13 Staff Report.HdL Third Amendment with Attachments
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: 04/02/2024
DATE: March 25, 2024
TO: Mayor and Town Council
FROM: Laurel Prevetti, Town Manager
SUBJECT: Authorize the Town Manager to Execute a Third Amendment with HdL
Companies for Business License Consulting and Reviewing Services to Review
Draft Procedures for the Apportionment of Business License Taxes with
Netflix Inc. Not to Exceed $40,000 with a Total Contract Not to Exceed
$273,000
RECOMMENDATION:
Staff recommends that the Council authorize the Town Manager to execute a third amendment
with HdL Companies for business license consulting and reviewing services to review draft
procedures for the apportionment of business license taxes with Netflix Inc. not to exceed
$40,000 with a total contract not to exceed $273,000.
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). With the second amendment, the Town continued its partnership with HdL
Companies (HdL) through December 31, 2025 to provide dedicated business license support to
Los Gatos businesses.
Through this arrangement, the Town’s business license application and renewal process has
been streamlined by offering online business license applications and renewals.
PAGE 2 OF 3 SUBJECT: Authorize the Town Manager to Execute a Third Amendment with HdL Companies for Business License Consulting Services DATE: March 25, 2024
BACKGROUND (continued):
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
to improve the customer experience.
DISCUSSION:
During the 2024 business license renewal cycle, Netflix Inc.’s legal team reached out to Town
staff to memorialize the business license tax payment methodology in a draft written Agreed
Upon Procedure. Staff is recommending that the Town engage with HdL to guide the process
to ensure proper reporting practices and conformance with tax law. With this third
amendment, HdL would review the gross receipts and proposed apportionment methodology
and present the Town with their findings. The consultant would also conduct any necessary
follow up with staff regarding the tax renewal received in 2024 following the final
determination of the apportionment methodology.
CONCLUSION:
Authorize the Town Manager to execute a third amendment with HdL Companies for business
license consulting and reviewing services to review draft procedures for the apportionment of
business license taxes with Netflix Inc. not to exceed $40,000 with a total contract not to
exceed $273,000.
FISCAL IMPACT:
There are sufficient funds in the adopted budget to cover the cost of the consulting services.
ENVIRONMENTAL ASSESSMENT:
This is not a project defined under CEQA, and no further action is required.
Attachments:
1. Third Amendment with HdL Compaines
2. Second Amendment with HdL Compaines
3. First Amendment with HdL Companies
4. Original Agreement with HdL Companies
1 of
HdL Companies 3rd Amendment to Agreement
3rd AMENDMENT TO AGREEMENT
This AMENDMENT TO AGREEMENT is dated for identification this 2nd day of April, 2024 and amends that certain agreement for business license tax consulting services dated 04/05/2022, made by and between the Town of Los Gatos, ("Town,") and HdL Companies.(“Consultant.”)
RECITALS
A.Town and Consultant entered into a business license tax consulting services Agreement on
April 5th 2022, (“Agreement”), a copy of which is attached hereto and incorporated by
reference as Attachment 2 to this Amendment.
B.Town and Consultant entered into a first amendment for business license tax consulting
services Agreement on September 30th 2022, (“1st Amendment”), a copy of which is attached
hereto and incorporated by reference as Attachment 3 to this Amendment
C.Town and Consultant entered into a second amendment for business license tax consulting
services Agreement on December 19th 2023, (“2nd Amendment”), a copy of which is attached
hereto and incorporated by reference as Attachment 4 to this Amendment.
AMENDMENT
1.Section 2.1, “Scope of Services” is amended to include the additional services described inthe statement of work sent to the Town on March 25, 2024, which is hereby incorporatedby reference and attached as Attachment 1 to this Amendment.
2.Section 2.6, “Compensation," is amended to add the following paragraph: Compensationshall be increased by $40,000 for the additional services for a total agreement not toexceed $273,000.00. Of the additional $40,000 compensation, an initial payment of$20,000 shall be due within 30 days of contract amendment execution date. A second
payment of $20,000 shall be made after the work is complete. The total cost does notinclude any training or related travel expenses. Payment shall be based upon Town
approval of each task.
3.All other terms and conditions of the Agreement remain in full force and effect.
IN WITNESS WHEREOF, the Town and Consultant have executed this Amendment.
Town of Los Gatos Approved as to Consent:
By: _______________________________ By: ______________________________
Laurel Prevetti, Town Manager Robert Gray, CIO HdL Companies
Attachment 1
2
Department Approval:
_______________________________________
Gitta Ungvari
Finance Director
Approved as to Form: Attest:
______________________________ ______________________________
Gabrielle Whelan, Town Attorney Wendy Wood, CMC, Town Clerk
Attachment 2
Attachment 3
Attachment 4