TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: Javier Carcamo, Finance Director
PREPARED BY: Cynthia Rockwell, Purchasing & Contracts Coordinator
SUBJECT:
title
Approval of an Agreement with Hinderliter, de Llamas and Associates (HdL) for Sales Tax Recovery Services
end
RECOMMENDATION
recommendation
Approve a two-year Agreement with Hinderliter, de Llamas (HdL) for Sales Tax Recovery Services, retroactively approving the date of the Agreement to January 1, 2025;
Authorize the exemption from bidding requirements; and
Authorize the City Manager to execute the Agreement.
body
PRIOR ACTION/VOTE
On December 4, 2018, the City Council adopted Resolution No. 18-4012, authorizing a three-year Agreement with Hinderliter, de Llamas for sales tax recovery services from January 1, 2019, through December 31, 2022, with two (2) additional one (1) year terms (Vote: 3-0-2).
On January 15, 2019, the City Council adopted Resolution No. 19-4026 authorizing a First Amendment to the Agreement with Hinderliter de Llamas to increase the scope of services necessitated by expanding tax recovery services to include Measure T (Vote: 4-0-1).
On November 19, 2002, the City Council adopted Resolution No. 02-1107, authorizing examination of the City’s sales and use tax records by Hinderliter, de Llamas, and Associates to perform sales tax recovery services on behalf of the City (Vote: 5-0).
CITY COUNCIL GOAL
Maintain a high performing organization that values fiscal sustainability, transparency, accountability and organizational efficiency.
BACKGROUND
HdL has provided sales tax recovery services to the City of Murrieta (City) since the first agreement was awarded on October 15, 2002. The services provided include economic analysis of the City’s sales tax trends, sales tax revenue forecasting, and ongoing sales tax audit recovery services. These audit services identify allocation errors and report formula changes, generating previously unrealized tax income for the City.
HdL also provides the City business license software and economic development consulting services under separate agreements.
The City’s most recent contract with HdL expired on December 31, 2024. Due to the expiration, staff seeks to enter into a new Agreement with HdL for two (2) years, with a term of January 1, 2025, through December 31, 2026. Staff was unable to bring this report and agreement extension to the City Council sooner, so the recommendation includes a request to approve the agreement retroactively to January 1, 2025.
This term of the contract will allow staff the appropriate time to conduct a formal request for proposals and select a vendor through equitable and transparent practices in accordance with the City’s Procurement Policy.
Section 3.08.280 of the Municipal Code outlines competitive bidding procedures, and requirements may be dispensed when the City Council finds that adherence to the procedures in this chapter would be inefficient, impractical, and unnecessary.
FISCAL IMPACT
Annual costs for the sales tax audit and recovery services are charged based on a monthly fee and a percentage of all new sales and/or use tax revenue received by the City as a result of audit or recovery work performed by the consultant, which is billed quarterly. The estimated cost per year of the Agreement is $25,000, bringing the not-to-exceed amount of the contract to $50,000.
The sales tax audit recovery service is expected to generate approximately $97,466 in additional sales tax revenue.
This annual expenditure is funded from the Contract Services General Ledger Account (1102600-60480) and has been budgeted accordingly in the Fiscal Year 2024/25 Operating Budget. The budget for the remaining term of the Agreement (July 2025-December 2026) will be included in the upcoming biennial budget.
ATTACHMENTS
1. Proposed Agreement with Hinderliter, de Llamas and Associates