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EXHIBIT A BUSINESS LICENSE INFORMATION SERVICE Municipal Resource Consultants (MRC) proposes to provide to the City of Redwood City (City) a Business License Information Service (BLIS) that is comprised of two individual services: 1) a business inventory management service; and 2) an optional business license administration service. The objectives, scope, procedures, system requirements, custom specific a tions, software license, timing, support and compensation are set forth as follows: 1. BACKGROUND In 1984 the state legislature enacted Revenue and Taxation Code Section 19556 1 requiring most California cities to furnish the state Franchise Tax Board (FfB) specific business tax information each year. In this regard, Government Code Section 17561 2 provides for reimbursement to cities for certain costs incurred from state-mandated local programs; also known as SB 90 reimbursement The FTB utilizes the cities' business community data to monitor compliance with the State Income Tax, and Bank and Corporation Tax. This program has proven to be successful in allowing the FTB to increase state revenue, but it has become apparent to the FfB that there is a strong correlation between the quality and frequency of the data received and the amount of the revenue that could be raised for the State. Furthermore, research has shown that cities throughout California experience changes in their business base at an average rate exceeding 20% per year - due to business openings, closings, expansions, consolidations, relocation, mergers, acquisitions and other events. Given this situation, a valid listing of a city's businesses typically does not exist As a result, much of the data received by the FfB is not of the desired quality, frequently in the wrong format, missing important data (e.g. SIC codes), not standardized as to address and name, includes closed businesses not purged from city files, missing many new businesses and it is received only once a year. 1 Revenue and Taxation Code Section 19556 requires any California city which maintains or has access to a computerized recordkeeping system, and which assesses a business tax, to annually furnish the Franchise Tax Board specified business tax information on all businesses subject to the tax in the preceding fiscal year. The Government Code further specifies that access to the business tax information is to be kept confidential and shall be disclosed only to the FTB. 2 Government Code Section 17561 provides for the State Controller's Office to reimburse cities for certain cost incurred for state-mandated local programs. City-incurred costs that are eligible for such reimbursement include administrative, operational and related costs which are reasonably necessary to . implement and maintain an FTB compliance program. This includes costs for staff, independent consultants, automated and manual system modifications, data collection and reasonable allocation of overhead expenses. 1 .-.