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HomeMy WebLinkAboutResolution - 2013-R0049 - Contract - Muniservices LLC - Revenue Enhancement Services - 01/31/2013Resolution No. 2013-R0049 January 31, 2003 Item No. 5.2 RESOLUTION BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF LUBBOCK: THAT the Mayor of the City of Lubbock is hereby authorized and directed to execute for and on behalf of the City of Lubbock, Contract No. 10979 for revenue enhancement services, by and between the City of Lubbock and MuniServices, LLC of Fresno, California, and related documents. Said Contract is attached hereto and incorporated in this resolution as if fully set forth herein and shall be included in the minutes of the City Council. Passed by the City Council on January 31, 2013 GL C. OBERTSON, MAYOR ATTEST: Rebe a Garza, City Secreta APPROVED AS TO CONTENT: Pam Moon, Executive Director of Finance APPROVED AS TO FORM: Chad Weaver, Assistant City Attorney vw:ccdocs'RES. Contract- MuniServices, LLC January 8, 2013 Resolution No. 2013—R0049 MuniServices, LLC Consultant Services Agreement 1. Us. We are MuniServices, LLC, a Delaware limited liability company, and a wholly owned subsidiary of Portfolio Recovery Associates, Inc.; with an office at 7625 N. Palm Avenue, Suite 108, Fresno, California 93711. In this Agreement we are referred to as "MuniServices" or "we", "our", "us. We use our sister company, RDS, to assist us with work. Sometimes we will refer to you and us as the "Parties." If you need to contact us a short list of helpful contacts is attached as Attachment 3. If you are sending us a notice required by this Agreement, send it to: MuniServices, LLC Attn: Legal Department 7625 N. Palm Avenue, Suite 108 Fresno, CA 93711 Email: legal Omuniservices.com Facsimile: 559.312.2957 When providing notice to us, you must also provide a copy of the notice to: PRA General Counsel, 120 Corporate Blvd., Suite 100, Norfolk, VA 23502. All notices, including notices of address changes, provided under this Agreement are deemed received on the third day after mailing if sent by regular mail, or the next day if sent overnight delivery. We do not accept notices by email or facsimile. Notice of rate changes or distribution changes must be sent by certified mail. 2. You. You are the City of Lubbock. You are a municipal corporation of the State of Texas. In this Agreement we will refer to you as "you", "your", "yours". If we are sending you a notice required by this Agreement, we will send it to: Contract 10979 City of Lubbock Attn: Marta Alvarez Director of Purchasing & Contract Management 162513th Street Lubbock, TX 79401 Email: MAlvarez@maiI.ci.lubbock.tx.us Facsimile: 806.775.2051 3. Our Services and your payment. We will provide you with the services listed in Attachment 1 (the "Services"). You will pay us the fees listed in that same Attachment. If we are providing more than one Service, each service will have a separate attachment and will be labeled Attachment 1-1,1-2, etc. 4. What our Services do not include. We do not provide to you or any third -parties any legal advice or services. We also do not provide tax advice to you or third parties. Also we cannot and therefore do not establish: the tax rates due from taxpayers; and the penalties and fees that are assessed against taxpayers (though we will calculate these amounts for you as part of the Services once you have established the rates). We also do not determine either the amount of refunds or the proper government account(s) that taxpayer receipts shall be deposited into. 5. Term of this Agreement. The initial term of this Agreement begins on January 31, , 2013 (the "Effective Date") and continues for a period of three years from the Effective Date. Thereafter the City will have the option to renew this Agreement for two successive one year terms (each a "Renewal Term"). There are some other ways this Agreement can end and those are found in Article I of the General Provisions, Attachment 2. Lubbock, TX - SUTA, HOT, FF- rev 010713 ►DMUMSE MCES 6. General Provisions. The parties are also bound by the General Provisions as set forth in Attachment 2 of this Agreement, which are by this reference incorporated into this Agreement. If something in this Agreement contradicts the General Provisions, then what is said in this Agreement governs rather than the General Provisions. The Parties are signing this Agreement on the Effective Date indicated in Section 5 above. CITY OF LUBBOCK By: _ A�r Glen C bertson Mayor ATTEST: By: P. Reb cc Garza City Secretary APPROVED AS TO CONTENT: By: ("'-�ajwjo mw-� Pam Moon Executive Director of Finance APPROVED S TQ FOR By. r`l Assistant City Attorney CONTRACTOR By: ou sen, SVP Client Services 4Mun ervices, LLC 7625 N. Palm Ave., Ste. 108 Fresno, CA 93711 Lubbock TX - SUTA, HOT, FF- rev 010713 ®/NUMSEMCES ATTACHMENT 1 Sales Tax Compliance Review Article 1 -Objectives and Methods MuniServices' Sales Tax Compliance Review is designed to assist City with economic forecasting and in preserving and enhancing its sales and use tax revenues by detecting, documenting, and correcting sales tax misallocations thereby producing previously unrealized revenue for City while giving the City a more accurate sales tax base upon which to forecast its revenue. Article 2 -Scope of Work The scope of work for Sales Tax Compliance Review includes the following procedures and tasks designed to identify and correct reporting errors and secure revenue that is due the City: 1. Meet with designated City official(s) to review service objectives and scope, MuniServices' work plan schedule, public relations and logistical matters. 2. Receive and process the sales and use tax payment distribution reports provided by the Texas Comptroller's Office. 3. Monitor and analyze the sales and use tax payment Distribution Reports with audit focus on the following: a. Those accounts with previously detected reporting errors to ensure the corrections are made for current reporting periods plus any retroactive adjustments for amounts improperly distributed in prior periods. b. Those accounts that meet the sales tax revenue annual threshold for available payment data of the City's total sales and use tax revenue, to identify and investigate significant aberrations (e.g. negative fund transfers, declines, deficiencies, etc.). c. Those accounts receiving deficiency assessments to ensure the City receives the correct amount of sales and use tax. 4. Review of sales/use permits for sellers with places of businesses and use tax permits for sellers engaged in business in the City's jurisdiction, to detect, document and correct sales/use tax reporting errors/omissions and thereby generate new, previously unrealized revenue for the City. S. Contact target businesses to determine whether a point-of-sale/delivery/use reporting error exists. MuniServices' inquiries are predicated on a non -controversial, constructive, public relations approach that emphasizes the importance of each business to the City and the mutual benefits of correcting reporting errors. 6. Provide the City with reports addressing each taxpayer reporting error individually, including the business name, address, telephone number, 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 and use tax revenue which should be forthcoming to the City. 7. Provide reports to the Texas Comptroller's Office detailing misallocation claims and, if necessary, work with businesses to create and file amended tax returns for more complicated tax sourcing corrections as applicable. Lubbock, TX - SUTA, HOT, FF- rev 010713 ,MUMSERVI CES 8. Respond to findings by Texas Comptroller's Office with timely reconfirmation documentation to preserve validity of original claim. 9. Routinely review all proposed and actual Texas Comptroller's Office adjustments to the City's sales and use tax. Our procedures for conducting these reviews are the same as for the conduct of allocation/under reporting audits. We seek to understand any adjustment and determine its validity. Compliance Audit and Misallocation Review MuniServices will identify non-compliant entities and assist in bringing these entities into compliance. We will work with the City to receive confidential sales tax data from the State of Texas and standardize and enhance state tax data with a myriad of other public and private data sources. We will use these enhanced data sources to identify reporting anomalies often working with the taxpayers to confirm incorrect tax application, and assist in gaining past and prospective compliance. Corrections will then be submitted to the Texas Comptroller, either directly or through amended taxpayer returns, for compliance action per statute. MuniServices will review and verify the City's allocation of tax revenues distributed by the Texas Comptroller to help ensure the proper collection and distribution of the tax revenue owed to the City on an ongoing basis. We will identify misreported or under -reported sales and use tax revenue and submit those findings to the Texas Comptroller, along with applicable supporting evidence and/or amended returns, for review and action. Kick-off meeting The most effective SUTA efforts begin with "kick-off' meetings. The City and MuniServices project teams will have an initial meeting to clarify the goals, objectives, timing, and responsibilities. This meeting allows each entity to discuss and better understand service components and priorities, assigned resources, work plan schedules, public relations and logistical matters. The City plays a large role in the community and the manner in which they approach SUTA efforts can have a positive impact within the community. MuniServices is and will be seen as an extension of the City's taxing authority, setting a clear understanding of this role within the local business community is important to overall success of this initiative. Article 3 -Deliverables Timing Considerations /Project Schedule MuniServices is committed to starting the process immediately upon award and contract signing and will submit a list of our work in progress within the first 60 days of execution of the contract. We will conduct the Sales Tax Compliance Review service in three-month intervals with the audit results submitted to the Texas Comptroller's Office on a regular basis. During each subsequent quarter, the work plan process is repeated. This process allows us to submit frequently and rapidly, ultimately obtaining corrections quicker from the Comptroller's Office which then translate into new revenue for the City sooner. Correction of a misallocated account is deemed complete once the taxpayer is properly reporting the local tax payments on the identified accounts to the City and the funds are allocated in the period in which the payment was made. As needed, MuniServices will represent the City before the Texas Comptroller's Office officials, boards, commissions and committees for the purpose of correcting sales tax distribution errors that have deprived our client of the revenue to which it is entitled. Progress Reports MuniServices will provide periodic progress reports to City in the form of status updates. These progress reports will also indicate areas in which City staff may further assist and improve the sales tax compliance review activities provided hereunder. MuniServices' progress reports will identify errors/omissions detected, documented and corrected and report on other services of benefit to City for the time period covered. Lubbock, TX - SUTA, HOT, FF- rev 010713 (QAKUMSERVICES Article 4 -Compensation What the City will pay MuniServices. In exchange for MuniServices performing the work indicated above, the City will pay MuniServices as follows: City shall pay MuniServices 35% contingency fee. The fee applies to the sales and use tax revenue received by the City from correction of taxpayer reporting errors detected and documented by the Sales Tax Compliance Review. The Contingency Fee applies to: all sales and use tax revenues corrected for the City for any periods prior to the date of the corrected allocation; and sales and use tax revenues received for the first eight consecutive reporting quarters following correction of the errors and confirmation of receipt of revenue by the City. City agrees to notify MuniServices within 10 days following receipt by the City of payments (cash payments, installment payments, or other compensation directly benefiting the Municipal Corporation) resulting from MuniServices' service. Upon being notified of receipt of payment(s), MuniServices will then invoice the Municipal Corporation. Invoices are due and payable upon receipt. All expenses incurred by MuniServices in providing the Sales Tax Compliance Review are the sole and exclusive responsibility of MuniServices, except those expenses that receive prior written approval of City. 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. Depending on the personnel assigned to perform the work, standard hourly rates range from $75 per hour to $300 per hour. These additional consulting services will be invoiced at least monthly based on actual time and expenses incurred. Article 5 -City Obligations In order for MuniServices to conduct the sales tax compliance services, we will request assistance from the City in the following: 1. Provide MuniServices, on a timely basis, information necessary to conduct its compliance review activities including but not limited to monthly tax payment histories. 2. Provide a letter of authorization identifying MuniServices as an authorized agent of the City to perform sales and use tax reviews and to receive and examine taxpayer records (hard copy and electronic) necessary to assure sales and use tax compliance and revenue forecasts. 3. Pursue in good faith corrective action on errors and omissions detected by MuniServices. 4. Issue necessary documentation to the state to correct errors validated by MuniServices. S. Notify MuniServices within 10 days following receipt by the City of payments (cash payments, installment payments, or other compensation directly benefiting the City). The City and/or the State Comptroller retain exclusive authority and responsibility to administer, interpret and enforce the City's sales and use tax, and recognize that MuniServices' role is limited to employing its unique expertise and proprietary tools for: i) detecting and documenting errors/omissions by taxpayers in the application, calculation, collection, and/or remittance of sales and use taxes and, ii) providing the City with technical assistance, without assuming or being delegated the authority or responsibility of the City to administer, interpret, and enforce its sales and use taxes. Lubbock, TX - SUTA, HOT, FF- rev 010713 (j&A4UNiSERVICES Article 6 - Completion of Services Notwithstanding anything else in this Agreement to the contrary, the City will pay MuniServices per the terms of this Agreement for services begun before termination or expiration of the Agreement even if the monies are received after termination or expiration. MuniServices will provide City with a list of accounts submitted but not yet corrected as of the expiration or termination within a reasonable time after the expiration or termination ("completion list"). MuniServices is allowed to continue working those accounts on the completion list for a reasonable time to obtain a correction. Lubbock, TX - SUTA, HOT, FF- rev 010713 aMUNMEMICESi TML4ATTACHMENT 1-1 Local Hotel Occupancy Tax BuXe1't cc T E X A Analysis and Audit plzltn"' MMCWAL Article 1 -Objectives and Methods MuniServices' Local Hotel Occupancy Tax Analysis and Audit Program is intended to assist City in maximizing the generation of lodging tax revenue and the allocation of that revenue to the promotion of visitation and other lawful purpose, through conducting annual analyses of returns and, when warranted, on-site examinations of records of lodging providers; identifying providers who should be subjected to field auditing or other scrutiny, providing draft Notices to collect tax deficiencies and other correspondence to assist City in collecting from or commending, warning or crediting the lodging providers examined; providing annual reports reflecting and projecting revenue trends; offering ordinance and administrative enhancements and other advice as needed; and educating lodging providers to ensure future appropriate collection and timely remittance of the lodging tax. Article 2 -Scope of Work 1. Ordinance, Return and Administration Review Services a. Review City's lodging tax ordinance, return form and administrative procedures; b. Recommend potential enhancements to better acquaint the lodging providers with their responsibilities in collecting and paying -over the tax, and to improve revenue generation and administration by the City; c. Provide a written report to City, including suggestions for new ordinance language, form design and process development, as applicable; and d. Meet with City to discuss findings, and to identify any recommendations for further review. 2. Analysis and Compliance Review Services (Annually) a. Obtain and analyze lodging provider return information in the possession of the City initially for the prior four-year (4) period, thereafter annually for the prior year; b. Conduct unobtrusive collection of information on each property, including number of rooms, occupancy rate, physical condition, business dynamics, etc.; c. Provide a report to the City on trend analysis to include projections for gross rent revenue and occupancy rates, and other information conducive to assessment of visitation; d. Perform discovery services designed to identify and locate lodging providers not properly registered with the City and not appearing on the City rolls as lodging tax remitters; e. Analyze lodging provider return information from the past three years in order to identify unusual or suspicious reporting and/or activities that warrant further review; and f. Provide a detailed report to the City identifying lodging providers who require additional investigation or examination to determine their compliance with the City's lodging tax ordinance; 3. Field Audit Services (As Deemed Needed By Analysis) a. Perform on-site examinations of the records of those providers identified through analysis to warrant further investigation, but only as authorized by City; b. Provide City staff with a detailed list of all records required to be made available by lodging providers for the further reviews, together with a draft engagement announcement letter to be sent to each lodging provider requiring examination; c. In coordination with City staff, schedule and conduct reviews at the property locations of those providers identified and authorized for examination; d. Verify accuracy of filed lodging tax returns with daily and monthly activity summaries; Lubbock, 7X - SUTA, HOT, FF- rev 010713 ( MUNisEmicEs e. Review a random sample of the daily and monthly summaries to determine if the daily summaries reconcile to the monthly summaries; f. Review bank statements to verify that deposits reconcile with the reported revenue on the lodging tax returns'; g. Review exempted revenue for proper qualifying documentation; h. Review a random sample of exempted guest revenue and trace registration and/or other source documents to verify compliance with the City ordinance; i. Where possible, compare the State lodging tax filings with City's tax returns; j. For each error/omission identified and confirmed, submit substantiating documentation to designated City staff in order to facilitate collection of revenue due from lodging providers for prior periods; k. Coordinate with designated City official(s) as necessary to review findings and recommendations; 1. Prepare draft Notices of Deficiency Determination, and commendation, warning and credit letters, as applicable, for City to advise lodging providers of examination results m. Provide assistance to City in reviewing any matters submitted in extenuation and mitigation by lodging providers in contesting a deficiency determination; and n. Prepare and document any changes to the review findings and provide revised tax, interest or penalty amounts due the City. o. Provide other collections advice upon request. 4. Mandatory Reporting to the State of Texas - Required Compliance The Bill requires that, if, as a result of an audit conducted, a City obtains documentation or other information showing a failure to collect or pay local and state occupancy taxes when due, the City shall notify and submit the relevant information to the Texas Comptroller. The City will receive a 20% finder's fee from the State of Texas upon receipt of payment from the lodging provider. During MuniServices meetings with the Texas Comptroller regarding HB 2048 and it's administration„ the report submitted to the State must have these additional specifications, but is not limited to: a. Summary of all hotels with local and state deficiencies discovered during our audit. b. Detailed Audit Support for findings over $2,000 (qualifying audits) due to the state. c. Audit report should include audit period. d. Separate documentation that breaks down the findings in each area by month. e. Separate documentation that itemizes the state only exemption details. f. Audit Communication executed by the hotel. g. Audit Report based on State Auditing Procedures. S. Seminar Services (When -Requested by City) a. Conduct a seminar session with City staff to present and discuss issues pertaining to lodging tax administration. Key topics for normal City staff sessions include applicable state and federal law, return analysis, deficiency determination techniques and collections. City may add select topics of City concern to be reviewed at this session; b. Conduct a seminar session for local lodging providers to disseminate information intended to further the providers' understanding of their duties and responsibilities under the City's lodging tax ordinance, their responsibilities for collections and record keeping, and to address any points requiring clarification in the lodging providers' understanding of the City's lodging tax ordinance. Lubbock, TX - SUTA, HOT, FF- rev 010713 (jD/yIUMSERVICES Article 3 -Deliverables 1. Ordinance, Return and Administration Review Services a. Provide a written report to City, including suggestions for new ordinance language, form design and process development, as applicable; and b. Provide other opinions and advice upon request. 2. Analysis and Compliance Review Services (Annually) a. Provide a written report to the City on trend analysis to include projections for gross rent and tax revenue and occupancy rates, and other information conducive to assessment of visitation; b. Provide a written report to the City identifying lodging providers who require additional investigation or examination to determine their compliance with the City's lodging tax ordinance; and c. Provide other opinions and advice upon request. 3. Field Audit Services (As Deemed Needed By Analysis) a. Provide City staff with a draft Audit Announcement Letter to be sent to each lodging provider to be examined; and a written report of the findings of such examinations together with draft Notices of Deficiency Determination, and/or credit, warning or commendation letters as applicable; b. Review any extenuation or mitigation proffered to deficiency determinations and prepare draft response to City staff, and c. Provide other collections advice upon request. 4. Mandatory Reporting to the State of Texas Should the City authorize MuniServices to provide the additional services as required, MuniServices shall: a. Provide a complete report, with supporting documentation, to the Texas State Comptroller (and the City) based on the requirements outline in HB 2048 for each applicable local audit performed on behalf of the City. The report will be provided to the Comptroller within 30 days of the completion of the audit and will include all substantiation of the issues and findings reported. b. Provide a monthly status to the City that tracks the submissions to the Comptroller's Office. This tracking tool's purpose is to provide the City with necessary information to ensure proper administration and follow up for the 20% finder's fee. c. Act as the City's advocate and representative in all communications with the Texas State Comptroller in regards to the local hotel occupancy tax audit sharing program, including Notifying the Comptroller's office if they should expect disputes or protest of an audit. Should the City elect to have MuniServices provide the services necessary to comply with HB 2048, the City will be required to provide a Letter of Authorization to the State Comptroller's Office designating MuniServices as an authorized agent of the City for the purposes of administration of this local hotel occupancy tax audit sharing program. Lubbock, TX - SUTA, HOT, FF- rev 010713 (MAIUNd3EFMCE'S Article 4 -Compensation 1. Analysis and Compliance Review Services a. The Analysis services shall be provided for a fixed fee of six -hundred dollars ($600) per each lodging property located in the City. b. The Fixed Fee shall be invoiced at the completion of and delivery of the Analysis Report to the City. 2. Field Audit Services a. The Field Audit services will be provided for an Annual Fixed Fee of nine -hundred dollars ($900) per each lodging property audited. b. The fixed fee shall be invoiced 50% upon the completion of Phase 1 which includes analysis of properties potentially underreporting occupancy tax to the City, reporting to the City of suggested lodging properties to be audited during the contract year and approval by the City. Phase 2 will consist of audit fieledwork, writeup and reporting to the City. Phase 2 will be billed 50% upon submission of the report to the City and the remaining 50% upon completion of the audit. 3. Mandatory Reporting to the State of Texas Should the City authorize MuniServices to provide the additional services (Mandatory Reporting to the State), the City agrees to pay MuniServices as follows: a. Cost per Audit: A flat fee of $400.00 per qualifying audit will be charged for each audit submitted to the State Comptroller under the program and includes all the services outlined in the above "Proposal for Additional Services" section. b. The $400 flat fee will be billed on a monthly basis for each report submitted to the Comptroller during that month. c. If, in order for the state to collect on an audit and/or the city to receive their finder's fee, additional or non- standard work is required outside of the above listed services, MuniServices will bill the City an hourly rate plus additional expenses incurred. Examples of additional or non-standard work includes, but is not limited to, additional field visits after an audit has been submitted as final,, testifying at hearings or court proceedings to support the work performed by our auditors, and any other activities requested by either the City or the Comptroller in regards to collection on an audit, etc. d. Any work required outside of $400 flat fee will only be performed with prior written approval from the City. The hourly services will be billed at the rate of $100 per hour, plus actual expenses. These additional hours will be invoiced at the time the case is resolved to the Comptroller's satisfaction. 4. Travel and Out -of -Pocket a. Reasonable travel and other out-of-pocket expenses associated with the performance of field audits will not exceed $150 per audited property without the prior written approval of the City. Such reimbursement shall be billed annually. 5. Additional Consulting a. The 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. Depending on the personnel assigned to perform the work, standard hourly rates range from $75 per hour to $300 per hour. The following are sample hourly rates based on the job classification: • Principal: $300 per hour • Client Services: $250 per hour • Information Technology (IT) support: $200 per hour • Operational Support: o Director: $175 per hour Lubbock, TX - SUTA, HOT, FF- rev 010713 10 ,MUMSEFMICES o Manager: $150 per hour o Senior Analyst: $125 per hour o Analyst: $100 per hour o Administrative: $75 per hour These additional consulting services will be invoiced at least monthly based on actual time and expenses incurred. Article 5 - City Obligations The City shall assist MuniServices by providing necessary information and assistance to include, but not be limited to, the following: 1. Ordinance, Return and Administration Review Services (Inception of Contract) a. Provide MuniServices with existing ordinance, return form and other information relevant to administration when requested. 2. Analysis and Compliance Review Services (At Least Annually) a. Provide MuniServices with lodging provider return information, initially for the prior four-year (4) period, thereafter annually for the prior year. b. Inform MuniServices of any circumstances concerning existing payees. c. Inform MuniServices of the development of new lodging properties. 3. Field Audit Services (As Deemed Needed By Analysis) a. Send Audit Announcement Letter to each lodging provider to be examined with a copy to MuniServices. b. Provide MuniServices written authorization for all properties to be audited. 4. Mandatory Reporting to the State of Texas Please choose one of the two options below. If the City desires for MuniServices to perform the new Mandatory Reporting to the State of Texas, and this letter agreement correctly reflects the terms agreed to by MuniServices and the City, please counter -sign this letter agreement in the space provided below. If the City acknowledges its obligations under House Bill 2048 and hereby elects to "OPT OUT" of MuniServices optional service to provide services required to perform the Mandatory Reporting to the State of Texas on its behalf, please counter -sign this letter agreement in the space provided below. a. City will need to enter in to an agreement with the Comptroller to insure that they make reasonable efforts to collect on each submission and reimburse the city for any hourly fees and expenses incurred on behalf of the state. b. City can expect payment of the finder's fee no sooner than 6 month's from the date of submission to the Comptroller, as the finder's fee is not due until the assessment is Administratively Final. c. City has an obligation to submit all findings to the Comptroller whether or not they contract with MuniServices. As such, MuniServices will require an "opt out" document be signed by the city if they chose not to have our assistance in fulfilling this requirement. (Actual bill located at: h_pt ://www.sos.state.tx.usIstatdoc/bills/hbIHB2048.pd0 Lubbock, TX - SUTA, NOT, FF- rev 010713 i 1 , MUMSERVICES YES - By signing in the space provided here, 1 hereby authorize MuniServices to perform the Mandatory Reporting to the State of Texas as required by House Bill 2048 that was adopted on September 2, 2011, and agree to compensate MuniServices as outlined above. By: Name: Title: Date: NO - By signing in the space provided here, the City declines MuniServices additional services option and acknowledges that MuniServices will have no responsibility or liability related to the Mandatory Reporting to the State of Texas as required by House Bill 2048 that was adopted on September 2, 2011. By: 1�X! V 60- r` Name: Pamela Moon Title: Executive Director of Finance Date: January 31, 2013 Lubbock TX - SUTA, HOT, FF- rev 010713 12 ►®MUNtSEEMWES ATTACHMENT 1-2 Franchise Fee Compliance Review Services Article 1 -Objectives and Methods The City desires to have MuniServices conduct a Franchise Fee Compliance Review ("Review") of the City's various franchise utility providers ("utility(ies)") collecting taxes and/or fees on the City's behalf. The Reviews are an agreed -upon -procedures review of the franchise fee payments made to the City from the utility provider(s). The taxes and/or fees to be audited will include: a. Natural Gas b. Electric c. Telephone d. Cable (Upon written authorization) e. Internet (Upon written authorization) Article 2 -Scope of Work 1. Pre -Audit Planning - To initiate the project, once a contract is in place, we recommend scheduling an introductory meeting with designated City management, to: a. Identify the population of franchise utilities to be considered for examination. b. Obtain copies of the ordinances and agreements governing each franchise utility provider. c. Review with the City any known compliance issues or previous compliance activity, and any other factors, for example, any recent boundary changes, annexations, or rate changes, that might impact compliance. d. Identify relevant payment records available from the City. e. Develop a specific list of audit engagements authorized by the City. 2. Schedule and Complete Audit Engagements - Based on the list of approved engagements, we will proceed to contact those utilities for which the City has approved audits. In preparing for and conducting its review of each utility, MuniServices will employ the following procedures: a. Obtain a letter of authorization from the City, copies of franchise agreements and any correspondence with the providers, and a history of franchise payments. b. Obtain and review available documents, reports, work papers, and any prior reports prepared by the internal or external auditors, which concern the computation or methodologies for computing the franchise fee paid. c. Review franchise agreements, all ordinances relating to taxes to ensure compliance with all Federal, State and Local laws, and correspondence relating to the City's franchise fees.[Note: MuniServices cannot offer legal advice to the City. d. Submit a Request for Information to each utility to obtain the information needed to complete our review. e. Review the work papers and supporting documentation used in the computation of the franchise fee payments. f. Review and analyze each utility's general ledger and financial statements. Compare and analyze the data for reasonableness, completeness, and accuracy as related to the franchise fee. g. Identify any revenues excluded from the franchise fee calculation: h. Review and analyze all the utility's revenue accounts in detail to: determine revenues that are to be included or excluded from the franchise fee computations; review the revenues excluded from the computations, if any, and determine if they are permitted by the City's franchise agreement, or relevant state law. i. Determine if utility or any of its subsidiaries receives any revenues from customers or third -parties for the use of utility's facilities located on City's right-of-way authorized by the franchise agreement that are not included in the franchise fee calculation used to determine the payment to the City. Lubbock, TX - SUTA, HOT, FF- rev 010713 13 (MAAUMSERVICES j. Review the process used to compute franchise fees on meter diversion revenue for gas and electric providers. k. Determine how gas and electric deregulation has impacted the franchise fee calculation, especially with regard to managed services (storage, distribution, etc.). 1. Evaluate the utility's treatment of natural gas and electricity consumed by the utility provider within its facilities located within the City's jurisdiction, if applicable. m. Analyze the number of customers reported in the City's jurisdiction by rate classification and obtain and review the utility's procedures to code new customers to the proper jurisdictions and the procedures used to address annexations. n. Obtain and review the list of exempted customers, if any, from the franchise fee computation. o. Compare customer address data for each utility with address data to be provided by the City to determine whether any residents and businesses currently within the boundaries of the City have been or are being serviced/invoiced without remittance of the appropriate tax or payment to the City. p. Sample test the utility's billings for completeness and accuracy of franchise fee from customers and verify that all monies collected are submitted to the City. q. Compare the utility's payments, exclusions, and other computations as related to the franchise agreement, or relevant state law. Compare the actual payments made to the City for timeliness and accuracy. Article 3 -Deliverables & Timeline Reports/Deliverables Throughout the course of the engagement, we will produce monthly reports documenting their efforts to date. The reports will include the following: a. Accomplishments to date. b. Next -step options and timeline for completion. c. Open items needing attention, with identification of the responsible party. d. Updates on issues requiring City attention. e. Review findings with Franchisee and obtain the Franchisee's position on the findings. Findings will include Electronic format data of all exceptions in formats required by utilities. f. Prepare a written report with findings that describe and explain the results of our review, identifying residents and businesses that, for whatever reason, are not paying the appropriate level of taxes, potential additional monies due to the City, and any applicable penalties and interest. MuniServices will schedule a final presentation of these findings with the City. Implementation a. Provide any and all necessary schedules and supporting documents to assist the City in collecting underpaid franchise fees. b. Provide ongoing assistance in implementing findings with applicable utilities. c. On an ongoing basis, work with the City and applicable utility service providers to implement those findings and recommendations authorized by the City for further action. d. Conduct a post implementation review to ensure that the requested changes have been implemented by the utility. Suggested Schedule MuniServices will begin scheduling audit examinations within 30 days of the execution of the contract with the City. Although we can assure the City of sufficient auditing resources to initiate audits without delay on our part, the actual start date and time to completion for any given engagement will depend to some extent on the timely cooperation of the franchisee being audited, including timeliness of source document provision, response to inquiries, and quality and completeness of data provided; as well as the complexity of the audit itself, and the time required to resolve any issues that the franchisee may raise regarding the results reported. Lubbock, 7X - SUM HOT, FF- rev 010713 14 (ffiMUNISEFMICES With this in mind, the following is our suggested project timeline: a. Commencement of the work: within 10 working days of a fully executed agreement and the required letter of authorization and other documents from the City. b. Review of Franchise fee payment: within 10 working days of receipt of necessary data, such as franchise payment history, from the provider and the City. c. Completion of the final report: within two to five months (depending on factors noted above, the number of franchisees to be audited, and whether the City prefers to proceed with audits one -by -one, or concurrently). d. Throughout the project, we will provide the City with progress reports as applicable. Upon completion of each audit, we will issue a draft report to the City noting the findings. After the City's review and approval, we will issue its final report. Article 4 -Compensation What the City will pay MuniServices for the Franchise Fee Compliance Review MuniServices' will provide its Franchise Fee Compliance Review Service on a performance-based pricing approach, which places the financial risk and obligation to perform on MuniServices and eliminates for the City any out-of- pocket expenses for the Compliance Review Service. The Review will be provided on a one-time performance-based contingency fee, as shown in the table below, of the additional revenue received by the City as a result of our Franchise Fee Compliance Review Services. The contingency fee will apply to the current tax year, all eligible prior period revenues, and include any applicable penalties, interest, late charges and any other associated fees. Contingent Fee on findings up to $300K Contingent Fee on findiggsgreater than $300K 30% 25% These fees include any out-of-pocket expenses or travel -related expenses. We will invoice the City upon issuance of the final report to the City. Article 5 — City Obligations The City shall provide MuniServices with a letter of authorization from the City, copies of the franchise agreements, amendments, and any subsequent agreements relating to franchise fee collection, any prior reports prepared by the internal or external auditors which concern the computation or methodologies for computing franchise fee, and a history of franchise payments made by providers to the City. MuniServices will also request an electronic copy of address ranges, annexations and any border changes if applicable and/or available. Lubbock, TX - SUTA, HOT, FF- rev 010713 15 (ffiAlUNNSERVICE'3 ATTACHMENT 2 General Provisions Article I Within 5 business days after signing You will designate, in writing, one individual to whom we may address this agreement. communications concerning this Agreement. This person or such person's designee will be the principal point of contact for us in obtaining decisions, information, approvals, and acceptances. 10 business days after you receive You have until this date to dispute in the invoice, or a portion of it, in writing. our invoice. Your written dispute must be post -marked by this date and must be sent to the addresses in paragraph 1 of the Agreement. (Paragraph 1 is located on the front page of the agreement and is titled "Us".) 10 business days after we receive We will either correct the error or explain to you why we think the invoice is your written notice that you dispute correct. During this time, we will not try to collect the amount being disputed. an invoice or part of an invoice. 30 days after receiving our invoice. You must pay our invoice(s) by this date. If you do not pay by that time, we have the right to charge you interest at the rate of one and one-half percent (1.5%) per month, or the maximum amount permitted by law, on any amounts you do not pay within thirty days. If we refer your account to an attorney for collection of past due amounts, we may charge you for our reasonable attorney fees, including costs for attorneys who are employed by us, and court costs incurred by us to the extent permitted by law. Any settlement of your account balance for less than what is owed requires our written consent 40 days after receiving our invoice If you have not paid, and have not disputed an invoice as provided above, then we may terminate this Agreement with no further notice and we have no further obligation to you. When you provide us with By providing us information, you represent that: information for use in the Services. . you have the right to provide us the information without violating the rights of third -parties; • your release of the information to us does not violate any applicable laws and regulations; and • to the best of your knowledge the information is accurate and not defamatory. You will notify us immediately if there is a change in the information you have provided to us. If we send you a report or other You will review all reports we provide to you in a timely fashion and you will deliverable. notify us immediately if you find a discrepancy in any of the information we have provided to you. Upon payment therefore, we will grant you all right, title, and interest in and to the reports, charts, graphs, and other deliverables we are required to produce under this Agreement. While the Agreement is effective. We will keep in full force and effect insurance coverage during the term of this Agreement including without limitation statutory workers' compensation insurance; employer's liability and commercial general liability insurance; comprehensive automobile liability insurance; professional liability and fidelity insurance. You may at any time request copies of our certificates. 90 -days after prior written notice. This Agreement terminates for convenience but only if the terminating party sends the notice to the person designated to receive notices under this Agreement (see paragraph 1 or 2, as applicable, of this Agreement). Lubbock, 7X - SUTA, HOT, FF- rev 010713 16 (D/YWNIS£HVICES After giving written notice of a breach The non -breaching party may immediately terminate this Agreement if. other than a failure to pay. • the written notice of the breach was sent to the person designated to receive notices for the breaching party under this Agreement (see paragraph 1 or 2, as applicable, of this Agreement); and the breach is not your failure to pay (that situation is addressed separately below.); and • the breach has not been cured in a reasonable time after the breaching party received notice. Ordinarily, 30 days will be a reasonable time to cure the breach but if the party receiving notice of the breach can demonstrate that the breach will take more than 30 days to cure, the non -breaching party and breaching party will agree on an extended period to cure the breach. After the occurrence of a "financial A party may terminate this Agreement immediately if the other party experiences default" a "financial default." A "financial default" means: • a material adverse change in a party's financial condition that adversely affects its ability to perform hereunder; or • a party becomes or is declared insolvent or bankrupt; or • a party is the subject of any proceedings relating to liquidation or insolvency or for the appointment of a receiver; or • a party makes an assignment for the benefit of all or substantially all of its creditors; or • a party enters into an agreement for the composition, extension, or readjustment of all or substantially all of its obligations. If you experience a "financial default" then we may, at our option, declare the entire outstanding amounts and costs owing to us hereunder immediately due and payable. This Agreement is terminated or You remain obligated to: (1) pay us for Services performed through the effective expires. date of the termination or expiration; (2) if applicable, provide us with all the information necessary for us to calculate what you owe us on revenue you receive after the termination or expiration; and (3) if applicable pay invoices we send you after the expiration or termination of this Agreement for Services performed before termination or expiration or for continuing payments required by the Scope of Work or for both. Lubbock, TX - SUTA, HOT, FF- rev 010713 17 (ibMUNISERVICES Article II. The parties also agree to the following miscellaneous terms. 1. Independent Contractor. We are an independent contractor. Nothing in this Agreement is to be interpreted as: creating the relationship of employer and employee between you and us or between you and any of our employees or agents; or creating a partnership or joint venture between you and us. We are responsible for any subcontractors we use in performing Services for you and we are solely responsible to pay those subcontractors. We may perform similar services for others during this Agreement and you agree that our representation of other government sector clients is not a conflict of interest. 2. Compliance with Laws. The parties agree to comply with all applicable local, state and federal laws and regulations during the term of this Agreement. 3. Intellectual Property. We retain all right, title, and interest in and to the processes, procedures, models, inventions, software, ideas, know-how, and any and all other patentable or copyrightable material used, developed, or reduced to practice in the performance of this Agreement. 4. Waiver. Either party's failure to insist upon strict performance of any provision of this Agreement are not to be construed as a waiver of that or any other of a party's rights under this Agreement at any later date or time. S. Force Majeure. Neither party is liable for failing to perform its obligations hereunder (other than payment obligations) where performance is delayed or hindered by war, riots, embargoes, strikes or acts of its vendors or suppliers, accidents, acts of God, or any other event beyond its reasonable control. 6. Counterparts. This Agreement may be signed in separate counterparts including facsimile copies. Each counterpart (including facsimile copies) is deemed an original and all counterparts are deemed on and the same instrument and legally binding on the parties. 7. Assignment MuniServices may assign this Agreement, in whole or in part, without your consent to any corporation or entity into which or with which MuniServices has merged or consolidated; any parent, subsidiary, successor or affiliated corporation of MuniServices; or any corporation or entity which acquires all or substantially all of the assets of MuniServices. Subject to the foregoing, this Agreement shall be binding upon and inure to the benefit of the parties and their successors or assigns. B. Public Release and Statements. Neither you nor we nor each of our representatives or agents shall disseminate any oral or written advertisement, endorsement or other marketing material relating to each other's activities under this Agreement without the prior written approval of the other Party. No Party or its agent will use the name, mark or logo of the other Party in any advertisement or printed solicitation without first having prior written approval of the other Party. The Parties shall take reasonable efforts to ensure that its Subcontractors shall not disseminate any oral or written advertisement, endorsement or other marketing materials referencing or relating to the other Party without that Party's prior written approval. In addition, the Parties agree that their contracts with all Subcontractors will include appropriate provisions to ensure compliance with the restrictions of this Section. 9. Entire Agreement. This Agreement is the entire Agreement between us and you for the Service(s). This Agreement supersedes and replaces any prior Agreements, of whatever kind or nature, for the Service(s) Any prior Agreements, discussions, or representations not expressly set forth in this Agreement are of no force or effect. No additional terms, Purchase Order Terms and Conditions, or oral or written representations of any kind are of any force and effect unless in writing and signed with the same formality as this Agreement 10. No Oral Modification. No modification of this Agreement is effective unless set forth in writing and signed with the same formality as this Agreement. 11. Invalidity. If any provision of this Agreement is determined to be invalid, illegal, or unenforceable, the remaining provisions of this Agreement remain in full force, if the essential provisions of this Agreement for each party remain valid, binding, and enforceable. 12. Construction. This Agreement is to be construed in accordance with the laws of the State of Texas without regard to its conflict of laws principals. 13. Headings. The section headings herein are for convenience and reference purposes only and are not to serve as a basis for construction or interpretation. 14. Records. At any time during the term of the contract, or thereafter, the City, or a duly authorized audit representative of the City or the State of Texas, at its expense and at reasonable times, reserves the right to audit MuniServices records and books relevant to all services provided to the City under this Contract. In the event such an audit by the City reveals any errors or overpayments by the City, MuniServices shall refund the City the full amount of such overpayments within thirty (30) days of such audit findings, or the City, at its Lubbock, TX - SUTA, HOT, FF- rev 010713 18 (0,MU ISEr VICES option, reserves the right to deduct such amounts owing the City from any payments due MuniServices. 15. Insurance. MuniServices shall obtain and and maintain in full force and effect during the term of this Agreement, commercial general liability, professional liability and automobile liability coverage with insurance carriers permitted to do business in the state of Texas. The insurance companies must carry a Best's Rating of A -VII or better. The policies will be written on an occurrence basis, subject to the following minimum limits of liability: Commercial General Liability: $1,000,000 General Aggregate Products-Comp/Op AGG Personal &Adv. Injury Contractual Liability Professional Liability Automobile Liability: $1,000,000 Combined Single Limit for any auto: The City shall be named as additional insured with respect to the Automobile and Commercial General Liability on a primary and non-contributory bases and shall be granted a waiver of subrogration under those policies. MuniServices shall provide a Certificate of Insurance to the City as evidence of coverage. The Certificate shall provide 30 days notice of cancellation. A copy of the additional insured endorsement and waiver of subrogration attached to the policy will be included in the Certificate. Copies of all endorsements are required. 16. Remedy. The City reserves the right to exercise any right or remedy to it by law, contract, equity, or otherwise, including without limitation, the right to seek any and all forms of relief in a court of competent jurisdiction. Further, the City shall not be subject to any arbitration process prior to exercising its unrestricted right to seek judicial remedy. The remedies set forth herein are cumulative and not exclusive, and may be exercised concurrently. To the extent of any conflict between this provision and another provision in, or related to, this document, this provision shall control. Lubbock, TX - SUTA, HOT, FF- rev 010713 I9 MUNISERVICES n.i.S.wt4.J.y:i Rr4. i.-�.wavw A:. Attachment 3 MuniServices Helpful Contacts Contact Project Role Phone Email Brenda Anderson Client Services Manager 817.771.4066 Brenda.anderson@muniservices.com Doug Jensen Sr. VP Client Services 559.288.8943 Lisa Broussard Vice President Client Services 713.459.5079 lisa.broussardC@muniservices.com Andrea Hunter Vice President Audit Services 205.533.0297 ahunter@revds.com Janis Varney Vice President Misallocation 559.271.3011 i . i Kyle Kasner VP Operations, Sales Tax Audit 972.814.6574 kyle.kasner0muniservices.cgm Kandi Warnock TOT Production Manager 817.905.7027 kandi.warnock@muniservices.com Kirk Dirnery Sales Tax Production Analyst 559.271.6836 kirk.dimeUftrnuniseryices.cgM Doug Estes Client Relations Manager 559.271.6868 i i Billing Department 559.271.6946 illi Omuniservices.com Francesco Mancia VP Government Relations 559.288.7296 fran.manciaCtmuniservices.com Brenda Nara an Dir. of Government Relations 916.261.5147 ren a.n r n muni rvi a .c m Patricia A. Dunn Contracts Manager 559.271.6852 i ia.d nn muni rvi m Lubbock, TX - SUTA, HOT, FF- rev 010713 20 iM/iwNISEFnncES