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HomeMy WebLinkAbout05/04/2010 12 Tax Refund Claim Release and Settlement Agreement BUSINESS OF THE CITY COUNCIL YAKIMA, WASHINGTON AGENDA STATEMENT Item No. 44-1 2- For Meeting Of May 4, 2010 ITEM TITLE: Consideration of a Resolution authorizing and directing the City Manager of the City of Yakima to execute a Release and Settlement Agreement to resolve and settle the claim for a tax refund filed with the City by Cost Management Services ( "CMS "). SUBMITTED BY: City Manager's Office, Finance Department and Legal Department CONTACT PERSON/TELEPHONE: Dick Zais, City Manager, 575 -6040 Rita DeBord, Finance Director, 575 -6070 Jeff Cutter, City Attorney, 575 -6030 Lawrence Wafters, Senior Assistant City Attorney, 575 -6030 SUMMARY EXPLANATION: This matter comes before the City Council for consideration of a Resolution authorizing the City Manager to execute a Release and Settlement Agreement in the claim for a tax refund filed by CMS. The case is scheduled for settlement, subject to the approval of the City Council, in the amount of $138,794.44. Resolution X Ordinance Other (Specify) Contract Mail to (name and address): Phone: Funding Source General Fund Reserves APPROVED FOR SUBMITTAL: City Manager STAFF RECOMMENDATION: Adopt Resolution. BOARD /COMMISSION /COMMITTEE RECOMMENDATION: COUNCIL ACTION: RESOLUTION NO. R -2010- A RESOLUTION authorizing and directing the City Manager of the City of Yakima to execute a Release and Settlement Agreement to resolve and settle the claim for a tax refund filed with the City by Cost Management Services, Inc. ( "CMS "). WHEREAS, on December 2, 2008, Cost Management Services (CMS), a company serving as the agent for the delivery of natural gas, submitted a claim against the City for $158,671.70 in utility taxes; CMS contended the taxes were paid by mistake and demanded a refund.; and WHEREAS, since that time, the City has engaged in discussions with CMS for the resolution of the claim through negotiation and settlement; and WHEREAS, Yakima Municipal Code Chapter 5.50 provides for a tax on supplying natural gas within the City's limits; this utility tax is similar to that imposed by a number of other jurisdictions; the tax is based on "doing business" within the City; and WHEREAS, CMS established it is an agent for arranging the delivery of the gas but the transfer takes place outside of the City at Terrace Heights; and III WHEREAS, CMS recently filed suit against Pasco, Hoquiam and Lakewood on these grounds; Hoquiam settled; Lakewood is in litigation now; and WHEREAS, the parties have worked together to mutually resolve the issues; and WHEREAS, through negotiation, a settlement will terminate all claims in the matter, subject to the approval of the Yakima City Council; and WHEREAS, the Yakima City Council concludes that it is in the best interests of the citizens of the City of Yakima to execute the attached Release and Settlement Agreement to resolve and conclude this claim, now, therefore, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF YAKIMA: The City Manager of the City of Yakima . is hereby authorized and directed to execute the attached Release and Settlement Agreement relating to the claim for a tax refund by CMS and to execute all necessary documents for the issuance of appropriate funds to implement settlement of the claim made by CMS against the City in the amount of $138,794.44. ADOPTED BY THE CITY COUNCIL this 4 day of May, 2010. ATTEST: Micah Cawley, Mayor. City Clerk • SETTLEMENT AGREEMENT Parties: This Agreement is entered into by and between Cost Management Services, inc. and the City of Yakima, a municipal corporation of the State of Washington. Preamble: Whereas Cost Management Services, Inc. ( "CMS ") filed a refund claim with the City of Yakima ( "Yakima or City ") on December 2, 2008 seeking a return of $158,671.70 it paid to the City for the tax on natural gas brokers, plus refund interest on such amounts; and Whereas both Parties have already incurred legal fees and costs in the course of preparing and reviewing the claim and the relative merits of each Party's positions and the Parties desire to enter into this Agreement to resolve their potential disputes without further expense or the additional commitment of resources in a manner beneficial to both Parties and in order to avoid further risks and uncertainty of litigation; Therefore, in consideration of each Party's promises to perform, The Parties Do Hereby Agree: 1. Within ten (10) days of the signing of this Agreement, the City shall pay to CMS the total sum of $138,794.44 by check delivered to CMS's office at 2737 78 Ave. SE, Mercer Island, WA 98040 -2843 or by wire transfer. 0 2. Execution of this Agreement by both Parties settles any and all claims either Party has or may have against the other arising or accruing prior to the date of the Agreement. This settlement waives any right either Party may have against the other to bring suit for any reason, known or unknown, for any act or inaction of the other Party through the date of signing. 3. This Agreement shall not be interpreted as an admission by either Party as to the correctness of any legal or factual position of the other Party. 4. Each signatory hereto represents and warrants that all necessary signatures and consents to enter this Agreement and to assume and perform the obligations hereunder have been properly obtained. 5. Each term and provision of this Agreement is deemed to have been explicitly negotiated at arm's length between the Parties and in all cases shall be construed and interpreted according to its fair meaning and not strictly for or against either Party and without reference to who might have drafted the term. 6. Each Party represents and warrants to the others that the decision to enter this Agreement is not based upon any representation by any other Party or by any attorney, employee or other representative of any other party. The City and CMS each represent that they have obtained independent legal advice prior to executing this Agreement. 7. CMS agrees to protect, defend, indemnify and hold harmless the City, its agents, officers, employees and elected officials from any and all claims, demands, losses, liens, liabilities, penalties, fines, lawsuits, and other proceedings and all judgments, awards, costs and 40 expenses (including attorneys' fees and disbursements) resulting from or concerning the settlement of this matter and the disposition of the settlement funds provided to CMS by the City, brought by CMS's customers or clients against the City, for refund of the taxes paid by CMS, Inc. and'GGty Yakima • Settlement Agreement Page 1 CMS to the City, provided that CMS shall not be liable for indemnification with respect to any claim unless the City shall notify CMS in writing of the claim, in as much detail as is feasible, within a reasonable time after the facts giving rise to it are known to the City. CMS may participate at its own expense in the defense of the claim, or if it so elects by a writing delivered to the City within a reasonable time after receipt of such notice, to assume the defense of the matter giving rise to the claim for indemnification or of any suit brought in connection with it;. if CMS so elects to assume the defense, the defense shall be conducted by counsel chosen by CMS. If CMS so elects to assume the defense of any such claim or suit and retain such counsel, the City shall bear the fees and expenses of its own counsel arising out of any legal service performed by its own counsel after notice of the election. 8. This Agreement is entered into and shall be construed and interpreted in accordance with the laws of the State of Washington. 9. This Agreement embraces and includes the entire agreement between the Parties and may not be changed except in writing by all Parties. 10. This Agreement may be executed in counterparts. Each counterpart shall be deemed an original, all of which taken together shall be one and the same instruments. This Agreement shall become effective upon execution of a counterpart by each Party and delivery to the other Party. IN WITNESS WHEREOF, the Parties have duly executed this Agreement on the dates indicated below. • CITY OF YAKIMA COST MANAGEMENT SERVICES, INC. R. A. Zais, Jr., City Manager Beth Beatty, President Date: Date: ATTEST: By City Clerk CMS, Inc. and City of Yakima Settlement Agreement Page 2