful disclosure of information contained in, or
derived from, the sales, use and transactions tax records of the Department.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
OF SAN JUAN CAPISTRANO AS FOLLOWS:
Section 1. That the City Manager, or other officer or employee of the City
designated in writing by the City Manager to the California Department of Tax and Fee
Administration, is hereby appointed to represent the City of San Juan Capistrano with
authority to examine sales, use and transactions tax records of the Department pertaining
to sales, use and transactions taxes collected for the City by the Department pursuant to the
contract between the City and the Department. The information obtained by examination of
Department records shall be used only for purposes related to the collection of City sales,
use and transactions taxes by the Department pursuant to that contract.
Section 2. That the City Manager, or other officer or employee of the City
designated in writing by the City Manager to the Department, is hereby appointed to
represent the City with authority to examine those sales, use and transactions tax records
of the Department, for purposes related to the following governmental functions of the City:
(a) City administration
(b) Revenue management and budgeting
(c) Community and economic development
(d) Business license tax administration
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The information obtained by examination of Department records shall be used only for those
governmental functions of the City listed above.
Section 3. That Hinderliter, de Llamas & Associates is hereby designated to
examine the sales, use and transactions tax records of the Department pertaining to sales,
use and transactions taxes collected for the City by the Department. The person or entity
designated by this section meets all of the following conditions:
(a) has an existing contract with the City to examine those sales, use and
transactions tax records;
(b) is required by that contract to disclose information contained in, or derived
from, those sales, use and transactions tax records only to the officer or employee
authorized under Sections 1 or 2 of this resolution to examine the information.
(c) is prohibited by that contract from performing consulting services for a retailer
during the term of that contract; and
(d) is prohibited by that contract from retaining the information contained in, or
derived from those sales, use and transactions tax records, after that contract has expired.
The information obtained by examination of Department records shall be used only for
purposes related to the collection of City sales, use and transactions taxes by the
Department pursuant to the contract between the City and the Department and for purposes
relating to the governmental functions of the City listed in section 2 of this resolution.
PASSED, APPROVED, AND ADOPTED this 1st day of September 2020.
TROY BOURNE, MAYOR
ATTEST:
MARIA MORRIS, CITY CLERK
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