Agenda Item No: 3.g Meeting Date: August 18, 2014 Department: CITY MANAGER SAN RAFAEL CITY COUNCIL AGENDA REPORT Prepared by: Cory Bytof Sustainability & Volunteer Program Coordinator City Manager Approval: _~-"S_' 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 MackIe, 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.: Council Meeting: Disposition:
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. 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: NOES: ABSENT: COUNCILMEMBERS: COUNCILMEMBERS: COUNCILMEMBERS: ESTHER C. BEIRNE, City Clerk
EXHIBIT A Managing Tomorrow's Resources Today 201 N. Civic Drive, Suite 230 Walnut Creek, California 94596 Telephone: 925/977-6950 Fax: 925/977-6955 www.hfh-consultants.com Robert D. Hilton, CMC John W. Farnkopf, PE Laith B. Ezzet, CMC Richard J. Simonson, CMC Marva M. Sheehan, CPA Robert C. Hilton, CMC 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 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 Ms. Susan McGuire Administrative Services Manager Las Gallinas Valley Sanitary District 300 Smith Ranch Road San Rafael, CA 94903 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 Mari.n Sanitary Service's (MSS) application for rates to be effective January 1, 2015. Background The Cities of San Rafael and Larkspur, the Town of Ross, the Ross Valley and Las Gallinas VaJley 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 1c 1d We will meet once with MSS management to receive the application and discuss the review schedule. We will review the application to ensure that it is complete and in compliance with the summary methodology. Thereafter, we will review the application for math accuracy and logical consistency. Task 2: Review of Revenues 2a 2b 2c 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. We will compare the results to MSS' audited financial statements for rate year 2013 and yearto-date revenues for 2014 and request explanations for variances. 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 3b 3c HF&H will review the appropriateness of MSS management's classification of expenses into the various expense categories. 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. We will review MSS management's projection of other expenses including:
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 ratesetting 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 thr~ugh 3c above.
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 Sa 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. Sb We will summarize the findings from the analysis performed in Task Sa 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 7b 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. 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 loa lob 10c 10d 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. We will make any appropriate adjustments to our initial draft report and present a preliminary draft to the Franchisors. Based on comments from the Franchisors, we will amend the preliminary draft report and issue the final report. 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. limitations 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 Team Qualifications Since its founding, HF&H has been providing independent solid waste rate review services to municipalities throughout California and the West Coast. HF&H has extensive experience as the Franchisors' consultant performing these reviews. Through the years, we have helped the Franchisors to substantially reduce the cost of the review through changes in methodology, while ensuring that both the customers' rates and MSS' 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
Managing Tomorrow's Resources Today Marin Sanitary Service's Franchisors' Group July 14, 2014 Page 7 of 8 fees 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. Proposed Schedule We have prepared the following proposed preliminary schedule: MSS Submits Application HF&H Commences Field Work HF&H Completes Field Work HF&H Reviews Results with MSS HF&H Provides MSS Draft Report MSS Provides Comments on Draft Report HF&H Presents Draft Report to Franchisors for Comment HF&H Delivers Final Report Boards/Councils Receive Report and Adopt Revised Rates Rates Effective August 1 August 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 o o o 9 $2,190 1b Kick-off Meeting with Company o 2 8 o o 10 $1,790 1c Completeness & Compliance Review o o 4 4 o 8 $1,220 1d Math Accuracy & Logical Consistency o o 3 4 o 7 $1,055 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 statements for 2013 0 8 $1,220 2c Review MSS' calculation of three year trend of subscription 0 0 4 0 levels and surplus or shortfall from projections 0 4 $660 2d Summarize Findings 0 2 4 0 0 6 $1,130 Task 2 0 2 16 10 0 28 $4,510 1 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 4a Review Calculation of Profit o o o o $165 Task 4 o o o o $ 165 1 5a Review MSS' calculations of pass-through expenses and 0 0 6 8 revenue(interest, franchise fees, other agency fees, and other revenue) 0 14 $2,110 5b Summarize Findings 0 2 2 Task 5 0 8 10 0 5 0 19 $845 $2,955 1 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 0 2 4 0 programs based on 2012 MRRA costs and revenues 0 6 $1,130 6b Summarize Findings 0 0 Task 6 0 3 5 0 0 2 0 8 $400 $1,530 I 7a Review Allocations for Reasonableness and Consistency 0 8 0 0 9 $1,555 7b Review of Allocations for San Anselmo, Fairfax & County 0 3 4 0 (RVSD-N) 0 7 $1,365 Task7 0 4 12 0 0 16 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 9a Survey and Document Comparable Rates o 3 16 Task 9 o 3 16 o 20 o 20 $2,970 $2,970 I 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 10d Prepare for and attend council meetings 0 24 0 0 Task 10 2 40 14 4 0 24 10 70 $5,640 $13,790 I Engagement management 2 4 o o o 6 $1,460 HF&H Consultants, LLC 7/14/2014
Attachment B HF&H CONSULTANTS, LLC Professional Fees 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 $260 $225 - $259 $215 - $225 $170 - $219 $130 - $155 $100 - $125 $95 - $100 Direct Expenses Standard charges for common direct expenses are as follows: Automobile Travel Document Reproduction Facsimile Telephone Public Conveyances Postage Overnight Mail and Couriers Prevailing IRS mileage rate 15 cents per page {black & white} 75 cents per page {color} No charge No charge Actual Actual Actual Billing Policies 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. 1 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 1 (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 1 (Effective January 1, 2014) Invoices and Payment for Services Our time reporting and billing system has certain standard formats that are designed to provide our clients with a detailed invoice of the time and charges associated with their engagement. (We typically discuss these with our clients at our kick-off meeting.) We are also pleased to provide our clients with a custom invoice format but we will have to bill the client for any additional costs associated with their unique requirements. Billings for professional services and charges are submitted every month, in order that our clients can more closely monitor our services. A late fee of one and one-half percent per month is applied to balances unpaid after thirty (30) days. HF&H Consultants, LLC Page 3 of 3