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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 11 j -! IiIIII 11111"!1111-mle, 11" !!1 MT Me 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.,, wkwm 6' AM MA 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. qqq ii�iimoplli 11 � � 1 111 � Ili I 1 111 11 � � I= REIM M-4 0 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 4 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; I 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. 0 Ilk a MMM 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 0 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. I 1111� 111111liq 1! 1 11111 i-11 il;] f M I � �11 11111111111;11q�!, 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 )