10-0701_MUNISERVICES, LLC._Personal Services Agreement■'. r- ' .� 1 �- 1.
THIS AGREEMENT is made, entered into, and shall become effective this 1st
day of July, 2010, 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 MuniServices, LLC, a Delaware limited liability 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 (PTX) and Sales and Use Tax Audit (SUTA)
and Sales/Use Tax Analysis & Reporting Service (STARS); 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 the Consultant shall consist of those tasks
as set forth in Exhibit 'A" attached and incorporated herein by reference. To the extent
that there are any conflicts. between the provisions described in Exhibit "A" and those
provisions contained within this Agreement, the provisions in this Agreement shall
control.
Section 2. Term.
This Agreement shall commence on the effective date and shall terminate, and
all services required hereunder shall he completed, no later than June 3Q, 2011;
provided that the contract may be extended by the City for a period of no more than
three (3) one year periods.
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. Comjgensation.
The compensation for the services to be performed by the Consultant shall not
exceed twenty-five thousand dollars ($25,000) for the full term and all allowable
extensions and shall be as summarized below and as set forth in Exhibit 'A," attached
and incorporated herein by reference. To the extent that there are any conflicts
between the provisions described in Exhibit "A" and those .provisions contained within
this Agreement, the provisions in this Agreement shall control.
713235.1
3.1 Amount.
Property y Tax Audit. Total compensation for property tax audit work
identified in he Scope of Work shall not exceed twenty-five percent (25%)
contingency
y fee with $3,000 minimum fee. The contingency fee applies to
reallocations for the fiscal year during which the Date of Correction falls and all
eligible prior period revenues corrected. The contingency fee also applies to
Corrected Allocations for three (3) subsequent Roll Years from the Date of
Correction. The minimum fee shall be invoiced immediately after the delivery of
the Audit report. The contingency fee shall not apply until such time as the
contingency fee, based on the revenue received by the City, equals the minimum
fee. and City shall only be responsible for that increment of the contingency fee in
excess of the minimum fee. MuniServices shall invoice City for the above
contingency fee at least annually, based on recoveries actually received by City.
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 rtmisallocated 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 Date 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.
Sales/Use Tax Analysis & Reporting Service. The STARS Digest and
Query System are provided to the City for an annual fixed fee of $of $4,464.36
per year, paid $1,141.09 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. The adjustments will be based on the CPI-WU from December of the
prior calendar year. Each Annual Fee adjustment shall not be less than two
percent (2%) or greater than ten percent (10%).
3.2 Method of Payment.
Consultant shall separate and support said reallocation and provide 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
713235.1
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 typically at the hourly rates set forth below. Included
within the compensation are 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.
Typical Hourly Rates: Principal $250.00 per hour
Client Services $200.00 per hour
IT Support $175.00 per hour
Operational Support
Director $175.00 per hour
Manager $150.00 per hour
Senior Analyst $125.00 per hour
Analyst $100.00 per hour
Administrative $ 75.00 per hour
3.4 Records of Expenses.
Consultant shall keep complete
expenses incidental to services covered by
made available at reasonable times to City.
Section 4. Independent Contractor.
and accurate records of all costs and
this Agreement. These records will be
It is agreed that Consultant shall act and be an independent Consultant and not
an agent or employee of the City, and shall obtain no rights to any benefits which
accrue to City's employees.
Section 5. Limitations U on Subcontracting and Aassi nment.
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 subcontractor as it is for persons
directly employed. Nothing contained in this Agreement shall create any contractual
relationships between any subcontractor 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.
713235.1
Section 6. Changes_ to Scope of Work,
For extra work not part of this Agreement, a written authorization from City is
required prior to Consultant undertaking any extra 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 addendum 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 and/or Construction Site.
By executing this Agreement, Consultant warrants that: (1) it has investigated
the work to be performed; (2) if applicable, it has investigated the work site(s), and is
aware of all conditions there, and (3) it understands the facilities, difficulties and
restrictions of the work to be performed 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 the 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; E-Verifv.
9.1. Compliance with Law.
Consultant shall comply with all applicable laws, ordinances, codes and
regulations of federal, state and local government.
9.2. E -Verify.
If Consultant is not already enrolled in the U.S. Department of Homeland
Security's E -Verify program, Consultant shall enroll in the E -Verify program within fifteen
days of the effective date of this Agreement to verify the employment authorization of
new employees assigned to perform work hereunder, Consultant shall verify
employment authorization within three days of hiring a new employee to perform work
under this Agreement. Information pertaining to the E -Verify program can be found at
http://www.uscis.go , or access the registration page at https:lle-verify.uscis.gov/enroll/.
Consultant shall certify its registration with E -Verify and provide its registration number
within sixteen days of the effective date of this Agreement. Failure to provide
certification will result in withholding payment until full compliance is demonstrated.
713235.1
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. Ownership of Documents.
All reports, information, data and exhibits prepared or assembled by Consultant
in connection with the performance of its services pursuant to this Agreement are
confidential to the extent permitted by law, and Consultant agrees that they shall not be
made available to any individual or organization without prior written consent of the City.
All such reports, information, data, and exhibits, prepared specifically for City, with the
exception of computer models previously developed by Consultant shall be the property
of the City and shall be delivered to the City upon demand without additional costs or
expense to the City. The City acknowle dges such documents are instruments of
Consultant's professional services.
Section 12. Indemnity.
To the fullest extent permitted by law, Consultant agrees to protect, defend, and
hold harmless the City and its elective or appointive boards, officers, agents, 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 damages of any nature,
including interference with use of property, arising out of, or in any way connected with
the negligence, recklessness and/or intentional wrongful conduct of Consultant,
Consultant's agents, officers, employees, subcontractors, or independent contractors
hired, by Consultant in the performance of the Agreement. The only exception to
Consultant's responsibility to protect, defend, and hold harmless the City, is due to the
negligence, recklessness and/or wrongful conduct of City, or any of its elective or
appointive boards, officers, agents, or employees.
This hold harmless agreement shall apply to all liability regardless of whether any
insurance policies are applicable. The policy limits do not act as a limitation upon the
amount of indemnification to be provided by Consultant.
Section 14. Insurance.
On or before beginning any of the services or work called for by any term of this
Agreement, Consultant, at its own cost and expense, shall carry, maintain for the
duration of the agreement, and provide proof thereof that is acceptable to the City, the
insurance specified below with. insurers and under forms of insurance satisfactory in all
respects to the City. Consultant shall not allow any subcontractor to commence work
on any subcontract until all insurance required of the Consultant has also been obtained
for the subcontractor. Insurance required herein shall be provided by Admitted Insurers
in good standing with the State of California and having a minimum Best's Guide Rating
of A- Class VII or better.
713235.1
14.1 Comprehensive General Liability.
Throughout the term of this Agreement, Consultant shall maintain in full force and
effect Comprehensive General Liability coverage in an amount not less than one million
dollars per occurrence ($1,000,000.00), combined single limit coverage for risks
associated with the work contemplated by this agreement. If a Commercial General
Liability Insurance form or other form with a general aggregate limit is used, either the
general aggregate limit shall apply separately to the work to be performed under this
agreement or the general aggregate limit shall be at least twice the required occurrence
limit.
14.2 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 an amount not less than one million dollars per occurrence
($1,000,000,00).
14.3 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.
14.4 Proof of Insurance Requirements/Endorsement.
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 naming City, its officers, employees, agents, and
volunteers as additional insureds as respects each of the following: Liability arising out
of activities performed by or on behalf of Consultant, including the insured's general
supervision of Consultant; products and completed operations of Consultant; premises
owned, occupied or used by Consultant; or automobiles owned, leased, hired, or
borrowed by Consultant. The coverage shall contain no special limitations on the scope
of protection afforded City, its officers, employees, agents, or volunteers.
14.5 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.
713235.1
14.6 Terms of Compensation.
Consultant shall not receive any compensation until all insurance
provisions have been satisfied.
14.7 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 Consultant has complied
with all insurance requirements of this Agreement.
Section 15. Termination.
Agency 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 by any party 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) day cure period.
Section 16. 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: Cindy Russell
To Consultant: MuniServices, LLC
7335 N. Palm Bluffs Ave
Fresno, CA 93711
Attn: Legal Department
Section 17. Attorne s' 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.
713235.1
Section 18. 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 19. 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.
SIGNATURE PAGE FOLLOWS
713235.1
IN WITNESS WHEREOF, the parties hereto have executed this Agreement.
APPROVED AS TO FORM:
Omar an val, MjAttorn*
APPROVED AS TO FORM:
Omar Sano a,Agency owns 4 .
7132351
CITY OF SAN JUAN CAPISTRANO:
J0 ?,"Tait, Pity'Manager
MUNISERVICES, LLC
J,
1 011 A/
Marc Herman, President
SAN JUAN CAPISTRANO
COMMUNITY REDEVELOPMENT
AGENCY
Z�11'q�a�
Ji Tait, xe'cutive Director
EXHIBIT A
Scope of Work and Compensation
Property Tax (PTX),
Sales and Use Tax Audit Services (SUTA) and
Sales/Use Tax Analysis & Reporting Service (STARS)
A. PROPERTY TAX (PTX)
Ob'ectives and Methods
The PTX service is designed to assist the City in recovering 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 of the 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 typically taken in conducting PTX:
• Contact City's designated staff to review service objectives, scope, workplan schedule,
public relations and logistical matters. MuniServices will also establish an appropriate
liaison with the City's coordinator and logical checkpoints for progress reviews.
• 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.
• Establish a comprehensive inventory of every parcel located within the City and the RDA
project(s), including the database ,elements needed to facilitate a comparison analysis with
County secured and unsecured taxable values.
• 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.
• 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").
• Meet with designated City official(s) as necessary to review our findings and
recommendations.
• Prepare and forward to the appropriate parties requests for corrective action and revenue
recovery for Misallocations. The date that the appropriate parties receive and acknowledge
these requests is the "Date of Knowledge".
• 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 Roil Correction ("ARC") will be
processed by the County correcting those Misallocations, typically triggering a reallocation. The Roll
Year in which the assessments first appear corrected is the Date of Correction. Corrected assessments
result in proper allocations in subsequent Roll Years ("Corrected Allocations").
San Juan Capistrano — ATX, SUTA, STARS 052810
Timing and Reporting
This is a one-time only audit. MuniServices shall commence the PTX within 10 working days of contract
execution (unless instructed otherwise by the City) with the objective of delivering the audit reports
within 90 to 120 working days. Thereafter, if applicable, MuniServices shall provide the City with audit
progress reports to include, but not be limited to, the following:
0 Actual revenue produced for the City by PTX on an annual and cumulative basis.
0 Projected revenue forthcoming to the City as a result of PTX, specified according to
source, timing and one-time payment versus ongoing.
0 Listing of all errors/omissions detected for the City including, for each, the account
number, correction status, payment amount received by the City, period to which
payment is related and payment type (e.g. reallocation, deficiency assessment, etc.).
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.
Compensation
City shall pay MuniServices a twenty-five percent (25%) contingency fee with $3,000 minimum fee. The
contingency fee applies to reallocations for the fiscal year during which the Date of Correction falls and
all eligible prior period revenues corrected. The contingency fee also applies to Corrected Allocations
for three (3) subsequent Roll Years from the Date of Correction. The minimum fee shall be invoiced
immediately after the delivery of the Audit report. The contingency fee shall not apply until such time as
the contingency fee, based on the revenue received by the City, equals the minimum fee and City shall
only be responsible for that increment of the contingency fee in excess of the minimum fee.
MuniServices shall invoice City for the above contingency fee at least annually, based on recoveries
actually received by City.
Additional Consulting
City may request that MuniServices provide additional consulting services at any time during the term of
the Agreement to which this Addendum is attached. If MuniServices and City agree on the scope of the
additional consulting services requested, then MuniServices shall provide the additional consulting on a
Time and Materials basis. Depending on the personnel assigned to perform the wont, MuniServices'
typical hourly rates range from $75 per hour to $250 per hour as follows:
Typical Hourly Rates: Principal
$250.00 per hour
Client Services
$200.00 per hour
IT Support
$175.00 per hour
Operational Support
Director
$175.00 per hour
Manager
$1.50.00 per hour
Senior Analyst
$125.00 per hour
Analyst
$100.00 per hour
Administrative
$ 75.00 per hour
These additional consulting services will be invoiced at least monthly based on actual time and expenses
incurred. All reimbursable expenses shall receive prior approval from the City and shall be reimbursed
at cost to MuniServices.
San Juan Capistrano — PTX, SUTA, STARS 062810
City Obligations
Because PTX service may result in correction of misallocations after termination of the Agreement, City's
obligation to pay and MuniServices' right to continue to receive payment, survive termination of this
Addendum or the Agreement for any reason.
B. SALES AND USE TAX AUDIT SERVICES (SUTA)
Objectives and Methods
MuniServices' 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 Local District Tax (also Known
as Transactions & Use Tax), Bradley -Burns sales tax and. local use tax activity within the statute of
limitations on recoverability.
In performing the sales and use tax audit program MuniServices shall:
• Identify and correct the sales/use tax reporting errors of businesses that, based on the nexus of
their activities, are not properly registered with the City.
• Identify and correct the reporting of businesses that are improperly reporting tax to state and
county pools (i.e. classifying sales tax as use tax) and thereby depriving the City of sales tax
revenue.
• Detect, document and correct sales/use tax reporting errors/omissions and thereby generate
new, previously unrealized revenue for the City.
• Ensure through comprehensive audit measures that the revenue information used for ongoing
economic analysis includes all sales/use tax generators.
• Assist the City with strategies to preserve and even enhance sales and use tax. revenue
generated by existing businesses within the City.
MuniServices' proposed sales/use tax allocation audit services for the City includes five distinct types of
audits:
o Taxable Nexus Field audits
o Permitization audits
o Deficiency assessment audits
o Accounts payable audits
o Quarterly Distribution Report audits
SUTA Detection and Documentation
MuniServices shall represent the City for purposes of examining SBE records pertaining to sales and use
tax to identify errors and omissions. MuniServices' procedures for detecting and documenting
misallocations are as follows:
• Review applicable provisions of the City's municipal code and ordinance adopted by the City to
determine applicability.
• Procure a computer tape of sales/use tax permit records from the SBE.
• Analyze sales tax distribution reports provided by the SBE for five or more of the most recent
consecutive quarters.
• Clean-up, standardize and computerize data from City's quarterly sales tax distribution reports
provided by SBE for previous quarters, current quarter and each future quarter service is
provided.
3
Son Juan Capistrano — PTX, SUTA, STARS 062810
• Prepare an aggregated list of business entities on electronic media; this fist is derived from
multiple private and public sources (hard copy and electronic), including specialized business
listings and directories, the City's sales and use tax payment files, and an electronic copy of the
City's Business License Tax registry, updated no less than twice per year.
• Clean, standardize and integrate, in address -order, each entity's business name, address and
payment file information, to eliminate redundancies, using MuniServices' proprietary software.
• Physically canvas commercial/industrial area within the City's borders.
• Develop a target list of potential point of sale/use reporting errors/omissions based on:
1) An electronic comparison of MuniServices' comprehensive inventory against the SBE's
quarterly distributions for the City, and
2) An analysis of each potentially misallocated account based on proprietary guidelines
established by MuniServices.
• Meet with designated City official(s) to review service objectives and scope, MuniServices
workplan schedule, public relations and logistical matters.
• Contact personnel in sales, operations and/or tax accounting at each target business to
determine whether a point-of-sale/use reporting error exists. (Note: this is accomplished with
the highest regard to discretion .and professional conduct. MuniServices' allocation audits are
predicated on a non -controversial, constructive public relations approach which emphasizes the
importance of each business to the City and the mutual benefits of correcting reporting errors.)
• Provide to the City. and SBE reports addressing each taxpayer reporting error individually,
including the business name, address, telephone number, California sales tax permit number,
individuals contacted, date(s) of contact, nature of business, reason(s) for error, recommended
corrective procedure and, if available, estimated sales/use tax revenue which should be
forthcoming to the City.
• MuniServices may also provide suggested language for letters to be sent to the taxpayers and/or
SBE from the City (or from MuniServices on behalf of the City) urging cooperation in promptly
correcting the distribution error.
• Respond to negative findings by SBE with timely reconfirmation documentation in order to
preserve the City's original dates of knowledge.
• Receive and process registration control record information monthly.
• Receive and process sales tax distribution reports quarterly. .
• Coordinate with the taxpayer and SBE to make the necessary corrections and collect eligible
back 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.
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. Prepare the necessary documentation to facilitate recovery, including assistance in
preparing and filing the returns.
TA Detection Timing.,Considerations
For each misallocated account detected, MuniServices will coordinate with the business and SBE to
make the necessary corrections plus retroactive adjustments for eligible amounts of sales/use tax
4
San Juan Capistrano — PTX, SUTA, STARS 062810
improperly distributed in prior quarters. MuniServices coordinates and communicates between typically
four parties; sales/operations personnel at the taxpayer's local operation, tax personnel at the
company's corporate headquarters, and SBE personnel and the in-state/out-of-state district offices.
Correction of the account is considered to have been made once the payments on identified taxpayer
accounts are being properly allocated by the taxpayer to the City in the period in which the payment
was made.
As needed, MuniServices will represent the City before state officials, boards, commissions and
committees for the purpose of correcting sales tax distribution errors that have deprived the City of
revenue to which it is entitled.
Timing
MuniServices 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
MuniServices as the authorized City Consultant to examine sales and use tax records.
Confidentiality Provisions
MuniServices is authorized by this Agreement to examine district tax, sales tax and use tax records of
the SBE provided to City pursuant to contract under the Bradley -Burns Uniform Sales and Use Tax Law
and California Revenue & Taxation Code applicable to transactions and use taxes.
MuniServices is required to disclose information contained in, or derived from, those sales and use tax
records only to an officer or employee of the City who is authorized by resolution to examine the
information.
MuniServices is prohibited from performing consulting services for a retailer during the term of this
Agreement.
MuniServices is prohibited from retaining the information contained in, or derived from, those sales and
use tax records, after this Agreement has expired.
This Agreement, and MuniServices' 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.
SUTA COMPENSATION.
MuniServices' compensation for the Sales and Use Tax Audit Service is a 25% contingency fee. This fee
applies to revenue received for six quarters beginning with the quarter in which the Date of Correction
falls and all eligible prior quarters back to and including the three quarters prior to the Date of
Knowledge quarter for Bradley -Burns sales tax revenues and all eligible prior quarters back to and
including all corrected quarters prior to the Date of Knowledge quarter for district tax revenues. As used
herein, the mate of Knowledge is the quarter during which MuniServices notifies the SBE of the existence
of a misallocation. As used herein, the Date of Correction refers to the quarter in which the taxpayer has
correctly reported the local tax and the SBE distributes the local tax properly to City based on the
taxpayer's reporting. For QDR Misallocations detected and corrected, MuniServices' compensation shall
only include the quarters for which the misallocation actually occurred.
Additional Consulting
City may request that MuniServices provide additional consulting services at any time during the term of
this Agreement, If MuniServices and City agree on the scope of the additional consulting services
requested, then MuniServices shall provide the additional consulting on a Time and Materials basis,
S
San Juan Capistrano — PTX, SUTA, STARS 062910
Depending on the personnel assigned to perform the work, MuniServices' typical hourly rates range
from $75 per hour to $250 per hour as follows:
Typical Hourly Rates: Principal
$250.00 per hour
Client Services
$200.00 per hour
IT Support
$175.00 per hour
Operational Support
Director
$175.00 per hour
Manager
$150.00 per hour
Senior Analyst
$125.00 per hour
Analyst
$100.00 per hour
Administrative
$ 75.00 per hour
These additional consulting services will be invoiced at least monthly based on actual time and expenses
incurred. All reimbursable expenses shall receive prior approval from the City and shall be reimbursed at
cost to MuniServices.
CITY OBLIGATIONS
Sales and Use Tax Audit Services (SUTA)
MuniServices' services performed hereunder may result in corrections of misallocations after cessation
of services by MuniServices for City. Therefore, City agrees that with regards to misallocations identified
to the SBE whose Date of Knowledge occurred during MuniServices' performance of services for City,
that City's obligation to pay MuniServices in accordance with the above compensation language shall
survive expiration or termination of this Agreement for any reason.
In the event that City identifies, documents, and notifies the SBE of a reporting error or misallocation as
those terms are used herein, City agrees to notify MuniServices of City's discovery no later than ten (10)
days after the Date of Knowledge. If City fails to so notify MuniServices and MuniServices later detects,
documents, and reports the misallocation or reporting error to the SBE, or if MuniServices has
established a Date of Knowledge with the SBE prior to notification to the Board by City, then
MuniServices is entitled to compensation for the affected account in accordance with this Addendum.
COMPLETION OF SERVICES
Notwithstanding any other provision of this Agreement, because Consultant's services performed
hereunder result in corrections of misallocations and other revenue after cessation of services by
Consultant for City, City agrees that with regards to misallocations identified to the SBE whose Date of
Knowledge occurred during Consultant's performance of services for City or for other revenue resulting
from Consultant's actions taken during the term of this Agreement, that City's .obligation to pay .
Consultant in accordance with the compensation language of this Agreement shall survive expiration or
termination of this Agreement for any reason. Additionally, notwithstanding any other provision of this
Agreement, if this Agreement is terminated or expires, Consultant shall continue to pursue corrections
of accounts identified during the term of this Agreement that have not been corrected by the SBE as of
the effective date of termination or expiration. The period after termination during which Consultant is
pursuing correction of accounts identified before termination is referred to as the "completion period."
City shall compensate Consultant in accordance with the compensation language of this Agreement for
corrected misallocations that result from Consultant's efforts during the completion period. City will also
take all necessary steps to allow Consultant to continue to receive the required information from the
SBE during this completion period.
6
San Juan Capistrano — PTX, SUTA, STARS 062810
C. SALES/USE TAX ANALYSIS & REPORTING SERVICE (STARS)
Objectives and Methods
MuniServices' STARS Digest provides 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. The
STARS Digest also includes the Quarterly Management Summary and specialized reports that analyze
the City's sales tax economic base and performance for the latest complete quarter and benchmark
year.
Timing; & Reports
MuniServices shall:
• Provide the City with quarterly updated STARS Digests.
• install the STARS Query System on a City designated PC
o update quarterly the City's sales tax registration and allocation data from the State
Board of Equalization (SBE) from MuniServices' proprietary STARS Query System on IBM
compatible PCs with Microsoft Access export capacity. (note: STARS is encrypted)
• Train authorized City staff in the use of the STARS Query System.
Quarterly STARS Digest
MuniServices will provide the City with quarterly updated bound STARS Digests including accounts from
which the City receives sales tax revenue. The primary reports included in the STARS Digest are:
• Allocation Summary - Reconciles SBE advances, cleanup payments and pool allocations with
budget projections to assist the City with revenue forecasting and receipt monitoring,
• Cash Analysis - Quarterly aberrations due to SBE audits, fund transfers, and other causes are
also identified and analyzed for budget planning and revenue forecasting purposes.
• Top 100 Five -Year - Historical performance of the top 100 accounts comparing current
benchmark year ranking and sales tax produced with that of prior years.
• 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 category and
segment is also shown to indicate trends in sales tax composition and performance.
• Geo -Area Reports - Tracks sales tax performance within designated areas of the City (e.g., key
shopping centers, business parks, and downtown /business districts,). Charts and printed
reports are included for each geo-area.
• Cross -Reference Reports - Allow the user to look up any account shown in the STARS Digest by
name, address or account number.
San Juan Capistrano — PTX, SUTA, STARS 062810
STARS Query System
MuniServices will install the STARS Query System (a software program) on a
City designated, IBM-compatible PC. Each quarter, MuniServices 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.
License Agreement
The STARS Query System is licensed software provided by MuniServices. The terms and conditions of
the STARS Query System License Agreement are provided to City upon installation. By installing and
using the STARS Query System, City agrees to be bound by the terms of the License Agreement.
SALES USE TAX ANALYSIS & REPORTING SERVICE STARS COMPENSATION
The STARS Digest and Query System are available for an annual fixed fee of $4,464.36 per year, paid
$1,141.,(}9 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. The adjustments will be based on the CPI-WU from December of the prior calendar
year. Each Annual Fee adjustment shall not be less than two percent (2%) or greater than ten percent
(10%).
8
Son Juan Capistrano — PTX, SUTA, STARS 062810
32400 PASF—q ADIELANTO
SAN JUAN CAF 'STAND, CA 92675
(949) 493.5171
(949) 493-1053 FAx
www.saqluancapistrano.org
TRANSMITTAL
TO:
MuniServices, LLC
Attn: Legal Department
7335 N. Palm Bluffs Ave
Fresno, CA 93711
DATE: ,July 19, 2010
MEMBERS OF THE CITY COUNCIL
— SAM AF.L EVATO
�F� a�apar4o LAURA FREESE
FSFABLISk4B f��6 THOMAS W.HRIBAR
MARK NIELSEN
DR. LONDRES USO
FROM: Christy .Jakl, Deputy City Clerk (949) 443-6310
RE: Personal Services Agreement — Property Tax Revenue and Sale and Use Tax Audit and
Sales/Use Tax Analysis & Reporting Service
Thank you for maintaining documentation confirming compliance with the terms of the
agreement related to insurance. Keep in mind this documentation must remain current with
our office during the term of this agreement.
Please be aware, our office needs to receive an E -verify certificate as outlined in your contract
under Section 9. If you have questions related to insurance and E -verify requirements, please
call me at (949) 443-6310.
If you have questions concerning the agreement, please contact at Cindy Russell, Chief
Financial Officer at (949) 443-6301.
An original agreement is enclosed for your records.
Cc: Cindy Russell, Chief Financial Officer
San .duan Capistrano: Preserving the fast to Enhance the Future,
Printed On 100% recycled paper