HomeMy WebLinkAbout05 - Cost Allocation Plan & Cost of Services StudyCITY OF NEWPORT BEACH
CITY COUNCIL STAFF REPORT
Agenda Item No. 5
October 10, 2006
TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: Administrative Services Department
Dennis C. Danner, Administrative Services Director (949) 644 -3123
ddanner@city.newport-beach.ca.us
SUBJECT: CITYWIDE COST ALLOCATION PLAN AND COST OF SERVICES
STUDY
RECOMMENDATIONS:
Authorize the City Manager to execute a Professional Services Agreement in
substantially similar form to the attached draft agreement with Public Resource
Management, LLC. ( "PRM "), to develop a defensible cost allocation plan and to
identify and analyze the cost of providing City services;
Approve a Budget Amendment in the amount of $47,400 (BA #07BA -018).
DISCUSSION:
Service fees are fees imposed to offset the cost of providing a government service.
Generally, fees must be reasonably related to the cost of providing the service for which
the fee is imposed, otherwise the fee may constitute a tax subject to voter approval.
More specifically, Government Code Section § 66014 requires that application fees for
zoning permits, building permits and similar approvals cannot exceed the cost of
processing such applications.
In 1996, the City contracted with KPMG Peat Marwick LLP to conduct a comprehensive
cost allocation plan and cost of services study. That study identified and provided
estimated costs for 156 services. Utilizing the results of that study, City Council
adopted Chapter 3.36, which established the percentage of cost to be recovered for
each service. Chapter 3.36 also provided that City Council will establish fees for each
Identified user service in a fee resolution, to be modified as each cost factor is modified.
This list of user services and their related fees is the City's Master Fee Schedule.
Nearly each year since the 1996 study, City Council has updated the Master Fee
Schedule based on changes in the cost of living and salary adjustments. In addition,
the Master Fee Schedule has evolved to include additional fees based upon Council
Policy, commission findings, new ordinances, resolutions and new services. Today, the
Citywide Cost Allocation Plan and Cost of Services Study
October 90, 2006
Page 2
Master Fee Schedule lists approximately 1000 user services and fees. City staff
suspects, however, that the overhead cost and fees currently charged for City services
are outdated. Moreover, as the numbers indicate, many services provided by the City
today were not included in the 1996 study. During the January 10, 2006, City Council
meeting, City Council recommended a new study be conducted (the "Project ").
Staff prepared and distributed a request for proposal to conduct a cost allocation plan
and cost of services study to twenty companies. Four companies submitted proposals
with costs ranging from $32,920 to $49,500. A selection committee comprised of City
staff interviewed the four companies last month. The selection committee unanimously
recommended PRM based on PRM's experience, excellent proposal terms,
professional presentation, and competitive pricing. PRM had also developed a
comprehensive and flexible spreadsheet based on Microsoft Excel which would allow
the City to easily make future adjustments to base fees.
The Project will include two distinct elements described below (it shall not provide a
review of development impact fees, utility rates or rental charges):
Cost Allocation Plan and Model
In order to accurately determine City service fees, PRM will develop a cost allocation
plan that will:
1) ensure enterprise funds are allocated at full cost and all indirect costs are.
allocated to public service departments;
2) allocate all layers of overhead costs to the fully burdened hourly rates; and
3) develop an OMB A -87 plan related allocation for State and Federal claiming
opportunities.
In addition, PRM will provide .a cost allocation model that will enable the City to easily
and accurately update the cost allocations each year.
Cost -of- Services Study and Model
In order to accurately update the Master Fee Schedule, PRM will analyze the cost of
providing services. PRM will:
1) identify the full costs for each service activity;
2) review fee structures in various departments (fixed fee vs. hourly rates vs.
valuation based fee vs. Nexus approach in building inspections);
3) calculate the fully burdened hourly rates for all staff positions;
Citywide Cost Allocation Plan and Cost of Services Study
October 10, 2006
Page 3
4) identify City services for which there may not be a current fee, determine the
costs of those activities, and recommend the addition of those fees to the Master
Fee Schedule; and
5) analyze and compare fee levels among other selected cities and do a subsidy
analysis.
Finally, PRM will develop a cost of services model that will allow the City to easily and
accurately update service and fee information on an annual basis.
City staff recommends that the City hire PRM to conduct the Project. The draft
Professional Services Agreement and Exhibits are attached.
Environmental Review: Environmental review is not required for this agenda item.
Funding Availability: Upon approval of the recommended Budget Amendment,
sufficient funds will be available in the following account for the project:
Account Description
Cost Allocation Plan and
Cost of Services Study
Prepared by:
l
ad, Revenue IDianager D nnis Danner, Administrative Services
Director
Attachments: Draft Professional Services Agreement with Public Resources Management, LLC.
Account Number
0640 -8080
Submitted by:
Amount
$47,400.00
PROFESSIONAL SERVICES AGREEMENT WITH
PUBLIC RESOURCE MANAGEMENT GROUP, LLC
FOR THE OVERHEAD COST ALLOCATION PLAN AND MODEL, AND
COST OF SERVICES STUDY AND MODEL
THIS AGREEMENT is made and entered into as of this T day of September, 2006,
by and between the City of Newport Beach, a Municipal Corporation ( "City"), and Public
Resource Management Group, LLC, a California limited liability company, whose
address is 1380 Lead Hill Boulevard, Suite 106, Roseville, California, 95661
( "Consultant"), and is made with reference to the following:
RECITALS
A. City is a municipal corporation duly organized and validly existing under the laws
of the State of California with the power to carry on its business as it is now
being conducted under the statutes of the State of California and the Charter of
City.
B. City bases its fees upon a cost allocation model and a cost of services model
which were developed from a study performed over ten years ago. The City
must now hire a consultant to review, and if necessary, update: 1) the overhead
costs originated from the original study; and 2) the methodology upon which the
costs were determined.
C. City desires to engage Consultant to affirm or update, as needed, the current
cost allocation plan and model and the current cost of services study and model
(the "Project').
D. Consultant possesses the skill, experience, ability, background, certification and
knowledge to provide the services described in this Agreement.
E. The principal member of Consultant for purposes of Project, shall be J. Bradley
Wilkes.
F. City has solicited and received a proposal from Consultant, has reviewed the
previous experience and evaluated the expertise of Consultant, and desires to
retain Consultant to render professional services under the terms and conditions
set forth in this Agreement.
NOW, THEREFORE, it is mutually agreed by and between the undersigned parties as
follows:
TERM
The term of this Agreement shall commence on the above written date, and shall
terminate on the 30th day of May, 2007, unless terminated earlier as set forth
herein.
2. SERVICES TO BE PERFORMED
Consultant shall diligently perform all the services described in the Scope of
Services attached hereto as Exhibit W and incorporated herein by reference.
The City may elect to delete certain tasks of the Scope of Services at its sole
discretion.
3. TIME OF PERFORMANCE
Time is of the essence in the performance of services under this Agreement and
Consultant shall perform the services in accordance with the schedule included
in Exhibit "B ". The failure by Consultant to strictly adhere to the schedule may
result in termination of this Agreement by City.
Notwithstanding the foregoing, Consultant shall not be responsible for delays
due to causes beyond Consultant's reasonable control. However, in the case of
any such delay in the services to be provided for the Project, each party hereby
agrees to provide notice to the other party so that all delays can be addressed.
3.1 Consultant shall submit all requests for extensions of time for
performance in writing to the Project Administrator not later than ten (10)
calendar days after the start of the condition that purportedly causes a
delay. The Project Administrator shall review all such requests and may
grant reasonable time extensions for unforeseeable delays that are
beyond Consultant's control.
3.2 For all time periods not specifically set forth herein, Consultant shall
respond in the most expedient and appropriate manner under the
circumstances, by either telephone, fax, hand - delivery or mail.
4. COMPENSATION TO CONSULTANT
City shall pay Consultant for its services in accordance with the provisions of this
Section. Consultant's compensation for all work performed in accordance with
this Agreement, including all reimbursable items and subconsultant fees, shall be
Forty-Seven Thousand Four Hundred and no /100 Dollars ($47,400.00) without
prior written authorization from City. This amount is based upon Consultants
Project Budget, attached hereto as Exhibit "C ". No billing changes shall be made
during the term of this Agreement without the prior written approval of City.
4.1 City shall pay Consultant no later than thirty (30) days after staffs
approval of Consultant's final report.
4.2 City shall reimburse Consultant only for those costs or expenses specifically
approved in this Agreement, or specifically approved in writing in advance
by City.
4.3 Consultant shall not receive any compensation for Extra Work performed
without the prior written authorization of City. As used herein, "Extra
Work" means any work that is determined by City to be necessary for the
proper completion of the Project, but which is not included within the
Scope of Services and which the parties did not reasonably anticipate
would be necessary at the execution of this Agreement. Compensation
for any authorized Extra Work shall be paid in accordance with the
Schedule of Billing Rates as set forth in Exhibit "C ".
5. PROJECT MANAGER
Consultant shall designate a Project Manager, who shall coordinate all phases of
the Project. This Project Manager shall be available to City at all reasonable
times during the Agreement term. Consultant has designated J. Bradley ,Wilkes
to be its Project Manager. Consultant shall not remove or reassign the Project
Manager, or assign any new or replacement personnel to the Project without the
prior written consent of City. City's approval shall not be unreasonably withheld
with respect to the removal or assignment of non -key personnel.
Consultant, at the sole discretion of City, shall remove from the Project any of its
personnel assigned to the performance of services upon written request of City.
Consultant warrants that it will continuously furnish the necessary personnel to
complete the Project on a timely basis as contemplated by this Agreement.
6. ADMINISTRATION
This Agreement will be administered by the Revenue Division. Lourdes Cantore
shall be the Project Administrator and shall have the authority to act for City
under this Agreement. The Project Administrator or her authorized representative
shall represent City in all matters pertaining to the services to be rendered
pursuant to this Agreement.
7. CITY'S RESPONSIBILITIES
In order to assist Consultant in the execution of its responsibilities under this
Agreement, City agrees to provide access to the required staff, and upon request
of Consultant, provide one copy of all existing relevant information on file at City.
City will attempt to provide all staff access and materials in a timely manner so
as not to cause delays in Consultant's Schedule of Work.
8. STANDARD OF CARE
8.1 All of the services shall be performed by Consultant or under Consultant's
supervision. Consultant represents that it possesses the professional and
technical personnel required to perform the services required by this
Agreement, and that it will perform all services in a manner
commensurate with community professional standards. All services shall
be performed by qualified and experienced personnel who are not
employed by City, nor have any contractual relationship with City.
8.2 Consultant represents and warrants to City that it has, shall obtain, and
shall keep in full force in effect during the term hereof, at its sole cost and
expense, all licenses, permits, qualifications, insurance and approvals of
whatsoever nature that is legally required of Consultant to practice its
profession. Consultant shall maintain a City of Newport Beach business
license during the term of this Agreement.
8.3 Consultant shall not be responsible for delay, nor shall Consultant be
responsible for damages or be in default or deemed to be in default by
reason of strikes, lockouts, accidents, or acts of God, or the failure of City
to furnish timely information or to approve or disapprove Consultant's
work promptly, or delay or faulty performance by City, contractors, or
governmental agencies.
9. HOLD HARMLESS
To the fullest extent permitted by law, Consultant shall indemnify, defend and
hold harmless City, its City Council, boards and commissions, officers, agents,
volunteers, and employees (collectively, the "Indemnified Parties ") from and
against any and all claims (including, without limitation, claims for bodily injury,
death or damage to property), demands, obligations, damages, actions, causes
of action, suits, losses, judgments, fines, penalties, liabilities, costs and
expenses (including, without limitation, attorney's fees, disbursements and court
costs) of every kind and nature whatsoever (individually, a Claim; collectively,
"Claims "), which may arise from or in any manner relate (directly or indirectly) to
any breach of the terms and conditions of this Agreement, any work performed
or services provided under this Agreement or Consultant's presence or activities
conducted on the Project (including the negligent and /or willful acts, errors
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and /or omissions of Consultant, its principals, officers, agents, employees,
vendors, suppliers, consultants, subcontractors, anyone employed directly or
indirectly by any of them or for whose acts they may be liable or any or all of
them).
Notwithstanding the foregoing, nothing herein shall be construed to require
Consultant to indemnify the Indemnified Parties from any Claim arising from the
sole negligence or willful misconduct of the Indemnified Parties. Nothing in this
indemnity shall be construed as authorizing any award of attorney's fees in any
action on or to enforce the terms of this Agreement. This indemnity shall apply
to all claims and liability regardless of whether any insurance policies are
applicable. The policy limits do not act as a limitation upon the amount of
indemnification to be provided by the Consultant.
10. INDEPENDENT CONTRACTOR
It is understood that City retains Consultant on an independent contractor basis
and Consultant is not an agent or employee of City. The manner and means of
conducting the work are under the control of Consultant, except to the extent
they are limited by statute, rule or regulation and the expressed terms of this
Agreement. Nothing in this Agreement shall be deemed to constitute approval
for Consultant or any of Consultant's employees or agents, to be the agents or
employees of City. Consultant shall have the responsibility for and control over
the means of performing the work, provided that Consultant is in compliance with
the terms of this Agreement. Anything in this Agreement that may appear to give
City the right to direct Consultant as to the details of the performance or to
exercise a measure of control over Consultant shall mean only that Consultant
shall follow the desires of City with respect to the results of the services.
11. COOPERATION
Consultant agrees to work closely and cooperate fully with City's designated
.Project Administrator and any other agencies that may have jurisdiction or
interest in the work to be performed. City agrees to cooperate with the
Consultant on the Project.
12. CITY POLICY
Consultant shall discuss and review all matters relating to policy and Project
direction with City's Project Administrator in advance of all critical decision points
in order to ensure the Project proceeds in a manner consistent with City goals
and policies.
13. PROGRESS
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Consultant is responsible for keeping the Project Administrator and /or her duly
authorized designee informed on a regular basis regarding the status and
progress of the Project, activities performed and planned, and any meetings that
have been scheduled or are desired.
14. INSURANCE
Without limiting Consultant's indemnification of City, and prior to commencement
of work, Consultant shall obtain, provide and maintain at its own expense during
the term of this Agreement, a policy or policies of liability insurance of the type
and amounts described below and in a form satisfactory to City.
A. gKtfcates of Insurance. Consultant shall provide certificates of
insurance with original endorsements to City as evidence of the insurance
coverage required herein. Insurance certificates must be approved by
City's Risk Manager prior to commencement of performance or issuance
of any permit, Current certification of insurance shall be kept on file with
City at all times during the term of this Agreement.
B. Signature. A person authorized by the insurer to bind coverage on its
behalf shall sign certification of all required policies.
C. Acceptable Insurers. All insurance policies shall be issued by an
insurance company currently authorized by the Insurance Commissioner
to transact business of insurance in the State of California, with an
assigned policyholders' Rating of A (or higher) and Financial Size
Category Class VII (or larger) in accordance with the latest edition of
Best's Key Rating Guide, unless otherwise approved by the City's Risk
Manager.
D. Coverage Requirements.
Workers' Compensation Coverage. Consultant shall maintain
Workers' Compensation Insurance and Employer's Liability
Insurance for his or her employees in accordance with the laws of
the State of California. In addition, Consultant shall require each
subcontractor to similarly maintain Workers' Compensation
Insurance and Employer's Liability Insurance in accordance with
the laws of the State of California for all of the subcontractor's
employees. Any notice of cancellation or non - renewal of all
Workers' Compensation policies must be received by City at least
thirty (30) calendar days (10 calendar days written notice of non-
payment of premium) prior to such change. The insurer shall agree
to waive all rights of subrogation against City, its officers, agents,
employees and volunteers for losses arising from work performed
by Consultant for City.
ii. General Liability Coverage. Consultant shall maintain commercial
general liability insurance in an amount not less than One Million
and no /100 Dollars ($1,000,000.00) per occurrence for bodily
injury, personal injury, and property damage, including without
limitation, contractual liability. If commercial general liability
insurance or other form with a general aggregate limit is used,
either the general aggregate limit shall apply separately to the work
to be performed under this Agreement, or the general aggregate
limit shall be at least twice the required occurrence limit.
iii. Automobile Liability Coverage. Consultant shall maintain
automobile insurance covering bodily injury and property damage
for all activities of the Consultant arising out of or in connection with
work to be performed under this Agreement, including coverage for.
any owned, hired, non -owned or rented vehicles, in an amount not
less than One Million and no /100 Dollars ($1,000,000.00)
combined single limit for each occurrence.
iv. Professional Errors and Omissions Insurance. Consultant shall
maintain professional errors and omissions insurance, which
covers the services to be performed in connection with this
Agreement in the minimum amount of One Million and no /100
Dollars ($1,000,000.00).
E. Endorsements. Each general liability and automobile liability insurance
policy shall be endorsed with the following specific language:
The City, its elected or appointed officers, officials, employees,
agents and volunteers are to be covered as additional insureds with
respect to liability arising out of work performed by or on behalf of
the Consultant.
ii. This policy shall be considered primary insurance as respects to
City, its elected or appointed officers, officials, employees, agents
and volunteers as respects to all claims, losses, or liability arising
directly or indirectly from the Consultant's operations or services
provided to City. Any insurance maintained by City, including any
self- insured retention City may have, shall be considered excess
insurance only and not contributory with the insurance provided
hereunder.
iii. This insurance shall act for each insured and additional insured as
though a separate policy had been written for each, except with
respect to the limits of liability of the insuring company.
iv. The insurer waives all rights of subrogation against City, its elected
or appointed officers, officials, employees, agents and volunteers.
V. Any failure to comply with reporting provisions of the policies shall
not affect coverage provided to City, its elected or appointed
officers, officials, employees, agents or volunteers.
vi. The insurance provided by this policy shall not be suspended,
voided, canceled, or reduced in coverage or in limits, by either
party except after thirty (30) calendar days (10 calendar days
written notice of non - payment of premium) written notice has been
received by City.
F. Timely Notice of Claims. Consultant shall give City prompt and timely
notice of claim made or suit instituted arising out of or resulting from
Consultants performance under this Agreement.
G. Additional Insurance. Consultant shall also procure and maintain, at its
own cost and expense, any additional kinds of insurance, which in its own
judgment may be necessary for its proper protection and prosecution of
the work.
15. PROHIBITION AGAINST ASSIGNMENTS AND TRANSFERS
Except as specifically authorized under this Agreement, the services to be
provided under this Agreement shall not be assigned, transferred contracted or
subcontracted out without the prior written approval of City. Any of the following
shall be construed as an assignment: The sale, assignment, transfer or other
disposition of any of the issued and outstanding capital stock of Consultant, or of
the interest of any general partner or joint venturer or syndicate member or
cotenant if Consultant is a partnership or joint - venture or syndicate or cotenancy,
which shall result in changing the control of Consultant. Control means fifty
percent (50 %) or more of the voting power, or twenty-five percent (25 %) or more
of the assets of the corporation, partnership orjoint- venture.
16. SUBCONTRACTING
The parties recognize that a substantial inducement to City for entering into this
Agreement is the professional reputation, experience and competence of
Consultant. Assignments of any or all rights, duties or obligations of the
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Consultant under this Agreement will be permitted only with the express written
consent of City. Consultant shall not subcontract any portion of the work to be
performed under this Agreement without the prior written authorization of City.
17. OWNERSHIP OF DOCUMENTS
Each and every report, draft, map, record, plan, document, analysis,
spreadsheet and other writing produced (hereinafter "Documents "), prepared or
caused to be prepared by Consultant, its officers, employees, agents and
subcontractors, in the course of implementing this Agreement, shall become the
exclusive property of City, and City shall have the sole right to use such materials
in its discretion without further compensation to Consultant or any other party.
Consultant shall, at Consultant's expense, provide such Documents to City upon
prior written request.
Documents, including drawings and specifications, prepared by Consultant
pursuant to this Agreement are not intended or represented to be suitable for
reuse by City or others on any other project. Any use of completed Documents
for other projects and any use of incomplete Documents without specific written
authorization from Consultant will be at City's sole risk and without liability to
Consultant. Further, any and all liability arising out of changes made to
Consultant's deliverables under this Agreement by City or persons other than
Consultant is waived against Consultant and City assumes full responsibility for
such changes unless City has given Consultant prior notice and has received
from Consultant written consent for such changes.
18. CONFIDENTIALITY
All Documents, including drafts, preliminary drawings or plans, notes and
communications that result from the services in this Agreement, shall be kept
confidential unless City authorizes in writing the release of information.
19. INTELLECTUAL PROPERTY INDEMNITY
Consultant shall defend and indemnify City, its agents, officers, representatives
and employees against any and all liability, including costs, for infringement of
any United States' letters patent, trademark, or copyright infringement, including
costs, contained in Consultant's Documents, drawings and specifications
provided under this Agreement.
20. RECORDS
Consultant shall keep records and invoices in connection with the work to be
performed under this Agreement. Consultant shall maintain complete and
s
accurate records with respect to the costs incurred under this Agreement and
any services, expenditures and disbursements charged to City, for a minimum
period of three (3) years, or for any longer period required by law, from the date
of final payment to Consultant under this Agreement. All such records and
invoices shall be clearly identifiable. Consultant shall allow a representative of
City to examine, audit and make transcripts or copies of such records and
invoices during regular business hours. Consultant shall allow inspection of all
work, data, Documents, proceedings and activities related to the Agreement for a
period of three (3) years from the date of final payment to Consultant under this
Agreement.
21. WITHHOLDINGS
City may withhold payment to Consultant of any disputed sums until satisfaction
of the dispute with respect to such payment. Such withholding shall not be
deemed to constitute a failure to pay according to the terms of this Agreement.
Consultant shall not discontinue work as a result of such withholding. Consultant
shall have an immediate right to appeal to the City Manager or his designee with
respect to such disputed sums. Consultant shall be entitled to receive interest on
any withheld sums at the rate of return that City earned on its investments during
the time period, from the date of withholding of any amounts found to have been
improperly withheld.
22. ERRORS AND OMISSIONS
In the event of errors or omissions that are due to the negligence or professional
inexperience of Consultant which result in expense to City greater than what
would have resulted if there were not errors or omissions in the work
accomplished by Consultant, the additional design, construction and /or
restoration expense shall be bome by Consultant. Nothing in this paragraph is
intended to limit Citys rights under the law or any other sections of this
Agreement.
23. CITY'S RIGHT TO EMPLOY OTHER CONSULTANTS
City reserves the right to employ other Consultants in connection with the
Project.
24. CONFLICTS OF INTEREST
Consultant or its employees may be subject to the provisions of the California
Political Reform Act of 1974 (the "Act "), which (1) requires such persons to
disclose any financial interest that may foreseeably be materially affected by the
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work performed under this Agreement, and (2) prohibits such persons from
making, or participating in making, decisions that will foreseeably financially
affect such interest.
If subject to the Act, Consultant shall conform to all requirements of the Act.
Failure to do so constitutes a material breach and is grounds for immediate
termination of this Agreement by City. Consultant shall indemnify and hold
harmless City for any and all claims for damages resulting from Consultant's
violation of this Section.
25. NOTICES
All notices, demands, requests or approvals to be given under the terms of this
Agreement shall be given in writing, and conclusively shall be deemed served
when delivered personally, or on the third business day after the deposit thereof
in the United States mail, postage prepaid, first -class mail, addressed as
hereinafter provided. All notices, demands, requests or approvals from
Consultant to City shall be addressed to City at:
Attn:
Ms. Lourdes Cantore
Revenue Division
City of Newport Beach
3300 Newport Boulevard
Newport Beach, CA, 92663
Phone: 949 - 644 -3143
Fax: 949- 644 -3073
All notices, demands, requests or approvals from CITY to Consultant shall be
addressed to Consultant at:
Attn:
Mr. J. Bradley Wilkes
Managing Principal
Public Resource Management Group, LLC
1380 Lead Hill Blvd., Suite 106
Roseville, CA 95661
Phone: 916 -677 -4233
Fax: 916 -677 -2283
26. TERMINATION
In the event that either party fails or refuses to perform any of the provisions of
this Agreement at the time and in the manner required, that party shall be
deemed in default in the performance of this Agreement. If such default is not
cured within a period of two (2) calendar days, or if more than two (2) calendar
days are reasonably required to cure the default and the defaulting party fails to
give adequate assurance of due performance within two (2) calendar days after
receipt of written notice of default, specifying the nature of such default and the
steps necessary to cure such default, and thereafter diligently take steps to cure
the default, the non - defaulting party may terminate the Agreement forthwith by
giving to the defaulting party written notice thereof.
Notwithstanding the above provisions, City shall have the right, at its sole
discretion and without cause, of terminating this Agreement at any time by giving
seven (7) calendar days prior written notice to Consultant. In the event of
termination under this Section, City shall pay Consultant for services
satisfactorily performed and costs incurred up to the effective date of termination
for which Consultant has not been previously paid. On the effective date of
termination, Consultant shall deliver to City all reports, Documents and other
information developed or accumulated in the performance of this Agreement,
whether in draft or final form.
27. COMPLIANCE WITH ALL LAWS
Consultant shall at its own cost and expense comply with all statutes,
ordinances, regulations and requirements of all governmental entities, including
federal, state, county or municipal, whether now in force or hereinafter enacted.
In addition, all work prepared by Consultant shall conform to applicable City,
county, state and federal laws, rules, regulations and permit requirements and be
subject to approval of the Project Administrator and City.
28. WAIVER
A waiver by either party of any breach, of any term, covenant or condition
contained herein shall not be deemed to be a waiver of any subsequent breach
of the same or any other term, covenant or condition contained herein, whether
of the same or a different character.
29. INTEGRATED CONTRACT
This Agreement represents the full and complete understanding of every kind or
nature whatsoever between the parties hereto, and all preliminary negotiations
and agreements of whatsoever kind or nature are merged herein. No verbal
agreement or Implied covenant shall be held to vary the provisions herein.
30. CONFLICTS OR INCONSISTENCIES
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In the event there are any conflicts or inconsistencies between this Agreement
and Exhibit "A ", or any other attachments attached hereto, the terms of this
Agreement shall govern.
31. INTERPRETATION
The terms of this Agreement shall be construed in accordance with the meaning
of the language used and shall not be construed for or against either party by
reason of the authorship of the Agreement or any other rule of construction
which might otherwise apply.
32. AMENDMENTS
This. Agreement may be modified or amended only by a written document
executed by both Consultant and City and approved as to form by the City
Attorney.
33. SEVERABILITY
If any term or portion of this Agreement is held to be invalid, illegal, or otherwise
unenforceable by a court of competent jurisdiction, the remaining provisions of
this Agreement shall continue in full force and effect.
34. CONTROLLING LAW AND VENUE
The laws of the State of California shall govern this Agreement and all matters
relating to it and any action brought relating to this Agreement shall be
adjudicated in a court of competent jurisdiction in the County of Orange.
35. EQUAL OPPORTUNITY EMPLOYMENT
Consultant represents that it is an equal opportunity employer and it shall not
discriminate against any subcontractor, employee or applicant for employment
because of race, religion, color, national origin, handicap, ancestry, sex or age.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed on
the day and year first written above.
APPROVED AS TO FORM:
City Attorney
for the City of Newport Beach
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CITY OF NEWPORT BEACH,
A Municipal Corporation
By:
Mayor
for the City of Newport Beach
ATTEST:
0
LaVonne Harkless,
City Clerk
CONSULTANT:
0
(Corporate Officer)
Title:
Print Name:
By:
(Financial Officer)
Print Name:
Attachments: Exhibit 'A" — Scope of Services
Exhibit °B" — Schedule of Work
Exhibit 'C — Project Budget
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Exhibit "A"
SCOPE OF SERVICES
Consultant shall perform the following steps in the full cost of services study:
Develop City's cost allocation plan. Consultant shall review the following:
a. Costs allocated — ensure all indirect costs are being allocated for use in a
user fee study;
b. Allocation base study; and
C. Allocations of indirect costs to user fee services.
2. Develop User Fee Study. Consultant shall perform the following:
a. Identify /Inventory all user fee related services;
b. Review fee structures in various departments (fixed fee vs. hourly rates
vs. Nexus approach in building inspection);
C. Calculate the direct cost of each user fee service —
i. Salary cost of direct staff supplying service;
ii. Fringe benefits; and
iii. Direct service and supplies;
d. Full Cost Identification —
L Integrate indirect cost data from the cost allocation plan;
ii. Integrate direct cost data;
e. Subsidy analysis;
f. Develop a comparison of fee levels among other selected cities;
g. Review user fee policy; and
h. Install PRM user fee software (Excel Worksheets) which would enable
City to update fee information on an annual basis.
Consultant's Work Plan is as follows:
Step 1: Project Introductory Meeting
Consultant shall meet with required City staff to:
a. Explain the cost plan and user fee analysis process;
b. Explain the purpose of the full cost study;
C. Describe how other cities use full costing;
d. Provide example summary reports; and
e. Answer any questions City staff may have.
Step 2: Data Review
Consultant shall develop lists of basis data requirements which may include:
a. lists of selected staff salary levels;
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b, benefit cost detail;
C. operational budgets;
d. transaction statistics;
e. and other data which Consultant may require.
Once the basic data is required, Consultant shall develop the cost plan and rate
structures.
Step 3: Cost Allocation Plan Development
a. Department Interview Preparation: After the data above is acquired,
Consultant shall develop forms for City department interviews. .Consultant's interview
forms shall .be developed with questions related to staffing lists, actual salary level, staff
titles, department expenditure report detail, development of pre - interview questions, etc.
b. . Departmental Interviews: Consultant shall interview allocating City
departments to ensure that costs are spread in a manner that reflects:
I. the work that was done;
ii. the departments that benefited; and
iii. which allocation bases are proper.
Consultant shall also interview any departments involved with internal service funds that
charge for service to ensure that indirect costs are allocated accurately so that they are
included in the full cost analysis when calculating internal service fund rates.
C. Department Personnel Staff Analysis: Consultant has developed
Personnel Staff Analysis ( "PSA ") worksheets. These worksheets shall be completed
with information gathered in the initial interviews. The PSA provides a basis for the
distribution of departmental costs into departmental functions. During the interviews,
Consultant shall discuss each employee's assignments and duties. Using timesheets,
assignments, or interview notes, Consultant shall determine what percentage of each
person's time should be divided into departmental functions. This information will be
entered into the PSA worksheets to define departmental functions. Once staff
members and their corresponding salaries are distributed to functions, other
department costs, such as materials and supplies, will also be distributed into the same
functions or cost pools. The process shall take a departmental budget unit and break it
into functional cost pools, which can then be allocated throughout the City using a
meaningful allocation base.
d. Departmental Cost Distribution; Consultant shall develop this schedule,
which allocates departmental costs of the central service department and any "incoming
costs" being allocating from other service departments. Consultant shall utilize its
software to analyze, display and allocate the indirect costs of each central service
department in such detail so as to facilitate City's review.
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e. Developing Allocation Bases: After departmental functions are
created, and costs are distributed across functions, a separate allocation base shall be
selected that best reflects the benefit each department receives from the various
services. The allocation base shall reflect a connection between the service provided
and the service received.
f. Cost Allocation Management Reports: After each central service
department has been interviewed, the departmental costs distributed to functional cost
pools, and each cost pool given an allocation base, Consultant shall produce the cost
plan utilizing its own software.
Step 4: User Fee Direct Cost Analvsis
a. User Fee Inventorv: Consultant will develop an inventory of all current
user fee charges. The list will include all general fund services provided to the public
for which fees are charged. The objective of the inventory is to identify all general fund
user fee charges and match them to the departments which supply the services. The
following information will be reviewed:
i. fee history;
ii. rate increase history;
iii. revenue history;
iv. fee purpose;
V. number of units completed each year; and
vi. departments providing service.
b. Departmental Interviews: With information from the fee inventory,
Consultant will interview each department supplying user fee services. Using the
interview forms it has developed, Consultant shall gather the following data:
i. names of staff members providing service;
ii. amount of time —
required to complete one unit of service, and
per year supplying the service
iii. activity statistics such as —
number completed per year,
number completed last fiscal year, and
estimated number of units to be completed in the coming
fiscal year.
The key statistics needed from a departmental interview are: individual staff estimates
of time spent providing each service, and the number of units completed on an annual
basis. In each department interview, Consultant shall ensure that 100% of each staff
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member's time is identified such that no service, user fee related or not, is excluded
from the full cost analysis.
C. Financial Analysis: Once the basic time and workload transaction data is
gathered from the departmental interviews, salary data, departmental service and
supply cost data shall be entered by Consultant into Consultants user fee software.
This departmental data shall be integrated with the indirect cost data developed within
the Consultant's cost allocation plan module. The direct cost and indirect cost of each
fee shall be calculated and displayed for review.
d. User Fee Management Reports: Consultant shall provide all the financial
transaction and comparsion data in the final management reports. Each City
department shall be provided at least two separate opportunities to review the
costfrevenue data. This shall ensure that the raw data will be as accurate as possible,
for a more reliable final report.
Step 5: Evaluation of Building Department Fees
Consultant shall review the building department fees, and evaluate the relevance of the
fees as they relate to the service provided. If Consultant concludes that the
methodology upon which these building department fees are based must be updated,
and if City Attorney approves, then Consultant shall conduct a "Nexus" study to develop
a new method and basis for charging fees. The Nexus method makes a firm
connection between hours and cost of service.
Step 6: Study Presentation /Defense /Clarification
If required, Consultant shall meet with staff to clarify its final report. In addition,
Consultant may be required to present its findings and final report to the City's Council,
Finance Committee, or other authoritative body. In the event Consultant presents its
report to the City Council, Finance Committee or any authoritative body with an elected
official present, Consultant shall be represented by J. Bradley Wilkes.
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Exhibit "B"
SCHEDULE OF WORK
Weeks One and Two:
[Insert Dates]
1. Meet with City management team and department heads to review study goals
and objectives.
2. Obtain budgets, salary levels, staff lists & expenditure data.
3. Begin meetings with City departments.
4. Begin structuring project data into PRM systems.
Weeks Three and Four:
[Insert Dates]
1. Obtain any feedback from departments, continue communication with
departments, and answer questions.
2. Enter transaction data into the PRM models.
Week Five:
[Insert Dates]
1. Produce any draft models completed.
2. Meet with City departments to review draft worksheets and discuss outstanding
items.
Weeks Six and Seven:
[Insert Dates]
1. Produce final cost allocation plan.
2. Link cost allocation plan to user fee worksheets.
3. Produce second user fee draft worksheets.
4. Obtain feedback and comments from City.
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Weeks Eight and Nine:
[Insert Dates]
1. Deliver final user fee worksheets.
2. Develop final project reports.
3. Install cost plan model.
4. Install user fee model.
Consultant shall submit weekly updates to the Project Administrator by e-mail
describing the work performed during the preceding week. These updates shall include
the name of the person who performed the work, a brief description of the services
performed and/or the specific task in the Scope of Services and Schedule of Work to
which it relates, the date the services were performed, the number of hours spent on all
work billed on an hourly basis, and a description of any reimbursable expenditures.
20
Exhibit "C"
PROJECT BUDGET
Consultant estimates the following number of hours for the Scope of Worlc
TASKS
SR PRM STAFF
PRM STAFF
TOTAL
Cost Allocation Plan
32
50
82
User Fee Calculation Analysis
80
90
170
Cost Plan Excel Model
8
8
16
User Fee Excel Model
8
16
24
Presentations
8
16
24
Totals:
136
180
316
Consultant's average hourly rate, which includes expenses, is $150. Consultant shall not be using
subcontractors.
Consultant's fees shall be as follows:
General Fund User Fee Study:
Full Cost Plan
OMB Cost Plan
Models:
Presentations:
Total Project
21
$25,500
$10,300
$ 2,000
$ 6,000
$ 3,600
$47,400
City of Newport Beach NO. BA- 07BA -018
BUDGET AMENDMENT
2006 -07
EFFECT ON BUDGETARY FUND BALANCE:
Increase Revenue Estimates
X Increase Expenditure Appropriations AND
Transfer Budget Appropriations
SOURCE:
from existing budget appropriations
from additional estimated revenues
PX from unappropriated fund balance
EXPLANATION:
This budget amendment is requested to provide for the following:
AMOUNT: $47,400.00
Increase in Budgetary Fund Balance
X Decrease in Budgetary Fund Balance
No effect on Budgetary Fund Balance
To increase expenditure appropriations for a citywide cost allocation plan and cost of services study.
ACCOUNTING ENTRY:
BUDGETARY FUND BALANCE
Fund Account Description
010 3605 Gen Fund - Fund Balance
REVENUE ESTIMATES (3601)
Fund /Division Account Description
EXPENDITURE APPROPRIATIONS (3603)
Signed:
Signed:
Signed:
Financial
Manager
City Council Approval: City Clerk
Amount
Debit Credit
$47,400.00 '
$47,400.00
W -
Date
Description
Division
Number 0640 Revenue
Account
Number 8080 Services - Prof & Tech NOC
Division
Number
Account
Number
Division
Number
Account
Number
Division
Number
Account
Number
Division
Number
Account
Number
Signed:
Signed:
Signed:
Financial
Manager
City Council Approval: City Clerk
Amount
Debit Credit
$47,400.00 '
$47,400.00
W -
Date