TO:
Honorable Mayor and Members of the City Council
THROUGH:
Talyn Mirzakhanian, City Manager
FROM:
Libby Bretthauer, Finance Director
Emy-Rose Hanna, Budget & Financial Analyst
SUBJECT:Title
Consideration of a Resolution Approving the Renewal of a Five-Year Professional Services Agreement with Hinderliter, de Llamas & Associates to Provide Sales, Use and Transactions Tax for an Estimated Cost of $61,980, Plus Auxiliary Audit Recovery Services (Budgeted) (Finance Director Bretthauer).
ADOPT RESOLUTION NO. 25-0097
Body
_________________________________________________________
RECOMMENDATION:
Staff recommends that City Council adopt Resolution No. 25-0097 approving a Five-Year Professional Services Agreement with Hinderliter, de Llamas and Associates for sales, use and transactions tax services for an estimated cost of $61,980, plus auxiliary audit recovery services.
FISCAL IMPLICATIONS:
Funds are budgeted annually for this service. The cost of the five-year agreement consists of an annual base fee of $12,396, plus an annual Consumer Price Index (CPI) adjustment. In addition to the base fee, sales tax audit recovery fees are charged at 25% of the initial amount of new transactions or use tax revenue received by the City through the audit and recovery work conducted by HdL.
BACKGROUND:
The City’s second largest General Fund revenue source is Sales Tax. In fiscal year 2026, the City expects to receive base sales tax totaling $11.4 million and a new local transactions and use tax (Measure MMB) totaling $5.9 million. Analyzing, auditing and reporting on these revenues is an important function that assists the City in budgeting, forecasting and tracking trends for this key funding source. The firm of Hinderliter, de Llamas & Associates has provided these services to the City since 1996.
DISCUSSION:
Founded in 1983, Hinderliter, de Llamas & Associates is the leading industry firm that offers cities, counties and districts with expert sales tax and audit services that help increase efficiency, enhance revenue streams, and plan effective management of critical revenue sources. The scope of the agreement with Hinderliter, de Llamas & Associates covers the City’s base sales tax and the new local transactions and use tax (Measure MMB). A summary of their services is outlined below:
• Revenue Forecasting;
• Analysis and Management Support;
• Monthly/quarterly reports and system updates;
• Tax trends by major groups and geographic areas;
• Listings of the major sales tax contributors;
• Sales tax newsletters for distribution on the City website;
• Client data analysis website that includes a sales tax database available through a web-based software application;
• One and five-year budget projections for City General Fund;
• Sales tax audits to help identify and correct distribution and allocation errors; and
• Submission of sales tax errors and misallocations to the CDTFA to promote recovery of sales tax payments owed to the City.
Staff recommends the City Council renew a five-year professional services agreement with Hinderliter, De Llamas & Associates. This recommendation is based on the excellent service they have provided to the City over the last twenty-nine years and their unique and specialized services offered. Hinderliter, de Llamas & Associates is the premier service provider in sales tax analysis and reporting, and the data they provide is relied upon for forecasting and tracking the City’s second largest General Fund revenue source.
If approved, the agreement will be in effect through August 19, 2030. Professional services are exempt from the City’s bidding requirements.
PUBLIC OUTREACH:
After analysis, staff determined that public outreach was not required for this Agreement.
ENVIRONMENTAL REVIEW:
The City has reviewed the proposed activity for compliance with the California Environmental Quality Act (CEQA) and has determined that the activity is not a “Project” as defined under Section 15378 of the State CEQA Guidelines; therefore, pursuant to Section 15060(c)(3) of the State CEQA Guidelines the activity is not subject to CEQA. Thus, no environmental review is necessary.
LEGAL REVIEW:
The City Attorney has approved the agreement as to form.
ATTACHMENTS:
1. Resolution No. 25-0097
2. Agreement - Hinderliter, De Llamas & Associates