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Council approves HDL audit contract amendment after debate over transparency and vendor incentives
Summary
The Los Gatos council voted 3-2 to authorize a fourth amendment with HDL to add business-license discovery, sales/tourism auditing and transient-occupancy audits and to waive late-fee penalties for compliant businesses for 90 days; the decision followed public concern about website clarity and audit incentives.
The Los Gatos Town Council on Sept. 16 approved a fourth amendment to its contract with HDL (the town's business-license processor) to add discovery, compliance audits, transient-occupancy audits and sales/use-tax review.
Staff said HDL already manages the town's business-license database and that discovery work would identify unlicensed commercial and transient businesses. The amendment extends services through June 30, 2027 and includes contingency fees linked to recoveries. Staff proposed a temporary amnesty: businesses found in an audit that cooperate, pay owed license taxes for up to three prior years and complete payment within 90 days would be eligible for a waiver of late fees and penalties.
Public comment raised problems with the town's public-facing business-license webpages and confusion about fees. A resident who tested the portal reported broken links, inconsistent fee displays, and difficulty finding information; another urged the council to delay the amendment until the town fixed website transparency issues. Critics also questioned incentive structures that pay auditors a percentage of recovered revenue.
Council deliberations focused on three points: (1) the need to ensure town web pages and public information are accurate before launching audits, (2) the fairness of limited retroactive windows (the staff proposed three years for retroactive billing), and (3) the structure of HDL's compensation. Council added an amendment requiring staff to verify and correct public online information (links, fee tables and FAQ) before initiating audit outreach.
After debate, the council approved the contract amendment and the late-fee waiver resolution on a 3-2 vote; the meeting record shows the motion passed with a simple majority after the website-accuracy amendment. Staff said they will report back on audit results and revenue recovery.
What the vote means: The town will proceed to a discovery and audit campaign with HDL, while allowing a short window (90 days) for newly identified businesses to come into compliance without late fees if they cooperate. Council minutes note continued scrutiny of HDL's processes and a request to supply clearer fee information to residents prior to active audit notices.
