HomeMy WebLinkAboutCM Refuse Rate Review; HF&H 20133 be
Agenda Item No:
eeting Date: August 5, 2013
6 M1 0, 0 11 IT, I ON V. I ON
Department: CITY MANAGER
Prepared by: Cory Bytof City Manager Approval
Sustainability & Volunteer Program Coordinator
SUBJECT: RESOLUTION AUTHORIZING CITY MANAGER TO ENTER INTO A
CONTRACT WITH HF&H CONSULTANTS, LLC IN AN AMOUNT NOT TO EXCEED
$569040 FOR WORK ON REFUSE RATE REVIEW FOR THE CITIES OF SAN
RAFAEL AND LARKSPUR, TOWN OF ROSS., LAS GALLINAS VALLEY SANITARY
DISTRICT AND ROSS VALLEY -SOUTH
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BACKGROUND: A number of local agencies within Marin County have franchise agreements
with Marin Sanitary Service (MSS) to provide refuse collection and recycling services to
residential and commercial customers. The agencies with similar contracts with MSS are the
cities of San Rafael and Larkspur, the Town of Ross, Ross Valley South (Marin County), and the
Las Gallinas Valley Sanitary District. Due to common interests and common contracts, these
agencies have formed a Franchisors' Group. MSS also has contracts with San Anselmo and
Fairfax but these contracts are different so those towns have not been included in the formal
Franchisors Group.
For a number of years, the Franchisors' Group has worked together to make certain that the
ratepayers (citizens and businesses) are being properly charged for the various levels of service
provided. In order to substantiate the rate schedules, the Franchisors' Group developed a jointly
sponsored program designed to conduct routine reviews of Marin Sanitary Service's operating
efficiencies and expenses contained in the annual solid waste rate application.
In 2012,, City staff conducted a consultant selection process for the annual solid waste rat
application review. A committee consisting of Mayor Phillips and Councilmember Connolly (a
the Sustainability Subcommittee at that time) and other members conducted the interviews. Th
Sustainability Subcommittee voted to recommend HF&H Consultants, LLC HF&H") for th
201-3 review. The Franchisors' Group and Sustainability Subcommittee have been pleased wit
-the work HF&H has done with the rate reviews, and the City has also contracted with HF&H ti
CouncH Meeting:
Dlisposi'fion.,,
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conduct -a rate structure analysis for the Franchisors' Group, which is currently underway.
Franchisors' Group entities are in agreement to continue contracting with HF&H for this next
rate review.
ANALYSIS: In 1995the Franchisors' Group adopted a methodology to set MSS' refuse
collection and disposal rates. The methodology was designed to provide a detailed review of
MSS' franchised operations every three years. In the interim two-year period, annual summary
reviews would be conducted. In a detailed review year, all categories are compared to actual
costs and revenues,, and costs and revenues are compared to other Bay Area communities. This
analysis sets a new baseline for the summary reviews in the interim two-year cycle.
The 2013 review was a detailed review, and 'Included additional analysis pursuant to 2012
amendments to the Franchise Agreement. This additional work included analysis on the new
commercial food scrap program, the creation of a recycling revenue stabilization fund for
diversion programs, and revenue projections. Results from the 2013 detailed review were used
to establish 2013 refuse and recycling rates for the Franchisors' Group. This year's review will
be a summary review.
HF&H submitted a proposal dated July 10, 2013 setting forth a scope of services for the 2014
rate review for the Franchisors' Group, and a fee estimate for that work for an amount not to
exceed $56,040. The proposal includes a survey of rates in other similar jurisdictions, 9 -
presentation to the Franchisors' Group for input and revisions, and one presentation to the
governing body of each member agency.
The attached Resolution would authorize the City Manager to execute an agreement with HF&H
on the terms set forth in HF&H's proposal dated July 10, 2013, in a form to be approved by the
City Attorney.
FISCAL IMPACT: The proposal from HF&H for the summary review is a not to exceed
amount of $56,040. The proposal includes one presentation to the governing body of each
member agency. Additional meetings will be charged to the individual agencies on a time and
materials basis. The cost for this contract is passed through to MSS and is not an expenditure of
either the City of San Rafael or the other members of the Franchisors Group. All participating
agencies have received a copy of this agreement and are aware of the scope of work and project
costs. The contract payments are absorbed into MSS operating expenses which are the basis for
the annual refuse collection rates.
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ATTACHMENTS.
Attachment A-. HF&H Proposal dated July 10, 2013
i
RESOLUTION AUTHORIZING MANAGER ENTER INTO 1
CONTRACT AND H CONSULTANTS, 1 AMOUNT
EXCEED $56,040 FOR WORK ON REFUSE RATE REVIEW FOR THE CITIES OF
1 RAFAEL
& LARKSPUR,
iPi O O ROSS,
♦ i 1 VALLEY
SANITARY DISTRICT AND ROSS
VALLEY-SOUTH
The CITY MANAGER and CITY CLERK are authorized to execute, on behalf of the City
of Rafael,
�
I I I I agreement Consultants Refuse Rate Review
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 C, BEIRNE, Clerk of the City of I Rafael, that the foregoing
resolution was duly and regularly introduced and adopted I I regular
I meeting • City Council
of said City held. on Monday the fifth day of August 2013, by the following vote, to wit:
iVice-Mayor
ABSENT: i Mayor
Phi' llips
AGREEMENT
FOR: Review of Marin Sanitary Servicels
2014 Rate Application
This Agreement is made •and entered •into this fifth •day of •August 2013, by and betwee
the CITY OF SAN RAFAEL (hereinafter "CITY"), and HF and H Consultants, LLC hereinafte
"CONTRACTOR").
RECITALS
WHEREAS, the City of Larkspur, the City of San Rafael, i 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 I
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 Pro -gram Coordinator Co!y 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.
D ORIGIAI,
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, CIT?J
shall pay CONTRACTOR an amount NOT to exceed $56,040, including the cost of lQc
business license taxes as described in Se c -tion 20. 1
Payment will be made monthly upon receipt by PROJECT MANAGER of itemizett'
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.
I
lil. 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 0 0)
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 I including projects not contemplated by this
Agreement.
I
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 CONTRACTORS performance
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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.
A. During the term of this Agreement, CONTRACTOR shall maintain, at no
expense to CITY, the following insurance policies:
comprehensive general liability insurance policy in the minimu
amount of one million ($1 000,000) dollars per occurrence for death, bodily injury, person
injury, or property damage; I
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.y
shMll 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;
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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
-ailacement 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'
compensation and employer's liability insurance, as required by the State Labor Code and othe
applicable laws and regulations, and as necessary to protect both CONTRACTOR and CIT
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.
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.
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.
N
CONTRACTOR shall observe and comply with all applicable federal, state an
local laws, ordinances, codes and regulations, in the performance of its duties and obligation
under this Agreement. CONTRACTOR shall perform all services under this Agreement i
accordance with these laws, ordinances, codes and regulations. CONTRACTOR shall releas
defend, indemnify and hold harmless CITY, and other entities in the Franchisors' Group, thei
officers, agents and employees from any and all damages, liabilities, penalties, fines and a
other consequences from any noncompliance or violation of any laws, ordinances, codes o
regulations. I
14. NO THIRD PARTY BENEFICIARIES
CITY and CONTRACTOR do not intend, by any provision of this Agreement, t
create in any third party, any benefit or right owed by one party, under the terms and condition
of this Agreement, to the other party. I
111110 10111
All notices and other communications required or permitted to be given under
Agreement, including any notice of change of address, shall be in writing and given by person
delivery, or deposited with the United States Postal Service, postage prepaid, addressed to th
parties intended to be notified. Notice shall be deemed given as of the date of personal delive
or if mailed, upon the date of deposit with the United States Postal Service. Notice shall bi
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.
I
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, or
or written, regarding the subject matter between the CONTRACTOR and the CITY.•
I
C. No other agreement, promise or statement, written or oral, relating to th
subject matter of this Agreement, shall be valid or binding, except by way of a writte
amendment to this Agreement. I
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,
iznd the terms and conditions of the attached exhibits or the documents expressly incorporated
by reference, the terms and conditions of this Agreement shall control.
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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 regulati6 n.
19. COSTS AND ATTORNEYS 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.
I
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 94-3097 and CONTRACTOR certifies under penalty • perjury that
said taxpayer identification number is correct.
IN WITNESS WHEREOF, the parties have executed this Agreement as of • day, •
and year first above written.
City Manager
City Clerk
121;ip
City Attorney
L
yfiT.", W toff
By:
Title: President
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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
I
!.anguage is acceptable.
Date Returned: 7/2,,Y 113By: ��.a�
Managing Tomorrow's Resources Today
201 N. Civic Drive, Suite 230
Robert D. Hilton, CMC
Walnut Creek,, California 94596
John W. Farnkopf, PE
Telephone: 925/977-6950
Laith B. Ezzet, CIVIC
Fax: 925/977-6955
Richard J. Simonson, CIVIC
www.hfh-consultants.com
Marva M. Sheehan, CPA
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
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
0,ear 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:
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.
Scope of Work and Schedule
We will perform the following tasks related to the review of IVISSs Application.
Task 1: Pre -Fieldwork
la We will meet once with the Franchisors to discuss the review process requested by the
Franchisors.
lb We will meet once with IVISS 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.
ld Thereafter, we will review the application for math accuracy and logical consistency.
Task 2: Review of Revenues
2a HF&H will review IVISS 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 IVISSs 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 IVISS management's classification of expenses into the
various expense categories.
3b We will review VISS 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 IVISS management's projection of other expenses including.-
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.
HF&H will review MSS management's calculation of projected profit for procedural compliance and
mathematical accuracy.
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 IVIES' 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 IVIES 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.
9b Thereafter, we will meet once with the Franchisors Group to present our adjustments to IVISS s
calculated revenues and expenses and its allocation among the Franchisors.
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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 es to obtain or clarify information.
We will work with the Franchisors Group to identify appropriate communities to include in the surve
We will prepare a table and aphs ♦summarizing the re
grsults. I
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.
U -0d 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 MSSs 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 MSSs 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.
Managing Managing Tomorrow's Resources Today
Marin Sanitary Service's Franchisors' Group
July 10, 2013
Page 6 of 8
Further, this scope of work does not include modifications to any of the individual Franchisor's rates or
rate structures.
Firm and Engagement Team Qualifications
Since its founding, HF&H has been providing independent solid waste rate review services to
municipalities throughout California and the West Coast. HF&H has extensive experience as the
Franchisors' 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 i 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 bn
rates, which will perform certain tasks under their direct supervision
Based on our last review ofrate application, my current understaof matters to be considere
ndingd
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.
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. Alsoit 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.
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
A
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 MISS 2014 Rate Adjustments Application
la Kick-off Meeting with Franchisors Group
1 b Kick-off Meeting with Company
1c Completeness & Compliance Review
2 5 0 0 0 8 $1,920
2 2 8 0 0 12 $2,500
0 0 2 3 0 5 $755
Id Math Accuracy & Logical Consistency 0 0 1 3 0 4 $585
Task 1 4 8 11 8 0 29 $5,740
. , � "x-'. ..:.� ,:. � -,'.3� ., .. , �-�=�"'«r - ' s-., � ", � ., �, �:-,. u..M.. -.�+n, �'�:-,.f.�3 ,- �:q,.,.� rr3� "`='; ;'� �%= : �,- '"u s�� ,r' ...x�• �;,�, � a*`„”
r
"' "v:�' -. ,- . , r.- s � r .",� � _• .., _ .,s .._ ,. r <� .. ,,,. - . �-_ " _, ,..� ate" , " � �<;,^, � x F5`' r �: .3�T •.�; '^. �- ,..;."',%�,��-,.
., ._...:,�....,..v-: .n �� .,,: ... � -,-. , .=..:o-�.€:,'' �:,.s:,.,,'��:.�.�"'e,-y,�g���s.�•:r:;��y�.��'".'�.. �.. �.: ;���.�•'�rr„��_ ��.�"'"..:�.s'.a-..a.����,.,s.: ...�r..., �...... u..,+..r;:�s"'t.�.�.:``�'�-,-. -s.3 ��. ..�� _..,-�..�";�•�,:c«,, ..�^ �- "�...�-'�" -.. �...ss�"-e.�s"fi.�.;�.a.<*. -,.. i'�>�. '..��.=:>•n.:,..m :,. -. �.� �<
2a Review of MSS projected revenue 0 0 2 0 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 $750
levels and surplus or shortfall from projections
2d Summarize Findings 0 2 4 0 0 8 $1,230
Task 2 0 2 14 10 0 26 L._ $4,380
%0'..
,x. - -W."o"'Ims,
" �,_� ,,����-r.. �:•��-�':�. .. ...,-;: a,:... '_'�. �..-,.-� .�.?s•.=.:�-'�:'�,r,us,,;�:..,-.:' x.-..��,:�•�-x...,:,, �.,�.�� �,a,� �:... �...m�;.,• 3.7.3,_,. .�.:�"'... � .,�:���....� _ ,�.�:��::. ..........,;�:�;..yr.
3aClassification of Expenses 0 0 8 4 0 12 $2,020
3b Calculation of Indexed Expenses 0 0 8 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
e Summarize Findings 0 4 8 5 0 15 $2,705
Task 3 0 7 44 45 0 96 $151630
�,
~�-..,
,"���� fflw
�w_. ,..,3 '�3sr�;,--•�:�s-.�rs;�.�s,. ��..,. :..+,,"�;,,�, s"�-....,,,-s•z�.`s'�"s�-��:�'�"�.„�.:..:.n,.;y�"';�:-,:...a.,".sr.-�.;t„«,.��:.�����...1�r<.,:z-.'�za,.>'x-�r=�:v-s..�:?r.-.,,_.,.,"_ .. ",�-_,�..s,r �-.�, f'.� .v-..��...,3;=:•�-'" :.. r' - �-. � "r, .,-s,
4a Review Calculation of Profit 0 0 1 0 0 1 $190
Task 4 0 4 1 0 0 1 $190
:- �" ... ^�"'_'� .�"v't"'=-..�,u ._ �'"".�-",.: .�' '. s.:�`4 '.,.�`�' >'. ..'�s^�b :. ' si'-��",^',-�s,„,n" „cam"'" �"G' ",z"� ,�`-�:., ~�- ';� , ��`S�, ~ �'.: .,sv�r�,.%'„r"'�." "c:-w%�..^�.�,-„+�:,.,�-'�”` ^'.,.�-�.-�,,.:+-:. �u'�« ""<""�'`.^.:,��` „=' w� x. ✓�<a:
��." ..<� � , �!�.-':-„ " `� ���� :�� ���.'`sly.�"�>�"Yy'�-'-�%��,�.�,��.���','�.. ��K�„��. �� `;�''-��� ���-�✓,�sf�a
. � �� lr l f C cam' ��-` ,3, :-.” �„ r_ ✓'
�-"�."� � ""`s "� �k��a'�.res<"1�'�-��;.,.._»sr%-`-s.ir,y�" >�- ^>t='z�' `'•.sem>'�- � ':.� ..- „-^�:1'` � „,""' _
P r
t
5a Review MSS' calculations of pass-through expenses and 0 0 8 8 0 14 $2,140
revenenterest, franchise fees, other agency fees, and
other revenue)
5b Summarize Findings 0 1 2 2 0 5 $805
Task 5 0 1 8 10 0 19 $3,005
7/1012013
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 $1,700
7a Review Allocations for Reasonableness and Consistency
0
1
8
0
0
9
$1,755
Task 7
0
1
8
0
0
9
$1,7551
o
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
$4,8901
9a Survey and Document Comparable Rates
0
2
0
16
0
18
$2,470
Task 9
0
2
0
16
0
18
$2,4701
rt
f.
M.
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
10c 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 L-$14,126
11a Engagement management
2 4 0 0 0 6 $1,450
Labor 16 79 106 91 12 304
Out -of -Pocket Expenses
Total Budget for Rate Adjustments Application
M
HF&H Consultants, LLC
7/10/2013
HF&H CONSULTANTS, LLC
STANDARD HOURLY RATES AND BILLING ARRANGEMENTS
(Effective January 1, 2013)'
Professional Fees
Hourly rates for professional and administrative personnel are as follows:
Position Rate
President
$255
Senior Vice President & Vice President
$225-$255
Senior Project Manager
$215-$225
Senior Associate/Project Manager
$170-$215
Associate Analyst
$130-$155
Assistant Analyst
$100-$125
Administrative Staff
$95-$100
Direct Expenses
Standard charges for common direct expenses are as follows:
Automobile Travel Prevailing IRS mileage rate
Document Reproduction 15 cents per page (black & white)
75 cents per page (color)
Facsimile No charge
Telephone No charge
Public Conveyances Actual
Postage Actual
Overnight Mail and Couriers Actual
B'10 I lin g P o I in do e s
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 Page 1 of 3
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.
MUMMEM
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.
HF&H Consultants, LLC Page 2 of 3
....... .......
STANDARD HOURLY RATES AND BILLING ARRANGEMENTS'
(Effective January 1, 2013)
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.
HF&H Consultants, LLC Page 3 of 3
SA I
- W"" 111ti
A
Below is the process for getting your professional services agreements/contracts finalized and
executed. Please attach this "Completion Checklist and Routing Slip" to the front of your
contract as you circulate it for review and signatures. Please use this form for all Professional
services agreements/contracts (not just those requiring City Council approval).
This process should occur in the order presented below.
Step
Responsible
Description
Completion
Department
Date
City Attorney
Review, revise, and comment on draft
agreement.
2
Contracting Department
Forward final agreement to contractor for
their signature. Obtain at least two signed
originals from contractor.
3
Contracting Department
Agendize contractor -signed agreement for
Council approval, if Council approval
necessary (as defined by City Attorney/City
Ordinance*).
4
City Attorney
Review and approve form of agreement;
bonds, and insurance certificates and
endorsements.
5
City Manager / Mayor or
Agreement executed by Council authorized
r
Department Head
official.
i 3 A
6
City Clerk
City Clerk attests signatures, retains original
agreement and forwards copies to the
.�o
contracting department.
To be completed by Contracting Department:
Project Manager: Coly Bylof Project Name.- 2014 refuse rate review
Agendized for City Council Meeting of (if necessary),- August 5, 2013
If you have questions on this process, please contact the City Attorney's Office at 485-3080.
* Council approval is required if contract is over $20, 000 on a cumulative basis.
CITY OF SAN RAFAEL
ROUTING SLIP / APPROVAL FORM
INSTRUCTIONS: USE THIS FORM WITH EACH SUBMITTAL OF A CONTRACT, AGREEMENT,
ORDINANCE OR RESOLUTION BEFORE APPROVAL BY COUNCIL / AGENCY.
SRRA / SRCC AGENDA ITEM NO.
FROM: Cory Bytof
'*,EPARTMENT: City Manager
DATE: July 25, 2013
TITLE OF DOCUMENT:
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 es of
San Rafael & Larkspur, Town of Ross, Las Gallinas Valley Sanitary District and Ross
Vallev-Sou K
0 Z a
(LOWER HALF OF FORM FOR APPROVALS ONLY)
APPROVED AS COUNCIL AGENCY
AGENDA ITEM:
City Manager (sign ture)
APPROVED AS TO FORM:
City Attorney {signator )