HomeMy WebLinkAboutCC Resolution 13984 (HF&H Refuse Rate Review)RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN
RAFAEL AUTHORIZING THE CITY MANAGER TO ENTER INTO A CONTRACT
WITH HF AND H CONSULTANTS, LLC IN AN AMOUNT NOT TO EXCEED
$83,495 FOR WORK ON REFUSE RATE REVIEW FOR THE CITIES OF SAN
RAFAEL & 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 2016 calendar year, in a form to be approved by the City
Attorney. The agreement shall be for an amount not to exceed $83,495, the terms described in the
July 21, 2015 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 third day of August 2015, by the following vote, to wit:
AYES: COUNCILMEMBERS: Bushey, Colin, Gamblin, McCullough & Mayor Phillips
NOES: COUNCILMEMBERS: None
ABSENT: COUNCILMEMBERS: None
ESTHER C. BEIRNE, City Clerk
AGREEMENT FOR PROFESSIONAL SERVICES
FOR REVIEW OF MARIN SANITARY SERVICES 2016 RATE APPLICATION
This Agreement is made and entered into this Sled day of Q c44 ugh , 2015, 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 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
Rev. Date: 1/30/14
under this Agreement. Sustainabilitv and Volunteer Prop -ram Coordinator Cory Bvtof 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. 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 2016 Rates,
dated July 21, 2015, attached hereto as 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,
CONTRACTOR shall be compensated as described in Exhibit " A " in a total contract amount not
to exceed $83,495.00. 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) 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 $55,000 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, 2016.
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 performance 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 AUDIT.
Upon reasonable notice, CONTRACTOR shall make 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.
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: 1/30/14
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 0104 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
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 Dolicv laneuaee or specific endorsements
evidencine the other insurance requirements set forth in this Aereement. 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: 1/30/14 5
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 from 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 under 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 under 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 willful 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 perform 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
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: Cory Bytof
Sustainability & Volunteer Program Coordinator
City of San Rafael
1400 Fifth Avenue
P.O. Box 151560
San Rafael, CA 94915-1560
TO CONTRACTOR: Marva Sheehan, CPA
Vice 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 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.
Rev. date: 1/30/14
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-OFF 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
and year first above written.
CITY OF SAN RAFAEL
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S HUTZ, City ag r
ATTEST:
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ESTIIER C. BEMNE, City Clerk
APPROVED AS TO FORM:
ROBERT F. EPSTEINO iity Att�n
y
Rev. date: 1/30/14
CONTRACTOR
By: .I / F �---�
Name: ARVA M. SHEER IAN
Title: Vice President
201 N. Civic Drive, Suite 230
Walnut Creek, California 94596
Telephone: 925/977-6950
Fax: 925/977-6955
www.hfh-consultants.com
July 21, 2015
Sent via email
Mr. Daniel Schwarz
City Manager
City of Larkspur
400 Magnolia Avenue
Larkspur, CA 94939
Mr. Saaid Fakharzadeh
Assistant Director of Public Works
County of Marin
3501 Civic Center Drive, Room 304
San Rafael, CA 94903-4155
Ms. Susan McGuire
Administrative Services Manager
Las Gallinas Valley Sanitary District
300 Smith Ranch Road
San Rafael, CA 94903
lanaging Tomorrow's Resources Today
Mr. Jim Schutz
Assistant City Manager
City of San Rafael
1400 Fifth Avenue, Room 203
P.O. Box 151560
San Rafael, CA 94915-1560
Mr. Joe Chinn
Town Manager
Town of Ross
31 Sir Francis Drake Boulevard
Ross, CA 94957
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 2016 Rates
Dear Messrs. Schutz, Schwarz, Fakharzadeh, and Chinn, and Ms. McGuire:
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, 2016.
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' 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'
costs among the Franchisors' and these new jurisdictions, make even more important the proper
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allocation of MSS' 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,
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 2012 for rates to be effective in 2013. Rates for 2014 and 2015
were set using the indexed method. For a review of rates to be effective in 2016, 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.
SCOPE OF SERVICES
Our scope of services is comprised of the following tasks:
Task 1: Kick-off Meetings/ Preliminary Application Review
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 MSS. HF&H will meet with MSS to receive MSS' Application and a
presentation by MSS 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 MSS 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 MSS 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.
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1e Reconciliation to Financial Statements. HF&H staff will reconcile the Application to MSS' most
recent financial statements. We will seek explanations for any unusual findings and we will inform
MSS in writing of any adjustments that may come to our attention that may be necessary to
reconcile the Application to the financial statements.
Task 2: Review of Forecasted Cost of Operations
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; 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 2016 forecasted annual cost of operations. We will
seek explanations for any unusual findings and we will inform MSS of any adjustments that we
believe are necessary to these estimated and projected expenses.
2b Review of Commercial Mixed Materials Processing Rate and Organic Materials Processing Rate.
HF&H will review the rate used by MSS in its application to determine it was calculated in
accordance with the rate setting methodology.
2c Review of Non -Franchisors' Affiliate Transfer and Transport Adjustment. HF&H will review MSS'
calculation of the rate based on the results of our review in other areas.
2d 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 compensation
methodology. We will seek explanations for any unusual findings and will inform MSS of any
adjustments that may come to our attention that we may believe are necessary to the estimated
and projected expenses.
2e 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.
2f Variance Analysis. HF&H staff will review MSS' reported actual 2014, estimated 2015, and
forecasted 2016 annual cost of operations by developing a variance analysis and will investigate
significant variances between periods.
2g 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.
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Task 3: Review of Rate Adjustment Factor
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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.
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 MSS 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.
Task 4: Review of New Programs
HF&H staff will review MSS' cost projections and anticipated rate impact for any anticipated new
programs in the coming rate year.
Task 5: Survey of Comparable Rates
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' to identify which communities to include in the survey. We will prepare
a table and graphs summarizing the results.
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.
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Task 7: Communication of Results
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7a 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.
7b 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.
7c 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.
7d HF&H staff will prepare for and attend up to three informational meetings as requested by
members of the Franchisors'.
7e Based on the comments from the Franchisors', we will amend the preliminary draft report and
issue the final report.
7f HF&H will present our findings at one meeting for each of the members of the Franchisors'.
SCHEDULE
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 schedule:
MSS Submits Application
Kick -Off Meetings with Franchisors'/ MSS
HF&H Commences Field Work
HF&H Completes Field Work
HF&H Reviews Results with MSS
HF&H Provides MSS Draft Report
MSS Provides Comments on Draft Report
HF&H Presents Draft Report to Franchisors' for Comment
HF&H Delivers Final Report
Boards/Councils Receive Report and Adopt Revised Rates
Rates Effective
August 3, 2015
August 5, 2015
August 6, 2015
September 15, 2015
September 16, 2015
September 25, 2015
September 30, 2015
October 6, 2015
October 20, 2015
October 2015 —
January 2016
January 1, 2016
HF&H Consultants, LLC Page 5 of 12
MarinTranchisors'
July 21, 2015
Page 6 of 12
LIMITATIONS
Managing Tomorrow's Resources Today
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 Contractor's Compensation and Rate
Adjustment Methodology recently adopted by the Franchisors'. This methodology includes the
review of MSS 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 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.
FIRM AND PROPOSED ENGAGEMENT TEAM QUALIFICATIONS
Since its founding over 25 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 15 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' 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; 23 of which have been in the solid waste industry. She will
HF&H Consultants, LLC Page 6 of 12
Marin Franchisors'
July 21, 2015
Page 7 of 12
nagingTomorrow's Resources Today
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 Franchisor's
objectives. She will also make presentations of our findings to the various councils and boards.
Scott Holt, an accountant with more than 18 years of industry controller experience, will serve as
Engagement Manager. Mr. Holt was the Engagement Manager for the 2015 rate setting process for the
Franchisors' and for the Town of Fairfax. Additionally, he has performed rate adjustment reviews for the
Cities of Sunnyvale and Union City, and contract compliance reviews for the Cities of Dana Point,
Lawndale, Bellflower and Long Beach.
Ms. Sheehan and Mr. Holt will be assisted by less senior, experienced staff at lower billing rates, who will
perform certain tasks under their direct supervision
FEES
Based on the tasks performed during our last detailed review and consideration to review new programs
if required, 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 $83,495, 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 $83,495. 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) 977-6961.
Sincerely,
HF&H CONSULTANTS, LLC
Marva M. Sheehan, CPA
Vice President
HF&H Consultants, LLC Page 7 of 12
Marin Franchisors'
July 21, 2015
Page 8 of 12
Managing Tomorrow's Resources Today
Attachments: A) Fee Estimate — Franchisors'
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
HF&H Consultants, LLC Page 8 of 12
ATTACHMENT A:
FEE ESTIMATE
Task 3 2 7 11 0 20 $3,415
Task 5 0 1 4 10 15 1 $1,7701
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�� r-� r , / aif > la t; Julr r ✓ f.,// n„' IJ; // r�r %ajfyr,i/'r%�1/i�, rarrlr,
��<p�,�dKr4.°fi:uaG: r,�kMi:��1�.,��k u.J t��'9...�1u ���Nhb.IN�: rrt�d-..rk,�'",dl,d r r..,l�,��9d1�,�a�a�l..�..�v.�✓�r:d�����lbre,�i��� �,wld§li�ir�,.�,1�1�rm!�r��u��r�l�
Task 7 57 so 6 16 129 $25,935
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K"A�,a,,,,rdrki Vwk ,9.,r, ;;/ar /�;y ++alk�rrrc, lua rr,,.,„N, r,,,rlw�^r.„i0 11,0l,;i,k,r ,�lr,Fr,.c,a+ %'rr' a��!'al�d%';��/lf^�''#ir3„1
HF&H Consultants, LLC Page 9 of 12
ATTACHMENT B:
HF&H Consultants, LLC
Standard Hourly Rates and Billing
Arrangements
(Effective January 1, 2015)1
Professional Fees
Hourly rates for professional and administrative personnel are as follows:
Position
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
$265
$240-$265
$219-$230
$185-$219
$140-$150
$100-$130
$100
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:
1 Litigation Support and Expert Witness Services are not covered by this schedule of fees and expenses.
HF&H Consultants, LLC Page 10 of 12
ATTACHMENT B (CONT):
HF&H Consultants, LLC
Standard Hourly Rates and Billing
Arrangements
• 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.
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 ($2,000,000)
HF&H Consultants, LLC Page 11 of 12
ATTACHMENT B (CONT):
HF&H Consultants, LLC
Standard Hourly Rates and Billing
Arrangements
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.
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