HomeMy WebLinkAbout2001-02-13; City Council; 16052; Agreement Capuchino & Associates Tax AuditingCITY OF CARLSBAD - AGENDA BILL
AGREEMENT WITH CAPUCHINO & ASSOCIATES
BUSINESS LICENSE TAX AUDITING
RECOMMENDED ACTION:
Adopt Resolution No. &C\ - qo approving the agreement with Capuchino & Associates to
perform certain transient occupancy tax (TOT) and business license tax audits.
ITEM EXPLANATION:
Overview
One of the goals, as set by the Carlsbad City Council, is to develop and implement proactive
strategies to ensure the financial health of the Community and the City. Two of the City’s many
revenue sources are TOT and business license taxes. Business license tax guidelines are outlined in
Carlsbad Municipal Code Chapters 5.04 and 5.08, whereas TOT guidelines are outlined in Carlsbad
Municipal Code Chapter 3.12.
Recently, the City embarked on a public awareness campaign to actively purse the licensing of all
businesses in Carlsbad. This program was highly successful in that we gained compliance with over
300 additional businesses operating in Carlsbad. However, we have identified organizations still
operating in the City without a valid license. We would like to obtain the assistance of an outside
auditing firm to assist the City in gaining compliance with these businesses.
Another significant revenue source for the City is transient occupancy tax. The City currently has 30
hotels offering over 3,100 rooms for tourist lodging. Staff would like to ensure that these hotels are
properly collecting and remitting TOT to the City. The selected firm would again provide assistance to
the City in obtaining this compliance.
Selection of Firm Staff evaluated six proposals that were received by the City. Firms were evaluated based on
experience, references, cost and audit approach. Based on this criteria, Capuchino & Associates was
selected by staff.
Capuchino & Associates specializes in providing revenue recovery audits, ordinance compliance
reviews and related consulting services to local governmental agencies. Capuchino & Associates has
provided these services to the City in the past, and the City has seen positive results.
FISCAL IMPACT:
Although cost was not a primary factor in the selection, bids for TOT audits ranged anywhere from
$750 per hotel to $2,500 per hotel. Bids for business license audits ranged from a low of $300 per
audit, to $2,500 per business establishment. The bid from Capuchino & Associates was the lowest
for both TOT and business license audits. Staff would like to enter into a five-year contract with
Capuchino & Associates, for an annual amount not to exceed $15,000 per year. Sufficient funds are
available in the Finance budget for the current year costs of $15,000. Future annual costs would be
appropriated for during the normal budgeting process.
EXHIBITS:
1. Resolution No. a I- 30 approving agreement with Capuchino & Associates to perform . certain transient occupancy tax’(TOT) and business license tax audits.
2. Agreement with Capuchino & Associates.
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RESOLUTION NO. 2001-40
A RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF CARLSBAD, CALIFORNIA, APPROVING THE
AGREEMENT WITH CAPUCHINO &ASSOCIATES TO PERFORM TRANSIENT OCCUPANCY TAX AND
BUSINESS LICENSE TAX AUDITING
WHEREAS, a goal of the City Council is to develop and
implement proactive strategies to ensure the financial health of the
Community and the City; and
WHEREAS, business license tax guidelines are outlined in
City Council Ordinance 5.04 and 5.08; and
WHERAS, transient occupancy tax guidelines are outlined
in City Council Ordinance 3.12; and
WHEREAS, staff has identified organizations doing
business in Carlsbad without a valid business license; and
WHEREAS, staff would like to ensure compliance with the
business license and transient occupancy tax ordinances; and
WHEREAS, bids from auditing firms have been solicited,
accepted, and evaluated; and
WHEREAS, Capuchino & Associates has been
determined to be the most qualified at a reasonable cost; and
Budget.
WHEREAS, funding is available in the 2000-01 Operating
Ill
III
II!
III
NOW, THEREFORE, BE IT RESOLVED by the City
Council of the City of Carlsbad, California, as follows:
1. That the above recitations are true and correct.
2. That the agreement between Capuchino & Associates
and the City of Carlsbad is hereby approved and the
Mayor is hereby authorized and directed to execute
said agreement.
PASSED, APPROVED AND ADOPTED at a regular
meeting of the City Council on the 13th day of February ,2001, by
the following vote, to wit:
AYES: Council Members Lewis, Kulchin, Finnila, Nygaard
and Hall.
NOES: None
ABSENT: None
ATTEST:
-?7vmd- WOOD, City Clerk
(SEAL)
AGREEMENT BETWEEN THE CITY OF CARLSBAD
AND CAPUCHINO & ASSOCIATES
THIS AGREEMENT is made and entered into as of the day of 7
74 cc f4r.q , J 203, by and between the CITY OF CARLSBAD, a municipal
corporation, hereinafter referred to as “City”, and Capuchino & Associates, a sole
proprietor, hereinafter referred to as “Contractor.”
RECtTALS
City requires the services of an independent auditing firm to provide the
necessary auditing services to ensure adherence to the City’s Transient Occupancy
Tax and Business License ordinances; and Contractor possesses the necessary skills
and qualifications to provide the services required by the City;
NOW, THEREFORE, in consideration of these recitals and the mutual covenants
contained herein, City and Contractor agree as follows:
1. CONTRACTOR’S OBLiGATIONS
Contractor will provide the following professional auditing services to the City
of Carlsbad:
l Audits of selected hotels in the City to ensure adherence to the City’s Transient
Occupancy Tax (TOT) ordinance and proper reporting.
l Audits of selected businesses conducting business in the City to ensure
adherence to the City’s Business License ordinance and proper reporting.
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rev. 4124100
fi& /t&!&J ;; I:, , ,: J ,i ! t J
2. CITY OBLIGATIONS
The City shall provide listings of selected businesses and hotels to be audited,
copies of all applicable ordinances, copies of all previously filed tax returns for selected
businesses, and be available to answer questions.
3. PROGRESS AND COMPLETION
The work under this contract will begin within ten (IO) days after receipt of
notification to proceed by the City and each audit shall be completed within 60 days of
receiving authorization by the City to proceed. Extensions of time may be granted if
requested by the Contractor and agreed to in writing by the Finance Director. The
Finance Director will give allowance for documented and substantiated unforeseeable
and unavoidable delays not caused by a lack of foresight on the part of the Contractor,
or delays caused by City inaction or other agencies’ lack of timely action.
4. FEES TO BE PAID TO CONTRACTOR
Fees for the assigned audits will be paid at a standard rate of $50.00 per hour for
travel time, completion of the field assignment analysis, preparation of the report
findings, and interfacing with the City staff. Transient occupancy tax audits will not
exceed $750.00 per audit and business license audits will not exceed $300.00 per
audit. Mileage will be reimbursed at $325 per mile. The Contractor may bill the City on
a monthly basis for the completed audits and appropriate reports filed with the City.
The total fee payable for all services to be performed shall not exceed $15,000.00 per
fiscal year, subject to the annual appropriation of funds by the City Council. No other
compensation for services will be allowed except those items covered by supplemental
agreements per Paragraph 8, “Changes in Work.”
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rev. 4/24/00
5. DURATION OF CONTRACT
This Agreement shall extend for a period of three (3) years from date thereof,
subject to the provisions of Paragraph Eleven, “Termination of Contract,” and annual
appropriation of funds by the City Council. The Agreement may be extended by the
City Manager for one (I) additional two (2) year period or part thereof, based upon a
review of satisfactory performance, annual appropriation of funds by the City Council
and the City’s needs. The parties shall prepare extensions in writing indicating effective
date and length of the extended Agreement.
6. PAYMENT OF FEES
Payment of approved items on the invoice shall be mailed to the Contractor
within 30 days of receipt of the invoice.
7. FINAL SUBMISSIONS
The Contractor will prepare a written summary of findings, including a detailed
analysis of all tax deficiencies, interest and penalties. The Contractor will also discuss
all the findings as well as the entire analyses and recommendations in details with the
City.
8. CHANGES IN WORK
If, in the course of the contract, changes seem merited by the Contractor or the
City, and informal consultations with the other party indicate that a change in the
conditions of the contract is warranted, the Contractor or the City may request a change
in contract. Such changes shall be processed by the City in the following manner: A
letter outlining the required changes shall be forwarded to the City by Contractor to
rev. 4124/00
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inform them of the proposed changes along with a statement of estimated changes in
charges or time schedule. A Standard Amendment to Agreement shall be prepared by
the City and approved by the City according to the procedures described in Carlsbad
Municipal Code Section 3.28.172. Such Amendment to Agreement shall not render
ineffective or invalidate unaffected portions of the agreement.
9. COVENANTS AGAINST CONTtNGEMT FEES
The Contractor warrants that their firm has not employed or retained any
company or person, other than a bona fide employee working for the Contractor, to
solicit or secure this agreement, and that Contractor has not paid or agreed to pay any
company or person, other than a bona fide employee, any fee, commission,
percentage, brokerage fee, gift, or any other consideration contingent upon, or resulting
from, the award or making of this agreement. For breach or violation of this warranty,
the City shall have the right to annul this agreement without liability, or, in its discretion,
to deduct from the agreement price or consideration, or otherwise recover, the full
amount of such fee, commission, percentage, brokerage fees, gift, or contingent fee.
10. ANTI-DISCRIMINATION AND ANTI-HARASSMENT CLAUSE
The Contractor shall comply with all applicable state and federal laws and
regulations prohibiting discrimination and harassment.
11. TERMINATION OF CONTRACT
In the event of the Contractor’s failure to prosecute, deliver, or perform the work
as provided for in this contract, the City Manager may terminate this contract for
nonperformance by notifying the Contractor by certified mail of the termination of the
Contractor. The Contractor, thereupon, has five (5) working days to deliver said
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7
documents owned by the City and all work in progress to the Finance Director. The
Finance Director shall make a determination of fact based upon the documents
delivered to City of the percentage of work which the Contractor has performed which is
usable and of worth to the City in having the contract completed. Based upon that
finding as reported to the City Manager, the Manager shall determine the final payment
of the contract.
This agreement may be terminated by either party upon tendering thirty (30)
days written notice to the other party. In addition, if, for any reason, any of the five (5)
years covered by this agreement, the City Council elects not to appropriate funds for
the agreement, the City shall notify the Contractor within five (5) business days of the
City Council’s decision. In such instance, this agreement will terminate automatically at
the end of the last fiscal year for which funds have been appropriated.
In the event of voluntary or automatic termination of this agreement, and upon
request of the City, the Contractor shall assemble the work product and put same in
order for proper filing and closing and deliver said product to City. The Contractor shall
be paid for work performed to the termination date; however, the total shall not exceed
the lump sum fee payable under paragraph 4. The City Manager shall make the final
determination as to the portions of tasks completed and the compensation to be made.
12. CLAIMS AND LAWSUITS
The Contractor agrees that any contract claim submitted to the City must be
asserted as part of the contract process as set forth in this agreement and not in
anticipation of litigation or in conjunction with litigation. The Contractor acknowledges
that if a false claim is submitted to the City, it may be considered fraud and the
rev. 4/24/00
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Contractor may be subject to criminal prosecution. The Contractor acknowledges that
California Government Code sections 12650 et seq., the False Claims Act, provides for
civil penalties where a person knowingly submits a false claim to a public entity. These
provisions include false claims made with deliberate ignorance of the false information
or in reckless disregard of the truth or falsity of information. If the City of Carlsbad seeks
to recover penalties pursuant to the False Claims Act, it is entitled to recover its
litigation costs, including attorney’s fees. The Contractor acknowledges that the filing of
a false claim may subject the Contractor to an administrative debarment proceeding
wherein the Contractor may be prevented to act as a Contractor on any public work or
improvement for a period of up to five years. The Contractor acknowledges debarment
by another jurisdiction is grounds for the City of Carlsbad to disqualify the Contractor
from the selection process. W (Initial) (Initial) The provisions of
Carlsbad Municipal Code sections 3.32.025, 3.32.026, 3.32.027 and 3.32.028
pertaining to false claims are incorporated herein by reference. lYb I (Initial)
(Initial)
13. JURISDICTION
The Contractor agrees and hereby stipulates that the proper venue and
jurisdiction for resolution of any disputes between the parties arising out of this
agreement is San Diego County, California.
14. STATUS OF THE CONTRACTOR
The Contractor shall perform the services provided for herein in Contractor’s own
way as an independent Contractor and in pursuit of Contractors independent calling,
and not as an employee of the City. Contractor shall be under control of the City only
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rev. 4/24/00
as to the result to be accomplished, but shall consult with the City as provided for in the
request for proposal. The persons used by the Contractor to provide services under this
agreement shall not be considered employees of the City for any purposes whatsoever.
The Contractor is an independent Contractor of the City. The payment made to
the Contractor pursuant to the contract shall be the full and complete compensation to
which the Contractor is entitled. The City shall not make any federal or state tax
withholdings on behalf of the Contractor or its employees or subcontractors. The City
shall not be required to pay any workers’ compensation insurance or unemployment
contributions on behalf of the Contractor or its ‘employees or subcontractors. The
Contractor agrees to indemnify the City within 30 days for any tax, retirement
contribution, social security, overtime payment, unemployment payment or workers’
compensation payment which the City may be required to make on behalf of the
Contractor or any employee or subcontractor of the Contractor for work done under this
agreement or such indemnification amount may be deducted by the City from any
balance owing to the Contractor.
The Contractor shall be aware of the requirements of the immigration Reform
and Control Act of 1986 and shall comply with those requirements, including, but not
limited to, verifying the eligibility for employment of all agents, employees,
subcontractors and Consultants that are included in this agreement.
rev. 4/24/00
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15. CONFORMITY TO LEGAL REQUIREMENTS
The Contractor shall cause all drawings and specifications to conform to all
applicable requirements of law: federal, state and local. Contractor shall provide all
necessary supporting documents, to be filed with any agencies whose approval is
necessary.
The City will provide copies of the approved plans to any other agencies.
16. OWNERSHIP OF DOCUMENTS
All plans, studies, sketches, drawings, reports, and specifications as herein
required are the property of the City, whether the work for which they are made be
executed or not. In the event this contract is terminated, all documents, plans,
specifications, drawings, reports, and studies shall be delivered forthwith to the City.
Contractor shall have the right to make one (1) copy of the plans for its records.
17. REPRODUCTION RIGHTS
The Contractor agrees that all copyrights which arise from creatSon of the work
pursuant to this contract shall be vested in City and hereby agrees to relinquish all
claims to such copyrights in favor of City.
18. HOLD HARMLESS AGREEMENT
Contractor agrees to indemnify and hold harmless the City of Carlsbad and its
officers, officials, employees and volunteers from and against all claims, damages,
losses and expenses including attorneys fees arising out of the performance of the
work described herein caused by any willful misconduct, or negligent act, or omission of
the contractor, any subcontractor, anyone directly or indirectly employed by any of them
or anyone for whose acts any of them may be liable.
rev. 4/24/00 -a -
19. ASSIGNMENT OF CONTRACT
The Contractor shall not assign this contract or any part thereof or any monies
due thereunder without the prior written consent of the City.
20. SUBCONTRACTING
No subcontracting will be allowed unless it is authorized in advance by the City in
writing. If the Contractor shall subcontract any of the work to be performed under this
contract by the Contractor, Contractor shall be fully responsible to the City for the acts
and omissions of Contractor’s subcontractor and of the persons either directly or
indirectly employed by the subcontractor, as Contractor is for the acts and omissions of
persons directly employed by Contractor. Nothing contained in this contract shall
create any contractual relationship between any subcontractor of Contractor and the
City. The Contractor shall bind every subcontractor and every subcontractor of a
subcontractor by the terms of this contract applicable to Contractor’s work unless
specifically noted to the contrary in the subcontract in question approved in writing by
the City.
21. PROHIBITED INTEREST
No official of the City who is authorized in such capacity on behalf of the City to
negotiate, make, accept, or approve, or take part in negotiating, making, accepting, or
approving of this agreement, shall become directly or indirectly interested personally in
this contract or in any part thereof. No officer or employee of the City who is authorized
in such capacity and on behalf of the City to exercise any executive, supervisory, or
similar functions in connection with the performance of this contract shall become
directly or indirectly interested personally in this contract or any part thereof.
rev. 4/24/00
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22. VERBAL AGREEMENT OR CONVERSATION
No verbal agreement or conversation with any officer, agent, or employee of the
City, either before, during or after the execution of this contract, shall affect or modify
any of the terms or obligations herein contained nor entitle the Contractor to any
additional payment whatsoever under the terms of this contract.
23. SUCCESSORS OR ASSIGNS
Subject to the provisions of Paragraph 18, “Hold Harmless Agreement,” all
terms, conditions, and provisions hereof shall inure to and shall bind each of the parties
hereto, and each of their respective heirs, executors, administrators, successors, and .
assigns.
24. EFFECTWE DATE
This agreement shall be effective on and from the day and year first written
above.
25. CONFLICT OF INTEREST
The Contractor shall file a conflict of interest statement with the City Clerk in
accordance with the requirements of the City’s conflict of interest code incorporating
Fair Political Practices Commission Regulation 18700 as it defines a consultant. The
disclosure category shall be categories I, 2, 3 and 4.
26. INSURANCE
The Contractor shall obtain and maintain for the duration of the contract and any
and all amendments insurance against claims for injuries to persons or damage to
property which may arise out of or in connection with performance of the work
hereunder by the Contractor, his agents, representatives, employees or subcontractors.
rev. 4/24/00
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I3
Said insurance shall be obtained from an insurance carrier admitted and authorized to
do business in the State of California. The insurance carrier is required to have a
current Best’s Key Rating of not less than “A-Y and shall meet the City’s policy for
insurance as stated in Resolution No. 91-403.
A. Coveraaes and Limits.
Contractor shall maintain the types of coverages and minimum limits
indicated herein, unless a lower amount is approved by the City Attorney or City
Manager:
1. Comprehensive General Liability Insurance. $1 ,OOO,OOO combined
single-limit per occurrence for bodily injury, personal injury and property damage. If the
submitted policies contain aggregate limits, general aggregate limits shall apply
separately to the work under this contract or the general aggregate shall be twice the
required per occurrence limit.
2. Automobile Liability (if the use of an automobile is involved for
Contractors work for the City). $1 ,OOO,OOO combined single-limit per accident for bodily
injury and property damage.
3. Workers’ Compensation and Employer‘s Liability. Workers’
Compensation limits as required by the Labor Code of the State of California and
Employer’s Liability limits of $1 ,OOO,OOO per accident for bodily injury.
4. Professional Liability. Errors and omissions liability appropriate to
the contractor’s profession with limits of not less than $1 ,OOO,OOO per claim. Coverage
shall be maintained for a period of five years following the date of completion of the
work.
rev. 4/24/00
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B. Additional Provisions.
Contractor shall ensure that the policies of insurance required under this
agreement contain, or are endorsed to contain, the following provisions.
I. The City shall be named as an additional insured on all policies
excluding Workers’ Compensation and Professional Liability.
2. The Contractor shall furnish certificates of insurance to the City
before commencement of work.
3. The Contractor shall obtain occurrence coverage, excluding
Professional Liability which shall be written as claims-made coverage.
4. This insurance shall be in force during the life of the agreement and
any extension thereof and shall not be canceled without 30 days prior written notice to
the City sent by certified mail.
5. If the Contractor fails to maintain any of the insurance coverages
required herein, then the City will have the option to declare the Contractor in breach, or
may purchase replacement insurance or pay the premiums that are due on existing
policies in order that the required coverages may be maintained. The Contractor is
responsible for any payments made by the City to obtain or maintain such insurance
and the City may collect the same from the Contractor or deduct the amount paid from
any sums due the Contractor under this agreement.
27. RESPONSIBLE PARTIES
The name of the persons who are authorized to give written notices or to receive
written notice on behalf of the City and on behalf of the Contractor in connection with
the foregoing are as follows:
rev. 4/24/00
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For City:
For Contractor:
Title
Name
Address
Title
Name
Address
Finance Director
Lisa Hildabrand
1635 Faraday Avenue
Carlsbad, CA 92008
Chief Executive Officer
Al D. Capuchino
P. 0. Box 4489
Oceanside, CA 920524489
28. BUSINESS LICENSE
Contractor shall obtain and maintain a City of Carlsbad Business License for the
duration of the contract.
29. ENTIRE AGREEMENT
This agreement, together with any other written document referred to or
contemplated herein, along with the purchase order for this contract and its provisions,
embody the entire agreement and understanding between the parties relating to the
subject matter hereof. In case of conflict, the terms of the agreement supersede the
purchase order. Neither this agreement nor any provision hereof may be amended,
modified, waived or discharged except by an instrument in writing executed by the party
against which enforcement of such amendment, waiver or discharge is sought.
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rev. 4/24/00
’ 7 dayof z/PJ(rr Executed by Contractor thts ,200 I .
CITY OF CARLSBAD, a municipal CONTRACTOR:
Mayor
ATTEST:
(Proper notarial acknowledgment of execution by Contractor must be attached.
Chairman, president or vice-president and secretary, assistant secretary, CFO or
assistant treasurer must sign for corporations. Otherwise, the corporation must attach a
resolution certified by the secretary or assistant secretary under corporate seal
empowering the officer(s) signing to bind the corporation.)
APPROVED AS TO FORM:
RONALD R. BALL, City Attorney
By: & q/ fd&-- ~i/(-JA/<i
Deputy City Attorney
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rev. 4/24/00
State of
County of cV ~~~
On F&f~fv~ bTl ? EWbj 3 Date
personally appeared
before me,
pi\ 0. bp&~~Q
Name and iWe 01 Officer (&. “Jane Doe, Dldary PubW)
,
/ Name(s) of Signer(s) Id personally known to me
q proved to me on the basis of satisfactory evidence
CommisskmY 1186248
to be the personwwhose name(&Jare subscribed to the
within instrument and acknowledged to me that@!sMthey
executed the same in-ir authorized capacity&s),
ir signature(s) on the instrument the
upon behalf of which the persorT(
acted, executed the instrument.
WITNESS $kXK
Signature of Notary Public
Though the information below is not required by law, it may prove valuable to persons relying on the document and could prevent
fraudulent removal and reattachment of this form to another document.
Description of Attached Document
Title or Type of Document:
Document Date: Number of Pages:
Signer(s) Other Than Named Above:
Capacity(ies) Claimed by Signer(s)
Signer’s Name:
0 Individual
0 Corporate Officer
Title(s):
q Partner - q Limited Cl General
0 Attorney-in-Fact
cl Trustee
0 Guardian or Conservator
0 Other: Top of thumb here
Signer Is Representing:
Signer’s Name:
Cl individual
•i Corporate Officer
Title(s):
q Partner - q Limited 3 General
Cl Attorney-in-Fact
Cl Trustee
0 Guardian or Conservator
0 Other:
Signer Is Representing:
Top of thumb here
0 1996 National Notary Assaciation l 8236 Remmet Ave., P.O. Box 7134. Canoga Park, CA 91309-7134 Prod No. 5907 Reorder: Call Toll-Free 1-800-876-6827,