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AGENDA BILL Agenda Item No. 5(G) Date: April 21, 2015 To: El Cerrito City Council From: Lisa Malek-Zadeh, Finance Director/City Treasurer Subject: Authorize Examination of Transactions and Use Tax Records, Including Amending an Existing Contract With Hinderliter, de Llamas & Associates ACTION REQUESTED Adopt a resolution authorizing the City Manager to amend an existing agreement with Hinderliter, de Llamas & Associates (HDL) and allow his designees to examine transactions and use tax records related to Measure R (2014). The resolution is required by the Board of Equalization (BOE). HDL’s additional services have an estimated annual cost of $4,000. BACKGROUND/ANALYSIS In November 2014, El Cerrito voters approved an extension of Measure R at the one percent rate for twelve years. Extension of this general sales tax will allow the City to maintain critical services provided to the community. The City has engaged the assistance of tax consultants to help effectively manage tax revenues for many years and in 2008 HDL was selected as the City’s sales tax consultant. HDL has assisted staff by providing annual revenue estimates for budgeting and cash flow management, monitoring, identification and initiating correction of reporting errors with BOE as well as assist with the preparation of required compliance reports and other ad hoc reports as needed. With the recent extension of Measure R, an amended agreement and resolution is required by the BOE, naming HDL as the City’s tax consultant. The resolution provides the authority required by BOE for HDL to access the City’s records and review financial transactions related to sales tax to accurately provide El Cerrito with the auditing and reporting services requested. It also authorizes the City Manager and his designees to review those records. ---PAGE BREAK--- Agenda Item No. 5{G) FINANCIAL CONSIDERATIONS The annual estimated cost for reporting and auditing for these services is $4,000. The costs for these services are included in the City's adopted budget each year. No additional appropriation is being requested. Scott Hanin City Manager Attachments: 1. Resolution Page 2 ---PAGE BREAK--- Agenda Item No. 5(G) Attachment 1 RESOLUTION 2015–XX RESOLUTION OF THE CITY COUNCIL OF THE CITY OF EL CERRITO AUTHORIZING EXAMINATION OF TRANSACTIONS AND USE TAX RECORDS AND AMENDING THE EXISTING CONTRACT WITH HINDERLITER, de LLAMAS & ASSOCIATES WHEREAS, pursuant to Ordinance No. 60, as amended by Ordinances 146 N.S, 323 N.S., 83-15, 88-5 and 2010-10, the City of El Cerrito entered into a contract with the State Board of Equalization to perform all functions incident to the administration and collection of local transactions and use taxes; and WHEREAS, the City Council of the City of El Cerrito deems it necessary for authorized representatives of the City to examine confidential transactions and use tax records of the State Board of Equalization pertaining to transactions and use taxes collected by the Board for the City pursuant to that contract; and WHEREAS, Section 7056 of the California Revenue and Taxation Code sets forth certain requirements and conditions for the disclosure of Board records and establishes criminal penalties for the unlawful disclosure of information contained in, or derived from the transactions and use tax records of the Board; and WHEREAS, Section 7056 of the California Revenue and Taxation Code requires that any person designated by the City shall have an existing contract to examine the City’s sales and use tax records. NOW THEREFORE, BE IT RESOLVED by the City Council of the City of El Cerrito as follows: Section 1. That the City Manager or other officer(s) or employee(s) of the City (hereafter referred to as City) designated in writing by the City Manager to the State Board of Equalization (hereafter referred to as Board), is hereby appointed to represent the City with authority to examine transactions and use tax records of the Board pertaining to transactions and use taxes collected for the City by the Board pursuant to the contract between the City and the Board. The information obtained by examination of Board records shall be used only for purposes related to the collection of City transactions and use taxes by the Board pursuant to the contract. Section 2. That the City’s existing contract with Hinderliter, de Llamas and Associates is hereby amended to add thereto the examination of the transactions and use tax records of the City pertaining to transactions and use taxes collected for the City by the Board. The fee for transactions tax related audit and recovery work will be 25% plus $100 charge for transaction district tax reports of all new transactions tax or related use tax recovered for those specific quarters identified as being missing and/or deficient. ---PAGE BREAK--- Agenda Item No. 5(G) Attachment 1 Section 3. That Hinderliter, de Llamas and Associates is hereby designated to examine the transactions and use tax records of the City pertaining to transactions and use taxes collected for the City by the Board. The entity designated by this section meets all of the following conditions: Has an existing contract with the City to examine those transactions and use tax records; Is required by that contract to disclose information contained in, or derived from, those transactions and use tax records only to the officer(s) or employee(s) authorized under Section 1 of this resolution to examine the information. Is prohibited by that contract from performing consulting services for a retailer during the term of that contract; and Is prohibited by that contract from retaining the information contained in, or derived from those transactions and use tax records, after that contract has expired. The information obtained by examination of Board records shall be used only for purposes related to the collection of City transactions and use taxes by the Board pursuant to the contract between the City and the Board. Section 4. The City Clerk of the City is hereby directed to certify adoption of this Resolution and to send a copy to: State Board of Equalization Local Tax Section MIC:27 P O Box 942879 Sacramento, CA 94279-0001 I CERTIFY that at the regular meeting on April 21, 2015, the El Cerrito City Council passed this resolution by the following vote: AYES: COUNCILMEMBERS NOES: COUNCILMEMBERS ABSENT: COUNCILMEMBERS ABSTAIN: COUNCILMEMBERS ---PAGE BREAK--- Agenda Item No. 5(G) Attachment 1 IN WITNESS of this action, I sign this document and affix the corporate seal of the City of El Cerrito on April 21, 2015. Cheryl Morse, City Clerk APPROVED: Mark Friedman, Mayor