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Home My WebLink AboutCC Resolution 13577 (HF&H Refuse Rate Review)RESOLUTION NO. 13577 RESOLUTION AUTHORIZING CITY MANAGER TO ENTER INTO A CONTRACT WITH HF AND H CONSULTANTS, LLC IN AN AMOUNT NOT TO EXCEED $56,040 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 2014 calendar year, in a form to be approved by the City Attorney. The agreement shall be for an amount not to exceed $56,040, the terms described in the July 10, 2013 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 fifth day of August 2013, by the following vote, to wit: AYES: COUNCILMEMBERS: Colin, Connolly & Vice -Mayor Heller NOES: COL'NCILMENMBERS: None ABSENT: COUNCILMEMBERS: McCullough & Mayor Phillips ES"HIER C. BEIRNE, City Clerk AGREEMENT FOR: Review of Marin Sanitary Service's 2014 Rate Application This Agreement is made and entered into this fifth day of August 2013, by and between the CITY OF SAN RAFAEL (hereinafter "CITY"), and HF and H Consultants, LLC hereinafter "CONTRACTOR"). RECITALS WHEREAS, the City of Larkspur, the City of San Rafael, the Town of Ross, the County of Marin and the Las Gallinas Sanitary District (the "Franchisors Group") have similar franchise agreements with Marin Sanitary Services; and WHEREAS, the City of Larkspur, the City of San Rafael, the Town of Ross, the County of Marin and the Las Gallinas Sanitary District have utilized a jointly sponsored program to conduct reviews of Marin Sanitary Services operations and expenses pursuant to the Franchise Agreements; and WHEREAS, the Franchisors Group desires to utilize the services of HF& H Consultants to conduct the review. AGREEMENT NOW, THEREFORE, the parties hereby agree as follows: 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 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. 2. DUTIES OF CONTRACTOR CONTRACTOR shall perform the duties and/or provide services as described in Exhibit " A " attached and incorporated herein. ,....r or ff�. 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 $56,040, including the cost of local business license taxes as described in Section 20. Payment will be made monthly upon receipt by PROJECT MANAGER of itemized invoices submitted by CONTRACTOR. 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, 2014. 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 CONTRACTOR's documents described in paragraph 7 below, shall be delivered to CITY as soon as possible, but not later than thirty (30) days after termination. 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 injury, personal injury, or property damage; 2. An automobile liability (owned, non -owned, and hired vehicles) insurance policy in the minimum amount of one million ($1,000,000) dollars per occurrence; 3. If any licensed professional performs any of the services required to be performed under this Agreement, a professional liability insurance policy in the minimum amount of one million ($1,000,000) dollars to cover any claims arising out of the CONTRACTOR's performance of services under this Agreement. B. The insurance coverage required of the CONTRACTOR by section 10. A., shall also meet the following requirements: 1. The insurance shall be primary with respect to any insurance or coverage maintained by CITY and shall not call upon CITY's insurance or coverage for any contribution; 2. Except for professional liability insurance, the insurance policies shall be endorsed for contractual liability and personal injury; 3. Except for professional liability insurance, the insurance policies shall be specifically endorsed to include the CITY, and other entities in the Franchisors' Group, their officers, agents, employees and volunteers as additionally named insureds under the policies; 19 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. CONTRACTOR shall provide the CITY's PROJECT MANAGER with thirty (30) days prior written notice for any planned reduction in coverage or planned non- payment of premium with respect to all insurance policies covering the CITY. 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. PROJECT MANAGER and the City Attorney shall approve the insurance as to form and sufficiency. 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. D. Any deductibles or self-insured retentions in CONTRACTOR's 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, judgment, loss, liability or expense of any kind, including attorney's fees, arising out of or resulting in any way, in whole or in part, from any acts or omissions, intentional or negligent, of CONTRACTOR or CONTRACTOR's officers, agents and employees in the performance of their duties and obligations under this Agreement. 12. NONDISCRIMINATION CONTRACTOR shall not discriminate, in any way, against any person on the basis of age, sex, race, color, religion, ancestry, national origin or disability in connection with or related to the performance of its duties and obligations under this Agreement. 4 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. Jim Schutz, Assistant City Manager City of San Rafael 1400 Fifth Avenue P.O. Box 151560 San Rafael CA 94915-1560 TO CONTRACTOR: Mr. Robert D. Hilton, President HF&H Consultants, LLC 201 North Civic Drive, Suite 230 Walnut Creek, CA 94596 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 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 attorney's fees expended in connection with such action. 6 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 RAFAEL City Manager ATTEST: City Clerk APPROVED AS TO FORM: r� ' City Attorney ` CONTRACTOR By: p Name: Robert D. Hilton Title: President REQUEST FOR LEGAL SERVICES,. ,r Date Requested: 7/24/13 Dated Needed: 7/25/13 Department: City Manager Contact: Cory Bytof Telephone: 3407 Request: (Be as specific as possible —Attach related backup material): HF&H is being asked to do our annual rate review for Marin Sanitary rates again this year on behalf of all franchise agencies, with San Rafael being the lead and executing the contract on behalf of everyone. This contract is the same as the last "indexed" review, which was in 2012 (last year's review was a full review). The one change has to do with insurance and the company says this new language has been approved in other jurisdictions. Please review the contract and provide any edits you see necessary, and please let me know if the insurance language is acceptable. I need this ASAP. Thank you very much City Attorney Reply:,,b J,ta "' 14A'11 ^n"e.....,a+ r9we„',fj% ✓'r.�"m' "'A✓"'6s54`..aQ".«�•. .._ � ''!. k � k'N.d%� �' �a_' s +, a..,Y.W,,,«,. (1 lies-' _ ... ........ '"` &� �''�° '•+�� Date Returned: a" By: ,;,.. 201 N. Civic Drive, Suite 230 Walnut Creek, California 94596 Telephone: 925/977-6950 Fax:925/977-6955 www.hfh-consultonts.com Sent via e-mail July 10, 2013 Mr. Daniel Schwarz City Manager City of Larkspur 400 Magnolia Avenue Larkspur, CA 94939 Mr. Michael Frost Deputy 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 Managing Tomorrow's Resources Today Robert D. Hilton, CMC John W. Farnkopf, PE Laith B. Ezzet, CMC Richard J. Simonson, CMC Marva M. Sheehan, CPA 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. Rob Braulik Town Manager Town of Ross 31 Sir Francis Drake Boulevard Ross, CA 94957 Subject: Proposal to Perform a Review of Marin Sanitary Service's Application for 2014 Rates Dear Ms. McGuire and Messrs. Schwarz, Schutz, Frost and Braulik: 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, 2014. 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) have adopted a methodology to set MSS's rates for refuse collection and disposal as well as recyclable and yardwaste 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 intervening years. Last year, we performed a review of the rate adjustment using the detailed method. For a review of rates to be effective 2014, we have been asked to: arm morm ' S.t lir �°,ti,b`' Managing Tomorrow's Resources Today Marin Sanitary Service's Franchisors' Group July 10, 2013 Page 2 of 8 • Perform the review using the summary method (the use of indices, and the review of a few key matters such as revenues, disposal, processing, and fuel costs); and, • Perform a survey of similar rates from cities in the Bay Area receiving comparable services. ficope, of Work and Schedule We will perform the following tasks related to the review of MSS's Application. Task 1: Pre -Fieldwork 1a We will meet once with the Franchisors to discuss the review process requested by the Franchisors. 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, 2013, and 2014. 2b We will compare the results to MSS's audited financial statements for rate year 2012 and year- to-date revenues for 2013 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. 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 rate year 2014 indexed expenses and compare them to the calculated expenses for 2013, 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: n Managing Tomorrow's Resources Today Marin Sanitary Service's Franchisors' Group July 10, 2013 Page 3 of 8 • Workers' Compensation will be reviewed by determining if the base wages, established as part of the prior review, 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 will be reviewed by evaluating MSS' projection for 2014 disposal expense and MSS's adjustments for the previous projections for Rate Years 2012 and 2013 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 will be reviewed by evaluating MSS' projection for 2014 commercial mixed waste processing and MSS' adjustments for the previous projections for Rate Years 2012 and 2013 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 will be reviewed by evaluating MSS' projection for 2014 organics processing and MSS' adjustments for the previous projections for Rate Years 2012 and 2013 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 will be reviewed by evaluating MSS' tonnage projection for 2014 and MSS' adjustments for the previous tonnage projections for Rate Years 2012 and 2013 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 will be reviewed by evaluating MSS' 2014 projection and the adjustments for Rate Years 2012 and 2013. 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 will be reviewed 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 will be reviewed by reviewing documentation from the JPA and MSS projections. • The costs related to the Commercial Food to Energy program will be reviewed by comparing to MSS' prior year projections to actual costs and revised projections. Task 4: Review of Projected Profit HF&H will review MSS management's calculation of projected profit for procedural compliance and mathematical accuracy. Ask AWE '=_ Managing Tomorrow's Resources Today Marin Sanitary Service's Franchisors' Group July 10, 2013 Page 4 of 8 Task 5: Review of Pass-through Expenses/ Revenue HF&H will review MSS' calculations of the following Pass-through Expenses and Other Revenue: • Interest Expense will be reviewed based on MSS' actual interest from its loan amortization schedules for actual and projected capital expenditures. • Franchise Fees will be reviewed based on each agency's appropriate rate and the forecasted values. • Other Agency Fees will be reviewed based on fees established by each agency and forecasted values. • Other Revenues will be reviewed 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. Task 6: Review of the Calculation of the Reserve for Future Diversion Programs HF&H will review the MSS' calculation of the increase or decrease to the reserve for future diversion programs in accordance with the procedures developed in 2012. Task 7: Review of Revenue and Expense Allocations 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. 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's calculated revenues and expenses and its allocation among the Franchisors. Task 9: 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 Group to identify appropriate communities to include in the survey. We will prepare a table and graphs summarizing the results. y Managing Tomorrow's Resources Today Marin Sanitary Service's Franchisors' Group July 10, 2013 Page 5 of 8 Task 10: Communicate Findings 10a HF&H will distribute a copy of our initial draft report documenting our findings and 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. 10c Based on comments from the Franchisors, we will amend the preliminary draft report and issue the final report. 10d We will attend council meetings to present findings. Engagement Management We will prepare and amend detailed work plans, monitor engagement progress, and provide sufficient resources to ensure timely completion of the engagement, review analytical results and interim findings, review the draft and final reports, and respond to questions regarding the progress of the engagement and other issues. 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's 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's auditor with regard to matters related to MSS's internal controls. Our testing of MSS's application (using judgmental samples of transactions and analytical procedures) will only be for the purpose of providing evidence that allows us to reach conclusions and recommendations regarding MSS's application. • We will conduct our review in accordance with the methodology adopted by the Franchisors Group. 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. We have not anticipated meeting with representatives of San Anselmo, Fairfax, or the County to discuss the impact of MSS serving the service areas outside of the Franchisors' service area. We would be pleased to meet with them on a time -and -materials basis. Marin Sanitary Service's Franchisors' Group July 10, 2013 Page 6 of 8 Managing Tomorrow's Resources Today Further, this scope of work does not include modifications to any of the individual Franchisor's rates or rate structures. Fire) ,norud sig gnnen ,. =Y-mrn 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' consultant performing these reviews. Through the years, we have helped the Franchisors to substantially reduce the cost of the review through changes in methodology, while ensuring that both the customers' rates and MSS's level of profit are reasonable. Marva Sheehan, Vice President, will serve as Engagement Director and will be responsible for directing the project and will be responsible 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 25 years of accounting and auditing experience; 11 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 Franchisor's objectives. She will also make presentations of our findings to the various councils and boards. Bob Hilton, President, will be an Engagement Advisor. Mr. Hilton is currently assisting the Franchisors Group in developing a sustainable rate structure. In past years, he has been the Engagement Director and substantially involved in each of these annual reviews. Bob Hilton has assisted more than 150 municipalities with nearly 750 solid waste consulting engagements, most of which have involved the cost of solid waste services. Colleen Costine and Darrell Bice will serve as lead rate consultants under Ms. Sheehan's supervision. Ms. Costine served in this role for the last detailed review. Mr. Bice was the Engagement Manager for MSS reviews several years ago. He is a Certified Public Accountant with over 35 years of accounting and auditing experience; 25 of which have been in the solid waste industry. Mr. Bice will provide a fresh perspective to the process and Ms. Costine will provide continuity. They 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 Franchisor's objectives. Ms. Sheehan, Mr. Bice and Ms. Costine will be assisted by less senior, experienced staff at lower billing rates, which will perform certain tasks under their direct supervision 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 scope of work described above to be $56,040, as shown on Attachment A. UUIHK 110100m," Managing Tomorrow's Resources Today Marin Sanitary Service's Franchisors' Group July 10, 2013 Page 7 of 8 As in the past, we will bill you in accordance with our standard rates and practices, as described in Attachment B, up to the $56,040. 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: MSS Submits Application 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 1 August 5 August 30 September 6 September 13 September 18 September 24 October 11 October/November January 1, 2014 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 to provide necessary direction and comments to draft work products in a timely manner. We anticipate that neither MSS management nor the Franchisors will have difficulty performing in the manner we have assumed. 1111111101 W 11,111, iui A S R�M"3C:,a:.i- -' Managing Tomorrow's Resources Today Marin Sanitary Service's Franchisors' Group July 10, 2013 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. Very truly yours, HF&H CONSULTANTS, LLC 114 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. Corey Bytof, City of San Rafael Mr. Darrell Bice, HF&H Ms. Kim Erwin, HF&H Attachment A - Fee Estimate Marin Franchisors Group Review of MSS 2014 Rate Adjustments Application �,�.,,�,.. ~r;,�:W-: �„�,. .,;;a �,+,.�°. .,,�,,,...��;a,..�-�” ''"^�'`��"`�ii.".�,•• a:;F:.,.�.�-,.g�,..,cs�,�?F'Pva~�'�t,��„�r,�r,¢�„r.�,..a , ;x.�x,re^:x�-.-��;-'��.•�'wx;�; •s; 1a Kick-off Meeting with Franchisors Group 2 6 0 0 0 8 $1,920 1b Kick-off Meeting with Company 2 2 8 0 0 12 $2,500 1c Completeness & Compliance Review 0 0 2 3 0 5 $755 1d Math Accuracy & Logical Consistency 0 0 1 3 0 4 $565 Task 1 4 8 11 6 0 29 ' $5,7401 x-,.4�.., I-^ e;^s=', - ac7,.`m ^,3,zi '. - f... ..-�.:• - >s,:y-x?P:"„+P?' L.. j2<J'ih�” e.Ye N.<% • e/iF.w:'e'.atx'�"-.'"�<` ,$'Ae :eN . 4,.Y4_ ." .i%'"'... :3sY•"nn 2a Review of MSS projected revenue 0 0 2 6 0 8 $1,130 2b Compare 2012 revenue to MSS' audited financial 0 0 4 4 0 8 $1,260 statements for 2012 2c Review MSS' calculation of three trend of subscription 0 0 4 0 0 4 $760 levels and surplus or shortfall from projections 2d Summarize Findings 0 2 4 0 0 6 $1,230 Task 2 0 2 14 10 0 26 ' $4,3801 3a Classification of Expenses 0 0 8 4 0 12 $2,020 3b Calculation of Indexed Expenses 0 0 6 6 0 12 $1,890 3c Review of Other Expenses 0 2 20 30 0 52 $8,020 3d Review of Commercial Food to Energy (F2E) costs and 0 1 4 0 0 5 $995 projections 3e Summarize Findings 0 4 6 5 0 15 $2,705 Task 3 0 7 44 45 0 96 ' $15,630 4a Review Calculation of Profit 0 0 1 0 0 1 $190 Task 4 0 0 1 0 0 1 $1901 58 Review MSS' caiculations of pass-through expenses and 0 0 6 8 C 14 $2,140 revenue(interest, franchise fees, other agency fees, and other revenue) 5b Summarize Findinas 0 1 2 2 0 5 $865 Task 5 0 1 8 10 0 19 1 $3,0051 HF&H Ccnsuitants, LLC 7110/2013 Attachment A - Fee Estimate Marin Franchisors Group Review of MSS 2014 Rate Adjustments Application 6a Review MSS' calculations of reserve for future diversion 0 3 3 0 0 6 $1,275 programs based on 2012 MRRA costs and revenues 6b Summarize Findings 0 1 1 0 0 2 $425 Task 6 0 4 4 0 0 8 I $1,7001 7a Review Allocations for Reasonableness and Consistency 0 1 8 0 0 9 $1,755 Task 7 0 1 8 0 0 9 1 $1,7551 8a Review with MSS Management 2 4 6 0 0 12 $2,590 8b Review with Franchisors Group 2 6 2 0 0 10 $2,300 Task 8 4 10 8 0 0 22 1 $4,8901 TV 9a Survey and Document Comparable Rates 0 2 0 16 0 18 $2,470 Task 9 0 2 0 16 0 18 $2,4701 10a Prepare draft report and meet with MSS management 2 8 4 4 8 26 $4,434 10b Prepare draft report and meet with Franchisors 4 6 2 0 2 14 $3,006 loc Prepare and distribute Final Report 0 6 2 0 2 10 $1,986 10d Attend council meetings 0 20 0 0 0 20 $4,700 Task 10 6 40 8 4 12 70 $14,1261 Ila Engagement management 2 4 0 0 0 6 $1,450 HF&H Consultants, LLC 7110/2013 "WATINMIAll CR In ? STANDARD HOURLY RATES AND BILLING ARRANGEMENTS (Effective January 1, 2013)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 Standard charges for common direct expenses are as follows: Automobile Travel Document Reproduction Facsimile Telephone Public Conveyances Postage Overnight Mail and Couriers Rate $255 $225-$255 $215-$225 $170-$215 $130-$155 $100-$125 $95-$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: • 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. ' Litigation Support and Expert Witness Services are not covered by this schedule of fees and expenses. HF&H Consultants, ._..LLC ..._.,..,_.�,...._.�......_u...�.......,..._._...,......m._........�Page ATTACHMENT B HF&H CONSULTANTS, LLC STANDARD HOURLY RATES AND BILLING ARRANGEMENTS' (Effective January 1, 2013) • 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. Inst" ra nciu, We maintain the following policies of insurance with carriers doing business in California: • Comprehensive General Liability Insurance ($2,000,000) • Workers' Compensation ($1,000,000) • Professional Liability Insurance ($2,000,000) • Hired and Non -Owned Auto Liability ($2,000,000) All costs incurred in complying with special insurance, licensing, or permit requirements, including but not limited to naming client as an additional insured and waiver of subrogation, become the responsibility of the client and are not included in the fees for services or direct charges but are billed in addition to the contract at cost, plus any professional or administrative fees. HI`&H..Consultants ..LLC_.m.� ,.,.._._......_..,..,w.,,......�..�.....w.v.._........_............_......�._,_..._..�.......,e....................._..�.,.._...,.....�........,.........._.Page 2of3 ATTACHMENT B k STANDARD HOURLY RATES AND BILLING ARRANGEMENTS' (Effective January 1, 2013) 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. HE&H�Consuftants, LLC..�_.�,a.,W...�.....,........_............,.�.�._....,.............�..._.��..._.�..w.�._.,......_...,_......__.,_.�a............Pag.............._... e3of3