HomeMy WebLinkAboutCC Resolution 10031 (MSS Refuse Rate Review)RESOLUTION NO. 10031
A RESOLUTION AUTHORIZING THE SIGNING OF AN
AGREEMENT WITH HILTON, FARNKOPF & HOBSON, LLC
FOR REFUSE RATE REVIEW FOR THE 1998/99 FISCAL
YEAR
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
Hilton. Farnkor)f & Hobson. LLC for Refuse Rate Review for the 1998/99 fiscal vear
a copy of which is hereby attached and by this reference made a part hereof.
I, JEANNE M. LEONCINI, Clerk of the City of San Rafael, hereby certify that the
foregoing resolution was duly and regularly introduced and adopted at a reaular
meeting of the City Council of said City held on Mondav the 16th day of March , 19 98 ,
by the following vote, to wit:
AYES: COUNCILMEMBERS: COHEN, HELLER, MILLER, PHILLIPS & MAYOR BORO
NOES: COUNCILMEMBERS: NONE
ABSENT: COUNCILMEMBERS: NONE
JEANNE M.LEO C NI, i y erk
F"1InlplP
AGREEMENT
FOR: Review of Marin Sanitary Service's
1998 Rate Application
This Agreement is made and entered into this 16th day of March , 1998 , by
and between the CITY OF SAN RAFAEL (hereinafter "CITY"), and Hilton Farnkopf and
Hobson. LLC hereinafter "CONTRACTOR").
PROJECT COORDINATION
A. CITY. The City Manager shall be the representative of the CITY for
all purposes under this Agreement. The Director of Administrative Services, Ken
Nordhoff 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. Robert D. Hilton 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.
2. DUTIES OF CONTRACTOR
CONTRACTOR shall perform the duties and/or provide services as
described in Exhibit " A " attached and incorporated herein.
3. DUTIES OF CITY
CITY shall cooperate with CONTRACTOR in his performance under this
agreement and shall compensate CONTRACTOR as provided herein.
4. COMPENSATION
For the full performance of the services described herein by
CONTRACTOR, CITY shall pay CONTRACTOR an amount NOT to exceed $57,500.00
plus 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.
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, 1998.
6. TERMINATION
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) 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 notice, to the
reasonable satisfaction of the party giving such notice, within thirty (30) days 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
CONTRACTOWs documents described in paragraph 7 below, 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.
8. INSPECTION AND AUDIT
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
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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
11. A., shall also meet the following requirements:
1. The insurance
insurance or coverage maintained by CITY
coverage for any contribution;
shall be primary with respect to any
and shall not call upon CITY's insurance or
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;
4. CONTRACTOR shall provide to PROJECT MANAGER, (a)
Certificates of Insurance evidencing the insurance coverage required herein, and (b)
specific endorsements naming CITY, and other entities in the Franchisors' Group, their
officers, agents, employees and volunteers as additional insureds under the policies;
5. The insurance policies shall provide that the insurance
carrier shall not cancel, terminate or otherwise modify the terms and conditions of said
insurance policies except upon thirty (30) days written notice to CITY's PROJECT
MANAGER;
6. 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;
7. The insurance policies shall provide for a retroactive date of
placement coinciding with the effective date of this Agreement;
8. The insurance shall be approved as to form and sufficiency
by PROJECT MANAGER and the City Attorney.
C. 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.
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D. Any deductibles or self-insured retentions in CONTRACTOR7s
insurance policies must be declared to and approved by the PROJECT MANAGER and
the City Attorney. 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.
11. INDEMNIFICATION
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, judgement, 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 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 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.
14. NO THIRD PARTY BENEFICIARIES
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. Kenneth A. Nordhoff
Director of Administrative Services
(Project Manager)
City of San Rafael
1400 Fifth Avenue
P.O. Box 151560
San Rafael CA 94915-1560
TO CONTRACTOR: Mr. Robert D. Hilton, CMC
(Project Director)
Hilton Famkopf and Hobson, LLC
2201 Walnut Avenue Suite 280
Fremont CA 94538-2334
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 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
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. 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
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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.
19. 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 attorneys fees
expended in connection with such action.
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.
CITY OF SAN RAFAELCONTRACTOR
City Manager
ATTEST:
City Attorney(/ j
ORM:
V
0
By:
Name: o6 erg D. i
Title: Pref t �c
EXHIBIT A
lilLTON FAItNKC -; HOBSON, LLC
Advisory Services to
Municipal Management
2201 Walnut Avenue, Suite 280 Fremont
Fremont, California 94538-2334 Ne%%Torr Brach
Telephone: 510%r 13.3270 5'1cramcnco
Fax: 5101713.3294
www.hih-consv ltants.com
March 3, 1998
Mr. Kenneth A, Nordhoff
Director, Administrative Services
City of San Rafael
1400 Fifth Avenue
San Rafael, CA 94915-1560
Via Facsimile;Qri inal to Follow
Re= Annual Reviewvf Marin Sanitary Service Rate$
Dear Mr. Nordhoff.
In response to your request on behalf of Marin Sanitary Service's (MSS) franchising
agencies (Franchisors), Hilton Farnkopf & Hobson, LLC (HF&H) submitted a
proposed engagement letter dated February 4, 1998. On February 13, 1998, I
distributed a memorandum related to the proposed engagement letter and on
February 17, 1998, the Franchisor's and Marin Sanitary Service met with us to
discuss the engagement. This letter outlines the scope of our review of MSS' rate
application, including certain additional tasks which the Franchisors requested
HF&H perform.
Background
In the Spring of 1995, I-iF&H assisted the Franchisors by developing a three year rate
application and review methodology. In the first two years of the methodology
(1996 and 1997), inflationary adjustments (using certain indices and an analytical
approach limited to certain specific revenues and expenses) were made to the
previously established revenue and expense values. In the third year, a
comprehensive detailed review of projected revenues and expenses is to be
performed.
Rate eview Objectives.
The goal of the rate review is to provide the company with compensation for the
costs it incurs in providing services to the Franchisor's communities and a
reasonable profit.
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='QF HILTON FARNKOPF & HOBSON. LLC
March 3, 1998
Mr. Kenneth Nordhoff
Page 2
The objectives for the rate review are to:
1. Compare actual prior year results to those anticipated using the index
methodology applied by the Franchisors during the past two years.
2. Establish the amount of revenues reasonably expected to be earned from IVISS at
current rates.
3. Establish the amount of actual, reasonable and necessary expenses which MSS is
expected to incur in the provision of services to customers within the
jurisdictions of the Franchisors.
4. Calculate a reasonable profit to compensate the company for the risks it incurs
and management it provides to the solid waste and recyclable collection
programs.
Avvroach and 5COve of Work
Our approach to the engagement is to:
1. Plan the engagement in cooperation with the Franchisors' representatives and
the management of MSS.
a) We met once with the Franchisors' representatives and MSS
management to receive direction on the scope of the review. Central to
this discussion was direction that the Franchisors did not wish to pursue
the jurisdiction based rate approach or the inclusion of MRRC revenues
and expenses in the analyses.
b) Thereafter, we met once with MSS management (and are available to
meet once more) to discuss the content and format of the application.
c) Based on the meetings described above,, we will prepare a detailed
workplan for the review of the application and a final schedule for the
engagement.
d) We will be available to respond to questions from MSS management
regarding the preparation of the application.
2. Review MSS' revenues using sampling, analytical and comparative techniques
to establish the reasonableness of MSS' reported actual 1996 and 1997 and
projected 1998 revenues.
a) We will agree MSS' projected revenues to the revenues reported in its
audited financial statements.
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*�-. HILTON FARNKOPF & HOBSON, LLC
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March 3, 1998
Mr. Kenneth Nordhoff
Page 3
b) For rate related revenues, we will calculate revenues at current rates by
the number of customers in each rate category (for a selected month) to
establish the reasonableness of the reported revenues. We will also
compare projected revenues to historical revenues. We will seek (and
evaluate) an explanation from MSS management for any unusual
variances.
c) For non -rate related revenues, we will perform such analytical techniques
as are necessary for us to express an opinion regarding the reasonableness
of the reported non -rate related revenues. We will seek (and evaluate) an
explanation from MSS management for any unusual variances_
d) Based on our review, we will calculate adjustments to MSS' projected
revenues as appropriate and review with MSS management.
3. Review MSS' application using sampling, analytical and comparative
techniques to establish that the actual 1996 and 1997 and projected 1998 expenses
are necessary, have or will actually be incurred and are reasonable in amount.
a) We will agree MSS' projected expenses to those reported in the audited
financial statements. We will seek (and evaluate) an explanation from
MSS management for any unusual variances.
b) We will test transactions related to selected expense accounts for
reasonableness and necessity. We will seek (and evaluate) an explanation
from MSS management for any unusual variances.
c) We will test other expense accounts for reasonableness, based on
analytical techniques which compare projected expenses to historical
expenses, management's plans, projected operation information and
industry norms. We will seek (and evaluate) an explanation from MSS
management for any unusual variances.
d) Based on our review, we will calculate adjustments to MSS' projected
expenses as appropriate and review with MSS management.
4. Calculate a reasonable profit using a 90.5% operating ratio.
5. Calculate the difference between the projected revenue requirement (expenses
plus profit) and revenues at current rates, to determine the amount of any rate
adjustment.
6. Compare the actual results for 1996 and 1997 to those anticipated when the rates
were set using the indexed methodology
7. Communicate our findings and recommendations to the management of MSS,
the Franchisors' representatives and their elected council and board members.
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act HILTON FARNKOPF & HOBSON LLC
March 3, 1998
Mr. Kenneth Nordhoff
Page 4
a) We will prepare an initial draft report documenting the scope of our
review, findings and recommendations for review by MSS management_
We will modify the report, as appropriate, to account for any factual or
logical errors we may have made.
b) Thereafter, we will distribute and present the draft report to the
Franchisors representatives. We will modify the report, as appropriate, to
account for any directions provided by the Franchisors' representatives.
c) We will issue a final report and be available to present it to the
representatives elected council and board members on a time and
materials basis.
8. Manage the engagement by communicating progress, adjusting staffing and
assignments, anticipating and responding to matters that could effect either the
engagement's schedule or fees.
Limitations
Every scope of work contains certain limitations. The most significant limitations
related to our proposed scope of work are:
1. We anticipate receiving direction from the Franchisors' representatives related
to the scope of review at our initial meeting. Should the Franchisors'
representatives change their minds regarding the scope of work at a later date,
the engagement workplan will have to be revised, the engagement schedule
extended and our fees may have to be increased.
2. Based on our experience, we anticipate that MSS will have the required
information readily available in a convenient format and that MSS
management will be readily available to provide correct responses to our
inquiries in a timely manner. Should the necessary information to review the
application not be readily available or should MSS management not be able to
respond to our inquiries in a timely manner, the engagement schedule may
have to be extended and the hours required to perform certain tasks may be
greater than anticipated and our fees may have to be increased_
3. We have anticipated that all rates will be adjusted by the same amount. We are
available to assist each of the Franchisers in developing a revised rate structure
on a time and materials basis (e.g., a revision to the 1 and 2 yard bun rate was
discussed at the February 17 meeting and some jurisdictions may wish to make
this change)..
HILToN FARNKOPP & HOBSON. LLC
March 3, 1998
Mr. Kenneth Nordhoff
Page 5
4. We have not anticipated making separate presentations to each of the
Franchisors representatives elected council or board members. However, we are
available to make such presentations on a time and materials basis. (At the
February 17 meeting there was discussion but no conclusion regarding which if
any of the Franchisors council or board meetings I might attend.)
5. We have not anticipated revising the various agreements to reflect a negotiated
inclusion of the MRRC in the franchised operations. However, we are available
to assist in such negotiations and prepare such documents on a time and
materials basis.
Schedule
We have developed the following schedule with the intent that the Final Report
may be delivered to the Franchisors in time for action to be taken in June with an
effective date of July 1, 1998.
Completion
hilestone Date
Direction to Proceed from Franchisors Representatives February 17
Initial Meeting with MSS Management re: Application February 18
Follow-up Meeting with MSS Management re: Application
Format and Content February 20
Prepare Detailed Workplan and Schedule March 13
Commence Review of Application March 16
Discuss Findings and Adjustments with MSS Management April 20
Prepare Initial Draft Report and Discuss with MSS Management May 4
Present Draft Report to Franchisors Representatives May 11
Distribute Final Report May 25
This schedule is predicated on certain assumptions, the most significant of which
are:
• We will receive direction from the Franchisors at the February 17 meeting.
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HILTON FARNKOPF & HOBSON, LLC
March 3, 1998
Mr. Kenneth Nordhoff
Page 6
MSS management will be able to provide the information required in the
format agreed upon within three weeks of finalizing those matters.
• Agreement can be reached between the Franchisors representatives and MSS
management regarding the manner in which MRRC will be incorporated into
the consideration of rates while MSS management is preparing the application.
MSS will have the required information readily available in a convenient
format and that MSS management will be readily available to provide correct
responses to our inquiries in a timely manner.
Fees
We propose to perform the basic review of MSS' application for an amount of
$57,500. While our estimate is reasonable, many factors could affect the actual fees_
These factors include the ability to obtain from MSS management timely and
correct responses to our questions, additional meetings, the preparation of revised
rate structures, attendance at meetings of the Franchisors' councils or boards, etc_
We believe this fee estimates represent significant value for the Franchisors:
• It is a fraction of the cost charged by your prior rate consultant almost five years
ago.
• At a fee of less than $10,000 per agency, none of the Franchisors could obtain the
same services at twice the expense.
• It represents less than one half of one percent (0.05%) of the revenues generated
by the rates set by the Franchisors - a modest cost to ensure their reasonableness.
Oualifications
Hilton Farnkopf & Hobson, LLC is well known to you, having performed similar
reviews on behalf of the Franchisors during the past two years. However, I have
included a brief description of the firm as Attachment B.
In order to provide cost effective services to our clients we organize engagements to
obtain the maximum benefit from our senior consultants while delegating more
routine analyses to less senior qualified staff.
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r�a HILTON FARNKOPF & HOBSON, LLC
�
March 3, 1998
Mr. Kenneth Nordhoff
Page 7
• I will be responsible for directing the engagement. In this role I will be
responsible for planning the engagement, monitoring its performance,
attending all key meetings and presenting our findings and recommendations.
• I will be assisted by Mr. David Davis who will serve as engagement manager. In
this role he will be responsible to me for managing the day to day performance
of the engagement. Mr. Bice, a CMA, is a Senior Associate with HF&H and has
performed a similar role on similar engagements throughout California. Prior
to joining HF&H, Mr. Davis was a corporate controller with a very large
privately held solid waste management firm in Southern California.
Mr. Davis will supervise other HF&H staff in the performance of certain tasks.
Principal among these will be Mr. Robert Sands an Associate with HF&H who is
also a CPA. Mr. Sands has performed similar roles on engagements for
numerous clients throughout Northern California. Prior to joining HF&H. Mr.
Sands was an auditor with the firm Maze and Associates.
Hilton Farnkopf & Hobson appreciate this opportunity to be of continued service to
the Franchisors and their representatives. We trust that this proposed engagement
letter is responsive to your request. Should you or the other Franchisors'
representatives have any questions prior to our February 17 meeting, please call me
at 510/713 -3272 -
Very truly yours,
Hilton Farnkopf & Hobson, LLC
Robert D. Hilton, CMC
President
cc: Ms. Jean Bonander, City of Larkspur
Mr. Leon Eddings, Las Gallinas Valley Sanitary District
Mr. Rabi Elias, Town of Ross
Mr. Ned Ongaro, Ross Valley Sanitary District
Mr. Jeff Rawles, County of Marin