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HomeMy WebLinkAboutCM Refuse Rate Review; HF&H 2014CITY OF�.. 3 . g Agenda Item No: Meeting Date: August 18, 2014 SAN RAFAEL CITY COUNCIL AGENDA REPORT 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 $57,544 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 RECOMMENDATION: Adopt Resolution. 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 rate application. In 2012, City staff conducted a consultant selection process for the annual rate application review. A committee consisting of Mayor Phillips and Councilmember Connolly (as the initial Sustainability Subcommittee), Nancy Mackle, Jim Schutz, Stephanie Lovette, Steve Devine from the County JPA, and Sustainable San Rafael's President Bill Carney conducted the interviews. The Council's Sustainability Subcommittee voted to recommend HF&H Consultants, LLC ("HF&H") for the 2013 review. The Franchisors' Group and Sustainability Subcommittee have FOR CITY CLERK ONLY File No.: 14 -3-Se3 Council Meeting:��©C Disposition:C�f� SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 2 been pleased with the work HF&H has done with the rate reviews, and the City has also contracted with HF&H to conduct a rate structure analysis for the Franchisor's Group, which is currently underway and will be presented to Council later this year. ANALYSIS: In 1995, the 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 14, 2014 setting forth a scope of services for the 2015 rate review for the Franchisors' Group, and a fee estimate for that work for an amount not to exceed $57,544. The proposal includes a survey of rates in other similar jurisdictions, a 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 14, 2014, 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 $57.544, which will be apportioned to each jurisdiction based on number of accounts in their service area. Last year the amount apportioned to San Rafael was $37,403.60. 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. ACTION REQUIRED: Adopt the resolution as presented. ATTACHMENTS: Resolution with Exhibit `A`, HF&H Proposal dated July 14, 2014 RESOLUTION NO. 13784 RESOLUTION AUTHORIZING CITY MANAGER TO ENTER INTO A CONTRACT WITH HF AND H CONSULTANTS, LLC IN AN AMOUNT NOT TO EXCEED $57,544 FOR WORK ON REFUSE RATE REVIEW FOR THE CITIES OF SAN RAFAEL & LARKSPUR, TOWN OF ROSS, LAS GALLINAS VALLEY SANITARY DISTRICT AND ROSS VALLEY -SOUTH THE CITY COUNCIL OF THE CITY OF SAN RAFAEL RESOLVES AS FOLLOWS: The CITY MANAGER and CITY CLERK are authorized to execute, on behalf of the City of San Rafael, an agreement with HF&H Consultants for Refuse Rate Review of Marin Sanitary Service's Rate Application for the 2015 calendar year, in a form to be approved by the City Attorney. The agreement shall be for an amount not to exceed $57,544, the terms described in the July 14, 2014 HF&H Consultants, LLC Proposal attached hereto as Exhibit A and incorporated herein by reference. I, ESTHER C. BEIRNE, Clerk of the City of San Rafael, hereby certify that the foregoing resolution was duly and regularly introduced and adopted at a regular meeting of the City Council of said City held on Monday the eighteenth day of August 2014, by the following vote, to wit: AYES: COUNCILMEMBERS: Bushey, Colin, Connolly, McCullough & Mayor Phillips NOES: COUNCILMEMBERS: None ABSENT: COUNCILMEMBERS: None ESTHER C. BEIRNE, City Clerk AGREEMENT FOR PROFESSIONAL SERVICES FOR REVIEW OF MARIN SANITARY SERVICES 2015 RATE APPLICATION This Agreement is made and entered ,into this M IAt day of A U& U5;— , 2014, by and between the CITY OF SAN RAFAEL (hereinafter "CITY"), and HF&H Consultants, LLC (hereinafter "CONTRACTOR"). RECITALS WHEREAS, the City of Larkspur, the City of San Rafael, the Town of Ross, the County of Marin and the Las Gallinas Sanitary District (hereinafter "FRANCHISORS' GROUP") have similar franchise agreements with Marin Sanitary Services; and WHEREAS, the , FRANCHISORS' GROUP utilizes jointly sponsored programs to achieve financial and staff time savings through collaborative analyses such as the annual reviews of Marin Sanitary Services operations and expenses pursuant to the Franchise Agreements; and WHEREAS, the FRANCHISORS' GROUP desires to utilize the services of the CONTRACTOR to conduct this review; and WHEREAS, the CITY has in the past acted as the contracting agency on behalf of the FRANCHISORS' GROUP, and has agreed to do so in this instance as well; and WHEREAS, the FRANCHISORS' GROUP entities (each a "Participating Entity" and collectively, "the Participating Entities") agree to share equally in the cost of the analysis, to be paid for by Marin Sanitary Service and allocated through each city/town's annual rate setting review as set forth below; AGREEMENT NOW, THEREFORE, the parties hereby agree as follows: I. PROJECT COORDINATION A. CITY. The City Manager shall be the representative of the CITY for all purposes T- Rev. Date: 1/30/14 1 L)IL under this Agreement. Sustainability and Volunteer Program Coordinator Cory B tAoof 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. 3. DUTIES OF CITY CITY shall cooperate with CONTRACTOR in his performance under this agreement and shall compensate CONTRACTOR as provided herein. 4. COMPENSATION. For the full performance of the services described herein by CONTRACTOR, CONTRACTOR shall be compensated as described in Exhibit " A " in a total contract amount not to exceed $57,544.00. It is understood and agreed by the parties that payment of compensation hereunder shall be made as follows: CONTRACTOR shall submit monthly invoices to CITY for review and approval, then CITY shall forward CONTRACTOR's approved invoices to Marin Sanitary Services, which shall remit payment on each invoice directly to CONTRACTOR within thirty (30) of receipt thereof. By separate agreements, Marin Sanitary Services and the Participating Entities have agreed that Marin Sanitary Services shall pass on the costs paid to CONTRACTOR hereunder by allocation of a proportionate share thereof, in accordance with the agreed upon rate setting methodology set forth in that Participating Entity's individual franchise agreement with Marin Sanitary Service, not to exceed $40,000 to San Rafael. TERM OF AGRE_F,MENT. The term of this Agreement shall commence upon the date of execution of this agreement and shall end on June 30, 2015. A. Discretionary. Either party may terminate this Agreement without cause upon thirty (30) days written notice mailed or personally delivered to the other parry. Rev. date: 1/30/14 B. Cause. Either party may terminate this Agreement for cause upon fifteen (15) days written notice mailed or personally delivered to the other party, and the notified party's failure to cure or correct the cause of the termination, to the reasonable satisfaction of the party giving such notice, within such fifteen (15) day time period. C. Effect of Termination. Upon receipt of notice of termination, neither party shall incur additional obligations under any provision of this Agreement without the prior written consent of the other. D. Return of Documents. Upon termination, any and all CITY documents or materials provided to CONTRACTOR and any and all of CONTRACTOR's documents and materials prepared for or relating to the performance of its duties under this Agreement, shall be delivered to CITY as soon as possible, but not later than thirty (30) days after termination. 7. OWNERSHIP OF DOCUMENTS. The written documents and materials prepared by the CONTRACTOR in connection with the performance of its duties under this Agreement, shall be the sole property of CITY. CITY may use said property for any purpose, including projects not contemplated by this Agreement. 8. INSPECTION AND AUDIT. Upon reasonable notice, CONTRACTOR shall make available to CITY, or its agent, for inspection and audit, all documents and materials maintained by CONTRACTOR in connection with its performance of its duties under this Agreement. CONTRACTOR shall fully cooperate with CITY or its agent in any such audit or inspection. 9. ASSIGNABILITY. The parties agree that they shall not assign or transfer any interest in this Agreement nor the performance of any of their respective obligations hereunder, without the prior written consent of the other party, and any attempt to so assign this Agreement or any rights, duties or obligations arising hereunder shall be void and of no effect. 10. INSURANCE. A. Scope of Coverage. During the term of this Agreement, CONTRACTOR shall maintain, at no expense to CITY, the following insurance policies: 1. A commercial general liability insurance policy in the minimum amount of one million dollars ($1,000,000) per occurrence/two million dollars ($2,000,000) aggregate, for death, bodily injury, personal injury, or property damage. 2. An automobile liability (owned, non -owned, and hired vehicles) insurance policy in the minimum amount of one million dollars ($1,000,000) dollars per occurrence. Rev. date: 1/30/14 3. If any licensed professional performs any of the services required to be performed under this Agreement, a professional liability insurance policy in the minimum amount of one million dollars ($1,000,000) per occurrence/two million dollars ($2,000,000) aggregate, to cover any claims arising out of the CONTRACTOR's performance of services under this Agreement. Where CONTRACTOR is a professional not required to have a professional license, CITY reserves the right to require CONTRACTOR to provide professional liability insurance pursuant to this section. 4. If it employs any person, CONTRACTOR shall maintain worker's compensation and employer's liability insurance, as required by the State Labor Code and other applicable laws and regulations, and as necessary to protect both CONTRACTOR and CITY against all liability for injuries to CONTRACTOR's officers and employees. CONTRACTOR'S worker's compensation insurance shall be specifically endorsed to waive any right of subrogation against CITY. B. Other Insurance Requirements. The insurance coverage required of the CONTRACTOR in subparagraph A of this section above shall also meet the following requirements: 1. Except for professional liability insurance, the insurance policies shall be specifically endorsed to include the CITY, its officers, agents, employees, and volunteers, as additionally named insureds under the policies. 2. The additional insured coverage under CONTRACTOR'S insurance policies shall be primary with respect to any insurance or coverage maintained by CITY and shall not call upon CITY's insurance or self-insurance coverage for any contribution. The "primary and noncontributory" coverage in CONTRACTOR'S policies shall be at least as broad as ISO form CG20 0104 13. 3. Except for professional liability insurance, the insurance policies shall include, in their text or by endorsement, coverage for contractual liability and personal injury. 4. CONTRACTOR will provide the PROJECT MANAGER with thirty (30) days written notice prior to any planned cancellation or planned non-payment of premium, or planned modifications of the terms and conditions of said insurance policies. In addition, immediately upon CONTRACTOR's receipt during the term of this Agreement of any notice of cancellation or of intent to cancel any policy of insurance required herein issued by CONTRACTOR's insurance carrier for any reason, CONTRACTOR shall provide PROJECT MANAGER with a copy of said notice by personal delivery or overnight mail. 5. If the insurance is written on a Claims Made Form, then, following termination of this Agreement, said insurance coverage shall survive for a period of not less than five years. 6. The insurance policies shall provide for a retroactive date of placement Rev. date: 1/30/14 4 coinciding with the effective date of this Agreement. 7. The limits of insurance required in this Agreement may be satisfied by a combination of primary and umbrella or excess insurance. Any umbrella or excess insurance shall contain. or be endorsed to contain a provision that such coverage shall also apply on a primary and noncontributory basis for the benefit of CITY (if agreed to in a written contract or agreement) before CITY'S own insurance or self-insurance shall be called upon to protect it as a named insured. 8. It shall be a requirement under this Agreement that any available insurance proceeds broader than or in excess of the specified minimum insurance coverage requirements and/or limits shall be available to CITY or any other additional insured party. Furthermore, the requirements for coverage and limits shall be: (1) the minimum coverage and limits specified in this Agreement; or (2) the broader coverage and maximum limits of coverage of any insurance policy or proceeds available to the named insured; whichever is greater. C. Deductibles and SIR's. Any deductibles or self-insured retentions in CONTRACTOR's insurance policies must be declared to and approved by the PROJECT MANAGER and City Attorney, and shall not reduce the limits of liability. Policies containing any self-insured retention (SIR) provision shall provide or be endorsed to provide that the SIR may be satisfied by either the named insured or CITY or other additional insured party. At CITY's option, the deductibles or self-insured retentions with respect to CITY shall be reduced or eliminated to CITY's satisfaction, or CONTRACTOR shall procure a bond guaranteeing payment of losses and related investigations, claims administration, attorney's fees and defense expenses. D. Proof of Insurance. CONTRACTOR shall provide to the PROJECT MANAGER or CITY'S City Attorney all of the following: (1) Certificates of Insurance evidencing the insurance coverage required in this Agreement; (2) a copy of the policy declaration page and/or endorsement page listing all policy endorsements for the commercial general liability policy, and (3) excerpts of policy language or specific endorsements evidencing the other insurance requirements set forth in this Agreement. CITY reserves the right to obtain a full certified copy of any insurance policy and endorsements from CONTRACTOR Failure to exercise this right shall not constitute a waiver of the right to exercise it later. The insurance shall be approved as to form and sufficiency by PROJECT MANAGER and the City Attorney. 11. INDEMNIFICATION. A. Except as otherwise provided in Paragraph B., CONTRACTOR shall, to the fullest extent permitted by law, indemnify, release, defend with counsel approved by CITY, and hold harmless CITY, its officers, agents, employees and volunteers (collectively, the "City Indemnitees"), from and against any claim, demand, suit, judgment, loss, liability or expense of any kind, including but not limited to attorney's fees, expert fees and all other costs and fees of litigation, (collectively "CLAIMS"), arising out of CONTRACTOR'S performance of its obligations or conduct of its operations under this Agreement. The CONTRACTOR's obligations apply regardless of whether or not a liability is caused or contributed to by the active Rev. date: 1/30/14 or passive negligence of the City Indemnitees. However, to the extent that liability is caused by the active negligence or willful misconduct of the City Indemnitees, the CONTRACTOR's indemnification obligation shall be reduced in proportion to the City Indemnitees' share of liability for the active negligence or willful misconduct. In addition, the acceptance or approval of the CONTRACTOR's work or work product by the CITY or any of its directors, officers or employees shall not relieve or reduce the CONTRACTOR's indemnification obligations. In the event the City Indemnitees are made a party to any action, lawsuit, or other adversarial proceeding arising from CONTRACTOR'S performance of or operations under this Agreement, CONTRACTOR shall provide a defense to the City Indemnitees or at CITY'S option reimburse the City Indemnitees their costs of defense, including reasonable attorneys' fees, incurred in defense of such claims. B. Where the services to be provided by CONTRACTOR under this Agreement are design professional services to be performed by a design professional as that term is defined under Civil Code Section 2782.8, CONTRACTOR shall, to the fullest extent permitted by law, indemnify, release, defend and hold harmless the City Indemnitees from and against any CLAIMS that arise out of, pertain to, or relate to the negligence, recklessness, or willful misconduct of CONTRACTOR in the performance of its duties and obligations under this Agreement or its failure to comply with any of its obligations contained in this Agreement, except such CLAIM which is caused by the sole negligence or willful misconduct of CITY. C. The defense and indemnification obligations of this Agreement are undertaken in addition to, and shall not in any way be limited by, the insurance obligations contained in this Agreement, and shall survive the termination or completion of this Agreement for the full period of time allowed by law. 12. NONDISCRIMINATION. CONTRACTOR shall not discriminate, in any way, against any person on the basis of age, sex; race, color, religion, ancestry, national origin or disability in connection with or related to the performance of its duties and obligations under this Agreement. 13. COMPLIANCE WITH ALL LAWS. CONTRACTOR shall observe and comply with all applicable federal, state and local laws, ordinances, codes and regulations, in the performance of its duties and obligations under this Agreement. CONTRACTOR shall perform all services under this Agreement in accordance with these laws, ordinances, codes and regulations. CONTRACTOR shall release, defend, indemnify and hold harmless CITY, its officers, agents and employees from any and all damages, liabilities, penalties, fines and all other consequences from any noncompliance or violation of any laws, ordinances, codes or regulations. 14. NO THIRD PARTY BENEFICIARIES. CITY and CONTRACTOR do not intend, by any provision of this Agreement, to create in any third party, any benefit or right owed by one party, under the terms and conditions of this Rev. date: 1/30/14 Agreement, to the other party. 15. NOTICES. All notices and other communications required or permitted to be given under this Agreement, including any notice of change of address, shall be in writing and given by personal delivery, or deposited with the United States Postal Service, postage prepaid, addressed to the parties intended to be notified. Notice shall be deemed given as of the date of personal delivery, or if mailed, upon the date of deposit with the United States Postal Service. Notice shall be given as follows: TO CITY: Cory Bytof Sustainability Volunteer Program Coordinator City of San Rafael 1400 Fifth Avenue P.O. Box 151560 San Rafael, CA 94915-1560 TO CONTRACTOR: Robert D. Hilton, CMC President HF&H Consultants, LLC 201 North Civic Drive, Suite 230 Walnut Creek, CA 94596 16. INDEPENDENT CONTRACTOR. For the purposes, and for the duration, of this Agreement, CONTRACTOR, its officers, agents and employees shall act in the capacity of an Independent Contractor, and not as employees of the CITY. CONTRACTOR and CITY expressly intend and agree that the status of CONTRACTOR, its officers, agents and employees be that of an Independent Contractor and not that of an employee of CITY. 17. ENTIRE AGREEMENT -- AMENDMENTS. A. The terms and conditions of this Agreement, all exhibits attached, and all documents expressly incorporated by reference, represent the entire Agreement of the parties with respect to the subject matter of this Agreement. B. This written Agreement shall supersede any and all prior agreements, oral or written, regarding the subject matter between the CONTRACTOR and the CITY. C. No other agreement, promise or statement, written or oral, relating to the subject matter of this Agreement, shall be valid or binding, except by way of a written amendment to this Agreement. Rev. date: 1/30/14 D. The terms and conditions of this Agreement shall not be altered or modified except by a written amendment to this Agreement signed by the CONTRACTOR and the CITY. E. If any conflicts arise between the terms and conditions of this Agreement, and the terms and conditions of the attached exhibits or the documents expressly incorporated by reference, the terms and conditions of this Agreement shall control. 18. SET-OFF AGAINST DEBTS. CONTRACTOR agrees that CITY may deduct from any payment due to CONTRACTOR under this Agreement, any monies which CONTRACTOR owes CITY under any ordinance, agreement, contract or resolution for any unpaid taxes, fees, licenses, assessments, unpaid checks or other amounts. 19. WAIVERS. The waiver by either party of any breach or violation of any term, covenant or condition of this Agreement, or of any ordinance, law or regulation, shall not be deemed to be a waiver of any other term, covenant, condition, ordinance, law or regulation, or of any subsequent breach or violation of the same or other term, covenant, condition, ordinance, law or regulation. The subsequent acceptance by either parry 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 parry of any term, condition, covenant of this Agreement or any applicable law, ordinance or regulation. 20. COSTS AND ATTORNEY'S FEES. The prevailing party in any action brought to enforce the terms and conditions of this Agreement, or arising out of the performance of this Agreement, may recover its reasonable costs (including claims administration) and attorney's fees expended in connection with such action. 21. CITY BUSINESS LICENSE / OTHER TAXES. CONTRACTOR shall obtain and maintain during the duration of this Agreement, a CITY business license as required by the San Rafael Municipal Code CONTRACTOR shall pay any and all state and federal taxes and any other applicable taxes. CITY shall not be required to pay for any work performed under this Agreement, until CONTRACTOR has provided CITY with a completed Internal Revenue Service Form W-9 (Request for Taxpayer Identification Number and Certification). 22, APPLICABLE LAW. The laws of the State of California shall govern this Agreement. IN WITNESS WHEREOF, the parties have executed this Agreement as of the day, month and year first above written. Rev. date: 1/30/14 CITY OF SAN RAFAEL NANCY MAC , City Manager ATTEST: ESTHER C. BEIRNE, City Clerk APPROVED AS TO FORM: k ` 1 ROBERT F. EPSTEIN, Cty Atto Rev. date: 1/30/14 CONTRACTOR By: Name: ROBERT D. HILTON Title: President 201 N. Civic Drive, Suite 230 Walnut Creek, California 94596 Telephone: 925/977-6950 Fax: 925/977-6955 www.hfh-consultants.com July 14, 2014 Sent via e-mail 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 Fomorrow's Resources Today Mr. Jim Schutz Assistant City Manager City of San Rafael 1400 Fifth Avenue, Room 203 P.O. Box 151560 San Rafael, CA 94915-1560 Mr. Rob Braulik Town Manager Town of Ross 31 Sir Francis Drake Boulevard Ross, CA 94957 Robert D. Hilton, CMC John W. Farnkopf, PE Laith B. Ezzet, CMC Richard J. Simonson, CMC Marva M. Sheehan, CPA Robert C. Hilton, CMC Subject: Proposal to Perform a Review of Marin Sanitary Service's Application for 2015 Rates Dear Ms. McGuire and Messrs. Schwarz, Schutz, Frost and Braulik: HF&H Consultants, LLC (HF&H) is pleased to present this proposal to perform a review of Marin Sanitary Service's (MSS) application for rates to be effective January 1, 2015. 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' 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. The last detailed review was performed in 2012 for rates to be effective in 2013. Last year, we performed a review of the rate adjustment using the summary method for rates effective in 2014. As part of reviewing the rates to be effective 2015, we have been asked to: AMk Managing Tomorrow's Resources Today Marin Sanitary Service's Franchisors' Group July 14, 2014 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. We will perform the following tasks related to the review of MSS's Application. Task 1® Pre -Fieldwork 1a We will meet once with the Franchisors to discuss the review process requested by the Franchisors. 1b We will meet once with MSS management to receive the application and discuss the review schedule. 1c We will review the application to ensure that it is complete and in compliance with the summary methodology. 1d Thereafter, we will review the application for math accuracy and logical consistency. Task 2: Review of Revenues 2a HF&H will review MSS management's projection of collection and non -collection revenues for the 12 -month periods ending December 31, 2014, and 2015. 2b We will compare the results to MSS' audited financial statements for rate year 2013 and year- to-date revenues for 2014 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. 2d We will summarize the findings of our work in Tasks 2a through 2c. Task 3: Review of Expenses 3a HF&H will review the appropriateness of MSS management's classification of expenses into the various expense categories. 3b We will review MSS management's calculation of rate year 2015 indexed expenses and compare them to the calculated expenses for 2014, established in our prior report, and the calculated changes to the indices determined in Task 1. 3c We will review MSS management's projection of other expenses including: Adak Managing Tomorrow's Resources Today Marin Sanitary Service's Franchisors' Group July 14, 2014 Page 3 of 8 • Review of Workers' Compensation 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. Review of Disposal Expense for residential and solid waste tons transferred at MSS' transfer station by evaluating MSS' projection for 2015 disposal expense and MSS' adjustments for the previous projections for Rate Years 2013 and 2014 based on historical trends, management's plans and adjustment to the disposal rates. • Review of Commercial Mixed Waste Processing Expense for commercial tons processed at MSS' processing facility by evaluating MSS' projection for 2015 commercial mixed waste processing and MSS' adjustments for the previous projections for Rate Years 2013 and 2014 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. Review of Organics Processing Expense by evaluating MSS' projection for 2015 organics processing and MSS' adjustments for the previous projections for Rate Years 2013 and 2014 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. • Review of the Transfer/Transport Adjustment for tons not affiliated with the Franchisors Group transferred and transported through MSS' transfer station by evaluating MSS' tonnage projection for 2014 and MSS' adjustments for the previous tonnage projections for Rate Years 2013 and 2014 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. • Review of Fuel Expense by evaluating MSS' 2015 projection and the adjustments for Rate Years 2013 and 2014. We will review MSS' calculations of the average price per gallon for fuel and verify the use of the proper projected gallons. • Review of Depreciation/Lease Expense projections 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. • Review of JPA Fees expense by reviewing documentation from the JPA and MSS projections. • Review of the costs related to the Commercial Food to Energy program to determine the costs were properly included in MSS' projected costs. 3d HF&H will summarize the findings from the analysis performed during Tasks 3a through 3c a Bove, M Managing Tomorrow's Resources Today Marin Sanitary Service's Franchisors' Group July 14, 2014 Page 4 of 8 Task 4: Review of Projected Profit 4a HF&H will review MSS management's calculation of projected profit for procedural compliance and mathematical accuracy. Task 5: Review of Pass-through Expenses/ Revenue 5a HF&H will review MSS' calculations of the Pass-through Expenses and Other Revenue, including: • Review of Interest Expense based on MSS' actual interest from its loan amortization schedules for actual and projected capital expenditures. • Review of Franchise Fees based on each agency's appropriate rate and the forecasted values. • Review of Other Agency Fees based on fees established by each agency and forecasted values. • Review of Other Revenues 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. 5b We will summarize the findings from the analysis performed in Task 5a above. Task 6: Review of the Calculation of the Reserve for Future Diversion Programs 6a HF&H will review MSS' calculation of the increase or decrease to the reserve for future diversion programs in accordance with the procedures developed in 2012. 6b We will summarize the findings of Task 6a. Task 7: Review of Revenue and Expense Allocations 7a 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. 7b If requested by the Franchisors Group, we will include the review of the allocations for San Anselmo, Fairfax, and the County (RVSD-N) and present the impact of the allocations to the Franchisors Group. 8a We will meet once with MSS management to review our adjustments to their calculated and projected revenues and expenses and their allocation among the Franchisors. We will obtain management's comments, review any additional material, and amend our adjustments, if necessary. Marin Sanitary Service's Franchisors' Group July 14, 2014 Page 5 of 8 ;ing Tomorrow's Resources Today 8b Thereafter, we will meet once with the Franchisors Group to present our adjustments to MSS' calculated revenues and expenses and its allocation among the Franchisors. Task 9: Survey of Comparable Rates 9a We will work with the Franchisors Group to identify appropriate communities to include in the survey. We will compile rates currently in effect in the municipalities in Marin County, as well as neighboring jurisdictions in other counties, as agreed upon. When possible, we will draw data from our existing project files. If necessary, we will contact cities to obtain or clarify information. We will prepare a table and graphs summarizing the results. Task 10: Communicate Findings 10a HF&H will distribute a copy of our initial draft report documenting our findings and recommendations for review by MSS management. Thereafter, we will meet once with MSS management to present and obtain its comments regarding our initial draft report. 10b We will make any appropriate adjustments to our initial draft report and present a preliminary draft to the Franchisors. 10c Based on comments from the Franchisors, we will amend the preliminary draft report and issue the final report. 10d We will attend council/board meetings to present findings. Engagement Management We will prepare and amend detailed work plans, monitor engagement progress, provide sufficient resources to ensure timely completion of the engagement, review analytical results and interim findings, review the draft and final reports, and respond to questions regarding the progress of the engagement and other issues. Every approach to an engagement is limited in its scope. The major limitations regarding our proposed scope of work are: • The scope of work described above is different from an audit of financial statements performed in accordance with Generally Accepted Auditing Standards, which is performed by MSS's auditor. • We will perform the tasks presented above in a manner that will allow us to achieve the objectives of the review in a cost-effective manner. We will rely on MSS' auditor with regard to matters related to MSS' internal controls. Our testing of MSS' application (using judgmental samples of transactions and analytical procedures) will only be for the purpose of providing evidence that allows us to reach conclusions and recommendations regarding IVISS' application. ISO Managing Tomorrow's Resources Today Marin Sanitary Service's Franchisors' Group July 14, 2014 Page 6 of 8 • 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. If San Anselmo, Fairfax and the County (RVSD-N) are not included in the rate -setting process for the Franchisors Group, we would be pleased to meet with them on a time -and -materials basis. Further, this scope of work does not include modifications to any of the individual Franchisor's rates or rate structures. 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' level of profit are reasonable. Marva Sheehan, Vice President, will serve as Engagement Director and will be responsible for directing the project and for your satisfaction with the engagement. Ms. Sheehan has been the Engagement Director or Manager for the MSS reviews since 2006. She is a Certified Public Accountant with over 3S years of accounting and auditing experience; 22 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. Scott Holt, an accountant with more than 18 years of industry controller experience, will serve as Engagement Manager. Mr. Holt is a recent addition to HF&H's staff. Since joining HF&H, he has performed the rate adjustment review for the Town of Fairfax, the contractor compensation review for the City of Sunnyvale, and contract compliance reviews for the Cities of I_awndale and Bellflower. Ms. Sheehan and Mr. Holt will be assisted by less senior, experienced staff at lower billing rates, which will perform certain tasks under their direct supervision AI N Managing Tomorrow's Resources Today Marin Sanitary Service's Franchisors' Group July 14, 2014 Page 7 of 8 Based on our last review of MSS' rate application, my current understanding of matters to be considered during this review, and the level of effort necessary to address them, I estimate our professional fees and out-of-pocket expenses for the scope of work described above to be $57,544, as shown on Attachment A. As in the past, we will bill you in accordance with our standard rates and practices, as described in Attachment B, up to the $57,544. We will bill you on a time -and -materials basis and, if the level of effort is less than anticipated, we will bill you the lesser amount. Also, it is possible that the level of effort to perform the review may exceed our estimate and, if so, we will contact you before proceeding to obtain your approval or direction. 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 3 August 31 September 8 September 14 September 19 September 25 October 10 October/November January 1, 2015 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 i 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 14, 2014 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. Sincerely, HF&H CONSULTANTS, LLC 3 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. Cory Bytof, City of San Rafael Ms. Kim Erwin, HF&H Attachment A - Fee Estimate Marird Franchisors Group Review of MSS 2015 Rate Adjustments Application 1 Pr WN i� Task �eidworJl�� �.~ � 1a Kick-off Meeting with Franchisors Group 3 6 0 0 0 9 $2,190 1b Kick-off Meeting with Company 0 2 8 0 0 10 $1,790 1c Completeness & Compliance Review 0 0 4 4 0 8 $1.220 1d Math Accuracy & Logical Consistency 0 0 3 4 0 7 $1,055 Task 1 3 8 15 8 0 34J $6,255 0000'0* 5 2a Review of MSS projected revenue 0 0 4 6 0 10 $1,500 2b Compare 2013 revenue to MSS' audited financial 0 0 4 4 0 8 $1,220 statements for 2013 2c Review MSS' calculation of three year trend of subscription 0 0 4 0 0 4 $660 levels and surplus or shortfall from projections 2d Summarize Findings 0 2 4 0 0 6 $1.130 Task 2 0 2 16 10 0 28 $4,510 3a Classification of Expenses 0 0 8 8 0 16 $2,440 3b Calculation of Indexed Expenses 0 0 6 6 0 12 $1,830 3c Review of Other Expenses 0 3 22 30 0 55 $8,535 3d Summarize Findings 0 4 6 5 0 15 $2,630 Task 3 0 7 42 49 0 98 715,435 4a Review Calculation of Profit 0 0 1 0 0 1 $165 Task 4 0 0 1 0 0 1 $165 5a Review MSS' calculations of pass-through expenses and 0 0 6 8 0 14 $2,110 revenue{Interest, franchise fees, other agency fees, and other revenue} 5b Summarize Findings 0 1 2 2 0 5 S845 Task 5 0 1 8 10 0 19 $2,955 HF&H Consultants, LLC 7/14/2014 Attachment A - Fee Estimate Marin Franchisors Group Review of MSS 2015 Rate Adjustments Application Task 6 Review Calculation of Reser 'future Diversion Programs 6a Review MSS' calculations of reserve for future diversion programs based on 2012 MRRA costs and revenues 6b Summarize Findings Task 6 a 2 4 0 0 6 $1,130 0 1 1 0 0 2 $400 0 3 5 0 0 8 $1,530 ._,,.. �.. .. ..Y . . w 7a Review Allocations for Reasonableness and Consistency 0 1 8 0 0 9 $1,555 7b Review of Allocations for San Anseimo, Fairfax & County 0 3 4 0 0 7 $1,365 (RVSD-N) Task 7 0 4 12 0 0 16 $2,920 NNO _.. 7.,_....,.,.. .., , _...,_ 8a Review with MSS Management 0 4 6 0 0 10 $1,930 8b Review with Franchisors Group 2 6 6 0 0 14 $2,920 Task 8 2 10 12 0 0 24 $4,850 0, 01*1.. 9a Survey and Document Comparable Rates 0 1 3 16 0 20 $2.970 Task 9 0 1 3 16 0 20 $2,970 w 10a Prepare draft report and meet with MSS management 0 4 10 4 6 24 $3,750 10b Prepare draft report and meet with Franchisors 2 6 2 0 2 12 $2,460 10c Prepare and distribute Final Report 0 6 2 0 2 10 $1,940 HF&H Consultarts. LLC 7i 1412014 Attachment B STANDARD HOURLY RATES AND BILLING ARRANGEMENTS (Effective January 1, 2014)1 Hourly rates for professional and administrative personnel are as follows: Position President Senior Vice President & Vice President Senior Project Manager Senior Associate/Project Manager Associate Analyst Assistant Analyst Administrative Staff Standard charges for common direct expenses are as follows: Automobile Travel Document Reproduction Facsimile Telephone Public Conveyances Postage Overnight Mail and Couriers Rate $260 $225-$259 $215-$225 $170-$219 $130-$155 $100-$125 $95-$100 Prevailing IRS mileage rate 15 cents per page (black & white) 75 cents per page (color) No charge No charge Actual Actual Actual Our policy is to bill for our services and direct expenses based on the standard hourly rates of the staff member assigned, multiplied by the time required to perform the client -related tasks, plus the subcontractor services as described above. In implementing this policy we adhere to the following practices: ® It is our standard practice to e-mail invoices to our clients, although hard copies of invoices can be sent to clients on request. ® We round to the nearest one-half hour (e.g., if two hours and 50 minutes are spent on a task, it is recorded as three hours, if two hours and 10 minutes are spent on a task, it is recorded as two hours). A minimum charge of one-half hour is charged for any client work performed in a day. Litigation Support and Expert Witness Services are not covered by this schedule of fees and expenses. HF&H Consultants; LLC Page 1 of 3 Attachment B SIF&H CONSULTANTS, LLC STANDARD HOURLY RATES AND BILLING ARRANGEMENTSi (Effective January 1, 2014) • 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. 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 Consul -tams, LLC Page 2 of 3 Attachment B STANDARD HOURLY RATES AND BILLING ARRANGEMENTS' (Effective January 1, 2014) 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 MAYOR GARY O. PHILLIPS \%3Cfi MAYOR DAMON CONNOLLY loft COU,,,,,( F iEMI3F,R MARII1I'rH BE SHEY CO!,,, iF YFE;m T2 KATF COt_iN COUNCILP.Ii MBER ANDREW CUYI GAN NWCULL OUCH CETT' N4 AN,'i<iER'S 01-FICE SUSTAINABILITY PROGRAM PHONE: (415) 485-3407 August 8, 2014 Patty Garbarino Marin Sanitary Service, Marin Resource Recovery Center 565 Jacoby Street San Rafael, CA 94901 Re: Payment for agreement with HF&H Consultants on behalf of Franchisors' Group Dear Patty, under This letter is to memorialize our mutual discussions s oval services agreernenunderstaning of the tew ith HF&Hich the City of San Rafael has agreed to enter Into a pofes Consultants (draft attached) on behalf of the Franchisors' Group of fntities (the including City witof San of Rafael, the Town of Larkspur, the Town of Ross, the County of Valley Sanitary District boundaries, and te f as r the lunch FranchisorsSaoupry District) for the purpose of preparing the annual rate review The City of San Rafael and Marin Sanitary Service services agreement o pay HF&H gee will assume the obligation of the City under the professional Consultants its fees for service, not to exceed $57,544.00, in accordance with the terms of the scope of work and agreement. We have further agreed that Marin Sanitary Service may subsequently allocate these fees equally among the five entities through the annual rate application, and that these fees shall not exceed $40,000 for San Rafael. In the case of the Franchisors' Group entities, this allocation will be in accordance with the provisions of the Franchise Agreement, Exhibit B.1, Contractor's Revenue Requirement and Rate Adjustment, dated October 1, 2012. Please sign below to indicate your agreement to finance this project in the manner described above. For the City of San Rafael For�ar�inS�anit,,Serv' e atty Garbarin ,Pres' ent ancy Ma&44 City Manager 1400 FIFTH AVENUE PO BOX 151560 . SAN RAFAEL, CA 94915-1560 W W W.CITYOFSANRAFAEL.ORG Client#: 782698 HFHCONSU ACORDTM CERTIFICATE OF LIABILITY INSURANCE DATE (MM/DD/YYYY) 1 8/19/2014 THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE HOLDER. THIS CERTIFICATE DOES NOT AFFIRMATIVELY OR NEGATIVELY AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW. THIS CERTIFICATE OF INSURANCE DOES NOT CONSTITUTE A CONTRACT BETWEEN THE ISSUING INSURER(S), AUTHORIZED REPRESENTATIVE OR PRODUCER, AND THE CERTIFICATE HOLDER. IMPORTANT: If the certificate holder is an ADDITIONAL INSURED, the policy(ies) must be endorsed. If SUBROGATION IS WAIVED, subject to the terms and conditions of the policy, certain policies may require an endorsement. A statement on this certificate does not confer rights to the certificate holder in lieu of such endorsement(s). PRODUCER HUB Int'I Insurance Serv. Inc. License #0757776 NAME: Tim McKinley PHONE FAX A/c, No, Ext): 925 415-1107 AJC, No); 925 884-8028 _- -.. E-MAIL hubinternational.com ADDRESS: Tim.Mckinley@hubinternational.com 3000 Executive Parkway Suite 300 San Ramon, CA 94583 _ckinle _ INSURER(S) AFFORDING COVERAGE NAIC f/ INSURER A: Sentinel Insurance Company Ltd 11000 _ INSURED INSURER B: Technology Insurance Company, I 42376 HF&H Consultants, LLC 201 North Civic Drive Ste 230 INSURER C: Houston Casualty Company 42374 -- _-- - - --- Walnut Creek, CA 94596 INSURER D --- --------"--- - _- - INSURER E i INSURER F: COVERAGES CERTIFICATE NUMBER: REVISION NUMBER: THIS IS TO CERTIFY THAT THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED. NOTWITHSTANDING ANY REQUIREMENT, TERM OR CONDITION OF ANY CONTRACTOR OTHER DOCUMENT WITH RESPECT TO WHICH THIS CERTIFICATE MAY BE ISSUED OR MAY PERTAIN, THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL. THE TERMS, EXCLUSIONS AND CONDITIONS OF SUCH POLICIES. LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS. INSR LTR TYPE OF INSURANCE ADD L INSR SIC -BR[ WVD� POLICY NUMBER POLICY EFF MM/DD/YYYY POLICY EXP MM/DD/YYYY} _ _ - LIMITS _.. A GENERAL LIABILITY X 57SBAGB6653 12/15/2013 12/15/201 EACH OCCURRENCE $2,000,000 X COMMERCIAL GENERAL LIABILITY DAMAGE TO RENTED PREMISES Ea occurrence $1,000,000 CLAIMS -MADE [F --,,] OCCUR - MED EXP (Any one person) $ 10,000 ------- PERSONAL & ADV INJURY -------.. 52,000,000 GENERAL AGGREGATE $4,000,000 GEN'L AGGREGATE LIMIT APPLIES PER: PRODUCTS - COMP/OP AGG $4,000,000 E PRO- -- $ A POLICY _LOC --__ AUTOMOBILE LIABILITY 57SBAGB6653 12/15/2013 1.2/15/201 COMBINED SINGLE LIMIT Ea accident 2 5 ,000,000_ BODILY INJURY (Per person) $ ANY AUTO ALL OWNED SCHEDULED BODILY INJURY (Per accident) $ _ AUTOS AUTOS X HIRED AUTOS X NON -OWNED AUTOS PROPERTY DAMAGE Per accident[ __ $ A X UMBRELLA LIAB X OCCUR 57SBAGB6653 12/15/2013 12/15/201 EACH OCCURRENCE s s3,000,000 EXCESS LIAB CLAIMS MADE AGGREGATE $3,000,000 DED X RETENTION 51_0,000 B - WORKERS COMPENSATION TWC3430245 9/06/2014 09/06/2015 - WC STATU-� OTH X T9 �v LIMIT �ER r- -- --- AND EMPLOYERS' LIABILITY YIN N ANY PROPRIETOR/PARTNER/EXECUTIVE� OFFICER/MEMBER EXCLUDED? LN N/A E L EACH ACCIDENT - -(- S1,000,000 — — (Mandatory in NH)EL DISEASE_-_E_A_E_ EMPLOYEE 51,000,000 " 51,000,000 If yes, describe under DESCRIPTION OF OPERATIONS below E.L. DISEASE - POLICY LIMIT C Professional Liab H714104195 9/06/2014 09106/2015, Occur/Agg: $2,000,000 Retro Date:8/1/89 •ACORD Retention: $10,000 DESCRIPTION OF OPERATIONS I LOCATIONS 1 VEHICLES (Attach 101, Additional Remarks Schedule, if more space is required) This insurance shall be primary with respect to any insurance or coverage maintained by City and shall not call upon City's insurance for coverage or contribution. The city and their officers, agents, employees and volunteers are Additional Insureds under the General Liability policy per the attached endorsement form SS0008 04/05. The insured's General Liability coverage is Primary per attached endorsement form SS0008 04/05 pg. 17. Ia:a1la[y-111111;5:Eel 4DIR 1 City of San Rafael Attn: Cory Bytof P.O. Box 151560 San Rafael, CA 94915 ACORD 25 (2010/05) 1 of 1 #S3036775/M3036716 SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE THE EXPIRATION DATE THEREOF, NOTICE WILL BE DELIVERED IN ACCORDANCE WITH THE POLICY PROVISIONS. AUTHORIZED REPRESENTATIVE 1988-2010 ACORD CORPORATION. All rights reserved. The ACORD name and logo are registered marks of ACORD SG42 Named Insured: HF&H Consultants,LLC Policy Number: 57SEAGD6653 Policy Term: 12/15/13-12/15/14 (b) Rented to, in the care, custody or control of, or over which physical control is being exercised for any purpose by you, any of your "employees "volunteer workers", any partner or member (if you are a partnership or joint venture), or any member (if you are a limited liability company). b. Real Estate Manager Any person (other than your "employee" or "volunteer worker"), or any organization while acting as your real estate manager. c. Temporary Custodians Of Your Property Any person or organization having proper temporary custody of your property if you die, but only: (1) With respect to liability arising out of the maintenance or use of that property; and (2) Until your legal representative has been appointed. d. Legal Representative If You Die Your legal representative if you die, but only with respect to duties as such. That representative will have all your rights and duties under this insurance. e. Unnamed Subsidiary Any subsidiary and subsidiary thereof, of yours which is a legally incorporated entity of which you own a financial interest of more than 50% of the voting stock on the effective date of this Coverage Part. The insurance afforded herein for any subsidiary not shown in the Declarations as a named insured does not apply to injury or damage with respect to which an insured under this insurance is also an insured under another policy or would be an insured under such policy but for its termination or upon the exhaustion of its limits of insurance. 3. Newly Acquired Or Formed Organization Any organization you newly acquire or form, other than a partnership, joint venture or limited liability company, and over which you maintain financial interest of more than 50% of the voting stock, will qualify as a Named Insured if there is no other similar insurance available to that organization. However: a. Coverage under this provision is afforded only until the 180th day after you acquire or form the organization or the end of the policy period, whichever is earlier; and Form SS 00 08 04 05 BUSINESS LIABILITY COVERAGE FORM b. Coverage under this provision does not apply to: (1) 'Bodily injury" or "property damage" that occurred; or (2) 'Personal and advertising injury" arising out of an offense committed before you acquired or formed the organization. 4. Operator Of Mobile Equipment With respect to "mobile equipment" registered in your name under any motor vehicle registration law, any person is an insured while driving such equipment along a public highway with your permission. Any other person or organization responsible for the conduct of such person is also an insured, but only with respect to liability arising out of the operation of the equipment, and only if no other insurance of any kind is available to that person or organization for this liability. However, no person or organization is an insured with respect to: a. "Bodily injury" to a co -"employee" of the person driving the equipment; or b. 'Property damage" to property owned by, rented to, in the charge of or occupied by you or the employer of any person who is an insured under this provision. 5. Operator of Nonowned Watercraft With respect to watercraft you do not own that is less than 51 feet long and is not being used to carry persons for a charge, any person is an insured while operating such watercraft with your permission. Any other person or organization responsible for the conduct of such person is also an insured, but only with respect to liability arising out of the operation of the watercraft, and only if no other insurance of any kind is available to that person or organization for this liability. However, no person or organization is an insured with respect to: a. 'Bodily injury" to a co -"employee" of the person operating the watercraft; or b. 'Property damage" to property owned by, rented to, in the charge of or occupied by you or the employer of any person who is an insured under this provision. Additional Insureds When Required By Written Contract, Written Agreement Or Permit The person(s) or organization(s) identified in Paragraphs a. through f. below are additional insureds when you have agreed, in a written Page 11 of 24 BUSINESS LIABILITY COVERAGE FORM Named Insured: HF&H Consultants,LLC Policy Number: 57SBAGB6653 Policy Term: 12/15/13- 12/15/14 contract, written agreement or because of a (e) Any failure to make such permit issued by a state or political inspections, adjustments, tests or subdivision, that such person or organization servicing as the vendor has be added as an additional insured on your agreed to make or normally policy, provided the injury or damage occurs undertakes to make in the usual subsequent to the execution of the contract or course of business, in connection agreement, or the issuance of the permit. with the distribution or sale of the A person or organization is an additional products; insured under this provision only for that (f) Demonstration, installation, period of time required by the contract, servicing or repair operations, agreement or permit. except such operations performed at the vendor's premises in However, no such person or organization is an connection with the sale of the additional insured under this provision if such product; person or organization is included as an additional insured by an endorsement issued (g) Products which, after distribution by us and made a part of this Coverage Part, or sale you, have been labeled including all persons or organizations added or relabeled used a as additional insureds under the specific container, part orr ingredient oof f any additional insured coverage grants in Section other thing or substance by or for F. — Optional Additional Insured Coverages. the vendor; or a. Vendors (h) "Bodily injury" or "property damage" arising out of the sole Any person(s) or organization(s) (referred to negligence of the vendor for its below as vendor), but only with respect to own acts or omissions or those of "bodily injury" or "property damage" arising its employees or anyone else out of "your products" which are distributed acting on its behalf. However, this or sold in the regular course of the vendor's exclusion does not apply to: business and only if this Coverage Part provides coverage for "bodily injury" or (i) The exceptions contained in " property damage" included within the Subparagraphs (d) or (f); or "products -completed operations hazard". (ii) Such inspections, adjustments, (1) The insurance afforded to the vendor tests or servicing as the vendor j is subject to the following additional has agreed to make or normally exclusions: undertakes to make in the usual course of business, in This insurance does not apply to: connection with the distribution (a) "Bodily injury" or "property or sale of the products. damage" for which the vendor is (2) This insurance does not apply to any obligated to pay damages by insured person or organization from reason of the assumption of whom you have acquired such products, liability in a contract or agreement. or any ingredient, part or container, This exclusion does not apply to entering into, accompanying or liability for damages that the containing such products. vendor would have in the absence of the contract or agreement; b. Lessors Of Equipment (b) Any express warranty (1) Any person or organization from unauthorized by you; whom you lease equipment; but only with respect to their liability for "bodily (c) Any physical or chemical change injury", "property damage" or in the product made intentionally "personal and advertising injury" I by the vendor; caused, in whole or in part, by your (d) Repackaging, except when maintenance, operation or use of unpacked solely for the purpose of equipment leased to you by such inspection, demonstration, testing, person or organization. or the substitution of parts under instructions from the manufacturer, s and then repackaged in the ! original container; Page 12 of 24 Form SS 00 08 04 05 Named Insured: HF&H Consultants,LLC Policy Number: 57SBAGB6653 Policy Term: 12/15/13- 12/15/14 (2) With respect to the insurance afforded to these additional insureds, this insurance does not apply to any "occurrence" which takes place after you cease to lease that equipment. c. Lessors Of Land Or Premises (1) Any person or organization from whom you lease land or premises, but only with respect to liability arising out of the ownership, maintenance or use of that part of the land or premises leased to you. (2) With respect to the insurance afforded to these additional insureds, this insurance does not apply to: (a) Any 'occurrence" which takes place after you cease to lease that land or be a tenant in that premises; or (b) Structural alterations, new construction or demolition operations performed by or on behalf of such person or organization. d. Architects, Engineers Or Surveyors (1) Any architect, engineer, or surveyor, but only with respect to liability for "bodily injury", "property damage" or "personal and advertising injury" caused, in whole or in part, by your acts or omissions or the acts or omissions of those acting on your behalf: (a) In connection with your premises; or (b) In the performance of your ongoing operations performed by you or on your behalf. (2) With respect to the insurance afforded to these additional insureds, the following additional exclusion applies: This insurance does not apply to "bodily injury", "property damage" or "personal and advertising injury" arising out of the rendering of or the failure to render any professional services by or for you, including: (a) The preparing, approving, or failure to prepare or approve, maps, shop drawings, opinions, reports, surveys, field orders, change orders, designs or drawings and specifications; or (b) Supervisory, inspection, architectural or engineering activities. BUSINESS LIABILITY COVERAGE FORM e. Permits Issued By State Or Political Subdivisions (1) Any state or political subdivision, but only with respect to operations performed by you or on your behalf for which the state or political subdivision has issued a permit. (2) With respect to the insurance afforded to these additional insureds, this insurance does not apply to: (a) 'Bodily injury", "property damage" or "personal and advertising injury" arising out of operations performed for the state or municipality; or (b) 'Bodily injury" or "property damage" included within the "products - completed operations hazard". f. Any Other Party (1) Any other person or organization who is not an insured under Paragraphs a. through e. above, but only with respect to liability for "bodily injury", "property damage" or "personal and advertising injury" caused, in whole or in part, by your acts or omissions or the acts or omissions of those acting on your behalf: (a) In the performance of your ongoing operations; (b) In connection with your premises owned by or rented to you; or (c) In connection with "your work" and included within the "products - completed operations hazard", but only if (i) The written contract or written agreement requires you to provide such coverage to such additional insured; and (ii) This Coverage Part provides coverage for "bodily injury" or "property damage" included within the "products - completed operations hazard". (2) With respect to the insurance afforded to these additional insureds, this insurance does not apply to: "Bodily injury", "property damage" or "personal and advertising injury" arising out of the rendering of, or the failure to render, any professional architectural, engineering or surveying services, including: Form SS 00 08 04 05 Page 13 of 24 BUSINESS LIABILITY COVERAGE FORM (a) The preparing, approving, or failure to prepare or approve, maps, shop drawings, opinions, reports, surveys, field orders, change orders, designs or drawings and specifications; or (b) Supervisory, inspection, architectural or engineering activities. The limits of insurance that apply to additional insureds are described in Section D. — Limits Of Insurance. How this insurance applies when other insurance is available to an additional insured is described in the Other Insurance Condition in Section E. — Liability And Medical Expenses General Conditions. No person or organization is an insured with respect to the conduct of any current or past partnership, joint venture or limited liability company that is not shown as a Named Insured in the Declarations. D. LIABILITY AND MEDICAL EXPENSES LIMITS OF INSURANCE 1. The Most We Will Pay The Limits of Insurance shown in the Declarations and the rules below fix the most we will pay regardless of the number of: a. Insureds; b. Claims made or "suits" brought; or c. Persons or organizations making claims or bringing "suits". 2. Aggregate Limits The most we will pay for: a. Damages because of "bodily injury" and "property damage" included in the "products -completed operations hazard" is the Products -Completed Operations Aggregate Limit shown in the Declarations. b. Damages because of all other "bodily injury", "property damage" or "personal and advertising injury", including medical expenses, is the General Aggregate Limit shown in the Declarations. This General Aggregate Limit applies separately to each of your 'locations" owned by or rented to you. "Location" means premises involving the same or connecting lots, or premises whose connection is interrupted only by a street, roadway or right-of-way of a railroad. Named Insured: HF&H Consultants,LLC Policy Number: 57SEAGB6653 Policy Term: 12/15/13- 12/15/14 This General Aggregate limit does not apply to "property damage" to premises while rented to you or temporarily occupied by you with permission of the owner, arising out of fire, lightning or explosion. 3. Each Occurrence Limit Subject to 2.a. or 2.b above, whichever applies, the most we will pay for the sum of all damages because of all "bodily injury", "property damage" and medical expenses arising out of any one 'occurrence" is the Liability and Medical Expenses Limit shown in the Declarations. The most we will pay for all medical expenses because of "bodily injury" sustained by any one person is the Medical Expenses Limit shown in the Declarations. 4. Personal And Advertising Injury Limit Subject to 2.b. above, the most we will pay for the sum of all damages because of all "personal and advertising injury" sustained by any one person or organization is the Personal and Advertising Injury Limit shown in the Declarations. 5. Damage To Premises Rented To You Limit The Damage To Premises Rented To You Limit is the most we will pay under Business Liability Coverage for damages because of "property damage" to any one premises, while rented to you, or in the case of damage by fire, lightning or explosion, while rented to you or temporarily occupied by you with permission of the owner. In the case of damage by fire, lightning or explosion, the Damage to Premises Rented To You Limit applies to all damage proximately caused by the same event, whether such damage results from fire, lightning or explosion or any combination of these. 6. How Limits Apply To Additional Insureds The most we will pay on behalf of a person or organization who is an additional insured under this Coverage Part is the lesser of: a. The limits of insurance specified in a written contract, written agreement or permit issued by a state or political subdivision; or b. The Limits of Insurance shown in the Declarations. Such amount shall be a part of and not in addition to the Limits of Insurance shown in the Declarations and described in this Section. Page 14 of 24 Form SS 00 08 04 05 Named Insured: HF&H Consultants, LLC Policy Number: 57SBAGE6653 Policy Term: 12/15/13 - 12/15/14 (6) When You Are Added As An Additional Insured To Other Insurance That is other insurance available to you covering liability for damages arising out of the premises or operations, or products and completed operations, for which you have been added as an additional insured by that insurance; or (7) When You Add Others As An Additional Insured To This Insurance That is other insurance available to an additional insured. However, the following provisions apply to other insurance available to any person or organization who is an additional insured under this Coverage Part: (a) Primary Insurance When Required By Contract This insurance is primary if you have agreed in a written contract, written agreement or permit that this insurance be primary. If other insurance is also primary, we will share with all that other insurance by the method described in c. below. (b) Primary And Non -Contributory To Other Insurance When Required By Contract If you have agreed in a written contract, written agreement or permit that this insurance is primary and non-contributory with the additional insured's own insurance, this insurance is primary and we will not seek contribution from that other insurance. Paragraphs (a) and (b) do not apply to other insurance to which the additional insured has been added as an additional insured. When this insurance is excess, we will have no duty under this Coverage Part to defend the insured against any "suit" if any other insurer has a duty to defend the insured against that "suit". If no other insurer defends, we will undertake to do so, but we will be entitled to the insured's rights against all those other insurers. Form SS 00 08 04 05 BUSINESS LIABILITY COVERAGE FORM When this insurance is excess over other insurance, we will pay only our share of the amount of the loss, if any, that exceeds the sum of: (1) The total amount that all such other insurance would pay for the loss in the absence of this insurance; and (2) The total of all deductible and self- insured amounts under all that other insurance. We will share the remaining loss, if any, with any other insurance that is not described in this Excess Insurance provision and was not bought specifically to apply in excess of the Limits of Insurance shown in the Declarations of this Coverage Part. c. Method Of Sharing If all the other insurance permits contribution by equal shares, we will follow this method also. Under this approach, each insurer contributes equal amounts until it has paid its applicable limit of insurance or none of the loss remains, whichever comes first. If any of the other insurance does not permit contribution by equal shares, we will contribute by limits. Under this method, each insurer's share is based on the ratio of its applicable limit of insurance to the total applicable limits of insurance of all insurers. 8. Transfer Of Rights Of Recovery Against Others To Us a. Transfer Of Rights Of Recovery If the insured has rights to recover all or part of any payment, including Supplementary Payments, we have made under this Coverage Part, those rights are transferred to us. The insured must do nothing after loss to impair them. At our request, the insured will bring "suit" or transfer those rights to us and help us enforce them. This condition does not apply to Medical Expenses Coverage. b. Waiver Of Rights Of Recovery (Waiver Of Subrogation) If the insured has waived any rights of recovery against any person or organization for all or part of any payment, including Supplementary Payments, we have made under this Coverage Part, we also waive that right, provided the insured waived their rights of recovery against such person or organization in a contract, agreement or permit that was executed prior to the injury or damage. Page 17 of 24 201 N. Civic Drive, Suite 230 Walnut Creek, California 94596 Telephone: 925/977-6950 Fax:925/977-6955 www.hfh-consultants.com July 14, 2014 Sent via e-mail 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 411 norl-Rd"i Managing Tomorrow's Resources Today Robert D. Hilton, CMC John W. Farnkopf, PE Laith B. Ezzet, CMC Richard J. Simonson, CMC Marva M. Sheehan, CPA Robert C. Hilton, CMC 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 2015 Rates Dear Ms. McGuire and Messrs. Schwarz, Schutz, Frost and Braulik: HF&H Consultants, LLC (HF&H) is pleased to present this proposal to perform a review of Marin Sanitary Service's (MSS) application for rates to be effective January 1, 2015. tea € lkgre, u -i. 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' 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. The last detailed review was performed in 2012 for rates to be effective in 2013. Last year, we performed a review of the rate adjustment using the summary method for rates effective in 2014. As part of reviewing the rates to be effective 2015, we have been asked to: Managing Tomorrow's Resources Today Marin Sanitary Service's Franchisors' Group July 14, 2014 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 MSS's Application. Task 1: Pre -Fieldwork 1a We will meet once with the Franchisors to discuss the review process requested by the Franchisors. 1b We will meet once with MSS management to receive the application and discuss the review schedule. 1c We will review the application to ensure that it is complete and in compliance with the summary methodology. 1d Thereafter, we will review the application for math accuracy and logical consistency. Task 2: Review of Revenues 2a HF&H will review MSS management's projection of collection and non -collection revenues for the 12 -month periods ending December 31, 2014, and 2015. 2b We will compare the results to MSS' audited financial statements for rate year 2013 and year- to-date revenues for 2014 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. 2d We will summarize the findings of our work in Tasks 2a through 2c. Task 3: Review of Expenses 3a HF&H will review the appropriateness of MSS management's classification of expenses into the various expense categories. 3b We will review MSS management's calculation of rate year 2015 indexed expenses and compare them to the calculated expenses for 2014, established in our prior report, and the calculated changes to the indices determined in Task 1. 3c We will review MSS management's projection of other expenses including: Marin Sanitary Service's Franchisors' Group July 14, 2014 Page 3 of 8 Tomorrow's Resources Today • Review of Workers' Compensation 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. • Review of Disposal Expense for residential and solid waste tons transferred at MSS' transfer station by evaluating MSS' projection for 2015 disposal expense and MSS' adjustments for the previous projections for Rate Years 2013 and 2014 based on historical trends, management's plans and adjustment to the disposal rates. • Review of Commercial Mixed Waste Processing Expense for commercial tons processed at MSS' processing facility by evaluating MSS' projection for 2015 commercial mixed waste processing and MSS' adjustments for the previous projections for Rate Years 2013 and 2014 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. • Review of Organics Processing Expense by evaluating MSS' projection for 2015 organics processing and MSS' adjustments for the previous projections for Rate Years 2013 and 2014 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. • Review of the Transfer/Transport Adjustment for tons not affiliated with the Franchisors Group transferred and transported through MSS' transfer station by evaluating MSS' tonnage projection for 2014 and MSS' adjustments for the previous tonnage projections for Rate Years 2013 and 2014 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. • Review of Fuel Expense by evaluating MSS' 2015 projection and the adjustments for Rate Years 2013 and 2014. We will review MSS' calculations of the average price per gallon for fuel and verify the use of the proper projected gallons. • Review of Depreciation/Lease Expense projections 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. • Review of JPA Fees expense by reviewing documentation from the JPA and MSS projections. • Review of the costs related to the Commercial Food to Energy program to determine the costs were properly included in MSS' projected costs. 3d HF&H will summarize the findings from the analysis performed during Tasks 3a through 3c above. AdIlk �_- Managing Tomorrow's Resources Today Marin Sanitary Service's Franchisors' Group July 14, 2014 Page 4 of 8 Task 4: Review of Projected Profit 4a HF&H will review MSS management's calculation of projected profit for procedural compliance and mathematical accuracy. Task 5: Review of Pass-through Expenses/ Revenue 5a HF&H will review MSS' calculations of the Pass-through Expenses and Other Revenue, including: • Review of Interest Expense based on MSS' actual interest from its loan amortization schedules for actual and projected capital expenditures. • Review of Franchise Fees based on each agency's appropriate rate and the forecasted values. • Review of Other Agency Fees based on fees established by each agency and forecasted values. • Review of Other Revenues 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. 5b We will summarize the findings from the analysis performed in Task 5a above. Task 6: Review of the Calculation of the Reserve for Future Diversion Programs 6a HF&H will review MSS' calculation of the increase or decrease to the reserve for future diversion programs in accordance with the procedures developed in 2012. 6b We will summarize the findings of Task 6a. Task 7: Review of Revenue and Expense Allocations 7a 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. 7b If requested by the Franchisors Group, we will include the review of the allocations for San Anselmo, Fairfax, and the County (RVSD-N) and present the impact of the allocations to the Franchisors Group. Task 8: Review of Adjustments 8a We will meet once with MSS management to review our adjustments to their calculated and projected revenues and expenses and their allocation among the Franchisors. We will obtain management's comments, review any additional material, and amend our adjustments, if necessary. Managing Tomorrow's Resources Today Marin Sanitary Service's Franchisors' Group July 14, 2014 Page 5 of 8 8b Thereafter, we will meet once with the Franchisors Group to present our adjustments to MSS' calculated revenues and expenses and its allocation among the Franchisors. Task 9: Survey of Comparable Rates 9a We will work with the Franchisors Group to identify appropriate communities to include in the survey. We will compile rates currently in effect in the municipalities in Marin County, as well as neighboring jurisdictions in other counties, as agreed upon. When possible, we will draw data from our existing project files. If necessary, we will contact cities to obtain or clarify information. We will prepare a table and graphs summarizing the results. Task 10: Communicate Findings 10a HF&H will distribute a copy of our initial draft report documenting our findings and recommendations for review by MSS management. Thereafter, we will meet once with MSS management to present and obtain its comments regarding our initial draft report. 10b We will make any appropriate adjustments to our initial draft report and present a preliminary draft to the Franchisors. 10c Based on comments from the Franchisors, we will amend the preliminary draft report and issue the final report. 10d We will attend council/board meetings to present findings. Engagement Management We will prepare and amend detailed work plans, monitor engagement progress, provide sufficient resources to ensure timely completion of the engagement, review analytical results and interim findings, review the draft and final reports, and respond to questions regarding the progress of the engagement and other issues. Every approach to an engagement is limited in its scope. The major limitations regarding our proposed scope of work are: • The scope of work described above is different from an audit of financial statements performed in accordance with Generally Accepted Auditing Standards, which is performed by MSS's auditor. • We will perform the tasks presented above in a manner that will allow us to achieve the objectives of the review in a cost-effective manner. We will rely on MSS' auditor with regard to matters related to MSS' internal controls. Our testing of MSS' application (using judgmental samples of transactions and analytical procedures) will only be for the purpose of providing evidence that allows us to reach conclusions and recommendations regarding MSS' application. — Managing Tomorrow's Resources Today Marin Sanitary Service's Franchisors' Group July 14, 2014 Page 6 of 8 • 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. If San Anselmo, Fairfax and the County (RVSD-N) are not included in the rate -setting process for the Franchisors Group, we would be pleased to meet with them on a time -and -materials basis. Further, this scope of work does not include modifications to any of the individual Franchisor's rates or rate structures. Firm and Engagement T a re 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' level of profit are reasonable. Marva Sheehan, Vice President, will serve as Engagement Director and will be responsible for directing the project and for your satisfaction with the engagement. Ms. Sheehan has been the Engagement Director or Manager for the MSS reviews since 2006. She is a Certified Public Accountant with over 35 years of accounting and auditing experience; 22 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. Scott Holt, an accountant with more than 18 years of industry controller experience, will serve as Engagement Manager. Mr. Holt is a recent addition to HF&H's staff. Since joining HF&H, he has performed the rate adjustment review for the Town of Fairfax, the contractor compensation review for the City of Sunnyvale, and contract compliance reviews for the Cities of Lawndale and Bellflower. Ms. Sheehan and Mr. Holt will be assisted by less senior, experienced staff at lower billing rates, which will perform certain tasks under their direct supervision lesions i AOL Managing Tomorrow's Resources Today Marin Sanitary Service's Franchisors' Group July 14, 2014 Page 7 of 8 Based on our last review of MSS' rate application, my current understanding of matters to be considered during this review, and the level of effort necessary to address them, I estimate our professional fees and out-of-pocket expenses for the scope of work described above to be $57,544, as shown on Attachment A. As in the past, we will bill you in accordance with our standard rates and practices, as described in Attachment B, up to the $57,544. We will bill you on a time -and -materials basis and, if the level of effort is less than anticipated, we will bill you the lesser amount. Also, it is possible that the level of effort to perform the review may exceed our estimate and, if so, we will contact you before proceeding to obtain your approval or direction. 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 3 August 31 September 8 September 14 September 19 September 25 October 10 October/November January 1, 2015 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 14, 2014 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. Sincerely, HF&H CONSULTANTS, LLC 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. Cory Bytof, City of San Rafael Ms. Kim Erwin, HF&H Attachment A - Fee Estimate Marin Franchisors Group Review of MSS 2015 Rate Adjustments Application 1a Kick-off Meeting with Franchisors Group 3 6 0 0 0 9 $2,190 1b Kick-off Meeting with Company 0 2 8 0 0 10 $1,790 1c Completeness & Compliance Review 0 0 4 4 0 8 $1,220 1d Math Accuracy & Logical Consistency 0 0 3 4 0 7 $1,055 Task 1 3 8 15 8 0 34 $6,255 W. 2a Review of MSS projected revenue 0 0 4 6 0 10 $1,500 2b Compare 2013 revenue to MSS' audited financial 0 0 4 4 0 8 $1,220 statements for 2013 2c Review MSS' calculation of three year trend of subscription 0 0 4 0 0 4 $660 levels and surplus or shortfall from projections 2d Summarize Findings 0 2 4 0 0 6 $1,130 Task 2 0 2 16 10 0 28 $4,510 3a Classification of Expenses 0 0 8 8 0 16 $2,440 3b Calculation of Indexed Expenses 0 0 6 6 0 12 $1,830 3c Review of Other Expenses 0 3 22 30 0 55 $8,535 3d Summarize Findings 0 4 6 5 0 15 $2,630 Task 3 0 7 42 49 0 98 $15,435 4a Review Calculation of Profit 0 0 1 0 0 1 $165 Task 4 0 0 1 0 0 1 $165 5a Review MSS' calculations of pass-through expenses and 0 0 6 8 0 14 $2,110 revenue(interest, franchise fees, other agency fees, and other revenue) 5b Summarize Findings 0 1 2 2 0 5 $845 Task 5 0 1 8 10 0 19 $2,955 HF&H Consultants, LLC 7/14/2014 Attachment A - Fee Estimate Marin Franchisors Group Review of MSS 2015 Rate Adjustments Application 6a Review MSS' calculations of reserve for future diversion programs based on 2012 MRRA costs and revenues 61b Summarize Findings Task 6 Task 7 Review of Allocations 0 2 4 0 0 6 $1,130 0 1 1 0 0 2 $400 0 3 5 0 0 8 $1,530 7a Review Allocations for Reasonableness and Consistency 0 1 8 0 0 71b Review of Allocations for San Anselmo, Fairfax & County 0 3 4 0 0 10c (RVSD-N) 10d Prepare for and attend council meetings Task 10 Task 11 Engagement Management Task 7 0 4 12 0 0 Task 8 Review of Adjustments 8a Review with MSS Management 0 4 6 0 0 8b Review with Franchisors Group 2 6 6 0 0 Task 8 2 10 12 0 0 Tas 10 4 6 2 6 9a Survey and Document Comparable Rates 0 6 Task 9 Task 10 Communication of Findings 10a Prepare draft report and meet with MSS management 10b Prepare draft report and meet with Franchisors 10c Prepare and distribute Final Report 10d Prepare for and attend council meetings Task 10 Task 11 Engagement Management Engagement management Total Costs for Rate Adjustments Application 0 1 3 16 0 0 1 3 16 0 0 4 10 4 6 2 6 2 0 2 0 6 2 0 2 0 24 0 0 0 2 40 14 4 10 9 $1,555 7 $1,365 16 $2,920 10 $1,930 14 $2,920 24 $4,850 20 $2,970 20 $2,970 24 $3,750 12 $2,460 10 $1,940 24 $5,640 70 $13,790 2 4 0 0 0 6 Labor 9 80 128 97 10 324 Out -of -Pocket Expenses Total Budget for Rate Adjustments Application $1,460 $56,840 $704 $57,544 HF&H Consultants, LLC 711412014 Attachment B HF&H CONSULTANTS, LLC STANDARD HOURLY RATES AND BILLING ARRANGEMENTS (Effective January 1, 2014)1 Hourly rates for professional and administrative personnel are as follows: Position President Senior Vice President & Vice President Senior Project Manager Senior Associate/Project Manager Associate Analyst Assistant Analyst Administrative Staff Direct Expenses Standard charges for common direct expenses are as follows: Automobile Travel Document Reproduction Facsimile Telephone Public Conveyances Postage Overnight Mail and Couriers Billing Policies Rate $260 $225-$259 $215-$225 $170-$219 $130-$155 $100-$125 $95-$100 Prevailing IRS mileage rate 15 cents per page (black & white) 75 cents per page (color) No charge No charge Actual Actual Actual Our policy is to bill for our services and direct expenses based on the standard hourly rates of the staff member assigned, multiplied by the time required to perform the client -related tasks, plus the subcontractor services as described above. In implementing this policy we adhere to the following practices: • It is our standard practice to e-mail invoices to our clients, although hard copies of invoices can be sent to clients on request. • We round to the nearest one-half hour (e.g., if two hours and 50 minutes are spent on a task, it is recorded as three hours, if two hours and 10 minutes are spent on a task, it is recorded as two hours). A minimum charge of one-half hour is charged for any client work performed in a day. Litigation Support and Expert Witness Services are not covered by this schedule of fees and expenses. HF&H Consultants, LLC Page 1 of 3 Attachment B HF&H CONSULTANTS, LLC STANDARD HOURLY RATES AND BILLING ARRANGEMENTS' (Effective January 1, 2014) • We attempt to schedule travel time before and after normal work hours and we do not bill for this time. If travel occurs during normal work hours and we can use public conveyances, we attempt to use the time productively for the benefit of the client or for another client and this time is billed to the appropriate client. If we must travel during business hours and cannot use the time productively or use a public conveyance, we bill the time to the client on whose behalf we are traveling. • Because public meetings (e.g., Board of Supervisors, City Council, and Board of Directors meetings) generally occur after business hours and are not conducted in accordance with strict schedules, our standard policy is to bill a minimum two-hour charge. • We do not mark up out-of-pocket expenses, however, we may charge administrative or professional time related to the provision of the goods and services associated with these charges. Costs for outside consultants and subcontractors are billed at actual cost plus a 15 percent administrative fee. • Mileage fees are based on the round-trip distance from the point of origin. • If a client's change to a previously scheduled meeting results in penalties being assessed by a third party (e.g., airline cancellation fee), then the client will bear the cost of these penalties. While no minimum fee for a consulting engagement has been established, it is unlikely (given the nature of our services) that we can gain an understanding of a client's particular requirement, identify alternatives, and recommend a solution in less than twenty-four hours. Insurance We maintain the following policies of insurance with carriers doing business in California: • Comprehensive General Liability Insurance ($2,000,000) • Workers' Compensation ($1,000,000) • Professional Liability Insurance ($2,000,000) • Hired and Non -Owned Auto Liability ($2,000,000) 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 Attachment B HF&H CONSULTANTS, LLC STANDARD HOURLY RATES AND BILLING ARRANGEMENTS' (Effective January 1, 2014) 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 PROFESSIONAL SERVICES AGREEMENT/CONTRACT COMPLETION CHECKLIST AND ROUTING SLIP 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 1 City Attorney Review, revise, and comment on draft 3 a.. 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 A / necessary (as defined by City Attorney/City Ordinance*). 4 City Attorney Review and approve form of agreement; bonds, and insurance certificates and C ;� endorsements. f 5 City Manager / Mayor / or Agreement executed by Council authorized Department Head official. 6 City Clerk City Clerk attests signatures, retains original. agreement and forwards copies to the contracting department. 4 To be completed by Contracting Department: Project Manager: Cory Bytof Project Name: HF&H Agreement Agendized for City Council Meeting of (if necessary): August 18, 2014 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. DATE OF MEETING: _8/18/14 F R0 M: _Cory Bytof [_)EPARTMENT: for City Manager's Office # ITLE OF DOCUMENT: RESOLUTION AUTHORIZING CITY MANAGER TO ENTER INTO A CONTRACT WITH HF&H CONSULTANTS, LLC IN AN AMOUNT NOT TO EXCEED $57,544 FOR WORK ON REFUSE RATE REVIEW FOR THE CITIES OF SAN RAFAEL AND LARKSPUR, TOWN OF ROSS, LAS GALLINAS VALLEY, AKIITARY'DISTRICT AND ROSS VALLEY -SOUTH -- Dep rtment Head (sign ure) *ick *�r�c ink�k �r *�k�c �k•i�r�lc �k�k�lc �Ihk�k �c�llc�k *�k�c c �k�c �k�c�c �k�k�k �c�lc�k (LOWER HALF OF FORM FOR APPROVALS ONLY) APPROVED AS COUNCIL % AGENCY AGEIVA .ITEM City na er (signatu1e) NOT APPROVED REMARKS: APPROVED AS TO FORM: City Attorney (signature)`