05-1001_MBIA MUNISERVICES COMPANY_Personal Services Agreement0
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PERSONAL SERVICES AGREEMENT
THIS AGREEMENT is made and entered into this 1st day of November, 2005, by
and between the City of San Juan Capistrano and the San Juan Capistrano Community
Redevelopment Agency (hereinafter collectively referred to as the "City") and MBIA
MuniServices Company (hereinafter referred to as "Consultant").
RECITALS:
WHEREAS, City desires to retain the services of Consultant regarding the City's
proposal to conduct Property Tax Revenue and Sales and Use Tax Audit; and,
WHEREAS, Consultant is qualified by virtue of experience, training, education and
expertise to accomplish such services.
NOW, THEREFORE, City and Consultant mutually agree as follows:
Section 1. Scope of Work.
The scope of work to be performed by Consultant shall consist of those tasks as set
forth in Exhibit "A," attached and incorporated herein by reference.
Consultant warrants that all of its services shall be performed in a competent,
professional and satisfactory manner and in accordance with the prevalent standards of its
profession.
Section 2. Term.
This Agreement shall commence on the effective date of this Agreement and shall
continue in full force and effect until June 30, 2007.
Due to the type of services rendered by Consultant and their compensation
schedule as outlined in Section 3 below, City shall remain obligated after termination to
provide Consultant such information as is necessary for Consultant to calculate its
compensation due as a result of receipt of revenue by City and City shall remain obligated
to pay Consultant's invoices in accordance with the terms of this Agreement.
Section 3. Compensation.
3.1 Amount.
Property Tax Audit. Total compensation for property tax audit work identified
in the Scope of Work shall not exceed twenty-five (25%) percent of the misallocated
revenues identified in the secured and unsecured audits. This fee applies to
reallocations for the fiscal year during which the Date of Correction falls and any
eligible prior period revenues corrected. The fee also applies to Corrected
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SD
Allocations for three (3) subsequent Roll years from the Date of Correction.
Sales and Use Tax Audit. Total compensation for the Sales and Use tax
audit work identified in the Scope of Work shall not exceed twenty-five (25%)
percent of misallocated revenue. This fee applies to six (6) quarters after the Date
of Correction and any eligible prior quarters back to and including the three (3)
quarters prior to the ate of Knowledge quarter. As used herein, the Date of
Knowledge is the quarter during which Consultant notifies the State Board of
Equalization 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 SBE distributes the local tax properly to City based on the taxpayer's
reporting, together with any prior period reallocations.
3.2 Method of Payment
Consultant shall separate and support said reallocation and provides City with
an itemized invoice showing all amounts due as a result of revenue recovery or
reallocation. City shall pay audit fees after Consultant's submittal of evidence that
corrections have been made by the appropriate Agency. Payment to Consultant shall be
made after City receives its first remittance advice during the fiscal year for which the
correction applies.
For extra work not part of this Agreement, a written authorization from City is
required prior to Consultant undertaking any extra work. Extra work will be billed according
to the Rate Schedule in Section 3.3.
3.3 Rate Schedule.
The services identified in the Scope of Work as Corollary Consulting Services
shall be billed to the City at the hourly rate set forth below. Included within the
compensation are all the Consultant's ordinary office and overhead expenses incurred by
it, its agents and employees, including meetings with City representatives and incidental
costs to perform the stipulated services.
Hourly Rates:
Principal
Director
Manager
Senior Analyst
Analyst
Administrative
3.4 Records of Expenses.
$175.00 per hour
$150.00 per hour
$125.00 per hour
$100.00 per hour
$ 75.00 per hour
$ 50,00 per hour
Consultant shall keep complete and accurate records of all costs and
expenses incidental to services covered by this Agreement. These records will be made
available at reasonable times to City.
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Section 4. Independent Consultant.
It is agreed that Consultant shall act and be an independent Consultant and not an
agent or employee of City, and shall obtain no rights to any benefits which accrue to City's
employees.
Section 5. Limitations upon Subcontracting and Assignment.
The experience, knowledge, capability and reputation of Consultant, its principals
and employees were a substantial inducement for City to enter into this Agreement.
Consultant shall not contract with any other entity to perform the services required without
written approval of the City. This Agreement may not be assigned, voluntarily or by
operation of law, without the prior written approval of the City. If Consultant is permitted to
subcontract any part of this Agreement by City, Consultant shall be responsible to City for
the acts and omissions of its sub Consultant as it is for persons directly employed. Nothing
contained in this Agreement shall create any contractual relationships between any sub
Consultant and City. All persons engaged in the work will be considered employees of
Consultant. City will deal directly with and will make all payments to Consultant.
Section 6. Changes to Scope of Work
In the event of a change in the Scope of Work provided for in the contract
documents as requested by the City, the Parties hereto shall execute an Scope of Services
to this Agreement setting forth with particularity all terms of the new agreement, including
but not limited to any additional Consultant's fees.
Section 7. Familiarity with Work.
By executing this Agreement, Consultant warrants that: (1) it has investigated the
work to be performed; and, (2) it is familiar with the City; and, (3) it understands the
facilities, difficulties and restrictions of the work under this Agreement. Should Consultant
discover any latent or unknown conditions materially differing from those inherent in the
work or as represented by City, it shall immediately inform City of this and shall not
proceed with further work under this Agreement until written instructions are received from
the City.
Section 8. Time of Essence.
Time is of the essence in the performance of this Agreement.
Section 9. Compliance with Law.
Consultant shall comply with all applicable laws, ordinances, codes and regulations
of federal, state and local government.
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Section 10. Conflicts of Interest.
Consultant covenants that it presently has no interest and shall not acquire any
interest, direct or indirect, which would conflict in any manner or degree with the
performance of the services contemplated by this Agreement. No person having such
interest shall be employed by or associated with Consultant.
Section 11. Indemnity.
Consultant agrees to protect, defend and hold harmless City, its elected and
appointed officials and employees from any and all claims, liabilities, expenses or damages
of any nature, including attorneys' fees, for injury or death of any person or damage to
property or interference with use of property and for errors and omissions committed by
Consultant arising out of or in connection with the work, operation or activities of
Consultant, its agents, employees and sub Consultants in carrying out its obligations under
this Agreement.
Section 12. Insurance.
Insurance required herein shall be provided by Admitted Insurers in good standing
with the State of California.
12.1 Comprehensive General Liability.
Throughout the term of this Agreement, Consultant shall maintain in full force
and effect Comprehensive General Liability coverage in the following minimum amounts:
$1,000,000 property damage;
$1,000,000 injury to one person/any one occurrence/not limited to
contractual period;
$2,000,000 injury to more than one person/any one occurrence/not limited to
contractual period,
12.2 Comprehensive Automobile Liability.
Throughout the term of this Agreement, Consultant shall maintain in full force
and effect Comprehensive Automobile Liability coverage, including owned, hired and non -
owned vehicles in the following minimum amounts:
$1,000,000 property damage;
$1,000,000 injury to one person/any one occurrence/not limited to
contractual period;
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$2,000,000 injury to more than one person/any one occurrence/not limited to
contractual period
12.3 Worker's Compensation.
If Consultant intends to employ employees to perform services under this
Agreement, Consultant shall obtain and maintain, during the term of this Agreement,
Worker's Compensation Employer's Liability Insurance in the statutory amount as required
by state law.
12.4 Proof of Insurance Requirements.
Prior to beginning any work under this Agreement, Consultant shall submit
the insurance certificates, including the deductible or self -retention amount, and an
additional insured endorsement to the Consultant=s general liability and umbrella liability
policies using ISO form CG 20 10 11 85 (in no event with an edition date later than 1990)
to the City's General Counsel for certification that the insurance requirements of this
Agreement have been satisfied.
12.5 Notice of Cancellation/Termination of Insurance.
The above policy/policies shall not terminate, nor shall they be cancelled, nor
the coverages reduced, until after thirty (30) days' written notice is given to City, except that
ten (10) days' notice shall be given if there is a cancellation due to failure to pay a
premium.
12.6 Terms of Compensation.
Consultant shall not receive any compensation until all insurance provisions
have been satisfied.
12.7 Notice to Proceed.
Consultant shall not proceed with any work under this Agreement until the
City has issued a written "Notice to Proceed", verifying that the Consultant has complied
with all insurance requirements of this Agreement.
Section 13. Termination.
City and Consultant shall have the right to terminate this Agreement without cause
by giving thirty (30) days' advance written notice of termination to the other party
In addition, this Agreement may be terminated for cause by providing ten (10) days'
notice to the other party of a material breach of contract. If the other party does not cure
the breach of contract, then the agreement may be terminated subsequent to the ten (10)
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day cure period.
Section 14. Notice.
All notices shall be personally delivered or mailed to the below listed addresses, or
to such other addresses as may be designated by written notice. These addresses shall
be used for delivery of service of process:
To City: City of San Juan Capistrano
32400 Paseo Adelanto
San Juan Capistrano, CA 92675
Attn: Douglas D. Dumhart
To Consultant: MBIA MuniServices Co.
7335 N. Palm Bluffs Ave
Fresno, CA 93711
Attn: Corporate Counsel
Section 15. Attorneys' Fees.
If any action at law or in equity is necessary to enforce or interpret the terms of this
Agreement, the prevailing party shall be entitled to reasonable attorneys' fees, costs and
necessary disbursements in addition to any other relief to which he may be entitled.
Section 16. Dispute Resolution.
In the event of a dispute arising between the parties regarding performance or
interpretation of this Agreement, the dispute shall be resolved by binding arbitration under
the auspices of the Judicial Arbitration and Mediation Service ("JAMS").
Section 17. Entire Agreement,
This Agreement constitutes the entire understanding and agreement between the
parties and supersedes all previous negotiations between them pertaining to the subject
matter thereof.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement.
ATTEST:
R. Monahan, City Clerk
AS TO FORM:
I
John R. Shaw, Chy Attorney
ATTEST:
4) 21�
R. Monahan, Agency Secretary
APPROVED AS TO FORM:
John R. aw, Agency Counsel
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CITY OF SAN JUAN CAPISTRANO:
ve gns;Lty�banager
MBIA MUNISERVICES COMPANY/MMC:
Mark Herman, President
SAN JUAN CAPISTRANO
COMMUNITY REDEVELOPMENT
AGENCY
&......�-t- C A/L,
ave A ans, Executive Director
APPROVED AS TO FORM:
44eWAe�, Corporate C sel
Eric Myvs
EXHIBIT A
SCOPE OF SERVICES
PROPERTY TAX
MBIA MuniServices Company (MMC) shall provide to the City of San Juan Capistrano/
San Juan Capistrano RDA (CITY), MMC's Property Tax Compliance Services which
consists of Discovery, Audit and Recovery Services.
OBJECTIVES AND METHODS
MMC's property tax audit assists CITY in recovering all of the revenue to which it is entitled
from its Property Tax and RDA Tax Increment. 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 MMC's Property Tax Audit:
o Contact CITY's designated staff to review service objectives, scope, work
plan schedule, public relations and logistical matters. MMC will also
establish an appropriate liaison with the CITY's coordinator and logical
checkpoints for progress reviews.
o Represent the CITY for purposes of examining records pertaining to property
tax and RDA tax increment 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 "Misallocations").
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 Misallocations. The date appropriate parties
receive and acknowledge these requests are 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
Misallocations, and for those Misallocations for which a correction is required, an
Assessor's Roll Correction (ARC) will be processed by the County correcting those
Misallocations, typically triggering a reallocation. The Roll Year in which the assessments
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first appear corrected is the Date of Correction. Corrected assessments result in proper
allocations in subsequent Roll Years ("Corrected Allocations").
Specifically, MMC shall:
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.
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
MMC shall commence the revenue enhancement audits and annual report services within
10 working days of authorization (unless instructed otherwise by the CITY) with the
objective of delivering the initial audit reports within 90 to 120 working days. Thereafter,
MMC shall provide the CITY with audit progress reports to include, but not be limited to, the
following:
o Actual revenue produced for the CITY by MMC's service on an annual and
cumulative basis.
o Projected revenue forthcoming to the CITY as a result of MMC's audit
service, specified according to source, timing and one-time payment versus
ongoing.
o 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.).
o 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.
COROLLARY CONSULTING
Upon mutual agreement between MMC and the CITY as to the scope of services to be
provided, MMC shall provide to CITY such additional consulting services as CITY may
request. Consulting services otherwise included in this Scope of Services will not be
subject to MMC's fees for Corollary Consulting as set forth below.
CITY OBLIGATIONS
MMC shall invoice CITY for the above fee on no less frequently than a quarterly basis,
based on recoveries actually received by CITY. Because MMC's Service may result in
collection of deficiencies after termination of the Agreement, CITY's obligation to collect
fees and notify MMC, and MMC's right to continue to receive payment, shall survive
termination of this Scope of Services or the Agreement for any reason.
SALES AND USE TAX AUDIT (SUTA)
OBJECTIVES AND METHODS
MMC'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 misallocations of sales
and use tax activity within the statute of limitations on recoverability.
In performing the sales and use tax audit program MMC 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.
MMC'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
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TAXABLE NEXUS FIELD AUDITS
MMC'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 misallocations will remain undetected. MMC'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 or use 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/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. MMC'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 State Board of Equalization 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 State pool,
county pools, or other jurisdictions. Accordingly, MMC has developed proprietary criteria
and techniques to detect and correct SBE deficiency assessment misallocations and thus
expand the benefits produced by MMC'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.
MMC'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. In this regard, MMC will prepare the documentation to facilitate the election, including
assistance in preparing and filing the tax returns.
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QUARTERLY DISTRIBUTION REPORT AUDITS
Every three months, the City and MMC receive a Quarterly Distribution Report (QDR) from
the SBE with the local allocation amount reflected by permit number.
MMC's QDR audits detect and correct taxpayer reporting errors and thereby generate new,
previously unrealized sales/use tax revenue for the City. MMC's QDR audits focus on
those accounts where MMC 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 revenue for three quarters prior to
the SBE being notified of the reporting error. Therefore QDR audits must be conducted
in a timely manner in order to preserve the opportunity for the City to recover
misallocated revenue. MMC shall conduct the QDR audit each and every quarter to
minimize the potential of lost revenue to the City.
SUTA DETECTION AND DOCUMENTATION
MMC shall represent the City for purposes of examining SBE records pertaining to sales
and use tax to identify errors and omissions. MMC's procedures for detecting and
documenting misallocations 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 State Board of
Equalization (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, and the City's revenue
payment files.
❑ Clean, standardize and integrate, in address -order, each entity's business name,
address and payment file information, to eliminate redundancies, using MMC's
proprietary software.
❑ Physically canvas commercial/industrial area within the City's borders.
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❑ Develop a target list of potential point of sale/use reporting errors/omissions
based on:
1)An electronic comparison of MMC'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 MMC.
❑ Meet with designated City official(s) to review service objectives and scope,
MMC work plan schedule, public relations and logistical matters.
❑ 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. MMC'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.)
❑ 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.
❑ MMC may also provide suggested language for letters to be sent to the
taxpayers and/or SBE from the City (or from MMC 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 State Board of Equalization to make the
necessary corrections and collect eligible back quarter's 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.
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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. MMC will prepare the necessary documentation
to facilitate recovery, including assistance in preparing and filing the returns.
COROLLARY CONSULTING
Upon mutual agreement between MMC and the CITY as to the scope of services to be
provided, MMC shall provide to CITY such additional consulting services as CITY may
request. Consulting services otherwise included in this Scope of Services will not be
subject to MMC's fees for Corollary Consulting as set forth below.
SUTA DETECTION TIMING CONSIDERATIONS
For each misallocated account detected, MMC 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. MMC 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 State Board of Equalization
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, MMC 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
MMC shall commence auditing the sales/use tax and preparing the sales tax Query System
within 10 working days of receipt of a fully executed contract and Confidentiality Resolution
designating MMC as the authorized City Consultant to examine sales and use tax records.
CONFIDENTIALITY PROVISIONS
MMC is authorized by this Agreement to examine sales and use tax records of the
State Board of Equalization provided to City pursuant to contract under the Bradley -
Burns Uniform Sales and Use Tax Law.
MMC 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.
MMC is prohibited from performing consulting services for a retailer during the term of
this Agreement.
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MMC 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 MMC's 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.
CITY RESPONSIBILITIES
MMC's services performed hereunder may result in corrections of misallocations after
cessation of services by MMC for City. Therefore, City agrees that with regards to
misallocations identified to the State Board of Equalization whose Date of Knowledge
occurred during MMC's performance of services for City, that City's obligation to pay
MMC 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 State Board of Equalization
of a reporting error or misallocation as those terms are used herein, City agrees to
notify MMC of City's discovery no later than ten (10) days after the Date of Knowledge.
If City fails to so notify MMC and MMC later detects, documents, and reports the
misallocation or reporting error to the State Board of Equalization, or if MMC has
established a Date of Knowledge with the State Board of Equalization prior to
notification to the Board by City, then MMC shall be entitled to compensation for the
affected account in accordance with this Scope of Services.
SALES/USE TAX ANALYSIS & REPORTING SERVICE (STARS)
OBJECTIVES AND METHODS
MMC's STARS Digest provides a summary that features a general analysis regarding
statewide trends that may affect the City's sales tax plus a specific analysis of the City's
sales tax composition, changes and performance. Report graphically illustrates the data
and analysis presented in the Summary. Each MMC STARS Digest includes the Quarterly
Management Summary. The MMC 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
MMC 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 MMC's proprietary STARS
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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
MMC 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.
❑ 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.
❑ 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.
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❑ Cross -Reference Reports - These reports allow the user to look up any
account shown in the STARS Digest by name, address or account
number.
STARS QUERY SYSTEM
MMC shall install the STARS Query System (a software program) on a
City designated, IBM-compatible PC. Each quarter, MMC 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.
COST PROPOSAL
The STARS Digest and Query System are available for an annual fixed fee of $4,000 per
year, paid $1,000 quarterly. The Annual Fee shall be 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, with the first adjustment to occur at the
beginning of the Calendar year following the first full calendar year of service. The current
available CPI-WU is 193.0 based on August 2004 index. The adjustments thereafter will
be based on the CPI-WU from the last month of the prior calendar year. Each Annual Fee
adjustment shall not be less than two percent (2%) or greater than ten percent (10%).
LICENSE AGREEMENT
The STARS Query System is licensed software provided by MMC. 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.
-17-
End-user notice and license agreement from MBIA MuniServices Company
Notice to end-user: Carefully read the following legal agreement ("license"). Installation or use
of the enclosed STARS Query System software and associated Data (together "Software') on a
computer system constitutes your acceptance of these terms. If you do not agree to the terms of
this license, discontinue this installation and promptly delete the Software from the computer
system, destroy any copies you made of the Software or any installation diskettes of the
Software, and dispose of all written materials in your possession regarding the Software. This
License is effective until terminated. You may terminate it at any time by destroying the
Software and all copies of it. It will also terminate if you fail to comply with any term or
condition of this License. You agree upon termination to destroy the Software together with all
copies of the Software.
License Grant: MBIA MuniServices Company grants to You a license to install and use one
copy of the Software on a single computer. Your license to use the Software is conditioned upon
Your compliance with the terms of this Agreement. A License is required for each installation of
the Software. You may make one (1) copy of the Software for archival purposes only.
Copyright: The Software is protected by copyright laws and international treaty provisions. You
acknowledge that no title to the intellectual property in the Software is transferred to You. You
further acknowledge that title and full ownership rights to the Software will remain the exclusive
property of MBIA MuniServices Company, and You do not acquire any rights to the Software
except as expressly set forth in this license. The Software in source code form remains a
confidential trade secret of MBIA MuniServices Company and decompiling, disassembling, or
otherwise reverse engineering the Software in any way is prohibited as a violation of those
copyrights.
Prohibited Uses: You may not (a) use, copy, modify, alter, or transfer the Software or
documentation except as expressly provided in this License; (b) translate, disassemble,
decompile, reverse program or otherwise reverse engineer the Software; (c) sublicense or lease
the Software or its documentation; or (d) use a single installation of the Software in a multi-user
or multiple computer environment or in a rental, time sharing or computer service business.
Without prejudice to any other rights, MBIA MuniServices Company may terminate this License
if You fail to comply with its terms and conditions. In such event, You must destroy all copies
of the Software.
Limited Warranty: MBIA MuniServices Company warrants that the Software will perform
substantially in accordance with the accompanying written materials for a period of thirty (30)
days from the date of purchase.
End -User Remedies: If the Software does not conform to the "Limited Warranty" section above,
MBIA MuniServices Company's entire liability and Your sole and exclusive remedy shall be, at
MBIA MuniServices Company's option, either to (a) correct the error, or (b) help you work
around the error. The Limited Warranty is void if failure of the Software has resulted from
accident, abuse, or misapplication. Any replacement software will be warranted for the
remainder of the original Limited Warranty period.
9 0
No other warranties: MBIA MuniServices Company does not warrant that the software is error
free, except for the express limited warranty in the "limited warranty" section. MBIA
MUNISERVICES COMPANY DISCLAIMS ALL OTHER WARRANTIES WITH RESPECT
TO THE SOFTWARE, EITHER EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED
TO IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE AND NON -INFRINGEMENT OF THIRD PARTY RIGHTS. Some jurisdictions do
not allow the exclusion of implied warranties or limitations of how long an implied warranty
may last, or the exclusion of limitation of incidental damages, so the above limitations or
exclusions may not apply to you. This warranty gives you specific legal rights and you may also
have other rights which vary from jurisdiction to jurisdiction.
No Liability for Consequential Damages: in no event shall MBIA MuniServices Company, or its
licensors, suppliers or licensees be liable to you for any consequential, special, incidental, or
indirect damages of any kind arising out of the performance or use of the software, even if MBIA
MuniServices Company has been advised of the possibility of such damages.
Governing Law: This Agreement is governed by the laws of the State of California, U.S.A.
without regard to its conflict of laws principals.
U.S. Government Restricted Rights: Use, duplication or disclosure of the Software by any
agency, department or other entity of the U.S. Government is restricted in accordance with FAR
12.212 for civilian agencies and DFARS 227.7202 for military agencies. The Software is a
commercial product. Use of the Software by the U.S. Government is further restricted by the
terms of this License.
Acknowledgement: Your installation or use of this product for any period of time constitutes
your acceptance of this agreement and License and binds You to its terms, contents and
conditions.
i
32400 PASEO ADELANTO
SAN JUAN CAPISTRANO, CA 92675
(949) 493-1171
(949) 493-1053 FAX
WWW.sall nancaptstrano. org
September 19, 2005
MBIA Muniservices, Co.
7335 N. Palm Bluffs Ave.
Fresno, CA 93711
Attention: Corporate Counsel
Dear Sir or Madam::
IO IO HPOARIID
EST Iusam 1961
1776
MEMBERS OF THE CITY COUNCIL
SAM ALLEVATO
DIANE BATHGATE
MATT HART
JOE SOTO
DAVID M. SWERDLIN
A fully executed, original Personal Services Agreement related to conducting a property
tax revenue and sales and use tax audit is enclosed for your records.
Thank you for maintaining documentation confirming current compliance with the terms
of insurance under your agreement with the city. Please keep in mind that should this
documentation lapse, all work under this agreement must stop and all payments will be
withheld until we receive proper evidence of insurance.
You may proceed with work under this agreement in coordination with the project
manager, Douglas Dumhart, Economic Development Manager (949) 443-6316.
you,
Clerk
CMC
Dumhart, Economic Development Manager
San Juan Capistrano: Preserving the Past to Enhance the Future