HomeMy WebLinkAboutStaff Report 2507-4964CITY OF PALO ALTO
CITY COUNCIL
Monday, October 20, 2025
Council Chambers & Hybrid
5:30 PM
Agenda Item
6.Approval of Contract Amendment No. 1 to Contract No. C23187298C with Hinderliter, de
Llamas, and Associates (HdL) for Business Tax and Business Registry Certificate Fee
Administration Services in the Amount of $750,000 for Additional Administrative and
Operational Services and $2,120,000 Contingent Fees for a Revised Total Not-To-Exceed
Amount of $2,870,000, to Extend the Term by Two Years to June 30, 2028, and Approve a
Budget Amendment in the General Fund (Requires 2/3 vote); CEQA Status – Not a Project
City Council
Staff Report
From: City Manager
Report Type: CONSENT CALENDAR
Lead Department: Administrative Services
Meeting Date: October 20, 2025
Report #:2507-4964
TITLE
Approval of Contract Amendment No. 1 to Contract No. C23187298C with Hinderliter, de
Llamas, and Associates (HdL) for Business Tax and Business Registry Certificate Fee
Administration Services in the Amount of $750,000 for Additional Administrative and
Operational Services and $2,120,000 Contingent Fees for a Revised Total Not-To-Exceed
Amount of $2,870,000, to Extend the Term by Two Years to June 30, 2028, and Approve a
Budget Amendment in the General Fund (Requires 2/3 vote); CEQA Status – Not a Project
RECOMMENDATION
Staff recommends that the City Council:
1. Approve and authorize the City Manager or their designee to execute Amendment No. 1
to Contract No. C23187298C with Hinderliter, de Llamas, and Associates (HdL)
(Attachment A) for business tax and business registry certificate fee administration
services in the amount of $750,000 for Additional Administrative and Operational
Services and $2,120,000 Contingent Fees for a revised not-to-exceed amount of
$2,870,000, and extend the term by two years, through June 30, 2028; and
2. Amend the Fiscal Year 2026 Budget Appropriation Ordinance in the General Fund by:
a. Increasing estimate for Business Tax revenue by $250,000; and,
b. Increasing Administrative Services Department contract expense appropriation
by $250,000.
EXECUTIVE SUMMARY
Hinderliter, de Llamas, and Associates (HdL) provides tax and fee administration services for the
City’s Business Tax and Business Registry Certificate programs, including annual registration and
renewal, compliance, payment processing, and reporting.
Since launching in 2023, the Business Tax has generated $5 million to $6 million annually as
rates have increased from 3.75 cents to the full 7.5 cents per square foot. FY 2026 will be the
first fiscal year with fully phased-in tax rates. Consultant costs to administer the program have
remained less than 10% of total revenue, keeping most program dollars focused on voter-
approved priorities for transportation, affordable housing, and public safety. The Business
Registry Program continues to generate approximately $150,000 per year.
The proposed amendment increases the not-to-exceed amount by $2.0 million and extends the
contract term by two years, from June 2026 to June 2028 for a total term of five years. Almost
90% of this increase represents contingency-based compliance costs, meaning such fees would
only be incurred if compliance collections are necessary and successful. This includes prior year
discovery and collections that recovered previously unpaid revenue, as well as future
compliance phases such as targeted audits. About 10% of the contract increase represents flat-
rate administrative services, including new and recurring registrations, expanded outreach to
register a broader group of exempt businesses, and enhanced reporting.
Key Changes
Increase not-to-exceed by $2.0 million to reflect early implementation work and future
phases, especially compliance and audit
Extend contract two years to ensure service continuity and support program
stabilization
No added fixed costs; compliance services are funded by recovered revenue
BACKGROUND
In November 2022, voters approved a Business Tax on office space, with revenues designated
for transportation, affordable housing, and public safety1. The tax applies to businesses
occupying office space in the City and is assessed based on square footage. The Business
Registry Certificate (BRC) program has been in place since 2015 and requires all businesses
operating in the City to register annually2.
In early 2023, the City issued a Request for Proposals for tax and fee administration services
and received two bids. Following operational challenges with the initially selected vendor, the
City entered into a new agreement with HdL in August 20233. The contract includes fee
administration, compliance, payment processing, and reporting for both the Business Tax and
the existing BRC programs. HdL uses a mix of fixed-fee billing for operations and revenue-based
billing for compliance. While HdL provides day-to-day support for both programs and ensures
compliance with the Palo Alto Municipal Code, the City retains oversight and guides key
decisions on program implementation, interpretation, and policies.
Their scope of work includes:
Administration and Operations: Maintaining the business database, processing new
registrations and renewals, generating notices, and managing access to an online
1 The Business Tax is codified in Chapter 2.37 of the Palo Alto Municipal Code
2 The Business Registry is codified in Chapter 4.60 of the Palo Alto Municipal Code
3 City Council, February 5, 2024, Staff Report#: 2401-2481
taxpayer portal. Billed as a flat rate of $17.00 per account, adjusted annually based on
the Bay Area CPI.
Contingent Fee for Compliance: Discovery of unregistered businesses, collections,
resolving incomplete or unpaid filings, and audit services. Billed as a percentage of
revenue collected (25-35%).
Additional Services and Contingency: Handling of credit/echeck payments, other
reimbursable expenses for travel, and additional contingency services billed at flat rates.
The Business Tax portal opened in October 2023 to support businesses in filing for calendar
year 2023, marking the start of the City’s business tax program. Businesses submitted their first
filings in early 2024, and quarterly payments will continue as part of the program (currently
authorized through December 31, 2057).
For more information about the Business Tax and Business Registry programs, visit:
https://www.paloalto.gov/Business/Business-Registry-and-Tax
ANALYSIS
HdL provides comprehensive support for the City’s Business Tax and Business Registry
programs, including account registration, payment processing, quarterly filings, compliance
activities (such as discovery and collections), and customer service. The Business Registry
Certificate program continues under the same contract, with HdL maintaining account
renewals.
Since launching in 2023, the Business Tax has generated between $5 million and $6 million
annually as rates have phased in from 3.75 cents to 7.5 cents per square foot. In FY 2025,
revenues totaled $5.7 million, reflecting higher program compliance by businesses and a partial
year at the fully phased-in rate.
Collections began in January 2024 at 50% of the voter-approved rates as part of a phased
implementation, with full rates taking effect on January 1, 2025. FY 2026 will be the full fiscal
year in which all revenues reflect the fully phased-in rates. The Business Registry program
remains consistent, generating approximately $150,000 annually.
In the first two years of the Business Tax program, much of the work focused on establishing
core operations, registering active businesses, and resolving outstanding accounts to bring
them into compliance. The proposed amendment increases the not-to-exceed amount by $2.0
million and extends the contract term by two years, from June 2026 to June 2028. Most of this
increase is tied to contingency-based compliance costs. This includes prior-year discovery and
collections that successfully recovered previously unpaid revenue, as well as continued
compliance efforts and upcoming phases, such as targeted audits. A smaller share of funds
supports administrative services, including new and recurring registrations, expanded outreach
to a broader base of exempt businesses, and enhanced reporting.
Table # 1: Proposed Changes to Contract Scope by Task
Incurred
Costs FY24-25
Current
Agreement
Amendment
No. 1
Net
Change
Scope of Services
1) Administrative and Operational
Services
$170,000 $424,320 $640,000 $215,680
2) Contingent Fee for Compliance
Services*
$760,000 $352,275 $2,120,000 $1,767,725
3) Additional Services and
Contingency
$-$83,960 $110,000 $26,040
Total Scope of Service NTE $930,000 $860,555 $2,870,000 $2,009,445
Term of Service 3 Years 5 Years 2 Years
Expiration Date June 30, 2026 June 30, 2028
*Compliance Services include discovery and collections as well as planned audits for later phases. Costs are incurred
only when revenue is recovered.
1) Administrative and Operational Services
Administrative services fees are billed at a flat rate per account for annual registrations and
renewals. To date, routine filings have remained under the not-to-exceed limit and represent a
smaller share of the overall contract cost. The proposed increase in this category supports
ongoing annual registration work, renewals, and expanded outreach to exempt businesses. In
the initial years, work centered on registering businesses that were required to pay the tax,
with some outreach to exempt businesses. In future years, a greater share of activity will shift
toward registering exempt businesses to ensure comprehensive participation.
Staff and HdL are also working to enhance internal reporting capabilities, including geo-tagging
business locations, tracking square footage, and monitoring exemption status and filing trends.
These enhancements will provide better data to assess business activity, compliance trends,
and inform future planning and policy decisions.
2) Contingent Fee for Compliance Services
Compliance services, which account for a majority of the proposed $2.0 million increase, are
billed on a contingent fee basis, meaning costs are incurred only if revenue is successfully
recovered. This increase reflects time consuming discovery and collections work that
successfully recovered unpaid revenue during program launch, as well as anticipated future
activities such as planned audits and continued account resolution. This structure enables
compliance-related expenses to scale directly with activity rather than adding ongoing fixed
costs.
Since program launch, discovery and collection services have generated approximately $2.5
million in additional revenue as part of efforts to establish the program and bring accounts
current. The majority of this revenue reflects the base tax payments, while penalties and
interest represent a small and declining share as on-time filing and payment continue to
improve.
Near-term activity remains focused on continued discovery and collections, which include
identifying unregistered businesses, conducting outreach, resolving accounts, and collecting
unpaid tax from both the current and prior years. This outreach can be time consuming
requiring multiple attempts and discussions to on board unregistered and past due business. In
FY 2025, these compliance costs were approximately $510,000, or less than 10% of total
Business Tax revenue. Overall, these efforts have generated a return of nearly $4.00 in
previously unpaid taxes for every $1.00 spent. As the program matures, the volume of
discovery and collections is expected to decline as unregistered businesses are on boarded, and
compliance resources will shift toward audit services, which are more targeted and typically
lower in overall cost. This evolution is expected to gradually reduce ongoing compliance
expenses while maintaining a strong level of revenue recovery.
3) Additional Services or Contingency
There are no significant changes in this category from the original agreement. Costs remain
minimal and primarily reflect payment processing support, reimbursable travel expenses, and
other contingency services, which are incurred only when needed.
Outlook and Next Steps
The Business Tax program is still in its early stages and will continue to evolve as rates are fully
phased in and participation stabilizes. Staff will continue to monitor filing patterns, compliance
activity, and overall program performance, and will provide updated analysis and
recommendations in future financial updates as more data becomes available.
FISCAL/RESOURCE IMPACT
STAKEHOLDER ENGAGEMENT
7, and the ability to schedule one-on-one
consultations. These efforts have continued through the quarterly renewal process, where staff
and HdL actively engage with businesses, provide guidance on filing requirements, and offer
support to facilitate timely filings and ongoing compliance.
ENVIRONMENTAL REVIEW
ATTACHMENTS
APPROVED BY:
7 1) City of Palo Alto Business Tax Implementation
https://www.paloalto.gov/Business/Business-Registry-and-Tax/Business-Tax-Implementation-2023
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Page 1 of 12
AMENDMENT NO. 1 TO CONTRACT NO. C23187298C
BETWEEN THE CITY OF PALO ALTO AND
HINDERLITER DE LLAMAS & ASSOCIATES (HDL)
This Amendment No. 1 (this “Amendment”) to Contract No. C23187298C (the “Contract”
as defined below) is entered into as of September 29, 2025, by and between the CITY OF PALO
ALTO, a California chartered municipal corporation (“CITY”), and HINDERLITER DE LLAMAS
& ASSOCIATES (HDL), a California corporation, located at 120 S. State College Blvd. Suite 200,
Brea, California 92821 (“CONSULTANT”). CITY and [CONSULTANT or CONTRACTOR] are referred
to collectively as the “Parties” in this Amendment.
R E C I T A L S
A. The Contract (as defined below) was entered into by and between the Parties
hereto for the provision of administration, collection, enforcement, compliance, and audit
activities for the City’s business tax and business registry certificate program, as detailed therein.
B. The Parties now wish to amend the Contract in order to extend the term for an
additional two (2) years, changing expiration date from June 30, 2026 to June 30, 2028 and
increase the compensation value by Two Million Nine Thousand Four Hundred Forty Five Dollars
($2,009,445); changing total not to exceed compensation value from Eight Hundred Sixty
Thousand Five Hundred Fifty Five Dollars ($860,555) to Two Million Eight Hundred Seventy
Thousand Dollars ($2,870,000).
NOW, THEREFORE, in consideration of the covenants, terms, conditions, and provisions
of this Amendment, the Parties agree:
SECTION 1. Definitions. The following definitions shall apply to this Amendment:
a. Contract. The term “Contract” shall mean Contract No. C23187298C
between CONSULTANT and CITY, dated October 1, 2023, as amended by:
b. Other Terms. Capitalized terms used and not defined in this Amendment
shall have the meanings assigned to such terms in the Contract.
SECTION 2. Section 2. “TERM” of the Contract is hereby amended to read as follows:
“The term of this Agreement shall be from the date of its full execution through June 30, 202 8
unless terminated earlier pursuant to Section 19 (Termination) of this Agreement.”
SECTION 3. Section 4. “COMPENSATION” of the Contract is hereby amended to read as
follows:
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“The compensation to be paid to CONSULTANT for performance of the Services shall be based
on the compensation structure detailed in Exhibit C, entitled “COMPENSATION,” including any
reimbursable expenses specified therein, and the maximum total compensation shall not exceed
Two Million Seven Hundred Seventy Thousand Dollars ($2,770,000). The hourly schedule of
rates, if applicable, is set out in Exhibit C-1, entitled “SCHEDULE OF RATES.” Any work performed
or expenses incurred for which payment would result in a total exceeding the maximum
compensation set forth in this Section 4 shall be at no cost to the CITY.
Optional Additional Services Provision (This provision applies only if checked and a not-to-
exceed compensation amount for Additional Services is allocated below under this Section 4.)
In addition to the not-to-exceed compensation specified above, CITY has set aside the not -to-
exceed compensation amount of One Hundred Thousand Dollars ($100,000.00) for the
performance of Additional Services (as defined below). The total compensation for performance
of the Services, Additional Services and any reimbursable expenses specified in Exhibit C, shall
Two Million Eight Hundred Seventy Thousand Dollars ($2,870,000), as detailed in Exhibit C.
“Additional Services” means any work that is determined by CITY to be necessary for the proper
completion of the Project, but which is not included within the Scope of Services described at
Exhibit A. CITY may elect to, but is not required to, authorize A dditional Services up to the
maximum amount of compensation set forth for Additional Services in this Section 4.
CONSULTANT shall provide Additional Services only by advanced, written authorization from CITY
as detailed in this Section. Additional Services, if any, shall be authorized by CITY with a Task
Order assigned and authorized by CITY’s Project Manager, as identified in Section 13 (Project
Management). Each Task Order shall be in substantially the same form as Exhibit A -1, entitled
“PROFESSIONAL SERVICES TASK ORDER”. Each Task Order shall contain a specific scope of
services, schedule of performance and maximum compensation amount, in accordance with the
provisions of this Agreement. Compensation for Additional Services shall be specified by CITY in
the Task Order, based on whichever is lowest: the compensation structure set forth in Exhibit C,
the hourly rates set forth in Exhibit C-1, or a negotiated lump sum.
To accept a Task Order, CONSULTANT shall sign the Task Order and return it to CITY’s Project
Manager within the time specified by the Project Manager, and upon authorization by CITY
(defined as counter-signature by the CITY Project Manager), the fully executed Task Order shall
become part of this Agreement. The cumulative total compensation to CONSULTANT for all Task
Orders authorized under this Agreement shall not exceed the amount of compensation set forth
for Additional Services in this Section 4. CONSULTANT shall only be compensated for Additional
Services performed under an authorized Task Order and only up to the maximum amount of
compensation set forth for Additional Services in this Section 4. Performance of and payment
for any Additional Services are subject to all requirements and restrictions in this Agreement.”
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SECTION 4. The following exhibit(s) to the Contract is/are hereby amended or added, as
indicated below, to read as set forth in the attachment(s) to this Amendment, which is/are
hereby incorporated in full into this Amendment and into the Contract by this reference:
a. Exhibit “A” entitled “SCOPE OF SERVICES”, AMENDED, REPLACES
PREVIOUS.
b. Exhibit “B” entitled “SCHEDULE OF PERFORMANCE”, AMENDED, REPLACES
PREVIOUS.
c. Exhibit “C” entitled “COMPENSATION”, AMENDED, REPLACES PREVIOUS.
d. Exhibit “C-1” entitled “SCHEDULE OF RATES”, AMENDED, REPLACES
PREVIOUS.
SECTION 5. Legal Effect. Except as modified by this Amendment, all other provisions of
the Contract, including any exhibits thereto, shall remain in full force and effect.
SECTION 6. Incorporation of Recitals. The recitals set forth above are terms of this
Amendment and are fully incorporated herein by this reference.
(SIGNATURE BLOCK FOLLOWS ON THE NEXT PAGE.)
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SIGNATURES OF THE PARTIES
IN WITNESS WHEREOF, the Parties have by their duly authorized representatives
executed this Amendment effective as of the date first above written.
CITY OF PALO ALTO
City Manager
APPROVED AS TO FORM:
City Attorney or Designee
(Contract over $25k)
HINDERLITER DE LLAMAS &
ASSOCIATES (HDL)
Officer 1
By:
Name:
Title:
Officer 2 (Required for Corp. or LLC)
By:
Name:
Title:
Attachments:
- EXHIBIT A – SCOPE OF SERVICES, AMENDMENT NO.1 (AMENDED, REPLACES PREVIOUS)
- EXHIBIT B – SCHEDULE OF PERFORMANCE, AMENDMENT NO.1 (AMENDED, REPLACES
PREVIOUS)
- EXHIBIT C – COMPENSATION, AMENDMENT NO.1 (AMENDED, REPLACES PREVIOUS)
- EXHIBIT C-1 – SCHEDULE OF RATES, AMENDMENT NO.1 (AMENDED, REPLACES
PREVIOUS)
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Vice President
Robert Gray
CFO
Richard Park
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EXHIBIT A
SCOPE OF SERVICES, AMENDMENT NO.1
(AMENDED, REPLACES PREVIOUS)
CONSULTANT shall provide the Services detailed in this Exhibit A, entitled “SCOPE OF
SERVICES”. CONSULTANT shall provide the Services detailed in this Exhibit A, entitled
“SCOPE OF SERVICES”. Notwithstanding any provision herein to the contrary,
CONSULTANT’s duties and services described in this Scope of Services shall not include
preparing or assisting CITY with any portion of CITY’s preparation of a request for proposals,
request for qualifications, or any other solicitation regarding a subsequent or addi tional contract
with CITY. CITY shall at all times retain responsibility for public contracting, including with
respect to any subsequent phase of this project. CONSULTANT’s participation in the planning,
discussions, or drawing of project plans or specifications shall be limited to conceptual,
preliminary, or initial plans or specifications. CONSULTANT shall cooperate with CITY to ensure
that all bidders for a subsequent contract on any subsequent phase of this project have access to
the same information, including all conceptual, preliminary, or initial plans or specifications
prepared by CONSULTANT pursuant to this Scope of Services
CONSULTANT (HdL) will provide the following monthly recurring services relative to the
administration, collection, enforcement, compliance, and audit activities for the City’s business
tax and business registry certificate program:
Task 1:
1. Operations Management Services
1.1. Establish and maintain database of businesses for the business registry certificate
program and business tax.
1.2. Receive and process, in a timely fashion:
1.2.1. Business registry applications, renewals and payments, and.
1.2.2. Business tax filings, amended returns, and payments.
1.3. Renewal and payment notices:
1.3.1. Business registry renewal notices will be sent renewal notices to active businesses within
30 days of the renewal period end date or at another interval specified by CITY.
1.3.2. Business tax payment reminder notices will be sent within 30 days of the tax payment
due date or at another interval specified by CITY.
1.4. Provide businesses multiple options for submitting applications, renewals, tax filing,
payments, or support requests (including via website, email, mail, phone, and fax).
1.4.1. Have experience and capabilities to process business payments, renewals, delinquent
payments and ongoing monitoring and administration of CITY’s business registry certificate
program and business tax, as described in the CITY’s municipal code, ordinances, policies and
program procedure manuals.
1.4.2. Consultant specialists will be available for live interactions Monday through Friday,
8:00am to 5:00pm Pacific).
1.4.3. Respond to business correspondence via return phone call or written correspondence
within 24 hours.
1.5. Remit revenue to CITY no less than monthly, along with detail of business registry
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applications, business tax filings, and any additional documentation.
1.6. Provide CITY staff access to website portal offering business registry inquiry, reporting,
and electronic department approval capabilities.
Task 2:
2. Compliance Services: 1) Identify and register businesses which are subject to business
registry certificate program and/or business tax, 2) collect known debt as pertains to business
registry certificate and/or business tax, and 3) identify under-reported registration fee and/or tax
liability.
2.1. Discovery Services
2.1.1. Develop a list of businesses subject to CITY business registry certificate or taxation.
2.1.2. Notify non-compliant businesses of their options to comply or dispute their non-
compliant status. Notification and support to businesses will be facilitated through the website,
mail, email, phone and/or fax.
2.1.3. Review information and forms submitted by the business for completion and accuracy,
inclusive of any additional required documentation (i.e. home occupation permit). All
submissions are filed and stored electronically and made available to CITY upon request.
2.1.4. Provide businesses with detailed invoicing and options to pay via website, mail, and
phone.
2.1.5. Remit revenue to CITY no less than monthly, along with detail of business registry
applications, business tax filings, and any additional documentation.
2.2. Collection Services
2.2.1. Identify businesses subject to CITY business registry certificate or taxation which have
known debt to CITY and have failed to pay within an appropriate time frame.
2.2.2. Notify businesses of their options to comply or dispute their non-compliant status.
2.2.3. Provide businesses with detailed invoicing and options to pay via website, mail and
phone.
2.2.4. Remit revenue to CITY no less than monthly, along with detail of business registry
applications, business tax filings, and any additional documentation.
2.3. Audit Services
2.3.1. Identify potential under-reporting and/or misclassified businesses.
2.3.2. Audit businesses mutually agreed to by CITY and CONSULTANT that are identified as
potential under-reporting businesses.
2.3.3. Submit audit summaries to CITY and discuss further actions.
2.3.4. Educate businesses on proper reporting practices.
2.3.5. Invoice and collect identified delinquencies.
3. Payment Processing – services include PCI compliant payment processing services
powered by FIS Global, which supports both credit card (taxpayer funded) and eCheck (CITY
funded) transactions.
Task 3:
3.1. CITY Responsibilities
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3.1.1. As a condition to its receipt of the Service, CITY shall execute and deliver any and all
applications, agreements, certifications or other documents required by FIS Global, Networks or
other third parties whose consent or approval is necessary for the processing of Transactions by
FIS Global. “Network” is an entity or association that operates, under a common service mark, a
system which permits participants to authorize, route, and settle Transactions among themselves,
including, for example, networks operated by VISA USA and Mastercard, Inc., NYCE
Corporation, American Express, and Discover.
3.1.2. CITY hereby grants CONSULTANT the full right, power and authority to request,
receive and review any Data or records reflected in a Transaction report. CITY represents and
warrants that it has the full right and authority to grant these rights.
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EXHIBIT B
SCHEDULE OF PERFORMANCE
CONSULTANT shall perform the Services so as to complete each milestone within the number
of days/weeks specified below. The time to complete each milestone may be increased or
decreased by mutual written agreement of the Project Managers for CONSULTANT and CITY so
long as all work is completed within the term of the Agreement. CONSULTANT shall provide a
detailed schedule of work consistent with the schedule below within 2 weeks of receipt of the
notice to proceed (“NTP”) from the CITY.
Milestones
Completion
Number of Days/Weeks (as specified below)
from NTP
1. Task 1: Operations Management Services Recurring monthly service within term of
Agreement, with first collection cycle beginning
October 2023; filing and collection occurring
quarter beginning January 2024.
2. Task 2: Compliance Services
a. Discovery
b. Collection
c. Audit
Recurring monthly service within term of
Agreement.
3. Task 3: Payment Processing Recurring monthly service within term of
Agreement.
Optional Schedule of Performance Provision for On-Call or Additional Services Agreements.
(This provision only applies if checked and only applies to on-call agreements per Section 1 or
agreements with Additional Services per Section 4.)
The schedule of performance shall be as provided in the approved Task Order, as detailed in
Section 1 (Scope of Services) in the case of on-call Services, or as detailed in Section 4 in the case
of Additional Services, provided in all cases that the schedule of performance shall fall within the
term as provided in Section 2 (Term) of this Agreement.
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EXHIBIT C
COMPENSATION, AMENDMENT NO.1
(AMENDED, REPLACES PREVIOUS)
AMENDMENT
NO.1
AMENDMENT
NO.1
BUDGET SCHEDULE RATE EST. UNIT
NOT TO
EXCEED
AMOUNT
(5 YEARS)
YEAR 1
FY 2024
(10/1/2023-
6/30/2024)
YEAR 2
FY 2025
YEAR 3
FY 2026
YEAR 4
FY 2027
YEAR 5
FY 2028
TASK 1: Operations Management Services
Includes all sub-tasks under Task 1 of Scope of
Services. Fees are increase as of July 1 of each year
based on the 12-month Bay Area Consumer Price
Index (Urban Wage Earners and Clerical Workers, San
Francisco-Oakland-San Jose) as of March 31, not to
exceed 5%
Max.
Annual
CPI Adj 4% 4%
Per processed account fee - any account for which an
application or renewal/return was processed, or active
account which was sent a renewal notice $17.00
8,000 $640,000.00 $85,000.00 $85,000.00 $130,000.00 $170,000.00 $170,000.00
TASK 2: Compliance Services
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2.1: Discovery Services
Contingency percentage applies to all monies received
for the current tax/license period and any other period
collected (including monies received for taxes,
penalties, interest, and fees).
In the event that CITY discovers a non-compliant
business and report to CONSULTANT, activity will be
categorized as a collection service effort rather than
discover effort. 35%
170,000 $260,000.00 $60,000.00 $60,000.00 $60,000.00 $40,000.00 $40,000.00
2.2: Collection Services
Contingency percentage applies to revenues received
as a result of compliance services. 25%
1,600,000 $1,700,000.00 $200,000.00 $450,000.00 $400,000.00 $350,000.00 $300,000.00
2.3: Audit Services
Contingency percentage applies to revenues received
as a result of audit services. 35%
115,000 $160,000.00 N/A N/A $40,000.00 $60,000.00 $60,000.00
Sub-Total Compliance Services $2,120,000.00 $260,000.00 $510,000.00 $500,000.00 $450,000.00 $400,000.00
TASK 3: Payment Processing
Taxpayer Funded:
Credit and debit card processing CITY authorizes
CONSULTANT to collect convenience fee from
taxpayer at the time of payment. 2.90% N/A N/A N/A N/A N/A N/A N/A
Taxpayer Funded:
Returned payment/NSF fee, each occurrence. 25% N/A N/A N/A N/A N/A N/A N/A
City Funded:
ACH/eCheck processing per transaction fee. $0.50
2,000 $5,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00
TOTAL BASIC SERVICES
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REIMBURSEABLE EXPENSES $5,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00
ADDITIONAL SERVICES OR CONTINGENCY $100,000.00 $20,000.00 $20,000.00 $20,000.00 $20,000.00 $20,000.00
TOTAL NOT-TO-EXCEED $2,870,000.00 $367,000.00 $617,000.00 $652,000.00 $642,000.00 $592,000.00
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EXHIBIT C-1
COMPENSATION, AMENDMENT NO.1
(AMENDED, REPLACES PREVIOUS)
YEAR 1 through 5, ADDITIONAL SERVICES
Title
Hourly Rate
Principal $325
Programmer $295
Senior Analyst $245
Analyst $195
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