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2012 Rate Review

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2012 Rate Review CITY OF HERCULES FRANCHISED SOLID WASTE COLLECTION RATE REVIEW NOTIFICATION OF REQUEST FOR PROPOSALS The City of Hercules is seeking proposals from qualified and experienced firms to conduct a review to verify the reasonableness, based on industry standards, of the request from the City’s Solid Waste Contractor, Richmond Sanitary Service (RSS) for Residential and Commercial Base Year Rate Adjustment. The City would also like to evaluate the feasibility of increasing its Franchise Fee as part of this process. The results of this evaluation will determine revised rates for garbage collection services provided by RSS, effective January 1, 2013. Proposals must be received by the City no later than 9:00am on Tuesday, August 21, 2012 at the front desk of the City of Hercules, 111 Civic Drive, Hercules, California, 94547. All proposals must be in a sealed envelope with “Solid Waste Review Proposal” clearly written on the front. Proposals may also be submitted via email to [email protected]. Late proposals will not be accepted. The Hercules City Council will (tentatively) consider awarding a professional services contract on Tuesday, August 28, 2012 to the most responsive proposer whose proposal complies with the specifications set forth by the City. The City reserves the right to reject all proposals. The Request for Proposals may be acquired starting at 9:00am Tuesday August 7, 2012 online at www.ci.hercules.ca.us or via email at [email protected], or at front desk of City Hall between 9 a.m. and 5 p.m. Monday through Thursday (City Hall is closed on Fridays). Questions regarding this Request for Proposals may be directed to Elizabeth Warmerdam, Deputy City Manager, and (510) 799-8231 or via email at [email protected]. A. INTRODUCTION The City of Hercules (City) is seeking proposals from qualified and experienced firms to review, evaluate and make recommendations regarding the City’s Solid Waste provider’s application for Base Year Rate Adjustment for Residential and Commercial services effective January 1, 2013. The City received the application in July 2011 from Richmond Sanitary Services for the Adjustment which would have taken effect on January 1, 2012. The City requested and was granted a one year extension. The results of this project will establish the new base rate effective January 1, 2013. B. BACKGROUND Richmond Sanitary Service has an exclusive solid waste (garbage, recyclables, and organics) collection franchise agreement with the City that was originally executed in 1986. Since that time, the agreement has been amended three times and currently extends to the year 2025. The amendments include provisions that include and allow West Contra Costa Integrated Waste Management Authority (aka Recycle More) to direct and process the City’s post collection solid waste, and establish a Base Year Rate which sets the maximum rate which RSS is allowed to charge for their services. The Base Year rate is adjusted every 5 years with a CPI allowance in the intervening years. The last adjustment was done in 2007. 1 111 Civic Drive Hercules CA 94547 www.ci.hercules.ca.us C. PROJECT DESCRIPTION The City intends to conduct a review to determine if costs, revenues, assumptions, and other aspects of the application are reasonable and appropriate. The consultant will be expected to provide periodic progress reports to City staff via phone and email, and will also be expected to attend meetings as necessary with both City and RSS staff as well as the Council meeting during which the City would expect to bring the new base year rates for consideration. The proposed timeline for this project is as follows (subject to change): Request for Proposals release date August 7, 2012 9:00am. Deadline to submit proposals August 21, 2012 9:00am. Anticipated Council award of contract August 28, 2012 Kick off Meeting with City September 3, 2012 Kick off meeting with RSS September 10, 2012 Final Draft Report to City October 26, 2012 Negotiations with RSS October 31, 2012 City Council Meeting consideration of 2013 November 27, 2012 Base Rate Adjustment New RSS Rates in effect January 1, 2013 (at least 25 days from Council Action) D. SCOPE OF WORK Task 1 – Document Review Review documents including Franchise Agreement and amendments, the City’s governing Municipal Code, RSS Rate Adjustment Application, and other financial documents provided by RSS. The City has requested audited financial statements from RSS, though has not received them to date. Task 2 - Kick-off Me e ting with RSS Prepare for and facilitate a meeting with RSS to discuss the rate application and gain an understanding of the major cost increases that contribute to the requested rate increase. Task 3 – Perform Analysis of Rate Application Based on Best Practices Perform rate analysis based on best practices in the industry as well as based on the City’s Municipal Code requirements including but not limited to: • Review the application to verify mathematical accuracy and to confirm that the stated assumptions were used. • Determine if the rate application is supported by RSS' accounting system and by audited financial statements. • Review RSS’ projected income statement for the next 12 months based on the proposed rate increase. • Review the allocation of the projected operating results segregated by services provided to Hercules versus those provided to other surrounding communities served by RSS. • Review RSS’ projected costs used in making operating projections segregated by cost of 2 111 Civic Drive Hercules CA 94547 www.ci.hercules.ca.us collection, transportation to disposal facility, processing and handling at any transfer station, landfill disposal and administrative costs. • Review rates currently in effect in other municipalities in Contra Costa County and other counties in close proximity to the City and review whether or not the rates proposed by RSS are or will be more than 1.2 times the rates charged for the same or similar services in neighboring cities and municipalities. • Perform a variance analysis comparing the actual expenses from the most recent three years. The variance analysis will identify what factors are affecting the rate increase. Discuss the variances with RSS, seek an explanation for the significant variances (typically those expenses that have increased by more than 5% and $5,000), and identify those variances which differ significantly from the variances being seen throughout the industry. Task 4 - Conduct Field Review of RSS’ Financial Transactions (May be in coordination with Task 3 above) Conduct a site visit at RSS offices to review items developed from the review of the Company's rate applications, their financial statements, and the variance analysis. The length of such a site visit will be subject to the scope of the questions, the need to review documented support for the responses and the determination by staff of the reasonable amount of time to be spent on such activities. Task 5 - Document Recommended Adjustments and Negotiate with RSS Document recommended adjustments. Assist the City in negotiations with RSS management to negotiate the recommended adjustments. Task 6 – Franchise Fee Review and Analysis Assist the City with the analysis, including gathering data from other jurisdictions, to determine the feasibility of increasing the City’s existing Franchise Fee. Assist in implementation of recommendations, as needed. Task 7 - Draft and Distribute Report Distribute a copy of draft report documenting findings and recommendations from the review of the rate application. Meet with the City and RSS to present and obtain comments regarding the draft report. Based on comments from the City and RSS, amend the draft report and issue the final report. Task 8 – Presentation to Council Prepare PowerPoint of findings and assist City staff in making a presentation to the City Council summarizing the findings and seeking adoption of the revised 2013 residential and commercial solid waste collection rates. E. PROPOSAL CONTENT At its discretion, the City may waive any informalities or minor irregularities in the proposals. Each proposal should be concisely written and should address all elements of the Scope of Work. Three (3) copies of the proposal shall be submitted. The proposal shall be signed by an individual authorized to execute legal documents on behalf of the proposer. The proposal shall include: 1. Company Profile 2. Relevant Experience 3 111 Civic Drive Hercules CA 94547 www.ci.hercules.ca.us 3. Professional Qualifications 4. Detailed Work Plan and Approach Methodology 5. Detailed Breakdown of Hours and Fees, Per Task 6. Total Fees for Services 7. References F. EVALUATION AND SELECTION PROCESS Contract award will be made to the proposer offering the most advantageous proposal after consideration of the evaluation criteria set forth below. The City shall not be obligated to accept the lowest price proposal, but will make an award in the best interests of the City after all proposals have been evaluated. Evaluation of proposals will consider the following: 1. Quality and completeness of the submitted proposal as per this RFP 2. Proposer’s concept and understanding of the City goals and intent for the project 3. Proposer’s approach to the project and proposal schedule 4. Proposer’s experience with similar types of projects, experience with public agencies, and staff experiences and qualifications 5. References 6. Proposed cost of service in relation to services provided G. CONTRACT AWARD AND PAYMENT The successful proposer will be required to enter into the City’s standard Professional Services Agreement (attached) shortly after the award of the contract. If a satisfactory contract cannot be negotiated in a reasonable time, the City, in its sole discretion, may terminate negotiations with the highest ranked proposer and begin contract negotiations with the next highest ranked proposer. H. SERVICE AGREEMENT AND REQUIRED DOCUMENTS Completion of the following documents is required prior to commencing work: 1.
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