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COUNTY OF SAN MATEO
Inter-Departmental Correspondence
County Manager’s Office
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DATE:
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November 29, 2010
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BOARD MEETING DATE:
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December 14, 2010
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SPECIAL NOTICE/HEARING:
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None
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VOTE REQUIRED:
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Majority
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TO:
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Honorable Board of Supervisors
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FROM:
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David S. Boesch, County Manager
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SUBJECT:
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Second Amendment to the Agreement with Hinderliter, de Llamas & Associates
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RECOMMENDATION:
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Adopt a Resolution:
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A) Authorizing the President of the Board to execute an Amendment to the Agreement with Hinderliter, de Llamas & Associates for the provision of sales tax audit, recovery and consulting services, increasing the not-to-exceed amount by $100,000 to a new total of $500,000 and extending the term by one year to December 31, 2011; and
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B) Authorizing the County Manager to execute subsequent amendments and minor modifications not to exceed $25,000 in aggregate and to make minor changes in the type of services and activities provided under the Agreement.
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BACKGROUND:
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On October 13, 2006 the County issued a Request for Proposals (RFP) for sales tax audit, recovery and consulting services. At that time, Hinderliter, de Llamas & Associates (HdL) was selected due to slightly favorable rates and continuity of service. On December 12, 2006 the County entered into a three-year, $300,000 agreement with HdL for calendar years 2007 through 2009, with an option to extend for two additional years. On December 15, 2009 the County exercised its option to extend the agreement for one year and increased the not-to-exceed amount to $400,000. Pursuant to the Agreement, HdL conducts ongoing sales tax audits in order to identify and correct “point-of-sale” distribution errors and thereby generate previously unrealized sales tax income for the County. HdL also provides the County with quarterly sales and use tax activity reports and assists the County in forecasting sales and use tax revenues, including Public Safety Sales Tax (Prop. 172) proceeds. Under the Agreement, HdL is paid 15% commission on all new sales and/or use tax revenue received by the County as a result of their audit and recovery work.
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The current Agreement with HdL is set to expire on December 31, 2010.
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DISCUSSION:
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The County has been pleased with HdL’s performance over the term of the agreement and wishes to extend the term by one year, to December 31, 2011, and increase the maximum obligation under the agreement by $100,000, to a new not-to-exceed amount of $500,000.
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Adoption of this Amendment contributes to the Shared Vision 2025 outcome of a Collaborative Community by maximizing sales and use tax revenues and ensuring that sound practices are used to project sales and use taxes for budgeting purposes. Sales and use tax revenue is a significant general purpose funding source that can be used at the Board’s discretion to provide County services.
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County Counsel has reviewed and approved the Resolution and Amendment as to form and content.
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Performance Measure:
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Measure
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CY 2008
Actual
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CY 2009
Actual
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CY 2010
Projected
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Sales and Use Tax Recoveries*
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$2,991,392
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$2,206,724
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$680,000
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*These figures are cumulative, reflecting current, billable recovery as well as prior audit finds that have completed the eight-quarter billing cycle, but for which the County is still receiving local tax revenue. The lower projection in Calendar Year 2010 is primarily due to the corrected allocation of jet fuel proceeds by the State Board of Equalization in Calendar Years 2008 and 2009.
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FISCAL IMPACT:
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There are sufficient funds appropriated in Non-Departmental Services FY 2010-11 Adopted Budget to cover the first six months of the extended term of the amended agreement through June 2011. Sufficient funds will be appropriated in the FY 2011-12 Recommended Budget to cover the remaining six months. There is no additional Net County Cost as a result of this action.
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