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HomeMy WebLinkAbout19- Professional Services Agreement - Burns & McDonnell Engineering Company - Solid Waste Rate Study PROFESSIONAL SERVICES AGREEMENT THIS AGREEMENT is made and entered into this 11 day of March, 2019, by and between the CITY OF BOZEMAN, MONTANA, a self governing municipal corporation organized and existing under its Charter and the laws of the State of Montana, 121 North Rouse Street, Bozeman, Montana, with a mailing address of PO Box 1230, Bozeman, MT 59771, hereinafter referred to as"City,"and,Burns&McDonnell Engineering Company,Inc, hereinafter referred to as"Contractor." In consideration of the mutual covenants and agreements herein contained,the receipt and sufficiency whereof being hereby acknowledged, the parties hereto agree as follows: 1. Purpose: City agrees to enter this Agreement with Contractor to perform for City services described in the Scope of Services attached hereto as Attachment "A" and by this reference made a part hereof. 2. Term/Effective Date: This Agreement is effective upon the date of its execution [and will terminate on the 11 th day of May, 2019. 3. Scope of Work: Contractor will perform the work and provide the services in accordance with the requirements of the Scope of Services. For conflicts between this Agreement and the Scope of Services,unless specifically provided otherwise,the Agreement governs. 4. Payment: City agrees to pay Contractor the amount specified in the Scope of Services. Any alteration or deviation from the described services that involves additional costs above the Agreement amount will be performed by Contractor after written request by the City, and will become an additional charge over and above the amount listed in the Scope of Services. The City must agree in writing upon any additional charges. 5. Contractor's Representations: To induce City to enter into this Agreement, Contractor makes the following representations: a. Contractor has familiarized itself with the nature and extent of this Agreement,the Scope of Services, and with all local conditions and federal,state and local laws, ordinances, rules, and regulations that in any manner may affect cost, progress or performance of the Scope of Services. b. Contractor represents and warrants to City that it has the experience and ability to perform the services required by this Agreement;that it will perform said services in a professional,competent and timely manner and with diligence and skill;that it has the power to enter into and perform this Agreement and grant the rights granted in it; and that its performance of this Agreement shall not infringe upon or violate the rights of any third party,whether rights of copyright,trademark,privacy,publicity, libel, slander or any other 1 rights of any nature whatsoever, or violate any federal, state and municipal laws. The City will not determine or exercise control as to general procedures or formats necessary to have these services meet this warranty. 6. Independent Contractor Status/Labor Relations: The parties agree that Contractor is an independent contractor for purposes of this Agreement and is not to be considered an employee of the City for any purpose. Contractor is not subject to the terms and provisions of the City's personnel policies handbook and may not be considered a City employee for workers' compensation or any other purpose. Contractor is not authorized to represent the City or otherwise bind the City in any dealings between Contractor and any third parties. Contractor shall comply with the applicable requirements of the Workers' Compensation Act, Title 39, Chapter 71,MCA, and the Occupational Disease Act of Montana, Title 39, Chapter 71, MCA. Contractor shall maintain workers' compensation coverage for all members and employees of Contractor's business, except for those members who are exempted by law. Contractor shall furnish the City with copies showing one of the following: (1)a binder for workers' compensation coverage by an insurer licensed and authorized to provide workers' compensation insurance in the State of Montana; or (2) proof of exemption from workers' compensation granted by law for independent contractors. Contractor shall indemnify, defend, and hold the City harmless from any and all claims, demands, costs, expenses, damages, and liabilities arising out of, resulting from, or occurring in connection with any labor problems or disputes or any delays or stoppages of work associated with such problems or disputes and for any claims regarding underpaid prevailing wages. 7. Indemnity/Waiver of Claims/Insurance: For other than professional services rendered, to the fullest extent permitted by law, Contractor agrees to release, defend, indemnify, and hold harmless the City, its agents, representatives, employees, and officers (collectively referred to for purposes of this Section as the City) from and against any and all claims, demands, actions, fees and costs (including attorney's fees and the costs and fees of and expert witness and consultants), losses, expenses, liabilities (including liability where activity is inherently or intrinsically dangerous) or damages of whatever kind or nature connected therewith and without limit and without regard to the cause or causes thereof or the negligence of any party or parties that may be asserted against, recovered from or suffered by the City occasioned by, growing or arising out of or resulting from or in any way related to: (i)the negligent, reckless, or intentional misconduct of the Contractor; (ii) any negligent,reckless, or intentional misconduct of any of the Contractor's agents; or (iii) the negligent, reckless, or intentional misconduct of any other third party. 2 For the professional services rendered, to the fullest extent permitted by law, Contractor agrees to indemnify and hold the City harmless against claims, demands, suits, damages, losses, and expenses, including reasonable defense attorney fees, to the extent caused by the negligence or willful misconduct of the Contractor or Contractor's agents or employees. Such obligations shall not be construed to negate, abridge, or reduce other rights or obligations of indemnity that would otherwise exist. The indemnification obligations of this Section must not be construed to negate,abridge,or reduce any common-law or statutory rights of the indemnitee(s)which would otherwise exist as to such indemnitee(s). Contractor's indemnity under this Section shall be without regard to and without any right to contribution from any insurance maintained by City. Should any indemnitee described herein be required to bring an action against the Contractor to assert its right to defense or indemnification under this Agreement or under the Contractor's applicable insurance policies required below the indemnitee shall be entitled to recover reasonable costs and attorney fees incurred in asserting its right to indemnification or defense but only if a court of competent jurisdiction determines the Contractor was obligated to defend the claim(s) or was obligated to indemnify the indemnitee for a claims) or any portion(s) thereof. In the event of an action filed against City resulting from the City's performance under this Agreement,the City may elect to represent itself and incur all costs and expenses of suit. Contractor also waives any and all claims and recourse against the City or its officers, agents or employees, including the right of contribution for loss or damage to person or property arising from, growing out of, or in any way connected with or incident to the performance of this Agreement except"responsibility for his own fraud, for willful injury to the person or property of another, or for violation of law, whether willful or negligent"as per 28-2-702, MCA. These obligations shall survive termination of this Agreement and the services performed hereunder. In addition to and independent from the above, Contractor shall at Contractor's expense secure insurance coverage through an insurance company or companies duly licensed and authorized to conduct insurance business in Montana which insures the liabilities and obligations specifically assumed by the Contractor in this Section. The insurance coverage shall not contain any exclusion for liabilities specifically assumed by the Contractor in subsection(a)of this Section. The insurance shall cover and apply to all claims, demands, suits, damages, losses, and expenses that may be asserted or claimed against,recovered from, or suffered by the City without 3 limit and without regard to the cause therefore and which is acceptable to the City and Contractor shall furnish to the City an accompanying certificate of insurance and accompanying endorsements in amounts not less than as follows: • Workers' Compensation—statutory; • Employers' Liability- $1,000,000 per occurrence; $2,000,000 annual aggregate; • Commercial General Liability - $1,000,000 per occurrence; $2,000,000 annual aggregate; • Automobile Liability - $1,000,000 property damage/bodily injury; $2,000,000 annual aggregate; and • Professional Liability- $1,000,000 per clairn; $2,000,000 annual aggregate. The above amounts shall be exclusive of defense costs. The City of Bozernan, its officers, agents, and employees, shall be endorsed as an additional or named insured on a primary non- contributory basis on both the Commercial General and Automobile Liability policies. The insurance and required endorsements must be in a form suitable to City and shall include no less than a sixty (60) day notice of cancellation or non-renewal. The City must approve all insurance coverage and endorsements prior to the Contractor commencing work. Contractor shall notify City within two(2) business days of Contractor's receipt of notice that any required insurance coverage will be terminated or Contractor's decision to terminate any required insurance coverage for any reason. The City must approve all insurance coverage and endorsements prior to the Contractor commencing work. 8. Termination for Contractor's Fault: a. If Contractor refuses or fails to timely do the work, or any part thereof, or fails to perform any of its obligations under this Agreement, or otherwise breaches any terms or conditions of this Agreement, the City may, by written notice, terminate this Agreement and the Contractor's right to proceed with all or any part of the work ("Termination Notice Due to Contractor's Fault"). The City may then take over the work and complete it, either with its own resources or by re-letting the contract to any other third party. b. In the event of a termination pursuant to this Section 8, Contractor shall be entitled to payment only for those services Contractor actually rendered. C. Any termination provided for by this Section 8 shall be in addition to any other remedies to which the City may be entitled under the law or at equity. 4 d. In the event of termination under this Section 8, Contractor shall, under no circumstances,be entitled to claim or recover consequential,special,punitive,lost business opportunity, lost productivity,field office overhead,general conditions costs,or lost profits damages of any nature arising, or claimed to have arisen, as a result of the termination. 9. Termination for City's Convenience: a. Should conditions arise which,in the sole opinion and discretion of the City, make it advisable to the City to cease performance under this Agreement City may terminate this Agreement by written notice to Contractor ("Notice of Termination for City's Convenience"). The termination shall be effective in the manner specified in the Notice of Termination for City's Convenience and shall be without prejudice to any claims that the City may otherwise have against Contractor. b. Upon receipt of the Notice of Termination for City's Convenience, unless otherwise directed in the Notice,the Contractor shall immediately cease performance under this Agreement and make every reasonable effort to refrain from continuing work, incurring additional expenses or costs under this Agreement and shall immediately cancel all existing orders or contracts upon terms satisfactory to the City. Contractor shall do only such work as may be necessary to preserve,protect, and maintain work already completed or immediately in progress. C. In the event of a termination pursuant to this Section 9,Contractor is entitled to payment only for those services Contractor actually rendered on or before the receipt of the Notice of Termination for City's Convenience. d. The compensation described in Section 9(c) is the sole compensation due to Contractor for its performance of this Agreement. Contractor shall, under no circumstances,be entitled to claim or recover consequential,special,punitive,lost business opportunity,lost productivity,field office overhead,general conditions costs,or lost profits damages of any nature arising, or claimed to have arisen, as a result of the termination. 10. Limitation on Contractor's Damages; Time for Assertiniz Claim: a. In the event of a claim for damages by Contractor under this Agreement, Contractor's damages shall be limited to contract damages and Contractor hereby expressly waives any right to claim or recover consequential, special, punitive, lost business opportunity,lost productivity,field office overhead,general conditions costs,or lost profits damages of any nature or kind. 5 b. In the event Contractor wants to assert a claim for damages of any kind or nature, Contractor shall provide City with written notice of its claim, the facts and circumstances surrounding and giving rise to the claim, and the total amount of damages sought by the claim, within thirty (30) days of the facts and circumstances giving rise to the claim. In the event Contractor fails to provide such notice, Contractor shall waive all rights to assert such claim. 11. .Representatives: a. City's Representative: The City's Representative for the purpose of this Agreement shall be the Finance Director or such other individual as City shall designate in writing. Whenever approval or authorization from or communication or submission to City is required by this Agreement, such communication or submission shall be directed to Kristin Donald as the City's Representative and approvals or authorizations shall be issued only by such Representative;provided,however,that in exigent circumstances when City's Representative is not available, Contractor may direct its communication or submission to other designated City personnel or agents as listed above and may receive approvals or authorization from such persons. b. Contractor's Representative: The Contractor's Representative for the purpose of this Agreement shall be Scott Pasternak or such other individual as Contractor shall designate in writing. Whenever direction to or communication with Contractor is required by this Agreement, such direction or communication shall be directed to Contractor's Representative; provided, however, that in exigent circumstances when Contractor's Representative is not available, City may direct its direction or communication to other designated Contractor personnel or agents. 12. Permits: Contractor shall provide all notices, comply with all applicable laws, ordinances, rules, and regulations, obtain all necessary permits, licenses, including a City of Bozeman business license, and inspections from applicable governmental authorities, and pay all fees and charges in connection therewith. 13 Laws and Regulations: Contractor shall comply fully with all applicable state and federal laws, regulations, and municipal ordinances including, but not limited to, all workers' compensation laws, all environmental laws including, but not limited to, the generation and disposal of hazardous waste, the Occupational Safety and Health Act (OSHA), the safety rules, codes,and provisions of the Montana Safety Act in Title 50,Chapter 71,MCA,all applicable City, County, and State building and electrical codes,the Americans with Disabilities Act, and all non- discrimination, affirmative action, and utilization of minority and small business statutes and regulations. 6 14. Nondiscrimination: The Contractor agrees that all hiring by Contractor of persons performing this Agreement shall be on the basis of merit and qualifications. The Contractor will have a policy to provide equal employment opportunity in accordance with all applicable state and federal anti-discrimination laws, regulations, and contracts. The Contractor will not refuse employment to a person, bar a person from employment, or discriminate against a person in compensation or in a term, condition, or privilege of employment because of race, color, religion, creed, political ideas, sex, age, marital status, national origin, actual or perceived sexual orientation, gender identity,physical or mental disability, except when the reasonable demands of the position require an age, physical or mental disability, marital status or sex distinction. The Contractor shall be subject to and comply with Title VI of the Civil Rights Act of 1964; Section 140,Title 2,United States Code,and all regulations promulgated thereunder. The Contractor shall require these nondiscrimination terms of its sub-Contractors providing services under this agreement. 15. Intoxicants; DOT Drug and Alcohol Regulations/Safety and Training: Contractor shall not permit or suffer the introduction or use of any intoxicants, including alcohol or illegal drugs, by any employee or agent engaged in services to the City under this Agreement while on City property or in the performance of any activities under this Agreement. Contractor acknowledges it is aware of and shall comply with its responsibilities and obligations under the U.S. Department of Transportation (DOT) regulations governing anti-drug and alcohol misuse prevention plans and related testing. City shall have the right to request proof of such compliance and Contractor shall be obligated to furnish such proof. The Contractor shall be responsible for instructing and training the Contractor's employees and agents in proper and specified work,methods and procedures. The Contractor shall provide continuous inspection and supervision of the work performed. The Contractor is responsible for instructing his employees and agents in safe work practices. 16. Modification and Assignability: This Agreement may not be enlarged, modified or altered except by written agreement signed by both parties hereto. The Contractor may not subcontract or assign Contractor's rights, including the right to compensation or duties arising hereunder,without the prior written consent of City. Any subcontractor or assignee will be bound by all of the terms and conditions of this Agreement. 17. Reports/Accountability/Public Information: Contractor agrees to develop and/or provide documentation as requested by the City demonstrating Contractor's compliance with the requirements of this Agreement. Contractor shall allow the City, its auditors, and other persons authorized by the City to inspect and copy its books and records for the purpose of verifying that the reimbursement of monies distributed to Contractor pursuant to this Agreement was used in compliance with this Agreement and all applicable provisions of federal,state,and local law. The 7 Contractor shall not issue any statements, releases or information for public dissemination without prior approval of the City. 18. Non-Waiver: A waiver by either party any default or breach by the other party of any terms or conditions of this Agreement does not limit the other party's right to enforce such term or conditions or to pursue any available legal or equitable rights in the event of any subsequent default or breach. 19. Attorney's Fees and Costs: That in the event it becomes necessary for either Party of this Agreement to retain an attorney to enforce any of the terms or conditions of this Agreement or to give any notice required herein, then the prevailing Party or the Party giving notice shall be entitled to reasonable attorney's fees and costs,including fees,salary,and costs of in-house counsel to include City Attorney. 20. Taxes: Contractor is obligated to pay all taxes of any kind or nature and make all appropriate employee withholdings. 21. Dispute Resolution: a. Any claim, controversy, or dispute between the parties, their agents, employees, or representatives shall be resolved first by negotiation between senior-level personnel from each party duly authorized to execute settlement agreements. Upon mutual agreement of the parties, the parties may invite an independent, disinterested mediator to assist in the negotiated settlement discussions. b. If the parties are unable to resolve the dispute within thirty (30) days from the date the dispute was first raised, then such dispute may only be resolved in a court of competent jurisdiction in compliance with the Applicable Law provisions of this Agreement. 22. Survival: Contractor's indemnification shall survive the termination or expiration of this Agreement for the maximum period allowed under applicable law. 23. Headings: The headings used in this Agreement are for convenience only and are not be construed as a part of the Agreement or as a limitation on the scope of the particular paragraphs to which they refer. 24. Severability: If any portion of this Agreement is held to be void or unenforceable, the balance thereof shall continue in effect. 8 25. Applicable Law: The parties agree that this Agreement is governed in all respects by the laws of the State of Montana. 26. Binding Effect: This Agreement is binding upon and inures to the benefit of the heirs, legal representatives, successors, and assigns of the parties. 27. No Third-Party Beneficiary: This Agreement is for the exclusive benefit of the parties, does not constitute a third-party beneficiary agreement, and may not be relied upon or enforced by a third party. 28. Counterparts: This Agreement may be executed in counterparts, which together constitute one instrument. 29. Integration: This Agreement and all Exhibits attached hereto constitute the entire agreement of the parties. Covenants or representations not contained therein or made a part thereof by reference, are not binding upon the parties. There are no understandings between the parties other than as set forth in this Agreement. All coin munications, either verbal or written,made prior to the date of this Agreement are hereby abrogated and withdrawn unless specifically made a part of this Agreement by reference. 30. Extensions: this Agreement may, upon mutual agreement, be extended for a period of one year by written agreement of the Parties. In no case, however, may this Agreement run longer than six months. [END OF AGREEMENT EXCEPT SIGNATURE PAGE] 9 IN WITNESS WHEREOF, the parties hereto have executed this instrument the day and year first above written. CITY OF BOZEMAN,MONTANA Burns & McDonnell Engineering Company,Inc By By ;� Andrea Surratt, City Manager Print N 1e: Stephe Hofflne Title: Principal APPROVED- TO FORM By Greg Sullivan,Bozeman City Attorney 10 BURNS WDONNELL MEMORANDUM To: Kristin Donald, Finance Director—City of Bozeman From: Scott Pasternak—Burns&McDonnell Engineering Company, Inc. Subject: Fee for Solid Waste Rate Study Date: February 18,2019 Burns&McDonnell Engineering Company, Inc.(Burns&McDonnell)is pleased to provide the following fee estimate for conducting a solid waste rate study for the City of Bozeman(City)based on the proposal submitted to the City on February 13,2019.Table 1 summarizes the fee for the Scope of Work described in Section 5: Work Summary of Burns&McDonnell's proposal. Our budget includes professional fees and expenses,and assumes services will be invoiced on a percent complete basis by phase. Table 1: fee for Solid Waste Rate Study Task Total Phase 1: Project Initiation& Management Task IA: Initial Data Request&Review $2,600 Task IB:Establish Project Task Force $0 Task 1C:Kick-off Meeting&Project Management $5,800 Phase 2: Cost of Service&Rate Study Task 2A:Current Cost of Service Analysis $16,200 Task 213: 5-Year Forecasted Cost of Service Analysis $6,000 Task 213: Review Revenue Generation from Existing Customer Classes and Review Billing Methods $4,300 Task 2B: Financial Benchmarking $5,300 Task 213: Fee Structure Methodology and Rate Development $6,200 Phase 3:Report Preparation and Presentation Task 3A:Draft Report $6,200 Task 3B:Final Report $2,900 Task 3C:PowerPoint and Presentation $5,500 Task 3D:Assist with Plan Implementation(Optional) TBD Total $61,000 8911 Capital of Texas Highway\Building 4,Suite 4260\Austin,TX 78759 0 512-872-7130\F 512-872-7127\burnsmcd.com UN RIMMING OF ° I ���DE O BU FMVES The City of Bozeman(City)provides a comprehensive array of solid Nvaste and recyclinv services for residential and commercial customers. Since the City of Bozeman completed its last solid waste rate study in 2012,there is a need for the City to develop a new study that provides an understanding of the adequacy of current rates,as wall as insight on how to adjust rates in the fixture to maintain the financial integrity of the solid waste system. To communicate our understanding of the project objectives and outcomes,we have developed the following draft scope of work to complete a solid waste rate study for the City. The purpose of this study is to provide the City with an understanding of the firll costs of existing Solid Waste Division operations and to develop a long-term financial plan. Burns&McDonnell's philosophy is to deliver services to you that are comprehensive and provide the highest level of quality and professional integrity. Our conclusions and recommendations will be supported by appropriate data and analyses,with comparisons made to both the internal metrics and the solid waste industry.This section provides a methodology of the approach Burns&McDonnell proposes to accomplish the City's objectives for this type of engagement. The basic tenets of our project approach have been time tested through the successfid conduct of numerous comprehensive solid waste financial studies for public entities throughout the nation.We have successfully developed financial studies that have often resulted in the development of sustainable,long-term rate recommendations. We are open to discussing the contents of the scope of work to provide a study that best meet your needs. SCOPE OF WORK AR D DFILIVERA, BUS This section describes our specific scope of work and deliverables on a task by task basis. riia,se I Protect Initiation s Management °i ASK'1111: 1011IAL DATA 1100EST&ItEVIP67 Following receipt of the Notice to Proceed,Burns&McDonnell will provide the City with a detailed preliminary data leting the study. The data request will itemize our needs for understanding request that will encompass data needs for comp the operational and financial considerations that must be addressed. While the anticipated data request is too detailed to list in this proposal,the following summarizes key data that we will request from the City: ► Copies of the ordinances,regulations,policies and agreements governing the current finances of the solid waste operation ► Supporting documentation used in the computation of all solid waste fee ► Historical solid waste fees available from the City ► Historical and current budgets p Billing data ► Contracts and other inter-governmental agreements ► Personnel rosters ► Inventory of equipment ► Solid waste revenue ► Reserve fund balances 5.Work YAA BURNS Mc®ONNELL. This task also includes organization and preliminary analysis of all data received.We recognize that the City may not have all information requested readily available or may track information differently than requested. We will work with the appointed project manager to arrive at reasonable substitutes for the key data,if needed. TASK ib: ESTAWSH A PROJECT TASK f010 In order to get the best information possible and increase buy-in for the outcomes of this project,we recommend that the City establish a Project Task Force(PTF)to participate throughout the process, The PTF would ideally include 5—7 key representatives from diverse roles and levels of responsibility within the City,including senior management. Based on experience applying this approach with other local governments,it is our general recommendation that participants include: e Solid Waste Manager m Public Works Director(or designee) City Manager(or designee) ,. Finance Director(or designee) r Key solid waste managers for collection operations The PTF will participate in the kick-off meeting,help facilitate data collection,provide feedback on preliminary findings,and provide support to our project team throughout the project. By.involving a variety of individuals with a wide range of skills and responsibilities,a complete picture of the solid waste system can be developed more quickly, The diverse experience and concerns of the participants will help identify problem areas and contribute meaningful input to the solutions. Full participation from the PTF members should also be expected to increase buy-in and will speed implementation of the project findings. TASK IC: RICK-OFF WEET1116 & PRORiC3 i'1A14Ai 2,R Prior to commencing the study,members of the project team will conduct a kick-off conference call and then an on-site kickoff meeting with key City staff; The purpose of the initial conference call will be to plan for the kick- T' , off meeting and site visit, At this kick-off meeting we will discuss the project work plan,key issues to be addressed,key findings from previous engagements as well as confi-ra the timing associated with the various project tasks. j We will discuss our initial data request(as previously described)that we will have provided to the City staff 7 to 14 days prior to the kick-off meeting. Burns&McDonnell will provide the agenda and any handout materials at least two days in advance. During the meeting,we will also identify primary contacts for our project team and the City and establish protocol for the exchange of information and the resolution of issues that arise in the normal course of this engagement. The kick-of meeting will provide a forum for - To facilitate effective communication between project team members and the establishing cloar communication for the City throughout the course of this project,Burns&McDonnell will: project. Schedule and participate in periodic conference calls as needed to discuss project matters(as identified in the specific tasks of this scope of work) r Provide periodic status updated via electronic format P Be available for other communication(s)as needed 5. Work Summary BURNS DONNELL. PRASE 1 DELIVERABLES Preliminary data request r Electronic copies of the kick-olf meeting agenda,handouts,and follow-up summary s Participation of Burps&McDonnell project manager and key staff in conference call and on-site kick-off meeting Phase 2: Cost at Service & Rate Study A cost of service study provides a clear understanding of the current operation's cost of providing service.This methodology is consistent with other financial studies Burns&McDonnell has completed for communities across the United States. TASK 2A:CURRENT COST OF SERVICE ANALYSIS A"Test Year"is a common term in cost of service studies that refers to an adjusted fiscal year budget that is used as a basis for determining cost of service and setting rates. The Test Year should be representative of typical conditions,with adjustments for any unusual or one-time expenses.Any projected non-recurring expenses or revenues will be identified and incorporated into the financial forecast. Burns&McDonnell will work with the City to develop an accurate Test Year revenue requirement reflecting the revenue requited to meet all operating and maintenance(O&M)costs,debt service (including coverage and reserve requirements),working capital requirements,and capital expenditures. The goal of this task will be to document the current fall cost of the City's various solid waste services and to allocate these costs to the appropriate cost centers. As part of this task,Burns&McDonnell will: Review current and historical financial data collected as part of Task I r Summarize and analyze the current solid waste fees r Develop a revenue requirement for the"Test Year,"which includes,but not limited to,the following types of costs: o Operational and maintenance o General fund and administrative overhead o Capital equipment and facility costs(current and future needs) o Current and anticipated long-term liabilities and debt obligations(and associated debt-coverage ratios) o Working capital and reserve funds requirements n Work with the City to define cost centers:Cost centers will be based on the primary services provided by the Solid Waste Division and will be refined based on input from City staff. A preliminary listing of cost centers may include:Residential Garbage,Residential Compost,Brush and Tree Trimming,Bulky Item,Single-stream Recycling,Commercial Dumpster,Commercial Roll-off,Disposal,and Administration H Work with the City to allocate test year costs to the cost centers in the cost allocation model P. Develop an infi•astructure and vehicle/equipment replacement analysis to account for growth and replacement > Assist the City in developing or modifying a cost allocation strategy that captures capital,debt,operations,and maintenance costs,as well as indirect costs(administration and overhead)for each of the targeted services a Allocate cost centers to customer classes' o. Determine billing units and calculate the cost of set-vice i 'Customer classes will include residential,commercial and landfill customers and may include other customer group as determined during the study. g z 5, Work Summary BURNS &11MONNELL.. AAA I f•` i 4! ® � I This figure describes the process to develop they Test Year Revenue Requirement and to allocate f the expenses to appropriate cost centers. 1 Residential Residential � Garbagei PG is For equipment and personnel that serve more than one function,we will assist City staff in the development of an appropriate strategy to allocate those costs among the programs being evaluated. It will be imperative to work closely with financial and operational personnel during the cost allocation process to confirm that all direct and indirect costs are apportioned in an appropriate and meaningful way among the programs being evaluated,which will be critical given the broad range of services and operations. TASK xA DELIVERABLES a Meeting with City staff(same trip as the kick-off meeting) . A Test Year revenue requirement r- Calculation of the Test Year cost of service J= Conference call with City staff to discuss results of Task 2A TASK U:FOUCASTED COST Of SERVICE ANIA.YSIS,PROt;NIN ldl:V NIR STREAK MNALYSIS, IIENCIIIIAR llll6 frill) Wi_. DEVELOPMENT This task will include four primary objectives:(1)to develop a five-year forecast;(2)to determine current revenue generation and review billing methods;(3)financial benchmarkhrg;and(5)fee structure methodology and rate development. Five-Year Forecasted Cast of Service In addition to calculating the cut-rent cost of service for the Test Year,Burns&McDonnell will pt'oject the future cost of service for a five-year time frame and will allocate these costs to the appropriate cost centers. While we understand that the City is requesting rate recommendations for the next two fiscal years,developing a five-year forecast provides additional insight on rate design. Burns&McDonnell will work in conjunction with the City to develop an accurate five-year revenue requirement and billing unit forecast. To develop the five-year revenue requirement for the City,Burns&McDonnell will examine historical budgets and audited financials and,utilizing input from City staff,will develop a forecast that incorporates"known and measurable"changes for the forecasted period. Burns&McDonnell will analyze the assumptions used in projecting the 5. Work Summary BURNS MMONNELL. revenue requirement and billing units,including,but not limited to,growth rate,inflation rates,increase in contractual obligations,and capital improvement plans for fleet,equipment and facilities.We will also develop the following schedules as a part of the five-year forecast: r Fleet replacement:Specific to equipment,we will collaborate with the City to develop an equipment replacement strategy for the five-year forecast. 1� Debt service and capital improvement plan(CIP):Will account for existing debt and anticipate fixture CIP needs. 1. Reserve funds:There is a need for capital and operating reserve funds.We will review existing balances and account for additional amounts that may be needed. Review Revenue Generation fr0111 Existing Customer Classes and Review Billing Methods Burns&McDonnell will evaluate how much revenue is currently generated by the current fee structure fi•om the existing customer classes to determine if revenues generated are sufficient to recover the cost of service assigned to each customer class. We will assess the overall revenue requitement compared to revenue generated under the current fee structure and . rates. We will complete this analysis based on a review of revenue received by the City for the various services provided. We will independently estimate how much revenue should be generated by the current billing units to estimate whether any under-recovering is occurring. This analysis will provide the City with an understanding of how current rates are either over- or under-recovering compared to the cost of service. Financial Benchniarking This effort will reflect efforts to benchmark key costs and rates from other communities,building fi•om a similar project we are developing for the City of Billings. Burns&McDonnell will prepare an analysis of current costs and solid waste rates being charges by all major cities in Montana and several in surrounding states for major customer classes—such as residential,commercial and landfill.Since we have previously _ perfarned similar solid waste financial/rate analyses for several El Paso Rates: Low and Flat i other cities in the multi-state 1 $79.00 region,we bring a working { knowledge of existing rate s:7.00 __ _ —— structures,as well as a familiarity s:$.D0 . - - ,•-- ••- - __. _.._ with the other City's solid waste $23.00 ... ,a.. ... operations,which may help explain why some city s rates are higher/lower than others. In ��~y — corpa,thrh0(SJS( •--Daea,R:SgI $17.00 -- .-�• ..-_ Municipaladdition to providing information —UnMlonblf.Nl1 ,.-•� ---7uaan17.N1 on the rates we can provide information on the cost of service — h.n�Yer,hw.7en I 533.00 �: I Private or Managed ,� omo.311) I competition based on other cost of service El Paso ..—— ,_ 1 p $31.00 - _ .�,.......... ..._ .. 1__Tol,a11.751) studies we have completed. For _ f_____________J t $'•the da ta h l exam e,we have aa on cost p �� ��, tip` �� h� .M1oo hoti' per collection for fiont-load 4 Doti 1ery 1e4 . collection for multiple cities, The Rite far some Intem,ediate years are based on irterpelated data behmn 5 p knonn rates ESD : following figure shows how we recently communicated This figure is a slide from a PowerPoint presentation to City Counril in the City of Ei Paso, The City was interested in privatization of residential refuse services. Clur internal information to the City of El Paso benchmarking data from other peer cities showed that the rates for El Paso had been City Council regarding residential comparatively low for an extended number of years. Following out presentation,the solid waste fates. Council discontinued its interest in privatization. G 5. Work YAA BURNS M�DONNELL.. 3 Fee Sh-rictrrre Methodology and Rate Development The objective of this task is-to develop proposed rates that meet the needs and objectives of the solid waste system for the next five years.Burns&McDonnell will assess the existing rate structure for its historical performance,overall equity,and ability to meet City objectives for future solid waste rates.Prior to developing specific rates,we will provide an overview of several proven approaches to municipal solid waste fund rate design and implementation. Rate alternatives for each rate category will be developed based on our industry experience and collaboration with the PTF. For each alternative,rates will be designed to generate adequate revenues in accordance with the financial forecast results, reflect the results of the cost of services analysis,and fmiller the objectives of the City far the utility systems.The pros and cons of each alternative will be evaluated;including compatibility with the City's billing system.Pricing objectives could include,but would not be limited to: r Escalation Strategies—For communities that have a need for increases,rates can be designed to be phased in at once or over an extended period of time. We will provide the City with an understanding of the financial implications associated with the timing of the proposed increases. t. Meeting Revenue Requirements in a Stable and Predictable Manuel-—Regardless of the outcome of the rate design process,rates must produce sufficient revenues to meet both the short-term and long-term financial needs and business objectives of the City. ► Fee Structure Equity—To the greatest extent possible,rate design will be based on cost of service principles and will not unduly subsidize certain customers or rate classes at the expense of others.We will specifically align rates with the cost of service for each of the major customer classes. r Environmental Sustainability—Simply put,rates send pricing signals to customers.These pricing signals should promote efficient use of the City's resources and increase customer understanding of the cost associated with the various products and services provided by the City. WE will specifically examine the variable rates presently in place for residential and commercial services. ► Simple and Understandable—From a public relations perspective,simple and easy to understand rate structures j are a benefit in that the City will be able to clearly communicate the relationship between the cost of service and 1 customer use. In addition,Burns&McDonnell is knowledgeable about statutory regulations affecting cost of service and rate development and will design rates accordingly.If desired by the City,annual inflationary adjustments may be considered to provide a means by which future adjustments may be indexed and adjusted automatically.This will effectively allow the City to systematically incorporate marginal rate increases. TASK 2B DELIVERABLES r A"base case"five-year revenue requirement forecast and fleet replacement schedule ► The calculation of the cost of service in each year t. Revenue projections ► Financial benchmarking ► Conference call to discuss findings and rate recommendations ► Rate design recommendations for the next five years for each customer class Phan 3: Report Preparation and Prescidatialt TASK 3A:DRAFT REPORT Upon completion of the analyses outlined above,Burns&McDonnell will develop a Draft Report outlining recommendations and conclusions in a clear and concise manner.The report will include detailed recommendations for changes,if any,to current practices and/or procedures. The report will include an implementation schedule for BURNSIW ®®f<fNELL.. 5. Work Summary timely and coordinated execution of all essential aspects of the report.Burns&McDonnell is committed to making sure the City thoroughly understands the recommendations in the Draft Report.Burns&McDonnell will provide the findings to the City staff and allow these individuals sufficient time to have their concerns and/or questions addressed. Burns& McDonnell will have a conference call with City staff to discuss the report. Burns&McDonnell will request that written comments be provided as one submittal fiom City staff to facilitate consensus regarding staff continents. TASK 30: FINAL REPORT Upon receipt of City staff recommendations and comments,Burns&McDonnell will make appropriate changes and provide the City with a Final Report. We will issue the Final Report within three weeks of receiving comments from the City. TASK 3C:DEVELOP POWERPOINT AND COIaDUCY CIYY COMMISSION MEETING Burns&McDonnell will develop a PowerPoint presentation that summarizes the key findings of the study. Burns& McDonnell will attend and present findings and recommendations from the report at a City Commission meeting or workshop.Bums&McDonnell will support the presentation of results and recommendations of the study.One PowerPoint be developed for presentation and handouts will use by the City to communicate the analysis,key findings and rate recommendations. TASK 0: ASSISY 1`1 11 PLAN IMPLEHIEWTA`f ION(Ella"10NAL) If requested,we will he prepared to assist the City in implementing any new or revised rate schedules,to include attendance at several anticipated rate hearings.Upon request from the City,we will develop a specific scope of work and fee for these services. PHASE 3 DELIVERABLES Electronic version of the Draft Report a. One conference call to discuss the Draft Report ►. Printed and one electronic version of the Final Report w PowerPoint presentation Participation in City Council Meeting or workshop j:. 1. 1 £44µ [L 5, Work SummaryAA x BURNS'�. 'WDONNELL. L P110,K)"il-JECT SCHEDULE Based on the scope of work included in Section 5,this section provides estimates of the number of hours for our project team to complete the study,as well as a schedule for the timely completing of the project. ESTIMATED HOURS The following table provides an outline of the services to be provided and includes the number of hours by task and positions identified on the organizational chart provided in Section 3. ManagerHours TasR Project Senior lead Filiandal Financial i Li Phase 1:Project initiation&Management TASK IA:INITIAL DATA REOIIEST $REVIEW 2 4 10 TASK IB: ESTABLISH A PROJECT TASK FORCE `ASI;X.III([14­IFF MEETING $PROJECT MANAGEMENT 6 6 8 Phase 2:Cast of Service&gate Study fASH 2A, (UrflIRIT COST OF SERVICE ANALYSIS 16 2 12 60 TASK 213:FORECASTED COST OF SERVICE ANALYSIS, PROGRAM-REVENUE STREAI'I ANALYSIS, BENCHMARKING AND RATE DEVELOPMENT 5-Year Forecasted Cost of Service Analysis 6 1 8 20 Review Revenue Generation fi-om Existing Customer Classes and 4 8 12 Review Billing Methods Financial Benchmarking 6 2 4 20 Fee Structure Methodology and Rate Development 8 10 16 Phase 3:Report Preparation and Presentaltioll TASK 3A: DRAFT REPORT 6 2 8 20 TASK 30:FINAL REPORT 4 4 8 TASK 3C: POWER POINT AND PRESENTATION 10 1 4 8 Total ti h 1Z BURNS McDONNELL.. 6. Work Plan and Project Schedule PROJECT SCHEDULE We have developed the following schedule based on assuming that we will receive a Notice Proceed no later than March 1, 2019. We understand that decisions on the rates that will be adopted need to occur no later than May 20,2019,as the City will update the City's rate schedules in June/July 2019. We will specifically collaborate with the City to provide final recommendations for the rates not later than May 20,2019;and will provide the draft report in later in May or early June. The final report and PowerPoint presentation will be developed within three weeks of receiving comments to the draft report. March April May June I Initial Data Request Submitted to the City Initial Conference Call Establish Project Task Force Kick-off Meeting Current Cost of Service Analysis (Develop 5 Year Forecast and Fleet Replacement Schedule r, Review Revenue Generation from Existing customer Classes and Review current Billing Systems Financial Benchmarking Fee Structure Methodology and Rate Development Rocommonded ratos to be finallrad no later than May 20. ®Draft Report Final report to be delivered 3 weeks Deliver Final Report after receiving City's comments. March April May June Q 'hase 1:Project Initiation 3' ;Phase 2:Cost of Service and Phase 3:Report Preparation Meetings/Workshops1 and Management :;Rate Design ®and Presentation BURNS�'.M�DONNELL. 6. Work Plan and Project Schedule • ..;., Section 5 of our submittal provides a draft scope of work for the City's consideration.Within the proposed scope of work,we have described the expected input and support fi•om the City's resources. Successful completion of a solid waste rate and fee study will require key input and support fi-om the City. Based on the scope of work,we have summarized this information for each of the three phases in the scope of work. Phase 1 Project Initiation & Management a Task 1A:Initial Data Request&Review:Provision of key data needed for the project. r Task 1B:Establish A Project Task Force:Key City staff to participate in key meetings and review of analysis,as described in the scope of work. Task 1C:Kick-Off Meeting&Project Management:Members of the Project Task Force(PTF)to participate in the meeting. Phase 1: Cost of Service & Rate Study ti Task 2A:Current Cost of Service Analysis:Meetings with PTF members to define cost centers,make adjustments to the revenue requirement,and allocate costs,personnel and equipment to cost centers. We will also ask City staff to review the analysis via Excel worksheets and to have a conference call to discuss any potential updates to the analysis. Task 211:Forecasted Cost of Service Analysis,Program Revenue Stream Analysis,Benchmarking,and Rate Development:Similar to efforts described in Task 2A,we will continue to collaborate with the PTF to seek input to inform the five-year forecast. For the benchmarking,we will ask the City to confirm(with our perspectives)the cities to be included. In developing the proposed rates,we will discuss ideas for the rate alternatives and request feedback options to be developed. This will involve multiple discussions with the PTF. Phase 3: Report Preparation and Presentation b Task 3A:Draft Report:We will request that the PTF review the draft report and provide one set of written comments: We would also request that City staff participate in a conference call to discuss the draft report. r Task 311:Final Report:We will request that the PTF review the final report to confirm that changes fiom the draft report have been addressed. i M Task 30 Develop PowerPoint and Conduct City Commission Meeting:We wil I request that City staff facilitate the discussion for the presentation to be presented by Burns&McDonnell. I BURNS WDONNELL.. 7. City-Furnished Documentation z=.