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HomeMy WebLinkAboutCM Refuse Rate Review; HF&H 2012.10Crry OF Agenda Item No: 3.c no Meeting Date: October 1, 2012 SAN RAFAEL CITY COUNCIL AGENDA REPORT Department: MANAGEMENT SERVICES Prepared by: Stephanie Lovette Economic Development Manage. City Manager Approval: SUBJECT: RESOLUTION AUTHORIZING CITY MANAGER TO EXECUTE A CONTRACT WITH HF&H CONSULTANTS, LLC IN AN AMOUNT NOT TO EXCEED $75,000 FOR WORK ON REFUSE RATES AND SERVICES FOR THE CITIES OF SAN RAFAEL AND LARKSPUR, TOWN OF ROSS, LAS GALLINAS VALLEY SANITARY DISTRICT AND ROSS VALLEY -SOUTH WITH COSTS TO BE PAID BY MARIN SANITARY SERVICES RECOMMENDATION: Adopt Resolution. BACKGROUND: A number of local agencies within Marin County have franchise agreements with Marin Sanitary Service (MSS) to provide refuse collection and recycling services to residential and commercial customers. The agencies with similar contracts with MSS are the cities of San Rafael and Larkspur, the Town of Ross, Ross Valley South (Marin County), and the Las Gallinas Valley Sanitary District. Due to common interests and common contracts, these agencies have formed a Franchisors Group. MSS also has contracts with San Anselmo and Fairfax but these contracts are different so those towns are not included in the formal Franchisors Group. For a number of years, the Franchisors Group has worked together to make certain that the ratepayers (citizens and businesses) are being properly charged for the various levels of service provided. In order to substantiate the rate schedules, the Franchisors Group developed a jointly sponsored program designed to conduct routine reviews of Marin Sanitary's operating efficiencies and expenses contained in the annual solid waste rate application. This summer, City staff conducted a consultant selection process for the annual solid waste rate application review. Staff compiled a list of consulting firms with rate application review experience based on recommendations from other cities, including San Francisco. A request for qualifications (Attachment A) was sent to thirty-seven firms that work on refuse and recycling FOR CITY CLERK ONLY File No.: 1 Council Meeting: tC7/ / 0 Disposition: k t_ u f,C r SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 2 issues for public agencies. Three firms A committee consisting of Mayor Phillips and CouncUmemberConnolly (as the "Sustainability Subcommittee"), Nancy Mackie, Jim Schutz, Stephanie Lovette Steve Devine from the County JPA` and Sustainable 8anDafae[s President Bill Carney conducted the interviews. The Council's Sustainability Subcommittee voted to recommend BF&l{ Consultants ("HFH") for the 2013 review. ANALYSIS: In 1995, the Franchisors Group adopted a new methodology to set MSS' refuse collection and dimonmu| rates. The methodology was designed to provide a dctui|ui review of MSS` franchised operations every three years. In the interim two-year period, annual summary reviews would be conducted. The 2013 povicvv will be o detailed review. The most recent detailed review was in 2010. Inudetailed review year, all categories are compared to actual costs and revenues and MSS actual coats and revenues are compared tnother Bay Area communities. This analysis sets oneYv baseline for the summary nmviavvm in the iuimrnn two-year cycle. Results from this detailed review shall beused to establish 3013 refuse and recycling rates for the Franchisors; Group. The 2013 rate year work will also include additional analysis pursuant hthe 2012 amendments to the Franchise Agreement. The additional work will include analysis on the new commercial fond waste program, the creation ofurate stabilization fund for diversion programs, and revenue projections. These changes are further discussed in another report on tonight's City Council agenda that relates toamendments tothe Franchise Agreement with MSS. HFH submitted upropoaaJ dated September 70, 2012 setting forth ascope ufservices for the 2013 rate review for the Franchisors Group, and ofee estimate for that work for an amount not to exceed $75.000. The pnopnoo| includes one presentation to the governing body ofeach member agency. In uneffort io manage costs, this amount is slightly less than the contract for the last detailed review in 2010, despite the addition ofnew work as detailed above. The 2010 contract also only included opresentation 10the City ofSan Rafael. The attached Resolution would authorize the City Manager to cxcotc an agreement with BFB onthe terms set forth ioBFD'8proposal dated September 2U,30I2'ioafoonk/be approved by the City Attorney. FISCAL IMPACT: The proposal from HFH for the detailed review isonot to exceed amount of $75,000. The proposal blc|odcm one presentation to the governing body of each member agency. Additional ozcctiuga will be charged to the individual agencies ooutime and materials basis. The cost for this contract is passed through to h1SB and is not an expenditure ofeither the City of San Rafael or the other onomuborm of the Franchisors Group. All participating agencies have received u copy if this agreement and are aware of the scope of work and project costs. The contract payments aro absorbed into MSS operating expenses which are the basis for the annual refuse collection rates. SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 3 ACTION REQUIRED: Adopt the resolution as presented. ATTACHMENTS: Attachment A: Request for Qualifications Solid Waste Application Review Attachment B: HFH Proposal dated September 20, 2012 RESOLUTION NO. 13417 RESOLUTION AUTHORIZING CITY MANAGER TO EXECUTE A CONTRACT WITH HF&H CONSULTANTS, LLC IN AN AMOUNT NOT TO EXCEED $75,000 FOR WORK ON REFUSE RATES AND SERVICES FOR THE CITIES OF SAN RAFAEL AND LARKSPUR, TOWN OF ROSS, LAS GALLINAS VALLEY SANITARY DISTRICT AND ROSS VALLEY -SOUTH THE CITY COUNCIL OF THE CITY OF SAN RAFAEL RESOLVES AS FOLLOWS: The CITY MANAGER and CITY CLERK are authorized to execute, on behalf of the City of San Rafael, an agreement with HF&H Consultants for Refuse Rate Review of Marin Sanitary Service's Rate Application for the 2013 calendar year, in a form to be approved by the City Attorney. The agreement shall be for an amount not to exceed $75,000, at the terms described in the September 20, 2012 HF&H Consultants, LLC Proposal attached hereto as Exhibit A and incorporated herein by reference. 1, ESTHER C. BEIRNE, Clerk of the City of San Rafael, hereby certify that the foregoing resolution was duly and regularly introduced and adopted at a regular meeting of the City Council of said City held on Monday the first day of October, 2012, by the following vote, to wit: AYES: COUNCILMEMBERS: Connolly, Heller, Levine, McCullough & Mayor Phillips NOES: COUNICILMEMBERS: None ABSENT: COU�NCILMEMBERS: None I/ ESTHER C. BEIRNE, City Clerk AGREEMENT FOR: Review of Mahn Sanitary Service's 2013 Rate Application This Agreement is made and entered into this second day of October 2012, by and between the CITY OF SAN RAFAEL (hereinafter "CITY"), and HF and H Consultants, LLC hereinafter "CONTRACTOR"). RECITALS WHEREAS, the City of Larkspur, the City of San Rafael, the Town of Ross, the County Of Marin and the Las Gallinas Sanitary District (the "Franchisors Group") have similar franchise agreements with Mahn Sanitary Services; and WHEREAS, the City of Larkspur, the City of San Rafael, the Town of Ross, the County of Marin and the Las Gallinas Sanitary District have utilized a jointly sponsored program to conduct reviews of Marin Sanitary Services operations and expenses pursuant to the Franchise Agreements; and WHEREAS, the Franchisors Group desires to utilize the services of HF& H Consultants to conduct the review. AGREEMENT NOW, THEREFORE, the parties hereby agree as follows: PROJECT COORDINATION A. CITY. The City Manager shall be the representative of the CITY for all purposes under this Agreement. Economic Development Manager, Stephanie Lovette, is hereby designated the PROJECT MANAGER for the CITY, and said PROJECT MANAGER shall supervise all aspects of the progress and execution of this Agreement. B. CONTRACTOR. CONTRACTOR shall assign a single PROJECT DIRECTOR to have overall responsibility for the progress and execution of this Agreement for CONTRACTOR. Richard Simonson is hereby designated as the PROJECT DIRECTOR for CONTRACTOR. Should circumstances or conditions subsequent to the execution of this Agreement require a substitute PROJECT DIRECTOR for any reason; the CONTRACTOR shall notify the CITY within ten (10) business days of the substitution. • 1110MINO CONTRACTOR shall perform the duties and/or provide services as described in Exhibit " A " attached and incorporated herein. ORIGINAL CITY shall cooperate with CONTRACTOR in his performance under this zgreement and shall compensate CONTRACTOR as provided herein. For the full performance of the services described herein by CONTRACTOR, CITY shall pay CONTRACTOR an amount NOT to exceed $75,000, including the cost of local business license taxes as described in Section 20. Payment will be made monthly upon receipt by PROJECT MANAGER of itemized invoices submitted by CONTRACTOR. The term of this Agreement shall commence upon the date of execution of this agreement and shall end on June 30, 2013. A. Discretionary. Either party may terminate this Agreement without cause upon thirty (30) days written notice mailed or personally delivered to the other party. B. Cause. Either party may terminate this Agreement for cause upon ten (10) iays written notice mailed or personally delivered to the other party, and the notified party's iailure to cure or correct the cause of the termination notice, to the reasonable satisfaction of the party giving such notice, within thirty (30) is of the receipt of said notice. C. Effect of Termination. Upon receipt of notice of termination, neither party shall incur additional obligations under any provision of this Agreement without the prior written consent of the other. D. Return of Documents. Upon termination, any and all CITY documents or materials provided to CONTRACTOR and any and all of CONTRACTOR's documents described in paragraph 7 below, shall be delivered to CITY as soon as possible, but not later than thirty (30) days after termination. The written documents and materials prepared by the CONTRACTOR Fn - connection with the performance of its duties under this Agreement, shall be the sole property o� CITY. CITY may use said property for any purpose, including projects not contemplated by this Agreement. 0 Upon reasonable notice, CONTRACTOR shall make available to CITY, or its agent, for inspection and audit, all documents directly related to CONTRACTOR'S performance of its duties under this Agreement. CONTRACTOR shall fully cooperate with CITY or its agent in any such audit or inspection. 9. ASSIGNABILITY The parties agree that they shall not assign or transfer any interest in this Agreement nor the performance of any of their respective obligations hereunder, without the prior written consent of the other party, and any attempt to so assign this Agreement or any rights, duties or obligations arising hereunder shall be void and of no effect. 10. INSURANCE A. During the term of this Agreement, CONTRACTOR shall maintain, at no expense to CITY, the following insurance policies: 1. A comprehensive general liability insurance policy in the minimum amount of one million ($1,000,000) dollars per occurrence for death, bodily injury, personal injury, or property damage; 2. An automobile liability (owned, non -owned, and hired vehicles) insurance policy in the minimum amount of one million ($1,000,000) dollars per occurrence; 3. If any licensed professional performs any of the services required to be performed under this Agreement, a professional liability insurance policy in the minimum amount of one million ($1,000,000) dollars to cover any claims arising out of 'the CONTRACTOR's performance of services under this Agreement. B. The insurance coverage required of the CONTRACTOR by section 10. A., shall also meet the following requirements: 1. The insurance shall be primary with respect to any insurance or coverage maintained by CITY and shall not call upon CITY's insurance or coverage for any contribution; 2. Except for professional liability insurance, the insurance policies shall be endorsed for contractual liability and personal injury; 3. Except for professional liability insurance, the insurance policies shall be specifically endorsed to include the CITY, and other entities in the Franchisors' Group, their officers, agents, employees and volunteers as additionally named insureds under the policies; CONTRACTOR shall indemnify, release, defend and hold harmless CITY, and other entities in the Franchisors' Group, their officers, agents, employees and volunteers, against any claim, demand, suit, judgment, loss, liability or expense of any kind, including attorney's fees, arising out of or resulting in any way, in whole or in part, from any acts or omissions, intentional or negligent, of CONTRACTOR or CONTRACTOR's officers, agents and employees in the performance of their duties and obligations under this Agreement. 12. NONDISCRIMINATION CONTRACTOR shall not discriminate, in any way, against any person on the basis of age, sex, race, color, religion, ancestry, national origin or disability in connection with or '♦ to the performance of its duties and obligations under this Agreement. 0 13. COMPLIANCE WITH ALL LAWS CONTRACTOR shall observe and comply with all applicable federal, state and local laws, ordinances, codes and regulations, in the performance of its duties and obligations under this Agreement. CONTRACTOR shall perform all services under this Agreement in accordance with these laws, ordinances, codes and regulations. CONTRACTOR shall release, defend, indemnify and hold harmless CITY, and other entities in the Franchisors' Group, their officers, agents and employees from any and all damages, liabilities, penalties, fines and all other consequences from any noncompliance or violation of any laws, ordinances, codes or regulations. CITY and CONTRACTOR do not intend, by any provision of this Agreement, to create in any third party, any benefit or right owed by one party, under the terms and conditions of this Agreement, to the other party. 15. NOTICES All notices and other communications required or permitted to be given under this Agreement, including any notice of change of address, shall be in writing and given by personal delivery, or deposited with the United States Postal Service, postage prepaid, addressed to the parties intended to be notified. Notice shall be deemed given as of the date of personal delivery, or if mailed, upon the date of deposit with the United States Postal Service. Notice shall be given as follows: TO CITY: Mr. Jim Schutz, Assistant City Manager City of San Rafael 1400 Fifth Avenue P.O. Box 151560 San Rafael CA 94915-1560 TO CONTRACTOR: Mr. Robert D. Hilton, President HF&H Consultants, LLC 201 North Civic Drive, Suite 230 Walnut Creek, CA 94596 Hammut For the purposes, and for the duration, of this Agreement, CONTRACTOR, its officers, agents and employees shall act in the capacity of an Independent Contractor, and not as employees of the CITY. CONTRACTOR and CITY expressly intend and agree that the status of CONTRACTOR, its officers, agents and employees be that of an Independent Contractor and not that of an employee of CITY. W A. The terms and conditions of this Agreement, all exhibits attached, and all documents expressly incorporated by reference, represent the entire Agreement of the parties with respect to the subject matter of this Agreement. B. This written Agreement shall supersede any and all prior agreements, oral or written, regarding the subject matter between the CONTRACTOR and the CITY. C. No other agreement, promise or statement, written or oral, relating to the subject matter of this Agreement, shall be valid or binding, except by way of a written amendment to this Agreement. D. The terms and conditions of this Agreement shall not be altered or modif ied except by a written amendment to this Agreement signed by the CONTRACTOR and the CITY. E. If any conflicts arise between the terms and conditions of this Agreement, and the terms and conditions of the attached exhibits or the documents expressly incorporated by reference, the terms and conditions of this Agreement shall control. The waiver by either party of any breach or violation of any term, covenant or condition of this Agreement, or of any ordinance law or regulation, shall not be deemed to be a waiver of any other term, covenant, condition, ordinance, law or regulation, or of any subsequent breach or violation of the same or other term, covenant, condition, ordinance, law or regulation. The subsequent acceptance by either party of any fee, performance, or other consideration which may become due or owing under this Agreement, shall not be deemed to be a waiver of any preceding breach or violation by the other party of any term, condition, covenant of this Agreement or any applicable law, ordinance or regulation. I I W, The prevailing party in any action brought to enforce the terms and conditions of this Agreement, or arising out of the performance of this Agreement, may recover its reasonable costs (including claims administration) and attorney's fees expended in connection with such action. M 20. CITY BUSINESS LICENSE/OTHER TAXES CONTRACTOR shall obtain and maintain during the duration of this Agreement, a CITY business license as required by the San Rafael Municipal Code. CONTRACTOR shall pay any and all state and federal taxes and any other applicable taxes. CONTRACTOR's taxpayer identification number is 94-3097242, and CONTRACTOR certifies under penalty of perjury that said taxpayer identification number is correct. 21. APPLICABLE LAW The laws of the State of California shall govern this Agreement. IN WITNESS WHEREOF, the parties have executed this Agreement as of the day, month and year first above written. VV4,t,� City Manage -07 ATTEST: City Clerk City Attorney V!, By. R 1W -A PROFESSIONAL SERVICES AGREEMENT/CONTRACT COMPLETION CHECKLIST AND ROUTING SLIP Below is the process for getting your professional services agreements/contracts finalized and executed. Please attach this "Completion Checklist and Routing Slip" to the front of your contract as you circulate it for review, and signatures. Please use this form for all professional services agreements/contracts (not just those requiring City Council approval). This process should occur in the order presented below. Step Responsible Description Completion Department Date 1 City Attorney Review, revise, and comment on draft agreement. 2 Contracting Department Forward final agreement to contractor for their signature. Obtain at least two signed originals from contractor. 3 Contracting Department Agendize contractor -signed agreement for Council approval, if Council approval necessary (as defined by City Attorney/City Ordinance*). 4 City Attorney Review and approve form of agreement; 112 - bonds, and insurance certificates and endorsements.J2- 5 City Manager / Mayor l or Agreement executed by Council authorized Department Head official. 6 City Clerk City Clerk attests signatures, retains original agreement and forwards copies to the contracting department. 'k OVA To be completed by Contracting Department: Project Manager: Stephanie Lovette Project Name: 2013 refuse rate review Agendized for City Council Meeting of (if necessary): 10/1/2012 If you have questions on this process, please contact the City Attorney's Office at 485-3080. * Council approval is required if contract is over $20,000 on a cumulative basis. Request For Qualifications For Solid Waste Rate Application Review Issued: August 3, 2012 Proposals Due: August 17, 2012, 3:00 pm Stephanie Lovette Economic Development Manager P.O. Box 151560 San Rafael, CA 94915 For more information, please contact Stephanie Lovette, Economic Development Manager, at steohanie.lovette0acityofsanrafael.org or (415) 485-3460. 1400 Ri-mi Avi-,Nui-- PO Box 151560 - SAN Rkl- \Ei- CA 94915-1560 \i'WN�'.C[rYOFSANRAf'Af-']-.OlR(; MAYOR GARY O. PHILLIPS ILLIPS VICE MAYOR MARC LEVINE, COUNCILMEMBER DAMON CONNOLLY COUNCILME1OB8R BARBARA Hr,.i,I.E,Z OBER ANDRE.W CUYUGAN MCC[ TLOUGI I CITY MANAGER'S OFFICE PHONE: 415-485-3070 FAX: 415-459-2242 ATTACHMENT A City of San Rafael Request for Qualifications Solid Waste Rate Application Review REQUEST FOR QUALIFICATIONS FOR SOLID WASTE RATE APPLICATION REVIEW The City of San Rafael, on behalf of the Marin Sanitary Services Franchisors Group is soliciting statements of qualifications from independent qualified firms (herein "Proposers") capable of providing comprehensive, accurate, timely and cost-effective solid waste rate review services related to the application scheduled to be filed by Marin Sanitary Service on August 1, 2012 for rates to be effective January 1, 2013. The Franchisors' Group is an informal association of particular agencies in Marin County, California managing the collection and processing of garbage, recyclables and organic materials for the cities of San Rafael and Larkspur, the Town of Ross, the County of Marin and the Las Gallinas Valley Sanitary District through franchise agreements with Marin Sanitary Service. Note that MSS's operations include service to the towns of Fairfax and San Anselmo as well as other unincorporated areas in Marin County that are not part of the Franchisors' Group. The Franchisors' Group welcomes and encourages responses from consultant firms who offer the following services: evaluation of rate proposals to multijurisdictional franchisors; cost allocations, and rate structure analysis and revision. Consultant selection will be limited to firms with physical offices in California. Generally, the Franchisors' Group is looking for assistance in administering the rate setting aspects, which are described in Attachment B of each agency's Franchise Agreement with Marin Sanitary Service (MSS) including, but not limited to the review of: • Customer billing information and receipts • Expense review and projections • Revenue attribution and expense allocation • Rate structure analysis Please refer to Exhibit 1 for a description of the current and proposed rate preparation and review methodology, which shall serve as the scope of work for the selected proposer. f 41 T4 a Moll GO The Franchise Agreement(s) with MSS require the company to perform a broad range of solid waste, recyclable and organic materials collection services and supporting functions. The pertinent supporting functions include billing residential and commercial customers, remitting agency fees billed and allocating the cost of service among the agencies served. In addition, the company is required to compile and maintain records related to its operations as necessary to prepare and review the rate application. Page 2 of 7 City nfSan Rafael Request for Qualifications Solid Waste Rate Application Review Annually MSS submits nnapplication k»the Franchisors' Grmp for the adjustment ofrates calculated iuaccordance with the methodology described bnExhibit l. Adetailed application ia prepared every three years (e.g., for rates effective January 1, 2013) and a summary application (relying, primarily but not exclusively, for price indexed m8uobnonta) in the alternative years (e.g.,for rates effective January l,ZOl4and 20l5). The Franchisors' Group engages uthird party consultant ooreview this application. For many years, that consultant has been Hfr&cB Consultants, LLC. The MSS rate application has various financial aspects that need k/tmverified. The methodology was initially developed by an international accounting firm and was thereafter simplified and amended many years ago byflP&f{Consultants, LLCU8P&A1. Since then, many adjustments have been made to the methodology including a recent renegotiation of the methodology which was facilitated byBfr8iB. onbehalf nfthe Franchisors' Group, the City of San Rafael is seeking statements of qualifications from firms interested inperforming the rate application review. 2. GENERAL INFORMATION 3a. Demographics In 2011, the Franchisors Group consisted of 24,519 accounts including 724 apartments,l'985 commercial accounts and 21.810 single family ,caiduniiu| accounts. The majority of the commercial and mno|d family accounts are in San Rafael. Larkspur has u mnna|| number of commercial and multi family accounts. 2b.Current Rate Methodology and Timing The current rate methodology is based on an indexed revenue requirement that includes the contractor's costs of operations for vvugem and benefits, disposal, equipment and |eunc expenses, fuel, profit and certain u||ovvab|u miscellaneous expenses. The Franchise /\gnoorncnt provides for a du|ui|cd review of &1S3' operations every three years. In the interim two-year period, unouo| aurnouury reviews are conducted based on the |umt detailed analysis. The formula aUnvvu a '"irnc-op" in the following year based on the specific indices. Under the current rate formula, the hauler isentitled touprofit based on the annual cost of operations. The profit imcalculated bydividing the forecasted uonuoO cost of operationsby 0.905 and subtracting the annual cost of operations from the dividend. The most recent detailed review was in 20lUand the next one will occur in 20I2for the 2013 rate year. The Franchisors Group and MSS are in the process of negotiating n new rate structure, vvbicb may change some of the ccvicx/ areas. This ccguct for qualifications is for the 20l3rate year work. 2c. Services provided by Hauler The current oouyc of services for MSS is included as Exhibit 2. Page 3 of 7 City of San Rafael Request for Qualifications Solid Waste Rate Application Review 3. CONSULTANT SCOPE OF SERVICES 3a. Review of Rate Application The work will consist of a review of the rate application and presentation of the findings to the Franchisors Group and the individual governing bodies. 3b. Report findings and presentation The report results will be presented by the consultant to the governing body of each member of the Franchisors Group. These meetings usually occur in January and February. In addition, there will be two -three meetings with the Franchisors Group to discuss the findings and develop the presentation to the governing bodies. 3c. Additional Work outside this contract Individual members of the Franchise Group may request additional work on rate related issues outside of the scope of this contract. Some examples of additional work in past rate analysis have been analysis of vehicle impact fees and the addition of street sweeping. In addition to the Franchisors Group, MSS also serves the Towns of San Anselmo and Fairfax. The two towns may also request the consultant to perform a similar rate application review outside of this contract. 4. RFQ PROCESS AND PROPOSER SELECTION TIMELINE Statements of Qualifications must be submitted by 3:00pm on August 17, 2012 to: Ms. Stephanie Lovette Economic Development Manager P.O. Box 151560 City of San Rafael, CA 94915 For more information, please contact Stephanie Lovette, Economic Development Manager, stephanie.lovette@cityofsanrafael.org or (415) 485-3460. The schedule for the selection process and performance of the engagement is shown below: Distribute RFQ August 3, 2012 Receipt of SOQ's August 17, 2012 Interviews (if necessary) Week of August 20, 2012 Consultant Selection Week of August 20, 2012 Negotiation of Contract Week of August 27. 2012 1 Award of Contract I Week of September 12, 2012 Commence Detailed Review Week of September 19, 2012 Submission of Draft Report Week of October 29. 2012 Submission of Final Report Week of November 12. 2012 Page 4 of 7 City of San Rafael Request for Qualifications Solid Waste Rate Application Review Consultant selection will be determined by the franchisors group. Selection criteria will include: the experience of the firm with multi jurisdictional solid waste application reviews, the qualifications and experience of key staff, experience with similar work, sufficient client engagements to provide information on comparable refuse rates and services in other California communities, and familiarity with MSS operations. Consultants will be limited to firms with physical offices in California. 5. DESIRED CONSULTANT QUALIFICATIONS The Franchisors' Group is seeking an independent consulting firm with expertise conducting reviews of rate applications for solid waste, recyclable and organic materials franchise collection services and solid waste transfer/MRF operations companies in a multi jurisdictional environment. The successful firm responding to this RFQ shall demonstrate that it has the appropriate professional and technical background as well as access to adequate resources to fulfill the stated scope of services. Any experience with similar projects for jurisdictions with demographics similar to those of the Franchisors' Group Member Agencies should be noted. 6. TERM OF AGREEMENT AND REQUIRED DOCUMENTS It is anticipated that Franchisors' Group and the selected Proposer will enter into an agreement for a minimum of a three-year term. Completion of the following documents is required prior to commencing work: 1. Professional Services Agreement 2. Proof of insurance coverage 3. A copy of IRS Form W9 4. City of San Rafael Business License 7. PROCEDURE FOR SUBMITTING QUESTIONS AND INQUIRIES All questions/inquiries must be directed to Stephanie Lovette in writing via email at stephanie.lovetteCcityofsanrafael.or by August 10, 2012 at 3:OOpm. The Franchisors' Group will provide a written response to all questions in the form of an Addendum to this RFQ. Please include both a PDF version and the source file (e.g., Word document). 8. PROPOSAL REQUIREMENTS Proposers must respond to this RFQ by submitting a Proposal no later than August 17, 2012 at 3:OOpm in order for submittals to be considered. Proposals must be addressed to the attention of Jim Schutz, clearly Labeled "Proposal — Franchise Rate Application Review Statement of Qualifications." Please include five (5) double -sided copies of the Proposal. Page 5 of 7 City of San Rafael Request for Qualifications Solid Waste Rate Application Review 8a. Proposal Contents The Proposal should be concise and responsive. The length of the Proposal is limited to the guidelines explained below. ➢ Cover Letter A two (2) page (double -sided) cover letter describing your firm, its history, number of years in business, and how your firm meets the desirable qualifications and has the ability to perform the scope of services. The individual authorized to contractually bind the firm should sign the cover letter. Resumes for the proposed team and sub consultants, if any, should be provided as an appendix. Proposer shall in its cover letter make the following representations: o Neither Proposer nor its principals are presently disbarred, suspended, proposed for disbarment, declared ineligible or voluntarily excluded from participation in this transaction by any federal department or agency, any California State agency, or any local governmental agency. o Neither Proposer nor its principals has been engaged by Marin Sanitary Service or any company in the industry for the past five years and will not accept engagements with Marin Sanitary Service or any company in the industry for the next five years. o Neither Proposer nor its principals received unauthorized information from any Franchisors' Group staff member during the RFQ response period except as provided for in the RFQ package or through formal addenda issued by Franchisors' Group. o Proposer hereby certifies that the information contained in the Proposal and all accompanying documentation is true and correct. ➢ Description of Firm Qualifications A three (3) page description of the firm and its qualifications for performing this engagement. ➢ List of Staff A one (1) page organization chart of all staff and sub -consultants associated with the project describing their role in the project, followed by a one (1) page statement of each staff member's qualifications. ➢ References A one (1) page description of each multi -jurisdictional public rate application review you have performed in the past five years including contact information. Additional Attachments Proposers are encouraged to include pertinent examples (i.e., five (5) maximum) of rate application review reports that are similar in nature or content to the scope of services described herein. Page 6 of 7 City of San Rafael Request for Qualifications Solid Waste Rate Application Review 9. EXHIBITS The following are included as attachments to this RFQ (digital distribution only; distribution by hard copy will include the attachments upon request): ■ Exhibit I Current rate model ■ Exhibit 2 MSS Current Description of Services ■ Exhibit 3 Sample Professional Services Agreement ■ Exhibit 4 2012 Refuse Collection Rates ■ Exhibit 5 2012 Maximum Collection Rate Staff Report ■ Exhibit 5 Citv's Zero Waste Resolution Page 7 of 7 201 N. Civic Drive, Suite 230 Walnut Creek, California 94596 Telephone: 925/977-6950 Fax: 925/977-6955 www.hfh-consultonts.com September 20, 2012 Sent via email Mr. Jim Schutz Assistant City Manager City of San Rafael 1400 Fifth Avenue San Rafael, CA 94919-1560 Mr. Michael Frost Deputy Director of Public Works County of Marin 3501 Civic Center Drive, Room 304 San Rafael, CA 94903-4155 Mr. Mark Williams District Manager Las Gallinas Valley Sanitary District 300 Smith Ranch Road San Rafael, CA 94903 Mr. Dan Schwarz City Manager City of Larkspur 400 Magnolia Avenue Larkspur, CA 94939 Mr. Rob Braulik Town Manager Town of Ross 31 Sir Francis Drake Blvd Ross, CA 94957 >urces Today Robert D. Hilton, CMC John W. Farnkopf, PE Laith B. Ezzet, CMC Richard J. Simonson, CMC Marva M. Sheehan, CPA Subject: Proposal to Review Marin Sanitary Service's Application for 2013 Rates Dear Messrs. Schutz, Schwarz, Frost, Braulik, and Williams: HF&H Consultants, LLC (HF&H) is pleased to present this proposal to perform a review of Marin Sanitary Service's (MSS) application for rates to be effective January 1, 2013. BACKGROUND In 1995, the Cities of San Rafael and Larkspur, the Town of Ross, the Ross Valley and Las Gallinas Valley Sanitary Districts, and the County of Marin (the Franchisors) adopted a new methodology that would be used to set MSS's rates for refuse collection and disposal as well as recyclable and yard waste collection and processing. The methodology is based on a detailed review (performed every three years) with summary reviews (based largely on the detailed review, the use of indices, and the review of a few key matters such as revenues and disposal costs) during the intervening years. In 2002, MSS was awarded the franchise to provide services to the Town of San Anselmo. Also in 2002, MSS was awarded the franchise to provide services to the north area of the Ross Valley Sanitary District. In 2004, MSS acquired the Fairfax franchise. These expansions of service, and the need to allocate MSS's costs among the Franchisors and these new jurisdictions, make even more important the proper allocation of MSS's costs among the jurisdictions to ensure that the Franchisors are not paying a share of the costs to service San Anselmo, Fairfax, and the north area of the Ross Valley Sanitary District. In 2005, ATTACHMENT B Marin Franchisors Group September 20, 2012 Page 2 of 7 Managing Tomorrow's Resources Today customers that were in the Las Gallinas Valley Sanitary District franchise area were integrated into the customer base of the City of San Rafael. In 2012, the Franchisors engaged HF&H to assist in the negotiations with MSS to revise the Contractor's Revenue Requirement and Rate Adjustment methodology. Significant revisions included documentation of: 1) procedures that had been agreed to by MSS and the Franchisors over the years but not documented; 2) related -party fees and how they will be adjusted in the future; 3) additional reporting to be submitted with the rate adjustment applications; and, 4) procedures to develop a reserve for diversion programs by sharing in Marin Resource Recovery Association's net revenues (net recyclables processing revenues). The last detailed review was performed in 2009 for rates to be effective in 2010. Rates for 2011 and 2012 were set using the indexed method. For a review of rates to be effective 2013, we have been asked to: • Perform a detailed review; and, • Perform a survey of similar rates from cities in the Bay Area receiving comparable services. Our scope of services is comprised of the following tasks: 1a Kick-off Meeting with Franchisors. HF&H will meet with the Franchisors to confirm our understanding of the engagement, timing and identify issues from the Franchisors' perspective. 1b Kick -Off Meeting with Company. HF&H will meet with the Company to receive the Company's Application and a presentation by the Company of the major matters leading to any rate adjustments. 1c Completeness and Compliance Review. Upon receipt of the Application, HF&H staff will test the current Application for compliance with the current procedures. We will seek explanations for any unusual findings and we will inform the Company of any matters that come to our attention leading us to believe the Application is either not in compliance or is inconsistent. 1d Mathematical Accuracy and Logical Consistency Review. HF&H staff will test the mathematical accuracy of all of the tables contained in the Application. We will verify that the Application is internally consistent and that any summary schedules agree to the supporting schedules or worksheets. We will seek explanations for any unusual findings and we will inform the Company in writing of any matters that may come to our attention that lead us to believe that the Application is not mathematically correct or logically consistent. Marin Franchisors Group September 20, 2012 Page 3 of 7 ;ources Today 1e Reconciliation to Financial Statements. HF&H staff will reconcile the Application to the Company's most recent financial statements. We will seek explanations for any unusual findings and we will inform the Company in writing of any adjustments that may come to our attention that may be necessary to reconcile the Application to the financial statements. 2a Review of Expenses. We will test the following expenses for reasonableness based on historical trends, consistency with operating data, and consistency with management's plans: Wages and Salaries; Benefits Expense; Workers Compensation Expense, Transfer, Transport, Disposal, and Processing Expense; Non -Franchisors Group Affiliate Transfer and Transport Adjustment, Fuel and Oil Expense; Equipment and Vehicle Maintenance Expense; Depreciation/Lease Expense; JPA Fees, Interest Expense; and, Miscellaneous Expenses. HF&H will test individual transactions to ensure non -allowable costs, including non -allowable related party transactions, have been excluded from the 2013 forecasted annual cost of operations. We will seek explanations for any unusual findings and we will inform the Company of any adjustments that we believe are necessary to these estimated and projected expenses. 2b Review Allocation Methodology. HF&H will review the methodology used by MSS to allocate operating expenses to the individual jurisdictions to ensure consistency with the new compensation methodology. We will seek explanations for any unusual findings and will inform the Company of any adjustments that may come to our attention that we may believe are necessary to the estimated and projected expenses. 2c Review Management Salaries. HF&H will review the management salaries to determine the allocation to the Franchisors operations is reasonable based on a time study provided by MSS and that overall compensation is reasonable based on similar positions in the industry. 2d Variance Analysis. HF&H staff will review the Company's reported actual 2011, estimated 2012, and forecasted 2013 annual cost of operations by developing a variance analysis and will investigate significant variances between periods. 2e Review Profit Calculation. HF&H staff will calculate a reasonable profit using a 90.5% operating ratio applied to the forecasted annual cost of operations, as those forecasted annual cost of operations submitted in the Application may be adjusted. Task 3: Review of Rate Adjustment Factor The Rate Adjustment Factor is determined using the projected contractor compensation based on the projected costs of operations and profit, projected pass-through costs and projected revenues. The method for projecting revenue is new for 2013. Marin Franchisors Group September 20, 2012 Page 4 of 7 sources Today 3a Review Revenue Projection. HF&H will review and verify the accuracy of MSS projected rate revenue at current rates. We will verify the calculation has been done in accordance with the methodology outlined in the agreement. 3b Review Non -Rate Revenue. HF&H staff will review non -rate revenue for consistency and reasonableness. We will seek explanations for any unusual findings and inform the Company of any adjustments that may come to our attention that we may believe are necessary to these estimated and projected revenues. 3c Review Calculation of Rate Adjustment Factor. HF&H staff will recalculate a Rate Adjustment Factor as the forecasted annual cost of operations and projected revenues submitted in the Application may be adjusted based on our review. HF&H staff will review MSS's cost projections and anticipated rate impact for the new commercial food scraps programs for reasonableness based on MSS's cost of operations and industry benchmarks. We will compile rates currently in effect in other municipalities in Marin County, as well as neighboring jurisdictions in other counties. When possible, we will draw data from our existing project files. if necessary, we will contact cities to obtain or clarify information. We will work with the Franchisors Group to identify which communities to include in the survey. We will prepare a table and graphs summarizing the results. 6a HF&H staff will meet once with MSS management to discuss the preliminary findings from our review and receive additional information from the Company that may revise our findings. 6b HF&H staff will draft an initial report based on the results from the above meeting and will provide it to MSS management for review. Thereafter, we will confer with MSS management to discuss its comments regarding our initial draft report. 6c Based on the above meeting, HF&H will make any appropriate revisions to our initial draft report and present a preliminary draft to the Franchisors. Thereafter, we will confer with the Franchisors to discuss its comments regarding our preliminary draft report. 6d Based on the comments from the Franchisors, we will amend the preliminary draft report and issue the final report. Marin Franchisors Group September 20,2O12 Page 5 of 7 ;ources Today 6e HF&H will present our findings at one meeting for each of the members of the Franchisors Group. Recognizing that we are reliant upon the Company for the timely preparation of documents and response to our questions, we plan to perform this engagement in accordance with the following Activity Completion Date Kick-off Meeting with MSS/Commence Fieldwork October 5, 2012 Kick-off Meeting with Franchisors Group October 5, 2012 Present Preliminary Findings to MSS November 2, 2012 Provide MSS Draft Report November 6, 2012 MSS Provides Comments on Draft Report November 9, 2012 Provide Franchisors with Draft Report November 16, 2012 Franchisors Provides Comments on Draft Report November 23, 2012 Provide Franchisors and MSS with Final Report November 30, 2012 Every approach to an engagement is limited in its scope. The major limitations regarding our proposed scope of work are: w The scope of work described above is different from an audit of financial statements performed inaccordance with Generally Accepted Auditing Standards, which bperformed by MS3'saudkoc w We will perform the tasks presented above in a manner that will allow us to achieve the objectives of the review in a cost-effective manner. VVewill rely onK4SS'sauditor with regard to matters related to K4SS'o interna/ controls. Our testing of K8SS's Application (using judgmental samples of transactions and analytical procedures) will only be for the purpose of providing evidence that allows us to reach conclusions and recommendations regarding MSS's Application. • We will conduct our review in accordance with the Contractor's Compensation and Rate Adjustment Methodology recently adopted by the Franchisors Group. This methodology includes the review of K85S management's projection of the future results of operations. We will review these projections for reasonableness and propose adjustments, as appropriate. We accept no responsibility to update these adjusted projected results after the date of our Marin Franchisors Group September 20, 2012 Page 6 of 7 irces Today report. Additionally, the projections result from assumptions regarding future events and management's planned response to them. Frequently, future events do not occur as anticipated and the difference can be material. Further, we have neither included in the scope of our work modifications to any of the individual Franchisor's rates nor rate structures. If any of the Franchisors would like us to perform modifications to their rate structures, we would be pleased to do so based on arrangements made with the requesting Franchisor. Finally, we have included in our scope of work one presentation to the Franchisors' governing bodies. If additional meetings are requested, we would be pleased to do so based on arrangements made with the requesting Franchisor. Since its founding over 23 years ago, HF&H Consultants, LLC has been providing independent solid waste rate review services to municipalities throughout California and the West Coast. Of particular relevance to this engagement, HF&H has been the Franchisors' consultant in this area for more than ten years. During that period, we have helped the Franchisors to substantially reduce the cost of the review through changes in methodology, while ensuring that both the customers' rates and MSS's level of profit are reasonable. I will be responsible for directing the project and will perform all subtasks related to the project management task described above. I will attend all meetings with the Franchisors and key meetings with MSS management. I have been the Engagement Director and substantially involved in each of these annual reviews since 1995, and I am well known to both the Franchisors and MSS management. During the past 20 years, I have assisted more than 100 municipalities with nearly 400 solid waste consulting engagements, most of which have involved the cost of solid waste services. I will be assisted by less senior, experienced staff at lower billing rates, who will perform certain tasks under my direction. Rick Simonson will serve as Engagement Manager under my direction. Mr. Simonson will provide a "fresh set of eyes" to the review. Rick was the Engagement Manager for this engagement over eight years ago, so he is familiar with the operations. Mr. Simonson will supervise and review the work performed by the staff assigned to the project to ensure that it is performed in accordance with the proposed scope of work, our detailed work plans, and meets the Franchisor's objectives. Colleen Costine will serve as the Senior Associate under Mr. Simonson's supervision. Ms. Costine has served in this capacity for the last five years and will provide continuity to the engagement. She will supervise and review the work performed by the staff assigned to the project to ensure that it is performed in accordance with the proposed scope of work; our detailed work plans, and meets the Franchisor's objectives. Marin Franchisors Group September 20, 2012 Page 7 of 7 Resources Today We will be assisted by less senior, experienced staff at lower billing rates, who will perform certain tasks under our direction. Based on the tasks performed during our last detailed review, my current understanding of the additional matters to be considered during this review, and the level of effort necessary to address them, I estimate our professional fees and out-of-pocket expenses for the scope of work described above to be $75,000, as shown in Attachment A. As in the past, we will bill you in accordance with our standard rates and practices (as described in Attachment B) up to the $75,000. It is possible that the level of effort to perform the review and address the additional matters may exceed our estimate and, if so, we will contact you before proceeding to obtain your approval or direction. Also, it is possible that our level of effort will be less and if so we will, of course, bill you the lesser amount. We sincerely appreciate the continued confidence you have expressed in HF&H and we are committed to do our best to fulfill your objectives. Should you have any questions, please call me at (925) 977-6952. Very truly yours, HF&H CONSULTANTS, LLC Robert D. Hilton, CMC President Attachments: A) Fee Estimate — Franchisors Group B) Standard Hourly Rates and Billing Arrangements cc: Ms. Patty Garbarino, Marin Sanitary Service Mr. Neil Roscoe, Marin Sanitary Service Mr. Rick Simonson, HF&H Ms. Kim Erwin, HF&H Attachment A: Franchisors Group Review of MSS' Application for 2013 Rates Fee Estimate 5 13 15 26 0 59 1 $9,377 2 20 81 88 0 191 1 $27,937 Labor Out -of -Pocket Expenses Total Budget 40 86 157 134 33 450 $73,622 $1,378 HF&H Consultants, LLC 9/20/2012 Attachment HF&H CONSULTANTS,LLC STANDARD HOURLY RATES AND BILLING ARRANGEMENTS (Effective January 1, 2012)1 Hourly rates for professional and administrative personnel are as follows: Position Rate President $249 Senior Vice President & Vice President $210-$245 Senior Project Manager $195'$225 Senior Associate/Project Manager $165-$195 Associate Analyst $125-$165 Assistant Analyst $100-$105 Administrative Staff $95 Standard charges for common direct expenses are as follows: Automobile Travel Document Reproduction Facsimile Telephone Public Conveyances Postage Overnight Mail and Couriers Prevailing IRS mileage rate 1Scents per page (black &white) 75cents per page (co|or) No charge No charge Actual Actual Actual I Litigation Support and Expert Witness Services are not covered by this schedule of fees and expenses. HF&H Consultants, LLC Page 1 of Attachment B HF&H CONSULTANTS, LLC STANDARD HOURLY RATES AND BILLING ARRANGEMENTS (Effective January 1, 2012) Our policy is to bill for our services and direct expenses based on the standard hourly rates of the staff member assigned, multiplied by the time required to perform the client -related tasks, plus the subcontractor services as described above. In implementing this policy we adhere to the following practices: • It is our standard practice to e-mail invoices to our clients, although hard copies of invoices can be sent to clients on request. • We round to the nearest one-half hour (e.g., if two hours and 50 minutes are spent on a task, it is recorded as three hours, if two hours and 10 minutes are spent on a task, it is recorded as two hours). A minimum charge of one-half hour is charged for any client work performed in a day. • We attempt to schedule travel time before and after normal work hours and we do not bill for this time. If travel occurs during normal work hours and we can use public conveyances, we attempt to use the time productively for the benefit of the client or for another client and this time is billed to the appropriate client. If we must travel during business hours and cannot use the time productively or use a public conveyance, we bill the time to the client on whose behalf we are traveling. • Because public meetings (e.g., Board of Supervisors, City Council, and Board of Directors meetings) generally occur after business hours and are not conducted in accordance with strict schedules, our standard policy is to bill a minimum two-hour charge. • We do not mark up out-of-pocket expenses, however, we may charge administrative or professional time related to the provision of the goods and services associated with these charges. Costs for outside consultants and subcontractors are billed at actual cost plus a 15 percent administrative fee. • Mileage fees are based on the round-trip distance from the point of origin. • If a client's change to a previously scheduled meeting results in penalties being assessed by a third party (e.g., airline cancellation fee), then the client will bear the cost of these penalties. While no minimum fee for a consulting engagement has been established, it is unlikely (given the nature of our services) that we can gain an understanding of a client's particular requirement, identify alternatives, and recommend a solution in less than twenty-four hours. HF&H Consultants, LLC Page 2 of 3 Attachment B HF&H CONSULTANTS, LLC STANDARD HOURLY RATES AND BILLING ARRANGEMENTS' (Effective January 1, 2012) . We We maintain the following policies of insurance with carriers doing business in California: • Comprehensive General Liability Insurance ($2,000,000) • Workers' Compensation ($1,000,000) • Professional Liability Insurance ($2,000,000) • Hired and Non -Owned Auto Liability ($2,000,000) All costs incurred in complying with special insurance, licensing, or permit requirements, including but not limited to naming client as an additional insured and waiver of subrogation, become the responsibility of the client and are not included in the fees for services or direct charges but are billed in addition to the contract at cost, plus any professional or administrative fees. Our time reporting and billing system has certain standard formats that are designed to provide our clients with a detailed invoice of the time and charges associated with their engagement. (We typically discuss these with our clients at our kick-off meeting.) We are also pleased to provide our clients with a custom invoice format but we will have to bill the client for any additional costs associated with their unique requirements. Billings for professional services and charges are submitted every month, in order that our clients can more closely monitor our services. A late fee of one and one-half percent per month is applied to balances unpaid after thirty (30) days. HF&H Consultants, LLC Page 3 of 3 CITY OF SAN RAFAEL INSTRUCTIONS: USE THIS FORM WITH EACH SUBMITTAL OF A CONTRACT, AGREEMENT, ORDINANCE OR RESOLUTION BEFORE APPROVAL BY COUNCIL / AGENCY. SRRA / SRCC AGENDA ITEM NO. 3.c DATE OF MEETING: 10/1/2012 FROM: Stephanie Lovette DEPARTMENT: Economic Development TITLE OF DOCUMENT: Resolution Authorizing City Manager to enter into a contract with HF and H Consultants, LLC in an Amount Not to Exceed $ 75,000 for work on 2013 refuse rate audit for the Cities of San Rafael & Larkspur, Town of Ross, Las Gallinas Sanitary District and Ross Valley -South Deportment Head (signature) (LOWER HALF OF FORM FOR APPROVALS ONLY) APPROVED AS COUNCIL / AGENCY APPROVED AS TO FORM: AGENDA ITEM: J, 4-Jq'L" City Manager (signature) City Attorney (signature) REMARKS: