The council on Dec. 9 approved a contract with HdL Companies to provide audit and information services for Measure GG. (See related story on page 2.)
In November 2024, Seal Beach voters approved a new half-cent sales tax (see story) that will go into effect in April 2025.
The vote was unanimous.
This was a Consent Calendar item. Consent items are voted on collectively without discussion unless a council member pulls one for further discussion. Nothing was pulled from the Dec. 9 Consent Calendar.
Background
“The City of Seal Beach has been working with Hinderliter, de Llamas and Associates (HdL) since 1991,” according to the staff report by Finance Director Barbara Arenado.
“In 2019, the City and HdL entered into an agreement for HdL to provide transactions and use tax management services in order to assist the City in evaluating the accuracy of Measure ‘BB’ revenues,” Arenado wrote.
“Pursuant to these contracts, HdL helps the City to monitor payment of sales, transactions and use taxes collected by the State of California (State) and transmitted to the City by the California State Department of Tax and Fee Administration (CDTFA) to make sure the City is obtaining all appropriate general sales tax and Measure ‘BB’ revenues,” Arenado wrote.
According to the report, the Tax and Fee Administration considers Measure GG to be separate from the Bradley-Burns Uniform Local Sales and Use Tax Act and from Measure BB (the 2019 1-cent sales tax).
That means the council had to pass a separate resolution and separate agreement for Measure GG, according to the report.
“The City and HdL propose to combine the services already provided by HdL with respect to Measure “BB” revenues, and the additional services to be provided by HdL with respect to Measure “GG” revenues, into one professional services agreement, thereby amending the 2019 Agreement. Under the proposed Agreement, the revenues monitored from the 2018 Measure “BB” and the new revenues monitored from the 2024 Measure ‘GG’ will hereinafter be collectively referred to as ‘Measure GG Services.’ In accordance with the SBMC and State law, separate records will be kept by HdL and the City with respect to each ballot measure. No changes are being made to the 1991 Agreement relating to general sales tax,” Arenado wrote.
“Unlike sales taxes where HdL waits for a quarter to see if the State finds any errors on their own, HdL will begin examining and correcting the Measure ‘GG’ transactions tax allocations immediately. The sooner that that the audit begins, the sooner the paying agencies come into compliance,” Arenado wrote.
“According to HdL, in March 2024, the CDTFA will send a letter to each taxpayer in the region informing them of the new requirement. CDTFA will also send out press releases to the media and include an article in their quarterly Tax Information Bulletin,” Arenado wrote.
Cost
“For the first year of the Agreement, term fees of $200 per month will be billed quarterly for the transaction district reports relating to the combined Measure ‘GG’ Services that will be included in HdL’s quarterly sales tax analysis,” Arenado wrote.
“Upon renewal for a second one-year term, the same $200 monthly fee paid quarterly will be billed to the City,” Arenado wrote.
“Upon renewal for a third one-year term, the fee will increase to $300 per month, paid quarterly.
“For a fourth renewal term or any one-year renewal term thereafter, the $300 per month fee will increase based on the percent change in the Consumer Price Index and will also be paid quarterly. Additionally, for each one-year term, there is a flat fee of 25% for any recoveries of any Measure ‘GG’ revenue misallocated or unremitted,” Arenado wrote.
There is enough money in the 2024-25 budget to cover the cost of three months in the current fiscal year, according to the report.
