HomeMy WebLinkAboutCalMet Attchment B
HF&H CONSULTANTS
SOLID WASTE CONSULTING SERVICES TO THE CITY OF DOWNEY
SCOPE OF WORK AND FEE ESTIMATE FOR PHASE 2
BACKGROUND
The City of Downey (“City”) contracts with CalMet Services, Inc. (“CalMet”) for
exclusive residential and commercial solid waste collection and recycling
services. The existing agreement (“Agreement”) became effective January 1,
2006 and expires March 31, 2013. The Agreement was awarded to CalMet after
a competitive proposal process. CalMet had previously served the city under a
prior agreement originally awarded to its predecessor company, CalSan, Inc.
The City and CalMet have been discussing several rate-related issues that have
arisen since the implementation of the new Agreement, including:
1) The application of commercial bin rollout charges.
2) The application of locking bin charges.
3) The appropriate rate schedule for multi-family and business bin rate
customers.
4) The timing and methodology for rate adjustments permitted under the
Agreement.
5) A potential surcharge for processing commercial refuse to recover
recyclables.
6) Construction & demolition debris processing costs.
The City has requested HF&H to assist in the evaluation of these rate adjustment
issues.
Completion of Phase 1
We completed Phase 1 of the engagement, which resulted in documentation of
the written record after reviewing background documents provided to us, and
meeting with City staff and CalMet representatives to gain an understanding of
the positions advocated regarding the issues described above. We conducted a
briefing for the City’s solid waste subcommittee on March 27, 2008, completing
our work under Phase 1.
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SCOPE OF WORK FOR PHASE 2:
Our scope of work for Phase 2 will include the following:
1) Preparing data collection forms for CalMet to complete regarding its
annual revenues and costs in the City of Downey by category of
customers (residential, commercial and rolloff) and service type (refuse,
recycling, green waste).
2) Calculating CalMet’s profit in the City of Downey as a percentage of rate
revenues with and without the “disputed revenues” (rollout charges,
locking bins, and multi-family v. business bins). We will compare the profit
percentage in Downey to available industry data. The purpose of this
analysis is to determine whether CalMet’s rates would generate a
reasonable profit with the disputed revenues included.
3) Preparing a request for other information for CalMet to submit, including:
A history of annual rate revenues (on a monthly basis) prior to and
after the implementation of the new rates under the current agreement
by customer category (residential, commercial, rolloff).
Documentation supporting CalMet’s estimates of the annual financial
impact of the disputed rate structure issues (rollout service, locking
bins, and business v. multi-family bin rates)
The estimated cost and rate impact to provide commercial mixed waste
processing services
The estimated cost and rate impact to provide mixed construction and
demolition debris processing services.
4) Reviewing the submitted data for reasonableness
5) Conducting a site visit at CalMet’s offices to review documentation
supporting the submitted data, and to obtain explanations for any unusual
data.
6) Reviewing with CalMet the details of how the existing provisional credits
are being billed to customers and the period during which such credits
have been billed.
7) Preparing a draft report documenting our findings.
8) Reviewing written comments submitted by CalMet and the City (one
integrated set of comments from all reviewers).
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9) Preparing a final report.
10) Attending one meeting with City officials to discuss the report.
SCHEDULE
We are prepared to initiate our services for Phase 2 after April 18, 2008, and will
begin after that time upon receipt of written authorization to proceed (e.g. a city
purchase order). We anticipate the cost of service study will take approximately
120 days to complete, and is dependent upon CalMet providing all requested
data in the format requested within two weeks of the request. The schedule also
assumes that CalMet will make its staff readily available to meet to answer
questions about the information provided and make supporting documentation
available for our review.
COSTS
We will assist the City based on time and materials. The estimated cost for
Phase 2 is $50,000. Our actual costs could be higher or lower than this amount,
depending on the level of effort required. The cost estimate assumes full and
complete cooperation from CalMet, and further assumes that all requested
information is submitted in a complete and accurate format the first time.
We will bill you once per month based on the number of hours worked multiplied
by our hourly billing rates, plus out-of-pocket expenses incurred. Hourly rates for
our consultants through December 31, 2008 are as follows:
Senior Vice President $235
Director/Sr. Manager $195
Senior Associate $165 to $190
Associate Analyst $125 to $135
Assistant Analyst $95
Administrative $80
Out-of-pocket expenses for mileage will be billed at the standard IRS allowance,
currently $0.505 per mile. Black and white document reproduction over 15 pages
per run will be billed at $0.15 per page, and color copies at $0.75 per page.
Postage, overnight mail, and other out-of-pocket expenses will be billed at actual
cost.
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Optional Services
In addition to the cost of service study, we are available to assist with the
following optional services if requested by the city:
Upon completion of the cost of service study, negotiating terms of an
amendment to the existing franchise agreement to resolve the issues
described above, and preparing the text of the amendment for review and
finalization by the City Attorney based on the results of the negotiations. Our
fee would depend on the complexity and number of negotiation sessions, and
the number of iterations of the amendment that are prepared, which cannot
be precisely estimated in advance. For budgeting purposes, our initial
estimate is $15,000, including attendance at one City Council meeting when
the amendment is considered for approval. This task if authorized would also
include preparing the contract language for a revised rate adjustment
formula/procedure.
Alternatively, the City may desire to renegotiate the entire agreement, in order
to clarify the language regarding not only the six issues described in this
proposal, but other issues as well. A renegotiated agreement may include a
term extension of two to five years, which may allow the city to resolve the
current issues with a reduced impact to the ratepayers. Additionally, subject
to agreement by the City and CalMet, a term extension may allow for
replacement of all of the current residential carts within a short period after
the term extension is approved. We recently assisted the City of Cerritos
renegotiate the entire agreement with CalMet in order to update its terms and
conditions. Our estimated cost to profile the existing agreement against an
up-to-date agreement, renegotiate the current terms, prepare the text of an
updated agreement for review by the City Attorney, evaluate the
reasonableness of the proposed rates against other communities, and attend
the City Council meeting for award are estimated at $35,000 to $40,000. This
estimate is contingent upon the cost of service study also being performed for
the fee described above.
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