HomeMy WebLinkAboutCC Resolution 14170 (Annual Refuse Rate Review 2016)RESOLUTION NO. 14170
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN RAFAEL
AUTHORIZING THE CITY MANAGER TO ENTER INTO A PROFESSIONAL
SERVICES AGREEMENT WITH HF&H CONSULTANTS, LLC IN AN AMOUNT NOT
TO EXCEED $69,855 FOR WORK ON THE ANNUAL REFUSE RATE REVIEW FOR
THE CITIES OF SAN RAFAEL & LARKSPUR, TOWN OF ROSS, LAS GALLINAS
VALLEY SANITARY DISTRICT AND THE COUNTY OF MARIN
THE CITY COUNCIL OF THE CITY OF SAN RAFAEL RESOLVES AS FOLLOWS:
The CITY MANAGER is authorized to execute, on behalf of the City of San Rafael, a
Professional Services Agreement with HF&H Consultants, LLC for Refuse Rate Review of Marin
Sanitary Service's Rate Application for the 2017 calendar year, in the form attached hereto as
Attachment 1, subject to final approval by the City Attorney. The agreement shall be for an amount
not to exceed $69,855, the terms described in the July 19, 2016 HF&H Consultants, LLC Proposal
attached hereto as Exhibit A and incorporated herein by reference.
I, 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 fifteenth day of August 2016, by the following vote, to wit:
AYES: COUNCILMEMBERS: Bushey, Colin, Gamblin, McCullough and Mayor Phillips
NOES: COUNCILMEMBERS: None
ABSENT: COUNCILMEMBERS: None
ESTHER C. BEIRNE, City Clerk
AGREEMENT FOR PROFESSIONAL SERVICES
FOR REVIEW OF MARIN SANITARY SERVICES 2017 RATE APPLICATION
This Agreement is made and entered into this 16%+, day of Q u g c.sL _, 2016, by
and between the CITY OF SAN RAFAEL (hereinafter "CITY"), and HF&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 Valley Sanitary District (hereinafter "FRANCHISORS' GROUP")
have similar franchise agreements with Marin Sanitary Services; and
WHEREAS, the FRANCHISORS' GROUP utilizes jointly sponsored programs to
achieve financial and staff time savings through collaborative analyses such as the annual reviews
of Marin Sanitary Services operations and expenses pursuant to the Franchise Agreements; and
WHEREAS, the FRANCHISORS' GROUP desires to utilize the services of the
CONTRACTOR to conduct this review; and
WHEREAS, the CITY has in the past acted as the contracting agency on behalf of the
FRANCHISORS' GROUP, and has agreed to do so in this instance as well; and
WHEREAS, the FRANCHISORS' GROUP entities (each a "Participating Entity" and
collectively, "the Participating Entities") agree to share equally in the cost of the analysis, to be paid
for by Marin Sanitary Service and allocated through each city/town's annual rate setting review as
set forth below;
AGREEMENT
NOW, THEREFORE, the parties hereby agree as follows:
1. PROJECT COORDINATION
A. CITY. The City Manager shall be the representative of the CITY for all purposes
under this Agreement. Sustainabilitv and Volunteer Program Coordinator Cory Bvtof is hereby
designated the PROJECT MANAGER for the CITY, and said PROJECT MANAGER shall
Rev. Date: 1/30/14
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. Marva Sheehan 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.
DUTIES OF CONTRACTOR
CONTRACTOR shall perform the duties and/or provide services as described in
CONTRACTOR's Proposal to Review Marin Sanitary Service's Application for 2017 Rates, dated
July 19, 2016, attached hereto as Exhibit "A" attached and incorporated herein, including the
Optional Task: Contract Review Assistance.
3. DUTIES OF CITY
CITY shall cooperate with CONTRACTOR in its perfonnance under this agreement and
shall compensate CONTRACTOR as provided herein.
4. COMPENSATION.
For the full performance of the services described herein by CONTRACTOR,
CONTRACTOR shall be compensated as described in Exhibit "A" in a total contract amount not
to exceed $69,855.00, which includes Optional Task: Contract Review Assistance. It is
understood and agreed by the parties that payment of compensation hereunder shall be made as
follows: CONTRACTOR shall submit monthly invoices to CITY for review and approval, then
CITY shall forward CONTRACTOR's approved invoices to Marin Sanitary Services, which shall
remit payment on each invoice directly to CONTRACTOR within thirty (30) days of receipt
thereof.
By separate agreements, Marin Sanitary Services and the Participating Entities have agreed
that Marin Sanitary Services shall pass on the costs paid to CONTRACTOR hereunder by
allocation of a proportionate share thereof, in accordance with the agreed upon rate setting
methodology set forth in that Participating Entity's individual franchise agreement with Marin
Sanitary Service, not to exceed $50,000 to CITY.
5. TERM OF AGREEMENT.
The term of this Agreement shall commence upon the date of execution of this agreement
and shall end on June 30, 2017.
6. TERMINATION.
A. Discretionary. Either party may terminate this Agreement without cause upon
Rev. date: 1/30/14 2
thirty (30) days written notice mailed or personally delivered to the other party.
B. Cause. Either party may terminate this Agreement for cause upon fifteen (15) days
written notice mailed or personally delivered to the other party, and the notified party's failure to
cure or correct the cause of the termination, to the reasonable satisfaction of the party giving such
notice, within such fifteen (15) day time period.
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 and
materials prepared for or relating to the perfonnance of its duties under this Agreement, shall be
delivered to CITY as soon as possible, but not later than thirty (30) days after termination.
7. OWNERSHIP OF DOCUMENTS.
The written documents and materials prepared by the CONTRACTOR in connection with
the performance of its duties under this Agreement, shall be the sole property of CITY. CITY may
use said property for any purpose, including projects not contemplated by this Agreement.
INSPECTION AND AL!DIT.
Upon reasonable notice, CONTRACTOR shall snake available to CITY, or its agent, for
inspection and audit, all documents and materials maintained by CONTRACTOR in connection
with its 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. Scope of Coverage. During the term of this Agreement, CONTRACTOR shall
maintain, at no expense to CITY, the following insurance policies:
1. A commercial general liability insurance policy in the minimum amount of
one million dollars ($1,000,000) per occurrence/two million dollars ($2,000,000) aggregate, for
death, bodily injury, personal injury, or property damage.
2. An automobile liability (owned, non -owned, and hired vehicles) insurance
Rev. date: 1/30114
policy in the minimum amount of one million dollars ($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 dollars ($1,000,000) per occurrence/two million dollars ($2,000,000) aggregate, to
cover any claims arising out of the CONTRACTOR's performance of services under this
Agreement. Where CONTRACTOR is a professional not required to have a professional license,
CITY reserves the right to require CONTRACTOR to provide professional liability insurance
pursuant to this section.
4. If it employs any person, CONTRACTOR shall maintain worker's
compensation and employer's liability insurance, as required by the State Labor Code and other
applicable laws and regulations, and as necessary to protect both CONTRACTOR and CITY
against all liability for injuries to CONTRACTOR's officers and employees. CONTRACTOR'S
worker's compensation insurance shall be specifically endorsed to waive any right of subrogation
against CITY.
B. Other Insurance Requirements. The insurance coverage required of the
CONTRACTOR in subparagraph A of this section above shall also meet the following
requirements:
1. Except for professional liability insurance, the insurance policies shall be
specifically endorsed to include the CITY, its officers, agents, employees, and volunteers, as
additionally named insureds under the policies.
2. The additional insured coverage under CONTRACTOR'S insurance
policies shall be primary with respect to any insurance or coverage maintained by CITY and shall
not call upon CITY's insurance or self-insurance coverage for any contribution. The "primary and
noncontributory" coverage in CONTRACTOR'S policies shall be at least as broad as ISO form
CG20 01 04 13.
3. Except for professional liability insurance, the insurance policies shall
include, in their text or by endorsement, coverage for contractual liability and personal injury.
4. CONTRACTOR will provide the PROJECT MANAGER with thirty (30)
days written notice prior to any planned cancellation or planned non-payment of premium, or
planned modifications of the terms and conditions of said insurance policies. In addition,
immediately upon CONTRACTOR's receipt during the term of this Agreement of any notice of
cancellation or of intent to cancel any policy of insurance required herein issued by
CONTRACTOR's insurance carrier for any reason, CONTRACTOR shall provide PROJECT
MANAGER with a copy of said notice by personal delivery or overnight mail.
5. If the insurance is written on a Claims Made Form, then, following
termination of this Agreement, said insurance coverage shall survive for a period of not less than
five years.
Rev. date: 1/30/14 4
6. The insurance policies shall provide for a retroactive date of placement
coinciding with the effective date of this Agreement.
7. The limits of insurance required in this Agreement may be satisfied by a
combination of primary and umbrella or excess insurance. Any umbrella or excess insurance shall
contain or be endorsed to contain a provision that such coverage shall also apply on a primary and
noncontributory basis for the benefit of CITY (if agreed to in a written contract or agreement)
before CITY'S own insurance or self-insurance shall be called upon to protect it as a named
insured.
8. It shall be a requirement under this Agreement that any available insurance
proceeds broader than or in excess of the specified minimum insurance coverage requirements
and/or limits shall be available to CITY or any other additional insured party. Furthermore, the
requirements for coverage and limits shall be: (1) the minimum coverage and limits specified in this
Agreement; or (2) the broader coverage and maximum limits of coverage of any insurance policy or
proceeds available to the named insured; whichever is greater.
C. Deductibles and SIR'S. Any deductibles or self-insured retentions in
CONTRACTOR's insurance policies must be declared to and approved by the PROJECT
MANAGER and City Attorney, and shall not reduce the limits of liability. Policies containing any
self-insured retention (SIR) provision shall provide or be endorsed to provide that the SIR may be
satisfied by either the named insured or CITY or other additional insured party. At CITY's option,
the deductibles or self-insured retentions with respect to CITY shall be reduced or eliminated to
CITY's satisfaction, or CONTRACTOR shall procure a bond guaranteeing payment of losses and
related investigations, claims administration, attorney's fees and defense expenses.
D. Proof of Insurance. CONTRACTOR shall provide to the PROJECT
MANAGER or CITY'S City Attorney all of the following: (1) Certificates of Insurance
evidencing the insurance coverage required in this Agreement; (2) a copy of the policy
declaration page and/or endorsement page listing all policy endorsements for the commercial
general liability policy, and (3) excerpts of policy language or specific endorsements
evidencing the other insurance requirements set forth in this Agreement. CITY reserves the
right to obtain a full certified copy of any insurance policy and endorsements from
CONTRACTOR. Failure to exercise this right shall not constitute a waiver of the right to
exercise it later. The insurance shall be approved as to form and sufficiency by PROJECT
MANAGER and the City Attorney.
11. INDEMNIFICATION.
A. Except as otherwise provided in Paragraph B., CONTRACTOR shall, to the
fullest extent permitted by law, indemnify, release, defend with counsel approved by CITY, and
hold harmless CITY, its officers, agents, employees and volunteers (collectively, the "City
Indemnitees"), from and against any claim, demand, suit, judgment, loss, liability or expense of
any kind, including but not limited to attorney's fees, expert fees and all other costs and fees of
litigation, (collectively "CLAIMS"), arising out of CONTRACTOR'S performance of its
obligations or conduct of its operations under this Agreement. The CONTRACTOR's
Rev. date: 1/3014
obligations apply regardless of whether or not a liability is caused or contributed to by the active
or passive negligence of the City Indemnitees. However, to the extent that liability is caused by
the active negligence or willful misconduct of the City Indemnitees, the CONTRACTOR's
indemnification obligation shall be reduced in proportion to the City Indemnitees' share of
liability for the active negligence or willful misconduct. In addition, the acceptance or approval
of the CONTRACTOR's work or work product by the CITY or any of its directors, officers or
employees shall not relieve or reduce the CONTRACTOR's indemnification obligations. In the
event the City Indemnitees are made a party to any action, lawsuit, or other adversarial
proceeding arising fi•om CONTRACTOR'S performance of or operations under this
Agreement, CONTRACTOR shall provide a defense to the City Indemnitees or at CITY'S
option reimburse the City Indemnitees their costs of defense, including reasonable attorneys'
fees, incurred in defense of such claims.
B. Where the services to be provided by CONTRACTOR wider this Agreement are
design professional services to be performed by a design professional as that term is defined
under Civil Code Section 2782.8, CONTRACTOR shall, to the fullest extent permitted by law,
indemnify, release, defend and hold harmless the City Indemnitees from and against any
CLAIMS that arise out of, pertain to, or relate to the negligence, recklessness, or willful
misconduct of CONTRACTOR in the performance of its duties and obligations tinder this
Agreement or its failure to comply with any of its obligations contained in this Agreement,
except such CLAIM which is caused by the sole negligence or willfill misconduct of CITY.
C. The defense and indemnification obligations of this Agreement are undertaken in
addition to, and shall not in any way be limited by, the insurance obligations contained in this
Agreement, and shall survive the termination or completion of this Agreement for the full period
of time allowed by law.
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 related to the
performance of its duties and obligations under this Agreement.
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 perforn all services under this Agreement in accordance with
these laws, ordinances, codes and regulations. CONTRACTOR shall release, defend, indemnify
and hold harmless CITY, its 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.
14. NO THIRD PARTY BENEFICIARIES.
CITY and CONTRACTOR do not intend, by any provision of this Agreement, to create in
Rev. date: 1/30/14 6
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 pennitted 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: Cory Bytof
Sustainability & Volunteer Program Coordinator
City of San Rafael
1400 Fifth Avenue
P.O. Box 151560
San Rafael, CA 94915-1560
TO CONTRACTOR: Robert D. Hilton, CMC
President
HF&H Consultants, LLC
201 North Civic Drive, Suite 230
Walnut Creek, CA 94596
16. INDEPENDENT CONTRACTOR.
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.
17. ENTIRE AGREEMENT -- AMENDMENTS.
A. The terns 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.
Rev. date: 1/30114
D. The terms and conditions of this Agreement shall not be altered or modified 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.
18. SET -OFT AGAINST DEBTS.
CONTRACTOR agrees that CITY may deduct from any payment due to
CONTRACTOR under this Agreement, any monies which CONTRACTOR owes CITY under
any ordinance, agreement, contract or resolution for any unpaid taxes, fees, licenses, assessments,
unpaid checks or other amounts.
19. WAIVERS.
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.
20. COSTS AND ATTORNEY'S FEES.
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.
21. 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. CITY shall not be required to pay for any
work performed under this Agreement, until CONTRACTOR has provided CITY with a
completed Internal Revenue Service Form W-9 (Request for Taxpayer Identification Number and
Certification).
22. 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
Rev. date: 1/30/14 8
and year first above written.
CITY OF SAN RAFAEL
SC TZ, City ana;er
ATTEST:
ESTHER C. BEIRNE, City Clerk
APPROVED AS TO FORM:
ROBERT F. EPSTEIN, City Attorney
Rev. date: 1130!14
CONTRACTOR
Name: V SHEEHA.N
Title: Vice -President, HF&H Consultants, LLC
H F, H CC)NSULTANTS LLC
201 N. Civic Drive, Suite 230
Walnut Creek, California 94596
Telephone: 925/977-6950
Fax:925/977-6955
www.hfh-consultants.com
July 19, 2016
Sent via e-mail
Ms. Cristine Alilovich
Assistant City Manager
City of San Rafael
1400 Fifth Avenue
San Rafael, CA 94919-1560
Mr. Steve Devine
Program Manager
County of Marin
1600 Los Gamos Drive, Suite #210
San Rafael, CA 94903
Ms. Susan McGuire
Administrative Services Manager
Las Gallinas Valley Sanitary District
300 Smith Ranch Road
San Rafael, CA 94903
Managing Tomorrow's Resources Today
Mr. Dan Schwarz
City Manager
City of Larkspur
400 Magnolia Avenue
Larkspur, CA 94939
Mr. Joe Chinn
Town Manager
Town of Ross
31 Sir Francis Drake Blvd
Ross, CA 94957
Robert D. Hilton, CMC
John W. Farnkopf, PE
Laith B. Ezzet, CMC
Richard J. Simonson, CMC
Marva M. Sheehan, CPA
Robert C. Hilton, CMC
Subject: Proposal to Perform a Review of Marin Sanitary Service's Application for 2017 Rates
Dear Ms. McGuire, Ms. Alilovich and Messrs. Schwarz, Chinn, and Divine:
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, 2017.
Background
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 (Franchisors' Group) have adopted a methodology to set MSS' 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,
disposal, processing, and fuel costs) during the interim years.
The last detailed review was performed in 2015 for rates to be effective in 2016. As part of reviewing the
rates to be effective 2017, we have been asked to:
0 Perform the review using the summary method (the use of indices, and the review of key
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components such as revenues, disposal, processing, workers' compensation and fuel costs); and,
• Perform a survey of similar rates from cities in the Bay Area receiving comparable services.
Scope of Work and Schedule
We will perform the following tasks related to the review of MSS' Application.
Task 1: Pre -Fieldwork
1a We will meet once with the Franchisors' Group to discuss the requested review process.
1b We will meet once with MSS management to receive the application and discuss the review
schedule.
1c We will review the application to ensure that it is complete and in compliance with the summary
methodology.
1d Thereafter, we will review the application for math accuracy and logical consistency.
Task 2: Review of Revenues
2a HF&H will review MSS management's projection of collection and non -collection revenues for the
12 -month periods ending December 31, 2015, and 2016.
2b We will compare the results to MSS' audited financial statements for rate year 2015 and year-to-
date revenues for 2016 and request explanations for variances.
2c We will review MSS' calculation of the three-year trend in subscription levels to determine an
average surplus or shortfall in rate revenues. The average surplus or shortfall will be used in the
determination of gross rate revenues.
2d We will summarize the findings of our work in Tasks 2a through 2c.
Task 3: Review of Expenses
3a HF&H will review the appropriateness of MSS management's classification of expenses into the
various expense categories.
3b We will review MSS management's calculation of the rate year 2017 indexed expenses and
compare them to the calculated expenses for 2016 established in our prior report, and the
calculated changes to the indices determined in Task 1.
3c We will review MSS management's projection of other expenses including:
• Workers' Compensation by determining if the base wages, established as part of the prior review,
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were properly multiplied by the applicable premium rates from MSS' insurance carrier.
• Disposal Expense for residential and solid waste tons transferred at MSS' transfer station by
evaluating MSS' projection for 2017 disposal expense and MSS' adjustments for the previous
projections for Rate Years 2015 and 2016 based on historical trends, management's plans and
adjustment to the disposal rates.
• Commercial Mixed Waste Processing Expense for commercial tons processed at MSS' processing
facility by evaluating MSS' projection for 2017 commercial mixed waste processing and MSS'
adjustments for the previous projections for Rate Years 2015 and 2016 based on historical trends
and management's plans. We will verify the processing rate per ton was calculated in accordance
with the rate -setting methodology.
• Organics Processing Expense by evaluating MSS' projection for 2017 organics processing and MSS'
adjustments for the previous projections for Rate Years 2015 and 2016 based on historical trends
and management's plans. We will verify the processing rate per ton was calculated in accordance
with the rate -setting methodology.
• The Transfer/Transport Adjustment for tons not affiliated with the Franchisors' Group transferred
and transported through MSS' transfer station by evaluating MSS' tonnage projection for 2017
and MSS' adjustments for the previous tonnage projections for Rate Years 2015 and 2016 based
on historical trends and management's plans. We will verify the Transfer/Transport Fee per ton
was calculated in accordance with the rate -setting methodology.
• Fuel Expense by evaluating MSS' 2017 projection and the adjustments for Rate Years 2015 and
2016. We will review MSS' calculations of the average price per gallon for fuel and verify the use
of the proper projected gallons.
• Depreciation/Lease Expense projections by evaluating the reasonableness of MSS management's
estimates for these expenses based on historical trends and records and MSS management's
plans. We will review MSS' adjustments to previous year projections, if any.
• JPA Fees expense by reviewing documentation from the JPA and MSS projections.
3d HF&H will summarize the findings from the analysis performed during Tasks 3a through 3c above.
Task 4: Review of Projected Profit
4a HF&H will review MSS management's calculation of projected profit for procedural compliance
and mathematical accuracy.
Task 5: Review of Pass-through Expenses/ Revenue
5a HF&H will review MSS' calculations of the Pass-through Expenses and Other Revenue, including:
Interest Expense based on MSS' actual interest from its loan amortization schedules for actual
and projected capital expenditures.
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• Franchise Fees based on each agency's appropriate rate and the forecasted values.
• Other Agency Fees based on fees established by each agency and forecasted values.
• Other Revenues based on revenues received by MSS from related and third parties from the use
of assets and services of employees where the costs are paid by the rates from the Franchisors'
Group ratepayers.
5b We will summarize the findings from the analysis performed in Task 5a above.
Task 6: Review of the Calculation of the Reserve for Future Diversion Programs
6a HF&H will review MSS' calculation of the increase or decrease to the reserve for future diversion
programs in accordance with the procedures developed in 2012.
6b We will summarize the findings of Task 6a.
Task 7: Review of Revenue and Expense Allocations
7a HF&H will review the appropriateness of MSS management's allocation of revenues and expenses
among the Franchisors and the other service areas in accordance with the procedures developed
in 2012.
7b If requested by the Franchisors' Group, we will include the review of the allocations for San
Anselmo and Fairfax and present the impact of the allocations to the Franchisors' Group.
Task 8: Review of Adjustments
8a We will meet once with MSS management to review our adjustments to their calculated and
projected revenues and expenses and their allocation among the Franchisors. We will obtain
management's comments, review any additional material, and amend our adjustments, if
necessary.
8b Thereafter, we will meet once with the Franchisors' Group to present our adjustments to MSS'
calculated revenues and expenses and its allocation among the Franchisors.
Task 9: Survey of Comparable Rates
9a We will work with the Franchisors' Group to identify appropriate communities to include in the
survey. We will compile rates currently in effect in the municipalities in Marin County, as well as
neighboring jurisdictions in other counties, as agreed upon. When possible, we will draw data
from our existing project files. If necessary, we will contact cities to obtain or clarify information.
We will prepare a table and graphs summarizing the results.
Task 10: Communicate Findings
10a HF&H will distribute a copy of our initial draft report documenting our findings and
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recommendations for review by MSS management. Thereafter, we will meet once with MSS
management to present and obtain its comments regarding our initial draft report.
10b We will make any appropriate adjustments to our initial draft report and present a preliminary
draft to the Franchisors' Group.
10c Based on comments from the Franchisors' Group, we will amend the preliminary draft report and
issue the final report.
10d We will attend council/board meetings to present findings.
Optional Task: Contract Review Assistance
Based on discussions with the Franchisors' Group and MSS, we are aware there are areas of concern for
both parties. In order to fully understand the potential impact to the ratepayers for changes to the
contracts, we recommend HF&H assist the Franchisors' Group in the following areas:
• Prepare a matrix of terms of all existing Franchisors Group contracts and up to four other
contracts in the Marin County. HF&H will discuss the options with the Franchisors' Group to
determine the non -Franchisors Group contracts to include.
• Research other agencies that have similar operational relationships with their collection hauler
(collection, processing, and/or transfer and transport of materials) and summarize our findings.
• Develop a list of pros and cons of including MRRC and MRRA in the Franchisors' Group, including,
where possible, the financial impact to the ratepayers.
• Perform other research/analysis as requested by the Franchisors' Group.
Limitations
Every approach to an engagement is limited in its scope. The major limitations regarding our proposed
scope of work are:
• The scope of work described above is different from an audit of financial statements performed
in accordance with Generally Accepted Auditing Standards, which is performed by MSS' auditor.
• 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. We will rely on MSS' auditor with regard to matters
related to MSS' internal controls. Our testing of MSS' 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' application.
• We will conduct our review in accordance with the methodology adopted by the Franchisors'
Group. This methodology includes the review of MSS management's projection of the future
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Marin Franchisors' Group
July 19, 2016
Page 6 of 8
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 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.
If San Anselmo, Fairfax and the County (RVSD-N) are not included in the rate -setting process for the
Franchisors' Group, we would be pleased to meet with them on a time -and -materials basis.
Further, this scope of work does not include modifications to any of the individual Franchisor's rates or
rate structures.
Firm and Engagement Team Qualifications
Since its founding, HF&H has been providing independent solid waste rate review services to
municipalities throughout California and the West Coast. HF&H has extensive experience as the
Franchisors' Group's consultant performing these reviews. Through the years, we have helped the
Franchisors' Group to substantially reduce the cost of the review through changes in methodology, while
ensuring that both the customers' rates and MSS' level of profit are reasonable.
Marva Sheehan, Vice President, will serve as Engagement Director and will be responsible for directing
the project and for your satisfaction with the engagement. Ms. Sheehan has been the Engagement
Director or Manager for the MSS reviews since 2006. She is a Certified Public Accountant with over 35
years of accounting and auditing experience; 24 of which have been in the solid waste industry. 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 the Franchisors'
Group's objectives. She, along with Mr. Holt, will also make presentations of our findings to the various
councils and boards.
Scott Holt, an accountant with more than 20 years of industry experience, 18 of which as an industry
controller, will serve as Engagement Manager. Since joining HF&H, he has performed the rate adjustment
reviews for the Franchisors' Group for the last two years. Additionally, he has performed the rate
adjustment reviews for the Town of Fairfax, the contractor compensation review for the City of Sunnyvale,
and contract compliance reviews for the Cities of Lawndale and Bellflower.
Ms. Sheehan and Mr. Holt will be assisted by less senior, experienced staff at lower billing rates, which
will perform certain tasks under their direct supervision
Fees
Based on our last review of MSS' rate application, my current understanding of 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 base scope of work described above to be $56,215, as shown on
Attachment A. Additionally, we have provided a cost proposal to perform the "Optional Task — Contract
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July 19, 2016
Page 7 of 8
Review Assistance" of $13,640 as shown on 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 $56,215 for the base scope of work and $13,640 should the Franchisors' Group
authorize the Optional Task. We will bill you on a time -and -materials basis and, if the level of effort is less
than anticipated, we will bill you the lesser amount. Also, it is possible that the level of effort to perform
the review may exceed our estimate and, if so, we will contact you before proceeding to obtain your
approval or direction.
Proposed Schedule
We have prepared the following proposed preliminary schedule:
Activity
Completion Date
MSS Submits Application
August 1, 2016
Kick -Off Meetings with Franchisors' Group / MSS
August 3, 2016
HF&H Commences Field Work
August 3, 2016
HF&H Completes Field Work
August 31, 2016
HF&H Reviews Results with MSS
September 5, 2016
HF&H Provides MSS Draft Report
September 12, 2016
MSS Provides Comments on Draft Report
September 19, 2016
HF&H Presents Draft Report to Franchisors' Group for Comment
October 26, 2016
HF&H Delivers Final Report
October 10, 2016
Boards/Councils Receive Report and Adopt Revised Rates
October/November
Rates Effective
January 1, 2017
The performance of our review, in accordance with the schedule described above, is dependent on:
The ability of MSS management to prepare its application and respond to questions in a timely
manner; and
• The ability of the Franchisors' Group to provide necessary direction and comments to draft work
products in a timely manner.
We anticipate that neither MSS management nor the Franchisors' Group will have difficulty performing in
the manner we have assumed.
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July 19, 2016
Page 8 of 8
Thank you for this opportunity to again be of service to you. If you have any questions, please call me at
(925) 977-6961.
Sincerely,
HF&H CONSULTANTS, LLC
Marva M. Sheehan, CPA
Vice President
Attachments: A) Fee Estimate
B) Standard Hourly Rates and Billing Arrangements
cc: Mr. Joe Garbarino, Jr., Marin Sanitary Service
Ms. Patty Garbarino, Marin Sanitary Service
Mr. Neil Roscoe, Marin Sanitary Service
Mr. Cory Bytof, City of San Rafael
Ms. Kim Erwin, HF&H
ATTACHMENT A: FEE ESTIMATE
1a
Kick-off Meeting with Franchisors Group
8
8
0
0
16
$3,560
1b
Kick-off Meeting with Company via a conference call
1
2
0
0
3
$640
1c
Completeness & Compliance Review
0
3
6
0
9
$1,395
1d
Math Accuracy & Logical Consistency
1
3
6
0
10
$1,645
Task 1
10
16
12
0
38
$7,240
Task 2
Review of Revenues
2a
Review of MSS projected revenue
0
1
4
0
5
$735
2b
Compare 2015 revenue to MSS' audited financial
1
2
4
0
7
$1,180
statements
2c
Review MSS' calculation of three year trend of subscription
0
2
2
0
4
$660
levels and surplus or shortfall from projections
2d
Summarize Findings
2
2
4
0
8
$1,430
Task 2
3
7
14
0
24
$4,005
Task 3
Review of Expense
3a
Classification of Expenses
0
4
8
0
12
$1,860
3b
Calculation of Indexed Expenses
0
4
10
0
14
$2,130
3c
Review of Other Expenses
2
12
24
0
38
$6,080
3d
Summarize Findings
2
4
4
0
10
$1,820
Task 3
4
24
46
0
74
$11,890
Task 4
Review of Projected Profit
4a
Review Calculation of Profit
0
1
1
0
2
$330
Task 4
0
1
1
0
2
$330
July 19, 2016 Page A-1 HF&H Consultants, LLC
ATTACHMENT A: FEE ESTIMATE
5a
Review MSS' calculations of pass-through expenses and
1
0
revenue(interest, franchise fees, other agency fees, and
8b Review with Franchisors Group
6
other revenue)
0
5b
Summarize Findings
1
10
Task 5
2
Task 6
Review Calculation of Reserve for Future Diversion Programs
6a
Review MSS' calculations of reserve for future diversion
4
1
programs
0
6b
Summarize Findings
1
3
Task 6
5
Task 7
Review of Allocations
7a
Review Allocations for Reasonableness and Consistency
1
7b
Review of Allocations for San Anselmo and Fairfax
1
Task 7
2
Task 8
Review of Adjustments
4 12 0 17 $2,650
1 1 0
5 13 0
4 0 0
2 0 0
6 0 0
2 2 0
2 2 0
4 4 0
8a Review with MSS Management
4
4
0
0
8b Review with Franchisors Group
6
6
0
0
Task 8
10
10
0
0
Task 9 Rate Comparisons
9a Survey and Document Comparable Rates
1
3
0
16
Task 9
1
3
0
16
3 $580
20 $3,230
8 $1,780
3 $640
11 $2,420
5
$910
5
$910
10
$1,820
8
$1,780
12
$2,670
20
$4,450
20
$2,515
20
$2,515
July 19, 2016 Page A-2 HF&H Consultants, LLC
ATTACHMENT A: FEE ESTIMATE
10a Prepare draft report and meet with MSS management
10
10
12
6
38
$6,700
10b Prepare draft report and meet with Franchisors
4
6
4
2
16
$2,920
10c Prepare and distribute Final Report
2
2
2
2
8
$1,370
10d Prepare for and attend council meetings
12
20
0
0
32
$6,900
Task 10
28
38
18
10
94
I $17,890
Labor
65
114
108
26
313
$55,790
Out -of -Pocket Expenses
$425
Total Budget before Optional Task
$56,215
Optional Task: Contract Review Assistance
Assist the FG in reviewing the contracts with MSS:
Prepare a matrix terms of all existing FG contracts and other
2
4
12
0
18
$2,900
4 other Marin County agencies
Research for other agencies that have similar operational
6
4
4
0
14
$2,820
relationships with their hauler (collection and processing)
and present to FG
Develop pros and cons of including MRRC and MRRA in the
2
4
0
0
6
$1,280
FG, including, where possible, the financial impact to the
ratepayers
Perform other tasks as requested by the FG
16
8
8
0
32
$6,640
Total Optional Task
26
20
24
0
70
I $13,640
I
Total Budget with Optional Task
I $69,855
July 19, 2016 Page A-3 HF&H Consultants, LLC
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ATTACHMENT B:
STANDARD HOURLY RATES AND BILLING
ARRANGEMENTS
(Effective January 1, 2016)1
Professional Fees
Hourly rates for professional and administrative personnel are as follows:
Pncitinn
President
Senior Vice President & Vice President
Senior Project Manager
Senior Associate/Project Manager
Associate Analyst
Assistant Analyst
Administrative Staff
Direct Expenses
Standard charges for common direct expenses are as follows:
Automobile Travel
Document Reproduction
Facsimile
Telephone
Public Conveyances
Postage
Overnight Mail and Couriers
Billing Policies
Rate
$270
$250-$269
$230-$235
$195-$219
$130-$170
$110-$130
$105
Prevailing IRS mileage rate
15 cents per page (black & white)
75 cents per page (color)
No charge
No charge
Actual
Actual
Actual
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
1 Litigation Support and Expert Witness Services are not covered by this schedule of fees and expenses.
July 19, 2016 Page B-1 HF&H Consultants, LLC
ATTACHMENT B:
STANDARD HOURLY RATES AND BILLING
ARRANGEMENTS
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 markup 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.
• 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.
Insurance
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 ($1,000,000)
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.
Invoices and Payment for Services
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.
July 19, 2016 Page B-2 HF&H Consultants, LLC
CONTRACT ROUTING FORM
INSTRUCTIONS: Use this cover sheet to circulate all contracts for review and approval in the order shown below.
TO BE COMPLETED BY INITIATING DEPARTMENT PROJECT MANAGER:
Contracting Department: City Manager
Project Manager: Cory Bytof
Extension: 3407
Contractor Name: HF&H Consultants, LLC
Contractor's Contact: Marva Sheehan
Contact's Email: msheehan@hfh-consultants.com
❑ FPPC: Check if Contractor/Consultant must file Form 700
Step
RESPONSIBLE
DESCRIPTION
COMPLETED
REVIEWER
DEPARTMENT
DATE
Check/Initial
1
Project Manager
a. Email PINS Introductory Notice to Contractor
7/26/2016
❑
7/26/2016
b. Email contract (in Word) & attachments to City
Atty c/o Laraine.Gittens@cityofsanrafael.org
❑
2
City Attorney
a. Review, revise, and comment on draft agreement
8/1/2016
® LAG
and return to Project Manager
7/28/2016
® LAG
b. Confirm insurance requirements, create Job on
PINS, send PINS insurance notice to contractor
3
Project Manager
Forward three (3) originals of final agreement to
Click here to
❑
contractor for their signature
enter a date.
4
Project Manager
When necessary, * contractor -signed agreement
❑ N/A
agendized for Council approval
*PSA > $20,000; or Purchase > $35,000; or
Or
Public Works Contract > $125,000
Date of Council approval
Click(ere to
enter a date.
PRINT
CONTINUE ROUTING PROCESS WITH HARD COPY
5
Project Manager
Forward signed original agreements to City
Attorney with printed copy of this routing form
6
City Attorney
Review and approve hard copy of signed
agreement
7
City Attorney
Review and approve insurance in PINS, and bonds
en�G—
(for Public Works Contracts)
8
City Manager / Mayor
Agreement executed by Council authorized official'
l
9
City Clerk
Attest signatures, retains original agreement and
�� t'/�
��
forwards copies to Project Manager