08 Staff Report.HdL Second Amendment
PREPARED BY: Gitta Ungvari
Finance Director
Reviewed by: Town Manager, Town Attorney, and Assistant Town Manager
110 E. Main Street Los Gatos, CA 95030 ● 406-354-6832
www.losgatosca.gov
TOWN OF LOS GATOS
COUNCIL AGENDA REPORT
MEETING DATE: 12/19/2023 ITEM NO: 8
DATE: December 12, 2023
TO: Mayor and Town Council
FROM: Laurel Prevetti, Town Manager
SUBJECT: Authorize the Town Manager to Execute a Second Amendment with HdL
Companies for Business License Operations Management Services for Up to
$70,000 Annually Through December 31, 2025 with the Total Contract Not to
Exceed $233,000, and Discontinue the Business License Late Fee Penalty
Waiver in the 2024 Calendar Year
RECOMMENDATION:
Staff recommends that the Council authorize the Town Manager to execute a second
amendment with HdL Companies for business license operations management services for up
to $70,000 annually through December 31, 2025 with the total contract not to exceed
$233,000, and discontinue the business license late fee penalty waiver in the 2024 calendar
year.
BACKGROUND:
In November 2022, Los Gatos voters approved Measure J, which modernized the Town’s
business license tax program. This was the first update to the program since 1991 and included
adjustments to flat rate fees, retailing gross receipts, and e-commerce, manufacturing,
wholesaling, and jobbing gross receipts. HdL Companies assisted the Town with the business
license modernization process (Attachment 3). Once those services were completed, the Town
executed a first amendment to the original agreement for business license tax and fee
administration services until December 31, 2023 (Attachment 2).
The Town requires all businesses located within Los Gatos and/or those that operate within Los
Gatos to obtain a business license. Annual renewal payments are due on January 2 of each year.
According to the Town Code, a 25% late fee penalty is assessed monthly, up to 100% on unpaid
balances.
PAGE 2 OF 3 SUBJECT: Authorize the Town Manager to Execute a Second Amendment with HdL Companies for Business License Tax Operations Management Services for Up to $70,000 Annually Through December 31, 2025 DATE: December 19, 2023
DISCUSSION:
With the second amendment, the Town would continue its current partnership with HdL
Companies (HdL) through December 31, 2025 to provide dedicated business license support to
Los Gatos businesses. Through the partnership, the Town’s business license application and
renewal process has been streamlined by offering online business license applications and
renewals. HdL is assisting with a variety of business license related tasks, including new
applications, annual renewals, payments, compliance inquiries, and other general support.
Staff is continuously monitoring and fine-tuning the business license application and renewal
process.
Since March 2020, to alleviate the impacts of the pandemic, the Town Council has been
working to remain supportive and adaptive to the community’s businesses. One of the steps
taken to support businesses included a business license late fee penalty suspension during the
pandemic emergency proclamation. Council continued the business license late fee penalty
waiver into 2023 to provide adequate time for businesses to adjust to the new process and fee
structure.
Discontinuing the late fee penalty waiver in 2024 would enable the Town enforce business
license compliance.
CONCLUSION:
Authorize the Town Manager to execute a second amendment with HdL Companies for
business license operation management services for the Town of Los Gatos for up to $70,000
annually through December 31, 2025 for a total contract amount not to exceed $233,000, and
discontinue the business license late fee penalty waiver in the 2024 calendar year.
FISCAL IMPACT:
The cost for business license administration a services is built into the FY 2023/24 operating
budget. Fees for the administration services are assessed for each processed account, so the
annual amount varies based on the number of active business licenses. Valid business license
holders also pay business license processing fees that partially cover the consulting fee and
staff time. The Town analyze the business license processing fee with the next comprehensive
cost allocation study and Council may choose to adjust it. Providing the online platform and
other HdL efficiencies enables businesses to pay on time, therefore staff estimates minimal
collection of late fee penalties.
PAGE 3 OF 3 SUBJECT: Authorize the Town Manager to Execute a Second Amendment with HdL Companies for Business License Tax Operations Management Services for Up to $70,000 Annually Through December 31, 2025 DATE: December 19, 2023
ENVIRONMENTAL ASSESSMENT:
This is not a project defined under CEQA, and no further action is required.
Attachments:
1. Second Amendment with HdL Compaines
2. First Amendment with HdL Companies
3. Original Agreement with HdL Companies