Agenda Item Wording:
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Award Contract for Business Tax Software: Authorize City Manager to enter into a five (5) year service and software license agreement with Hinderliter de Llamas and Associates (HdL), Inc for business tax billing for a total of $286,000, and transfer funds of $50,000 from capital to the operating budget for FY 2024/25 and 2025/26 for annual use and hosting fees.
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Deadline for Action: 10/21/2024
Submitting Department: Finance and Technology Services
Contact Name and Phone Number:
Renee Nagel, 559-713-4375, renee.nagel@visalia.city <mailto:renee.nagel@visalia.city>
John Howison, 559-713-4122, john.howison@visalia.city <mailto:john.howison@visalia.city>
Department Recommendation:
It is recommended that the City Council authorize the City Manager to enter into a five (5) year service and software license agreement with Hinderliter de Llamas and Associates (HdL), Inc for a business tax billing system for a total of $286,000, and transfer funds of $50,000 from capital (CP0541) to the operating budget (1537) for FY 2024/25 and 2025/26 for annual use and hosting fees. The contract total of $286,000 includes initial license fees and implementation costs totaling $150,000 to be paid from the capital budget (CP0681), and 5 years of use and hosting fees projected to cost $136,000 to be paid from the Business Tax operating budget (1537 Division).
Background Discussion:
Project Summary: Entities doing business in Visalia are required to pay a Business Tax (BT) and display a valid BT certificate as proof of payment. The BT paid varies and is based upon business type, and/or the gross receipts of the business. The Business Tax Division of the Finance and Technology Department is responsible for compliance, tax collection, and certificate issuance for all business tax accounts as mandated in Chapter 5 of the Visalia Municipal Code.
The Accela software, currently used by both Business Tax (BT) and Community Development, is being scheduled to migrate to the cloud by June 30, 2025. This must be done to continue receiving service and support from the software vendor. As part of this migration process, the current BT Accela configuration has been reviewed. As a software designed for permits, Accela has never been a good fit for use in BT billing and tracking. Accela is not designed for billing and does not have the standard functions required to apply charges, generate invoices, track and age balances, and manage collections. The highly customized BT setup within Accela has always required constant maintenance and intervention by IS staff to complete semi-annual billing, collection of annual gross receipts data from businesses, and monthly billing of delinquencies. IS staff is currently required to spend several weeks of valuable time on BT Accela software “housekeeping” tasks annually.
Information Systems (IS) has worked with BT staff to determine the most efficient solution to this issue. After reviewing the available options, staff is recommending moving the BT billing and tracking to a new software, Prime Business License (PBL), a Hinderliter de Llamas and Associates (HdL) hosted system. PBL is specifically designed for the collection of business tax and will allow the BT staff to perform their billing and tracking functions without the daily need for assistance from IS staff. The PBL software has a current attach opportunity through the City of South Lake Tahoe, which conducted a full RFP process and awarded a contract to HdL using purchasing procedures that are in compliance with City of Visalia (COV) purchasing requirements. The attachment will shorten the timeframe required for implementation of the new BT software and will also allow the cloud migration of Community Development’s Accela permitting software to move forward in a timely manner. A copy of the executed contract between HdL Companies and South Lake Tahoe is included in this item as Attachment 2.
Other Options: The HdL software has additional options for the tracking of Transient Occupancy Tax (TOT) and tracking of Short-term Rentals (STR’s) which are closely related to business tax collection. While these options are not included in this proposal, they will be evaluated during the configuration and implementation of the PBT module, and staff may return to Council requesting additional appropriations at a future date if the TOT and/or STR software functions offered by HdL are recommended for implementation.
Review Process:
As proposed, the Prime Business License (PBL) software will include 3 end user licenses, administrative access for IS staff, and will be equipped with a web module to allow BT applications and payments online, which is a feature much requested by COV business tax customers. Prior to choosing PBL, IS and BT staff obtained both technical and end user references from the City of Modesto, and the City of Sacramento, which are current users of the proposed software. References confirmed the software was implemented on time and on budget. Both cities confirmed the implementation of the software with the web module had shifted a significant portion of BT applications and payments to the online portal. This expected shift of the BT workload will allow staff to spend more time on collection of delinquencies, and prospecting for new and non-compliant businesses. The references also noted that HdL proactively updates their software and trains users when there are changes in California Law that affect business tax/license requirements.
Project Budget:
The proposed project implementation budget shown below in, Table 1: Project Implementation Budget Summary, includes detail amounts for licensing, implementation, optional features, and contingencies. Staff is recommending purchase of the ESRI-GIS option which will allow the definition of boundaries for special districts such as the Industrial Park and Town-Center (Downtown). This option will allow easy mapping of businesses to review their distribution and buffer zones. Staff is also recommending a review of alternative payment gateways to allow for the most efficient payment processing solution. If a non-HdL payment gateway is chosen during configuration, this would require an additional development charge of $5,000 which has been included in the budget below to preserve this option. Additional report writing has also been provided for in the “additional costs” budget line to allow for non-standard reports which may be required for the implementation of best practices for tracking, aging, and balancing.
Table 1 also includes a transfer from the project budget to the BT operating division (1537) to assist with the payment of the first two years annual software use and hosting fees, which are discussed in the fiscal impact section below. This transfer will make use of the $50,000 project balance that is projected to remain upon completion of the project.
Table 1: Project Implementation Budget Summary
Fiscal Impact:
Business tax is a General Fund revenue source that is projected to generate $3.5 million in the 2024/2025 fiscal year. The 2024/2025 Capital Budget includes $200,000 in the General Fund (001) for the purchase and configuration of business tax software (CP0681 and CP0541) which is projected to cover the $150,000 cost of this project (purchase and implementation), with $50,000 remaining at completion, which is proposed to be transferred to operating to cover the first two years of use and hosting fees, as discussed below. No additional appropriations are requested.
Annual software use and hosting fees for the initial 5-year period are estimated to total $136,000, as shown below in Table 2: 5-Year Summary of Projected HdL Use and Hosting Fees. The first year of fees is due at go live, which is projected to be in the current fiscal year (2024/2025). Staff is requesting approval for a transfer of the projected remaining CIP project balance to the Business Tax division (1537) of $24,500 in 2024/2025 and $25,500 in 2025/2026 to pay this annual use and hosting fee.
Table 2: 5-Year Summary of Projected HdL Use and Hosting Fees
The combined cost of purchase, implementation, and the first 5 years of use and hosting fees is shown in Table 3: HdL contract summary, below.
Table 3: HdL Contract Summary
Prior Council Action: None.
Other: N/A
Alternatives: None recommended.
Recommended Motion (and Alternative Motions if expected):
recommendation
I move to authorize the City Manager to enter into a five (5) year service and software license agreement with Hinderliter de Llamas and Associates (HdL), Inc for a Business Tax billing system for a total of $286,000, and transfer funds of $50,000 from capital (CP0541) to the operating budget (1537) for FY 2024/25 and 2025/26 for annual Use and Hosting Fees
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Environmental Assessment Status: N/A
CEQA Review: N/A
Attachments:
Attachment 1: HdL Prime BL Proposal
Attachment 2: City of South Lake Tahoe Professional Service Agreement