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HomeMy WebLinkAboutS1-City Administrator , 1 CITY OF SAN BERNARDINO - REQUEST FOR COUNCIL ACTION From: Fred Wilson Subject: City Administrator Administrator's Office July 28, 1997 ' ORIGINAL Appro~al of an amendment to the contract with Deloitte & Touche LLP, for an appraisal of the Refuse operation. Dept: Date: Synopsis of Previous Council action: None. Recommended motion: Adopt resolution. #Ji. Contact person: Fred Wilson Phone: 5122 Supporting data attached: Yes Ward: All FUNDING REOUIREMENTS: Amount: $4, 000.00 Source: (Acct. No.) 527-415-55'2 (Acct. Descriotion) Refuse Recycling cente~ Finance: fiJ;JJ&u~ ~ Council Notes: f'/o A-clil771 74 KUI 75-0262 Agenda Item No. I/Jf!lJ7 ~ I STAFF REPORT In March, the Mayor authorized the release of a Request for Proposals for an appraisal of the Refuse operation. The firm of Deloilte & Touche LLP was selected as the most qualified vendor. A contract in the amount of $24,500 was approved by the Mayor for the completion of this work. Since the contract was executed, a number of developments have arisen that have caused the scope of the project to exceed the original cost estimate. As the Refuse Division budget was revised through the FY 1997-98 budget process, the underlying assumptions needed for the appraisal also required revision. As the Council approved various actions through the budget meetings that involved Refuse, staff requested that the contractor modify the appraisal to reflect these most recent developments. In addition, some of the key data requested by Deloilte & Touche was not available in the format that the firm customarily uses, which required additional time by the contractor to enter into the appraisal models. For example, historical water billing data was available that reflects the various types of refuse accounts, but in a format that could be transferred to a spreadsheet without manual data entry. Staff has been able to negotiate a contract amendment that considers these unforseen circumstances, and compensates the contractor in an appropriate manner. An additional $4,000 will be paid to Deloitte & Touche for the completion of the appraisal, for a total contract price of $28,500. It is anticipated that the appraisal will be presented to the Mayor and Council at the September 2nd meeting. / .I / RIiSOLO'11ON O'TIIE MAYOR AND COMMON CO'# O'TIIE CITY 0 SAN BERNARDINO AUTHORIZING AN AMENDMENT TO CONTRACT 3 DELOITTE & TOUCHE LLP FOR THE COMPLETION OF APPRAISAL OF , CITY'S REFUSE OPERATION. . RESOLUTION NO. 1 2 4 5 BE 1'l' RESOLVED BY THE MAYOR AND COMMON COUNCIL OF THE C OF SAN BERNARDINO AS FOLWWS: i 6 SECTION 1. The Mayor is hereby authorized aJ.rii directed to execute on behalf 0 ,I of the Refuse appraisal. held on the day of , 1997, by the following vote, to wit: 1/111 1/1/1 1/11/ 20 1/1/1 21 22 1/1/1 23 1/11/ 24 1/1/1 25 1/1/1 26 27 July 28, 1997 28 1 1 RESOLUTION OF THE MAYOR AND COMMON COUNCIL AUTHORIZING AN AMENDMENT WITH DEWITTE & TOUCHE REGARDING APPRAISAL OF REFUSE 2 DIVISION. 3 4 (- , i .' 5 6 Council Members 7 NEGRETE 8 CURLIN 9 ARIAS AYES NAYS ABSTAIN /ABSENT i / OBERHELMAN ./ /' l /' / 10 11 DEVLIN 12 13 -,. / ANDERSON 14 MILLER 15 16 17 18 19 City Clerk .i / I 20 , / The foregoing resolution is h~reby approved this day of , 1997. I - ; ,.. 21 22 Approved as to form 23 and legal content: 24 25 26 27 28 / i TOM MINOR, Mayor City of San Bernardino James F. Penman, City Attorney 2 Ie: JUL 29'97 :1:02 No.007 0.02 Deloltte & Touche LLP o 50 Fremont Street Telephone: (4151247.4000 San Francisco, California 94105-2230 Facsimiie: (4151 247-4329 July 29 1997 Mr. Fred Wilson City Administrator Sixth Floor, City Hall 300 North D Street San Bernardino, CA 92418 Dear Fred: We propose the following amendments to our original contract: 1. Our report will include a list that shows the stated book value of the major tangible assets. 2. Issue a draft report for discussion with City Management. 3. Create a final report. 4. Present our fmdings to the City CoWlcil discussing our assumptions, methodologies and conclusions. 5. City of San Bernardino agrees to pay an additional $4,000 above the original $24,500 budget. Please contact me at (415) 247-5197, if you have any questions or comments. Respectfully, ~~g1CF~ Senior Manager The signature below indicates the City of San Bernardino's acceptance of this engagement letter. The original Tenns and Conditions remain in effect. Signature Name Title Date IlIIaItlI T.eIIe ToIInIlIu IntBmItIIIII \ . \ ~// AGRDMENT FOR PROFl:SSION'AL SERVICES PERFORM AN APPRAISAL OF THE CITY'S REFUSE OPERATION IN ORDER TO ESTABLISH A FAIR MARKETVALUJ: This AGREEMENT is made aDd CDICRd into thisjo ~ of fltfl--l'f-. 1997, by aDd bet".c.... tile CITY OF SAN BERNARDINO, Califomia, a mllllicipBl corponIioa, bereiDatter rdcmd to as tile 'CITY" aDd DELOITTE " TOUCIIJ:, a limited liability plbtu...dIip, bereiDatter rdcmd to as "PROVIDER. . WITNESSETH WHEREAS. Cl1Y desiRs to obtain pro(essioaal services to conduct an appraisaJ of tile City's RaicIeDtiaI aDd Commercial Rdilse opcralioDs. WHEREAS, in Older to obtain an objecIjvc ewlualion of the City's Rdilse opcraIiOD, it is ""(: III ry to main tile jlrofessioaal ~ of a <p"'HfiM firm; aDd WHEREAS, PROVIDER is qualified to pnMde said proCcssioaal services; aDd has SlIbmiUed a proposaI dated ApriI 10, 1997 in '''"I''''''''' to tile ClTY's Request for Proposal which bas been determined to adeqUatcIy IIICd tile aecds of tile Cl1Y in this project . NOW, THEREFORE, it is mutuaUy agreed, as follows: I. SCOPE OF SERVICES PROVIDER sball perform lhosc scrvices specified in tile 'Scope of Services' as set forth in tile Cl1Y's Request tOr Pk.....-I dated March 20, 1997, a copy ofwbic:h is ....",.""" as ExbiIlit .1- aDd as set forth in PROVIDER's Pk"l"""'i dated April 10, 1997 aDd deIctingbotll tile paragraph CIIIitIed "J-nifit...tioo- aDd tile paagraph ...mtlNl "I inrihrion on n......y set fonh on pip 21in Appeqdix C of PROVIDER's ProposaI, a copy ofwha. is -"<"hcd bmto as ExbiIlit "2', boIh incorporated as Ibongb set bth beIein in fiIIl. 2. TERM OF AGREEMENT The savia:s of PROVIDER are to com"""'<:e within leD (10) ClII-I- days after tile date first set fbrth above, with tile scbeduIed ~ date to be DO Ialer than sixty-fiw (65) ep'-lotr days &om tile date lint set forth allow. 3. CHAN=~ASERVICES A. Ptaro,~ of tile WIlIk IIIC':;fied in tile "Scope ofScmccs,. is made an obIiplicm of PROVIDER UDder this ~........... sni!jc:c:t to any "'-r made suIRqnendy npon IIIIdnaI q.eeweut of tile pulies. AD such """'IV" sball be iDc:ofpor.lted by writIcD ......"""- lIb to Ibis ~ aDd iDclude any incrase or dcc. in tile amowu of u-..... n..';,. due PROVIDER fOr tile clIaqe in scope. ADy clIaqe which has DDl beea so iDco.}IU&..r.,d sball DDl be biDding on citber party. B. No extra services Shan be ft:IIdalllI by PROVIDER 1IIIdcr Ibis Ap......411111ess such extra ow .;..... me autbarized, in wriliD& by City prior to pdA......... of such 1lIIIt. AadIoIized extra services sball be iawic:ed '-lOll PROVIDER's "Billing Rate Per Hour. set fortb on pqe ci&ht (S) of PROVIDER's PropaaI dated April 10, 1997 aDd doI.tn,g both tile __..... CIIIitIed "I........nifirll/oiln-1IId tile paragraph eaIided "Limi1atioa OIl ~ set fortb on pqe 21 in .41'1"'",,1;', C of PROVIDER's ProposaI. 1 4. COMPENSATION A. The City sIIaIJ reimburse Ihe PROVIDER for fees aDd "'1" .l41 . as iDvoicaIlIplII complelioD of Ihe prqject, for a tota1 DOt 10 exc:eed $24,500.00. Said paymeDl sIIaIJ be for PROVIDER's adIIaIl'ecs aDd alIlS iDdudiDg JaIlor IXISls, empI~ beDdits, ombead, profit, other direct aDd iDdiRct alIlS iDcumd by Ihe PROVIDER in perfOnDlllll:C of Ihe work. B. Said compellS3lion sIIaIJ DOt be altered lIIIless there is sill'iMont aJtmtioa in Ihe scapc, complexity or dIaracter of Ihe work 10 be performed. Ally such sill'ifi....nt aItaatioa sIIaIJ be apeed uplD in writing by City aDd PROVIDER befo~ Cl""""''''~.....ld of perfortllllllCC of such sipiMont aIIaaIicm by PROVIDER. Ally adjuslmcnt of Ihe tota1 cost of services will only be permitted wIleD Ihe PROVIDER CSlohli.- aDd City bas apeed, in writin& that there bas beca. or is 10 be, a sigJ'im..nt c:baDgc in: 1. Scope, complexity, or charaaer of Ihe services 10 be performed; 2. Conditions 1IDdcr which Ihe work is requiJed 10 be performed; aud 3. Duration of work if Ihe change from Ihe time period ~fiM in paragraph 2 warratIIS such adjl1<tmrnt D. The PROVIDER is requiJed 10 comply with all Federal, State aud Local laws aDd QJ'Ifi","""", appl~" 10 tbc work. The PROVIDER is required 10 comply with pm'lIillng wage I3lCS in aa:ordaDce with CaIifomia Labor Code Section 1770. 5. PAYMENT BY CITY A. The billiDp for all services rendered pursnant 10 this A&>oCdIedl sIIaIJ be snbmittf'd upon cofDl'lction of aD tasks by PROVIDER 10 City aud sball be paid by City within thirty (30) cIaJs after receiJl of same, --,.n"g any ........... diV"'Od by City. Dispute over any iIMIiced IDIOlIDI sbaD be IIlIliccd 10 Ihe PROVIDER within ten (10) days ofbilliDg auda meet aDd confer -ng for 1""_ ofnllllulion ofsuch dispuIe shaD be initi.....! by Ihe City within ten (10) days of notice of such cIispIIe. Each lIS as "...- in . Eyhihit "I" shaD be completed prior 10 final payment. B. Should litigation be lie( "110 cnfon:e any tcnn or ~ of this A&>.......... or 10 coIIcct any portion of Ihe IDIOlIDI pIylIIlIe 1IDdcr this Afp.. ....n'. Ihen all litigation aud collection ~'I" noes, W- fees. aDd court lXlSIs, aDdallOnley's fees shaD be paid 10 Ihe prmWing party. TheIXlSls, salary aude..I....~ oflhe City AItomey and members ofbis oIIice in enforcing this CODIract on bebaIf oflhe City sbaD be mn~ as -attorney's fi:es" for Ihe 1""_ of this puagraph. C. The City Administrator of City. or bis designee, sball hIM Ihe right of pneraI supervision over aD work paformcd by PROVIDER aud sbaD be City's agent with rapcct to """';ni"l PROVIDER's monpIl...... h...~. No paymeDl for any smices n:ndeted nnder this Agreemeat sbaD be made withant prior IppIOYaI of Ihe Dim:tor ofPnblic: Scrviocs or bis designee. D. The Office of Ihe Administrator may ~ aDd inspect Ihe PROVIDER's aclivities lbing Ihe proa...... oftbc lXll51ilw. 6. COMPLIANCE Wl1H crvn. RlOHl'S LAWS PROVIDER bcn:by c:ertifics that it will nat discriminate apinst any --*"e.. or W........ for cmpIoymc:at because of IlICe, color, religion, sex, IIIIrilaI sIaIas or _I ori8iL PROVIID. sbaD JIIOWOle afIirm8Iiw actiaa in its hiring praclic:es and empIoJee poIic:ies for minoriIics and other docj~ c:l.-Ia ....co.dl.Dcc: with FcdeIaI, SlaIC aDd Local laws. Such acliaa sbaD ~ lIal nat be limited llI, 1be lbIIowiDc: .......:t.._... and .....~ advertising. empIoymeaI, apgradiJJ& and I".-.-ltiaa. In ..tt:,~"\ PROVIDER sIIaIJ 2 aat exclude from !llrticipalion UDder this Agreement my empIoyce 01' appIicmt for empIoymcD& on tile bIsis of IF. ""ndi.-..p or ldigion in CllIIlpI;2""" with State and Fedmllaws. 7. TERMINATIONOf' AGREEMENT A. This ...- may be tcrmin"'e" by eitbcr party upon lbiJty (30) days' written IIOlice in tile event of -ntiallllilure of tile otbcr party to perform in a=rdance with tile terms of this ~. Each )lIIIty sba1I haw l1l'CDty (20) days foIlowinl dale of snch IIOlice within wbic:h to cnmct tbe ......2nti211'ai1uJe, giYiDs rise to such DOlicc. In tbe C\'CIIt of tcrminm.... of this Agleemedl, City sbaI1 within dIiny (30) days JIIY PROVIDER. for aD tile fees, charges and services perfol1llCd to City's at;cf'wotinn by PROVIDER, wbic:h finding of ----ion sball Dllt be umeasonabIy witltbcld. PROVIDER bmby COVCDaDIS and apes tbIt upon Jcrmin2fion of this ~n"'''' fill' my RaSOII, PROVIDER will preserve and make imnvodl"''''Y awilabIe to City, 01' its dcsilJlllled rqnsentaIiYes. spread sbecJs, maps, DOleS, comspondence, or teeonIs reIaIed to WOJk)lllid iIr by tile City and JeqDiraI fCll' as timcIy complelion, and to IitIly coopcraIe with City so that tile WOJk to be .. . '-"r1ichl'd UDder this Agiee.nelll may COIIlinuc within forty-five (45) days of JenDiDalion. Any a'~ use of sadt i"CO'llplele dn...._1s sball be at tile sole risk of tile City, and tbe City apes to bold barmIcss and i.wmnit)r PROVIDER fiom any ciaims, losses, <:os!So includinl attomey's fees and Iiabi1ity arising out of snch use. B. This agreeoIk;ut may be tcrm;n2te<! for tbe CODVeDience of tbe City upon twaIly (20) days wnltcD DOIice to PROVIDER. Upon snch 1Illlice, PROVIDER sbaII provide won: pnllb:t to City, and City sbaII COnopen_.. PROVIDER in tile JDaIIIIer set forth above. c. FoUowinl tbe effective dale of termination of this Agreement pursuant to this section, tile Agio..u./;lIl sba1I continue IIIIIi1 all obIiptiODS arising fJOm snch termination are c2ricfted. 8. CONTINGENCIES In tbe C\'CIIt that, due to causes beyoDd tbe control of and without tile IlwJt 01' Delli&>"",,", of PROVIDER, PROVIDERIlills to meet my of its obIiplioDs UDder this A.,.........d, and such IlIilure sbaI1_ ......am.tc a ddmIt in performaDce, tbe City may granl to PROVIDER snch exIeDsioas of time and make otbcr ~."....". or ltd.fiti()n,. ~"I any iDcIase in payment, as may be RlISOIIlIbIe UDder tbe c\,i'.......~nces La.. : in ...,..-1 sba1I be made only UDder tile .......np. provision of this A&o-..t. PROVIDER sbaI1l1lllify City within tIuee (3) days ia writinl wben it b...u...... aware of my ewat or cirmm"2~ for wbic:h it claims or may daim an CldcDsion. 9. 1NDEPENI>Em" CONTRACI'OR \ PROVIDER sbaD act as an i...L .- .Ant COIItral:tor in tbe perf'ormaDce oftbe servic:a provided Iilr UDder this AaI---"~'" PROVIDER sbaI1 fbrnisb such services in its own _ and in 110 Iapcct sbaD it be oon~ an aput CII' empIoJee of City. 10. ASSIGNMENT OR SUIlCON'BACIlNG ExI:qJt as set forth in PROVIDER's I'ropoAl dated April 10, 1997 and ....Loti'll both tbe paragraph _1M ...--..nficatioqft and tbe paragraph eaIitIed "T imibtinn OIl no-r" Jet forth on JIIIll21 in Ari"'wfi" . C of'PROVIDER's Proposal, aeither this A&oeew..ul, nor my portioIltllaeo( may be ISSiped by PROVIDER witbouI thcwriucn aJIISeIIt of City. Any IItempt by PROVIDER to assilll or ...tl<:>II""-.i my pcdL._ of this Aaf.-..""... wiIboat tbe wriUeD consent oftbe City sbaD be naU aDd widaDdsbaU lXl"oIlf..",.lnach of this Aaf.-..",... All sblxuutl-.b ...._nl S10,OOO, sbaU COJJIaiD aD provisions of this CuotIi-.l II. NOTIno~ AD aOiciaI DOlica tda:lM to this A&oc.......4 sbaU be in writing aDd """ ~ to tbe filIIowing .I~ ..I"':~ f'lPIlOVIDER aDd City: 3 PROVIDER em: MarkJ. Maxson Principal DeIoitte .t Touche LLP SO Fmoonl SlIect San Fr.mc:isco, CA 94105 12. RESPONSIBILITIES OF PARTIES A. The PROVIDER may mlto"ably rely upon the aa:uracy at daIa provided through the City or its agenIS witbout independent evaluation. Mr. FRd Wilson City AdmiDistralor 300 North "D" SlIect San BcmardiDo. CA 92418 B. The City shaD pay all costs at iDspection and permit fees. Charges DIll spcc:ificalIy comed by the terms of this Agreement shaD be paid as apeed by the parties bcreto at the time such costs arise; but in III CYeDl sbaIIlhe work to be pezfOlIllCd bcmmder cease as a consequence of any umoresccn charges unless by IIIIIIual written agreement of City ind PROVIDER. C. All tracinp, sancy IIIIlcs, and other original document' an: iDslrumeD1s at service and shaD ranain the pOflUlY oCPROVIDER except wbeR by law, pcec~<II. or agreement these dnnJ"""'fs become pIblic pOjloolty. All such documCIIIs or m:ords shaD be made accessible to City. PROVIDER shaD maimmn alIlU01ds foe iDspection by the City, Stale, or their duly lIUIborized representatives Cor a period attbree (3) yars after fiDal payment 13. COVENANT AGAINST CONI'lNGENT FEE PROVIDER wammIS !bat no pmon or sdIing agency bas been empto,aI or n:tained to soIk:it or_ this As=meD1 upon an apcement or underslanding Cor a QlIn1IIimon, ..-.~...llratI:raF. or (X'ftti'W"" fee, C'X~l1g bona fide -Jllv,. or bona fide -lsJwd c:ommc:ztiaI or sdIing ..,..-;- Iftlli_i_ by the PROVIDER Cor the JlDIIlOIlI at sccnring hoci_ For breach or vio1ation of this wamnty. City shaD IuM the rigbl to tmniDale this Atio.........t in aa:on:laDce with the danse permitting IR ...:..""ion Cor cause and, at its sole cIisaetion. 10 cledlx:t from the Atio-..t price or c:oDSidmlion, or otherwise _. the filii amount at such c:ommissioa. pen:entage. tIrotaa&e or c:oatingent fee. 14. HOlD~ F!l.c; CLAUSE A. PROVIDER badly agrees to bold City. its e1cctM, and appointk'e boInIs, ofticas, and employees, barmlcss from any liability Cor damaF or claims Ibr ......~.. Cor personal iJ!imy -.. deatb, as wdl as from claims Cor propc:rty .........., wbid1 may arise from PROVIDER's negligent adS, aron or omi- under this ApemenI. B. PROVIDER shaD indPtnnitY. ddend and bold fi= and barmlcss the City. its c1ec:tecl and llpp'in....t boards, offic:ers, and employees from all c:Iaims, ......~r. costs, c""n_. and liability. i_... but not limited to, aaorne,'s fees :"'1' ~l upon them Ibr any aJ1eFd iDCri'W"""'" at plIlcDt righIs or CCl(I.Yri&Ids at any person or p:noIIS in ro"5('-" atthe_ by City. itsc1ec:tecland ~-bouds, oIIiI:as, -...,.u,..... aDd other ciIly aD1borized .............4ldi..es. at programs or pre: I I supplied to City by PROVIDER nadcr Ibis ~n-4'... IS. INDEMNITY PROVIDER sbaII ;,w.....:fJ. defCad and bold barmIcss City Cnmt and apiDst any and all c:Iaims, .&--'-" 4;' . '- .- .., "'- (i-t,;,C"." ._..~IKK. IIIits, 1CIiODS,... ..11119'1--..1, -.-, nlllIHlr", IIIJIIIICI, p---"~ COlIS, ~-l~.~ 1._~____.. .tUOfoey's_>. and lillbo1~ a( by, or wiIh n:spriCl to 1binI pIrties. wbicIt arise soIcIy ftom PROVIDER's 4 ocgIigeac performance at services lIIIder Ibis AgrcclDClll PROVIDER sIlaI1l1l1t be .e.v.....:w.. Cor, aDd City sbaD ;__nify, dl:fcod. aDd bold barmIcss PROVIDER fiom aDd apiDst. any aDd aD daims, .......""". saits, actioDs. pr<J,ecdinp,judgmenIs. Josses. d,,,.,,,lV". iDjuries. P"""'';''. COSlS, <<'I" n-t (iDdading -.y's fees) aDd liabilities of; by, or with rapecl to third putics. whicII arise soIcIy fnlm tbc City's DCgJifleDCll. With rapeclto any aud all claims. demauds, saits,lIdioas, proc_fillP. jovlgIn-" losses, d:t........ injuries, pcaalties, CllIlS, "'V".... (iDl:ludin& lIIIOIDey's fees) aDd I~es of; by cw with Japect to third puties. whic:II arise fiom tbc joint or COac:urmll DCgJigeoce of PROVIDER aDd City, each puty sbaD assume resplllsibility in JlIOIlOIlion to tbc degree of its respecti.e fau1t. 16. LlABn.rrvIlNSURANCE A. PROVIDER's liability iDsurauc:e Cor iDjury or d:tmav to persons or property arising out at_lit for which 1epl1iabi1ity may be fouDd 10 rest upon PROVIDER otber than Cor profcssioaal cnors aud omissioas. shall be a min;mllm of SI,ooo,ooo. For any damar on lICCOUIIt of any error, omission, cw GIber profcssioaaI ocgIigence. PROVIDER's iDSUI3IIl:e sba11 be limited in a sum IIlIt to CXl:CCd SSO,ooo or PROVIDER's fee, whic:bewr: is greater. B. TIle City will require the PROVIDER 10 povide Wodtcrs O".lj......tinn aDd CllIIIpdIensm pneralliability insuranc:e, including a1"'1"e'cd operations aDd coDtr3ClUalliabi1ity, with CIMIIF tlJffic:ient to insure the PROVIDER's ;-...n~, as above required; and, such insurance will include the City, the PROVIDER, their CIlIII9.h.n~. aDd each at tbeir offic:ers, agenJs aDd empJo,ees as additioaal insureds. C. PROVIDER sba11 povide evideDce at iDsurauc:e in tbc form of a p11icy at insuranc:e, in wIIich the City, its elec;tcd aDd appointed boards, ofIicers aud ~ an: named as an additioaal named insured to the extent oftbc coverage RqUircd by Ibis A8J~ 17. VALIDITY Sbould any povisioa herein be found or cIcemcd 10 be invalid. this Agreemeat shaD be QOIIStIucd as IIlIt containing such provision, aDd aD GIber povisions Whic:h are athcrwisc IawfiIl sba11 raaain in ti1I1 fora: aDd Iffect. aud to this end the povisioas atlbis ~ an: cIecIared 10 be seYeIlIbIe. 18. ENI'IRE AGP~ "Ibis Agr<:cme&4 '...........lllo the entire aud inIcgralcd l&ille..-l bd....... the pIItim hereto aDd supenedes aD pior aDd CllIIIeDIpIraneoas ~atioas, representations nndcrsIandings. aDd avu"ms, wbethcr written cw onI. with rapecllo the suiject maltcr thcreol 1bis AgnlCIDedl may be ...... ""'l 0Dly by wriIIen instrument sigucd by both parties. . 5 .- AGREEMENT FOR: APPRAISAL OF CITY'S REFUSE COLLECTION OPERATION IN WITNESS WHEREOF,Ibe pulics b=to have caused this Ap..e4lCllt lAl be boCO'-.I on the date wriUca aboYe by tbeir cIuIy IIIIborized afIicas on tbeir bebaIf. Cl1Y OF SAN BERNARDINO BY~~ ~ MiDor. Mayor Deloitte ;md Touche, LLP ~ 8. CALIFORNIA ALL.PURPOSE ACKNOWLEDGMENT ""-5907 State of County of California San Bernardino On before me, Rachel R. Shay DATE NAME, TITlE OF OFFICER. E.G., "JANE DOE. NOTARY PU8LJC" personally appeared Tom Minor NAME(S) OF S1GNER(S) ~ personally known to me - OR - 0 proved to me on the basis of satisfactory evidence to be the person(s) whose nameM is/aFe= subscribed to the within instrument and ac- knowledged to me that he:;;I'v/I"ey executed the same in his/l"""lHttfir authorized capacity(ies), and that by hisf.Aef~ir signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. r.- . - ---RACH-EL R. S-HAY l ~ COMM. No. 997208 : .. . _ NOTARY PUBUC. CAUFORNIA ;:: Cl SAN BERNAROINO COUNlY .. l-_ ~y ~om:iS~~ ~~ir~ ~9U~ ~~ WITNESS my hand and official seal. ~.. _1. ~:il!: 'r OPTIONAL Though the data below is not required by law, ~ may prove valuable to persons relying on the document and could prevent fraudulent realtachment of this form. CAPACITY CLAIMED BY SIGNER o INDIVIDUAL o CORPORATE OFFICER DESCRIPTION OF ATTACHED DOCUMENT TITLE OR TYPE OF DOCUMENT T11lE(S) o UMITED o GENERAL NUMBER OF PAGES o PARTNER(S) o ATTORNEY-IN-FACT o TRUSTEE(S) o GUARDIANICONSERVATOR o OTHER: DATE OF DOCUMENT SIGNER IS REPRESENTING: _ 01' PERSON($) OR EHTlTYllESl SIGNER(S) OTHER THAN NAMED ABOVE 01993 NA110NAL NOTARY ASSOClAllON. 8236 __ Avo.. P.O. EloI7184. ~ Pwtc, CA 91309-7184 EXH IBIT 1 ~~~. .! ~~:flr~'f., !II (':~~..~~~1S ~'~~~"i ,'-" ~~~.~~~-~ ~ ~----~. , CITY 0' San Bernardino o",el ~, T HIM A YON . I NOli TO. IIAYOR March 20, 1997 Dear Potential Proposer: The City. of San Bernardino is seeking qualified consultants who have the expertise to perform an appraisal of the City's Refuse operation in order to establish a fair market value. In order to accomplish this, the City is requesting proposals in response to the attached Request for Proposal. The successful consuhant will have experience during the last five years in performing simi1ar evaluations of municipal and private refuse operations. The vendor sha1l possess appropriate knowledge regarding the methodology of conducting a business appraisal, including establishing the value of refuse equipment and other non-fixed assets. Due to the sensitive nature of this Request. for Proposal, I want to call your attention to the "Notice of Confidentiality" clause contained within the RFP. The City desires to maintain strictest confidentiality tegarding this process, therefore we are impl.........m,g what we feel are very severe restrictions on release of data and information. SHOUlD YOU OR YOUR FIRM FAIL TO MAINTAIN THIS APPROPRIATE LEVEL OF CONFIDENTIALITY, IT MAY RESULT IN YOU, YOUR FIRM AND ITS INDIVIDUAL EMPLOYEES BEING BARRED FROM PERFORMING FUTURE WORK WITH OUR CITY. The deadline for submission is Thursday, April 10 at 4:00 p.m. Your proposal must be physically received by the City at the appropriate date and time in order to be considered. We are looking forward to receipt of your proposal, and wish you the best of1uck with your future eodeavon. Respectfu!1y, ~~ Mayor c..-Ldkr S.. HONTH '0' I'.IET. IAH .ENMANDIHO. CALIFO."IA '..".000' C. . 1'1 I . . . . I I , A I-C' I 'I I . . - . . . . .- REOUEST FOR PROPOSAL The City of San Bernardino is requesting the services of a qualified consultant to conduct an appraisal of the City's Refuse operations in order to establish a current market value. The qualified consultant sha1l be fimiliar with the methods and techniques for conducting a business appraisal, with specific expertise in the appraisal of both residential and commercial refuse and recycling collection operations. The City is anticipating the cost of the project to not exceed $24,500. BACKGROUND The recent passage of Proposition 218 bas resulted in a concern by the City regarding it's ability to continue providing municipal refuse collection services in an efficient and cost etfective manner, while being able to establish rates for these services that reflect the true cost of the operation, including overhead and admini..uative support. In addition, the City is &cing severe budget shortfalls as a further result of the passage of Proposition 218. The City is therefore considering the sale of the municipal refuse operation as a poSSIble source of funds. The City of San Bernardino provides both residential and commercial refuse collection operations within the corporate boundaries of San Bernardino. The City services an area of approximately 55 square miles and 184,000 residents. The annua1 budget for FY 96-97 projects revenues in the amount ofS13,785,OOO and expenses ofSI4,209,900 for a net incomel(loss) of(S424,900.oo.) The following briefly descnbes the City's existing refuse operation: Residential The City services approximately 36,000 residential customers with once a week collection of refuse. commingled recyclables and green waste on a four-day per week schedule. Service is provided using automated collection vehicles servicing a standard 96-gaRon wheeled cart (TOTER) for an three materials. The City completed automItion of collection of refuse in 1995 and complete implementation of the automated collection of commil\gled recyclables and green waste in June 1996. The City currently operates a fleet of thirty-seven automated collection vebicles with an average age ofllppCOAi.nately 4.03 years. The Residential Unit bas a total of34 full time employees and 7 temporary employees assigned to the Unit and services approximately 26 routes per service clay. The City .....int"in. a fleet of five rear loaders and two smaller collection trucks for special services. The City provides special 'lLadance to bandicapped and elderly customers, and tpecial collection services for bulky and hard to bancIle materials. . Conln~.~ The City services approximately 2,000 commercial customers with a variety of sc:heduIes. including both front loader and roB-ofr services. Front loader services include up to six ,. L--.___ day per week collection using bin sizes from 2 cubic yard bins up to 6 cubic yard bins. Roll-otT services includes both compactor and roll-off semces up to five days per week, using bin sizes ranging from 10 cubic yard to 40 cubic yard. The City currently operates a fleet offifteen front-loader collection vehicles and a fleet ofsix roU-offtrucks. The average age of the front-load tIeet is 6.4 years and the average age of the roll-offt1eet is 6.9 years. The Commercial Unit bas a total ofJO fuIl...time and 3 temporary employees assigned to the Unit. It semces approximately II front loader routes Monday through Friday, and two routes on Saturday. Four roll-off routes are assigned Monday through Friday. The City provides commercial collection of mixed paper for recycling. SUJ1llOrt Services The City bas both a customer service unit and a recycling and environmental projects unit which provides t....Jonicool. administrative, billing and customer support to both the residential and conunercial units. SCOPE OF SERVICES The City desires that the following tasks be accomplished by the selected consultant: 1. Conduct an appraisal of the City's refuse operation to establish a fiIir market va1ue for this operation. This appraisal sha1l include establisbing individual va1ues for each collection vehicle, the value of an existing assets, such as residential carts, commercial bins and commercial roU-offs, and any other physical assets associated with the operation of the Refuse Division. 2. Based on current and projected customer growth, establish a fiIir market value for the customer base currently served by the City's Refuse operation. 3. Establish an overall fair market value for the sale of the Refuse Division to another concern. 4. Project future revenues and expenses for a fifteen year period of the operation as cum:ntIy configured and compare total net cash received by the City, inch,tlil1l that paid to internal service departments within the City, from continued public operation and compare that amount to that projected over fifteen years from the sale of the Refuse Division and the payment ofa 15% franchise fee by a private provider. The end product shall be in the form of a letter report, with accompanying notes, spr-tlchH.ts and other documents used by the consultant to establish the value for the Division. AU notes, documents and other items either collecte4 by or &eaerated by the consultant shall become the property orthe City of San Bernardino and shall be turned over to the City upon completion of this project and prior to final payment. eo.....ltsnt is authorized to maint..in appropriate file copies as necesnry, however an files are subject to the foDowing clause: .. ALL INQUIRIES RELATED HERETO AND ANY WORK PERFORMED FOR EITHER THE PREPARATION OF A RESPONSE HERETO OR ACCOMPLISHED AS A RESULT OF AWARD UNDER TInS REQUEST FOR PROPOSAL SHAlL BE DEEMED ADMINISTRATIVE CONFIDENTIAL. NO CONTACT SHAlL BE MADE WITH ANY EMPLOYEE OF THE CITY OF SAN BERNARDINO OTHER THAN THOSE INDIVIDUALS SET FORTH HEREIN UNLESS DIRECTED BY THE CITY IN WRITING. IN ADDmON. CONSULTANT SHALL MAINTAIN STRICT CONFIDENTIALITY AT ALL TIME PRIOR TO. DURING AND FOR A PERIOD OF TWO YEARS AFTER RECEIPT OF THE REQUEST FOR.PROPOSAL AND ANY WORK RESULTING THEREFROM CONSULTANT SHAlL NOT DISCUSS THE ISSUANCE OF TInS REQUEST FOR PROPOSAL OR THE INFORMATION CONTAINED IN TInS REQUEST FOR PROPOSAL WITH ANY OUTSIDE REFUSE FIRM. INCLUDING BUT NOT LIMITED TO THEIR PRINCIPALS, EMPLOYEES OR AGENTS. F'J\ILURE TO MAINTAIN THIS CONFIDENTIALITY SHALL RESULT IN IMMEDIATE DISQUALIFICATION OF THE CONSULTANT, HIS CURRENT EMPLOYEES, SUBCONTRACTORS AND AGENTS, PRESENT OR FUTURE FROM CONSIDERATION FOR AWARD FOR THIS AND/ORANY OTHER SOUCITlATIONS ISSUED BY THE CITY OF SAN BERNARDINO. FURTHER, ANY REFUSE FIRM WHICH WILLFULLY SEEKS AND KNOWINGLY RECEIVES ANY INFORMATION REGARDING OR RELATING TO THIS SOUCITATION SHALL BE DISQUALIFIED FROM ENTERING INTO ANY FUTURE CONTRAcrs WITH THE CITY, AND MAY BE SUBJECT TO ADDmONAL PENALTIES, INCLUDING TERMINATION OF EXISTING AGREEMENTS. AS APPROPRIATE. The consultant shaI1 signify concurrence with the above condition by Afthring their signature on the attached "NOTICE OF CONFIDENTIALITY" and returning a copy of this with their submission. SUBMISSION OF RESPONSE The Consultant shaI1 submit a letter proposal consisting of a statement of qualification. a discussion of consultants experience within the last five years relating to the appraisal of refuse operations. a resume of staff' members who will be used on this project. and an estimated cost to perform this work. segregated by labor category. fuDy burdened hourly rate, projected number of hours per category and other direct costs. The RSpoDSe shaI1 be placed in a sealed envelope and marked with the foDowing external designation: , "CITY OF SAN BERNARDINO - REFUSE PROJECT 1997-01. CONFIDENTIAL" Proposals shaD be delivered to the office of the City Administrator no later than Thursday. April 10, 1997 at 4:00 p.OL The mAiIit\g address is: . City Administrator, Sixth Floor City HaD, City of San Bernardino, 300 North 0 Street, San Bernardino, CA 92418. FOR FURTHER INFORMATION: n.e point of contact for all inquiries regarding this solicitation is as foUows: James R. HoweD, Direc:tor of Public Services Telephone (909) 384-5140. . EXHIBIT 2 Deloitte & Touche UP 1.\ 50 Fremont Street llllephone: (415) 247-COOO San Francisco, California 94105-2230 Facsimile: (415)247-4329 April 10, 1997 City Administrator Sixth Floor, City Hall City of San Bernardino 300 North D Street San Bernardino, California 92418 Re: City of San Betnardino - Refuse Proiect 1997-01 CONFIDENTIAL Dear City Administrator: Deloitte &. Touche LLP ("D&T") is pleased to present this response to the City of San Bernardino's Man:h 20, 1997 Request for Proposal ("RFP.). This proposal outlines our understanding of your needs and objectives, project scope, the appropriate valuation methodologies, our qualifications to serve you, proposed project team members, as well as our fee estimate. Pursuant to our preliminary review of information provided, we are confident that the valuation and corporate finance experience of our Valuation Group professionals, combined with the industry knowledge of our Cor,,".lting GrOllp and Management Solutions and Services group professionals represents an unparaDe1ed resource for the City's strategic planning needs. Deloitte &. Touche is a preeminent professional services linn with a dedicated national practice consistiDg of almost 1 SO fI".".,;.1 valuation and corporate ji....nce professionals. The waste management industry CODII.It.nt!l we have committed to this project on a COD!lnltllfive basis have bad extensive experience with a wide variety of services to haulers, waste ficility owners and operators, and public regulators in a variety of capacities. The combination of our valuation, 1i1uo.....e, lIIId industry resources are designed to provide you with solutions to the issues raised in the RFP. 1tIIaIlII... -. boo ..~~, II' city of San Benwdino April 10, 1997 Page 2 D&T is best suited to perfonning and communicating the scope of services delineated in the RFP because: . We are cognizant of the complex finance issues and valuation concerns that 8M rise to the RFP and are experienced with effectively comnmnicating these concepts in a clear and understandable manner. Our valuation professionals are the best of the best. . We have recently completed a very similar project for the County of Fresno as it privatized its health care delivery system and, thus, are mindful of the unique aspects of a process that involves a variety of interested parties. This project would not be "a first" for us. - . We have the right team of experienced valuation and industry specialists nec:est?'Y to provide efficient, comprehensive and meaningful solutions to the issues you have raised. While we are perfectly happy to stay within the project scope you have defined, the experience of our team will allow for a smooth transition to transactional consulting assistance, should the facts support and should you decide to move forward with the privatization process. Our experience encompasses the whole transaction process. . We understand the need for complete confidentiality with regard to the subject matter inherent to the RFP. We do not have conflicting relationships nor any predisposition to a particular viewpoint in what may become a politically charged debate. Our independence and reputation of keeping our client's business private are several of our most valued attributes. We look forward to the opportunity to discuss your needs and' our ideas for assisting in the resolution of the challenges you are fiIcing. Should you have any questions during the course of your review of our proposal, please contact Mark Maxson at (415) 247-4219. Respec:tfuDy ~:~LLJi' Deloitte &: Touche LLP By: Mark 1. Maxson Principal Attacbment TIle City of So BerurdiIIo A .,1(1. 1997 11". Table of Contents ENGAGEMENT SCOPE COMMENTARY ON PROBer SCOPE Page 2 3 METllOOOLOGY 4 lNcoYE ArrIlOACH...........:................................................................................................._.................................4 MMur APnoAaL..........................................................................................................._................................4 CasT AI'PIIoAaL................................................................................................................_................................4 PB.ORSSlONAL QUAImCATlONS AND ENGAGEMENT TEAM , PllORSSIONAL rns 7 APPENDIX A: WASTE MANAGEMENT EXPERIENCE , APPENDIX B: PROBer TEAM RESUMES APPENDIX C: TIllMS AND CONDmONS APPENDIX D: NOTICE or CONFIDENTIALITY 12 20 23 1 Tbe City of S- BemardiDo . Aprlll0. 1997 ENGAGEMENT SCOPE The objective of the valuation study is to estimate, largely using financial and operating assumptions to be provided by City management persooneI ("Management"), the Fair Market Value of the Refuse Operation as of a current date ("Valuation Date"). The purpose of the valuation is twofold: (1) to independently provide the City with an analytical foundation from which it can proceed with its strategic decision making process, and (2) to convey our e.qIertise regarding finance and generally accepted business valuation methodologies to Management personnel. We understand Management bas conducted extensive analysis of the Refuse Operation and does not desire expanded consulting services in the nature of "due diligence." We understand Management bas already compiled market data reganIiog items such as demographic trends, Landfill costs. and comparable transaction and that such data and information will be made available to us. We understand historical operational data and financial statements, which reflect fully burdened. "stand alone" costs and expenses, will be provided to us. Aa:ordingIy. at your request the scope of the project does not include "due cliligence" related to the bllci-~s' operations, analysis of specific regional industry trends, development of historical ..stand alone" financia1 statements for the Refuse Operation. or more than CUfS01}' analysis of tile 'support underlying Management's '""'......1 and operational forecasts. The project scope lIIso does not include a detailed. "line item" analysis and quantification of the revenue, cost and ~ synergies which likely could be re-r~ by a buyer of the bt'.;"..s. While .....intaini"8 our independence, we would accordiDgIy view our role as being a member of the existing Management team, which is leading the City's planning effort. It is important that Management team members understand that this project will require interaction with us which is not insignificant. We wi1I, however, make every reasonable effort to miDimize the time required by us ofManagernent personnel. In addition to our independence and indust!}' knowledge, our primary contnllution to the team would be to impart our deep undentanding of the "real world" valuation processes and techniques which would be utilized by a buyer of the Refuse Operation. We define Fair Market Value as: the price atwhich property would change hands between a willing buyer and a willing seller, neither being under . any compulsion to buy or se/~ and with each having reDSOnabk knowledge of all relevantfacts. Pursuant to the RFP, we understand the scope of this project includes aud we must address the following four items: 1. Estimate the Refuse Operation's Fair Market Value, including an allocation of that value to the major tangible assets (i.e., collection vehicles, containen, carts, bins, and roD oft's) (" Assetsj associated with the 1-.oi-.,' operation. 2. Estimate the Fair Market Value of the business' intll1!J'"ble assets, including the customer base currently served by the City's Refuse Operation. 3. Estimate the <mnI1 Fair Market Value for which the Refuse Operation could be sold to another (private) concern. 2 The City of SaD BeruardiDo .4prlll0. 1997 4. Compare a fifteen year forecast of c:ashtlow ("Status Quo Receipts") expected to be received by the City, as a result of operating the business as currently configured, to the cash flow expected to be received by the City, over a fifteen year period, from the sale of the business and the receipt of a 15% franchise fee to be paid by the buyer of the Refuse Operation. (y{e understand the Status Quo Receipts forecast will include amounts to be paid-to internal City departments for services, reflecting the true, fUlly burdened cost of the Refuse Operation.) COMMENTARY ON PROBer SCOPE On the basis of reading the RFP, our discussion with Mr. MeniIl, and our experience with valuation aud strategic financial planning projects of this nature, we offer the fonowing comments on and clarification of valuation concepts directly related to the project scope Management bas outlined in the RFP. We ore not certain that discrete appraisal of the l1usinesses' tangible and intangible assets is ne'Y~ to the City's current plunning process. The va1uation, under a going concern premise, of a business like the Refuse Operation should be based upon its cash flow generating ability. That is, the value of the business is best determined through application of the Income and Market approaches. which are described in the Methodology section that fonows. Application of these approaclles results in a value est..."ote for a "',,.;ft~" invested capital. Invested capital refers to the "right band side" of the balance sheet and includes the interest bearing debt and equity capital, which constitute an economically feasible bl.,;-, By accounting definition, the value of debt and equity must equal the value of aU of the tangible and intangible assets, including net working capital, which comprise a business. Thus, if the value of a businesses' invested capital is, say, $20 million, then the total value of its tangible and intangible assets must be S20 million. If the value of the tangible assets is, say, SlS million, then the intangible assets, including goodwill, must be SS million. For a business like the lUfuse Operation, especially from the perspective of a private. for profit buyer, the foreCDSt cosh flow and, thus, the right hand side of the balonce sheet drive the valuation process. Under the cost approach, discrete appraisal of that business' tangible and intangible assets could (and too often does) result in an erroneous value estimate. The cost approach does not address the economic reality in which the assets are being put to use. Thus, given our undent_nding of the City's objectives, we question whether the time, and fees, associated with discrete appraisal of the Refuse Operation's tangible assets are an efficient use of the City's limited resources. We would like to ensure that Management is clear about the Fair Market Value stDndard used in the RFP. Our clarification relates to the "fiIir . market value of this operation" clause reflected in project scope item # 1 as contrasted with the "fiIir market value for the sale of the Rdbse Division to another concern" dause conUinod in project scope request #3. A3 previously defined, the Fair Market Value standard inherently asSllflleS a transaction. The present value of the cash flow streams discussed in project scope request #4 - Status Quo Receipts - would represent the value of the business under its current ownenbip and management. Project scope request #3 lISSI- a transaction between the City and a hypothetical buyer which, thus, caDs for a Fair Market Value ] TIle City of Suller1lBdiao . Aprl110. 1997 estimate. Such an estimate shou1d consider the future cash flow that would be expected &om operation of tile Refuse Operation's tangible and intangl"ble usets,from the perspective 01 said hypothetical buyer. We make this clarification not to take issue with tile valuation "jargon" Management has used in its RFP (we frankly appreciate the fact that relatively technical concepts and issues are clearly artiwIated), rather we mean to clarify that the va1ue of a business to its current owner and the va1ue of a tiusiness to a potential buyer set the stage for negotiatioo. ThC price finally negotiated between these two potentially disparate points '. _Jents tile Fair Market Value of the business. The 15% ftanc:hise fee direct1y impacts the buyer's forecast and thus the Fair Market Value estimate. METHODOLOGY The Valuation Group ofD&T uti1izes generally accepted valuation procedures as promulgated by the professional organizations with which we are .tfiIillted and as utilized by the investment community. We wiD conduct our valuation consulting efforts by considering the three generally ac:ceptecI approaches to -hmJltU,g the va1ue ofbusinesses and business iDterests. The objective of applying more than one method, if appropriate, is to dcve10p mutually supporting eYidence as to the value estimates. These generally ac:ceptecI ..,..;....S valuation approaches are briefly descn"bed below: Iacome Approach This methocIoIogy is hued on the premise tbat the value of a business is the pre.1lI1t worth of tile expected, annua1 net cash flow generated by the enterprise. The Income Approach often requires an ana1ysis and projection of revenue, expenses, investment needs, capital structure, !lll';-, and financia1 risk and investment alternatives. In the valuation of a business' invested capita1 this forecast data is typically developed from the perspective of a potential buyer of the entire business. Market Approach This method utilizes the premise that the value of a business is hued upon what utute and rational investors are paying for similar interests in comparable "guideline companies" in the marketplace. The Market Approach includes the developmellt of ratios of market prices to various earnings indications (Le., sales or PIE mu1tiples). Consideration is given to adjustments for growth prospects, debt levels, and overall size, as well as the date, source and depth of the market data. For the valuation of an entire business enterprise, the value of I non contro11ing interest in invested capital may be adjusted by I control premium. Or, I direct estimate of control value may be obtained through analysis of comparable transactions. Cost Approach WIth this method, consideration is given to the value of all the subject company's tangible and intangible assets. The Cost Approach generally requires a cliscrete appraisal of current assets, real estate, tangible personal property and intangible assets. The Cost Approach is most often applied in the valuation of companies for which tangible assets comprise a significant portion of the company's value, such as a real estate holding company. This approach is also utilized when continuation of the J:.l,r-. as a "going concern" cannot be reuonib1e justified by the investment returns being generated. 4 TIle City 01 Saa Beruntiao Our valuation consulting services will include, but will nOt be limited to, the fonowing steps: 1. Gather requisite informD1ion and more fully untItJntond the City '.I' o~ectives and antI/ytical needs. - Obtain data related to the Refuse Operation, including such items u: historical financial data; background, history, and industry information; management-prepared financial projectiQns; etc. We will rely on information provided by the City as..being complete and accurate without independent verification. A preliminary data request will be provided to you upon your authorization to proceed. - Meet with and conduct interviews with key Management team members. 2. Deve/Qp an Income A,wroach Analysis - Develop a detailed discounted cash flow model, using Management's forecast assumptions, to usess the future prospects of the Refuse Operation u currently operated. . Research the cost of cspital normal to an hypothetical buyer of the business by analyzing rates ofreturn being demanded by investors in waste management companies so u to support a discount rate. . IdentifY key "drivers" which have a material impact on the va1ue ePi""ot.., . Develop sensitivity UlI1yses based upon the key value drivers id-nfW 3. A -IS 1nI1ler ~es andperfurm a r;vnbul premium .rtutb' . AprillD. 1997 - Assess the revenue, cost and expense items which would be likely to materially change under buyer management of the Refuse Operation. - Research the control premiums paid for waste management businesses in the pubfic market. - Analyze and correlate the 15% franchise fee proposed by the City to the Fair Market Value of the Refuse Operation from the perspective of a buyer. 4. Pre1X1Te a Market AW"""J, Analysis - Research and ana1yze pubfic waste management companies, the foundation for their stock prices, and conduct comparative analysis of the Refuse Operation relative to these guide6ne firms. - Analyze private traJ'$lOcVon data contained in our files as well u that possessed by the City for the purpose of deve10ping transaction multiples. s. Perform an Asset APJ1rt1isal , - Bued on an Asset &sting provided by the City including such cIetaiIed information u original purclwe date, d.......:jltion, purclwe price and condition asses--t. develop a Fair Market Value estimate for the Assets. 6. Present our Findinp - Prepare a letter report of our findillp, with accompanying notes, spte""."- printouts, and other dOQIftV'!IIR wbich convey the key IS"'"".,uODS and methodo.ogies used to reach the va1ue estimate. - PraaIt our fintf"'P. in person, to Management as weI1 as the key IS"'"".,uons , The City ors.. Bel'lW'diao and methodologies used to reach our value estimate. PROFESSIONAL QUALmCATIONS AND ENGAGEMENT TEAM The valuation efforts described herein will be developed and communicated by valuation professionals located in our San Francisco and Los Angeles, California practices. Waste management industry professionals located in San Francisco and Portland, Oregon will serve as advisors to You and our va!!Jation professionals. Attached, as Appendix A is a copy of relevant projects developed for clients operating in the waste management industry. Attached, as Appendix B is a copy of the resumes of the key members of our engagement team. Vllhll.tion Team Mark Maxson, the Principal in charge of our Northern California Valuation Group practice, will be responsible for overall project management aswe\l as review and communication of our findings to you. Mark bas over 13 years of corporate finance and valuation experience. Working with our finn's waste management industry consultants, Mark bas testified before the Contra Costa County Board of Supervisors regarding rate of return and cost of CIpita\ DOrms in the waste management industry for rate ~ purposes. He bas conducted and managed waste mllnllsement valuation studies for both "n"fin and conection sectors of the industry. Importantly. Mark recently lead a team of Valuation Group professionals in our service to Fresno County in its privatization of the County's Vaney Medical Center hospital That project, while related to the health care industry. provides . April 10. 1997 Mark with a unique pea spective into the issues with which the City is dealing. Nicholas Florio. the Principal in charge of our national Capital Asset Recovery Services practice is based in Los Angeles. Nick win be responsible for directing and reviewing the work of our project consultants re1ated to the tangible asset valuation component of this engagement. . Mark Kangas, a Senior Manager with our Valuation Group practice, bas over 13 years of valuation, corporate finance and investment banking experience, and is based in San Francisco office. He win be respoDSlble for the day to day management and development of the teclmica\ analyses that comprise our valuation consulting services. Mark bas particular experience in resolving complex valuation issues within the context of merger and acquisition transactions and other strategic financia\ issues. Staff' consultants, including Craig Such and Heather Welch win be utilized for data gathering, research, analysis and the development of our valuation models. Waste IndustJv Advisors Erik Gilberg, a Principal with the Deloitte &; Touche Consulting Group in San Fp...,;tco. bas served a variety ofwaste management firms, ga..t&.....etltAI agencies and regulatory bodies. His experience ranges from rate setting, t.ndfin closure cost studies, to operations and accounting system reviews. As needed, Erik win serve as an industry advisor to you and our valuation project team. Ross Wilson, a Senior Manager who leads our Portland, Oregon Management Solutions and Services consulting practice, win serve as a consultative in6l.stry advisor on this project. Ross bas -!live experience working with 6 1be City of Sa BeraardiDo April 10, 1997 utility and waste management clients in rate setting, operations, and transaction matters, and will provide industry expertiJe to this projec:t, as needed. Ross is currently directing services being provided to the Environmental Protection Agency as it evaluates the privatization of both the landfill and collection operations of Jackson County, Florida. PROFESSIONAL FEES Our fee for providing professional services is pmnised upon the time ~ by our staff to complete the assignment. at our hourly rates. BiUing rates applicable to this project for the professionals who will be of service to the City range from Sl20 to S250 per hour. We would expect the weighted average fees for this project to approximate S135 to S150 per hour. On the basis of information provided to us and the project scope outlined herein, we estimate our fees will range from S20,5OO to $23,000, plus apenses. This fee range is dependent upon the City' desire fOr the discrete valuation of the Assets, as cfivo.,aed in the Commentary on Project Scope section of this proposal. Excepting for a change in project scope, our total fees, including expenses, will be invoiced at the lesser of our actual time and expenses or $24,500. We will make every reasonable attempt to conduct the valuation process as efficiently as possible and, therefore, limit our fees. Expenses iDcurred for items such as travel, report production, computer pr-,;11g, researdl materials, and telephone are billed in addition to die professional fee and are shown as a separate figure. For an engagement of this nature, expenses typically app1"Wmlllfe 10% of tile professional fees incurred. Invoices will be issued during the course of our work and are payable upon receipt. We will assess a service charge of 1.5% per month, beginning from the initial invoice date, on invoiced amounts outstanding more tha,n 30 days. It is our policy to withhold issuance of our report whenever past due amounts remain outstanding. The fee estimate is premised upon the scope of the valuation engagement as noted herein. To the extent it becomes necesSlry to expand the scope of the project, we will advise you of any additional fee requirements, in advance of incurring them, and obtain your authorization to proceed. Under the assumption that the information requisite to the valuation process will be readily available through the cooperation of the City, we expect to complete our va1ustion ana1ysis within 8 weeks of our receipt of a signed engagement letter. Pursuant to your request for the "estimated cost to perform this work, segregated by labor category, fWly burdened hourly rate, projected number ofbours per category and other direct costs", we have separated the estimated cost for each categOry of indiviclual scheduled to work on this project. The table on the next page ollmmarizes that information. 7 TIle City of Sa 8enw'diao April 10. 1997 City of San Bernardino professional Fee Estimate Proressioaal Position Mmt Maxson Principal Eric Gilberg Principal NICk Florio Principal Mmt YC-'18"" Senior Manager Ross WiIson-. Senior Manager Craig SucblHeather Welch. Senior Consultant BiDing Rate per Hr. 250 250 175 150 150 120 ExpeIIS es (mc1uding travel) Total fees and apeasel I Boan 12 4 10 24 12 90 152 Fees 3,000 1,000 1,750 3,600 1,800 10,800 21,950 2,500 I S 24,450r The City ofSaa BenardiDo . AprlllO. 1997 APPENDIX A: WASTE MANAGEMENT EXPERIENCE The fonowing summaries iDustrate Defoitte 81: Touche's experience with a broad area of services to participants in the waste management industry. Each of the projects listed below has involved at least one member of our proposed engagement team. Auburn Placer DisDOS" Services Developed. methodology to establish rates for a fiaDcbisecl Waste hauler. Ana1yzed characteristics oharious rate methodologies aDd profit provisioo OptiODS. Interviewed representatives from the jurisdictions served by the waste hauler to obtain their input on preferred rate methodologies, profit provisions, and services issues. CItY of Norwalk Developed. standard regulatory rate setting process to be applied for establishing refuse conection rates in the City of Norwalk. The project inducIed building a PC-based model to allocate and project refuse collec;tion costs between various service jurisdictions aDd non- francbised operators. The work also included the development of methodologies for treatment of c:onfidoNlti..1 information, IIIIifonn rate ~ for two separate service providers, and the allowed rates ofretum. In addition, provided support to Norwalk's fi'apdU-' refuse collectors to compile and develop . rate application for residential and commercial operations. Upon completion of the rate applicatioDs, performed a rate review lUId ~<<I disposal rates. gar of........nt Hill Reviewed the reported COlts of a franchised reIbse coDection and c:wbside recycling operator to "..R_ allowable expc:IISe5. Developed recommendations on allowable costs, treatment of parent company acquisition costs aDd savings, reasonableness of compll1Y overhead charges, allowed returns, rate stlUcture, aDd recycling rate incentives. The review concluded with recommended rate increases for the City of Pleasant Hill. City of San Rafael Conducted a review of operating costs of a franchised hauler for Southern Marin County Cities. Costs associated with commercial, residential, resource recovery, transfer, rec:ycling, and debris box OperaUOIIS were separately identified and allocated. A program was implemented which provided for annual compilation and review of a rate application. City of Southern Maria Developed methods mI prOcedures for regulatory rate setting in the Cities of Mill Valley, Belvedere, Tiburon, mI Corte Madera. Work also included first year implementation of the rate review aDd recomm.....htions on refuse collec;tion and disposal rates. ~jty orVacaville Assisted the City ofVll:lWle in negotiating a long-term fi'ancbise for waste co1lec:tion and 1andfill disposal servica. ~ a part of the new franchise agreement, deve10ped an annua1 regulatory rate setting system to establish cost based rates while providing a tiir return to the franchisee. City ofWalDut CneII, Calif'omia Ceatnl Coatra Costa J.Ii!!l'owen Authoritv Performed a pl'PJiminlny review of aegotiation terms and coaditions for the pun:hase of the Acme Fill Permanent Transfer Statioa laud ud pamits. Separately cIIitermined the market value 9 The City .f Sa BenaardiDo . AprillD. 1997 o( the site and the inv""b...mt value to the Joint Powers Authority. Also provided negotiation support including measurement or additional volume impacts and estimated costs to haulers. Contra Costa County. Califoraia Reviewed an interim transfer station rate application (or reasonableness o( submitted costs and for conformance with the original rate-setting guidelines. Recommended new or revised rate policies to the County to handle unanticipated issues. Researched and developed the support (or a reasonable return on both debt and equity investments in the waste Dianagement industry. Marin RKvdinl! Provided support to Marin County's franchised curbside recycling operator to compile and develop a rate application for the County's recycling surcharge. The work included projections of salvage prices, estim-tes o( capital expenditures, and development o( doaunentation and support for all allowable expenses. Marin SanDn' Service Developed an estimated value o(Marin Sanitary's customer list and associated refuse collection franchise. The ana1ysis was performed using two methodologies: 1) comparison to a transaction involving a similar refuse collection company and 2) quantification and segregation o(the returns attributed to the intangible asset iom the cub flows projected (or the overall business. Also, provided support to a ftanchised curbside recycling and refuse collection operator to compile and develop a rate appHcation for recycling surcharges and residential, commercial, debris box, and transfer station rates. Identified and aDocated costs using . PC-based refuse recycling rate setting model. Reviewed reported costs for reasonableness and recorded support doco.-"tinn for an allowable expenses. Mill Vaney Refuse Service Faci1itated the analysis and negotiation for an exchange o( equity and cash between Mill Valley Refuse Services, Marin Recyding and Marin Sanitary Service and restructuring o( the entities. The engagement was comprised o(two primary analyses: o Analyzed the cost structure changes that would occur after the proposed transfer o( responsibility for recyclable materials collection. Developed a new rate structure in accordance with the new, proposed oJ'8l'ni7>ltional structure. Developed the methodology by which recyclables would be collected after the restructuring. . Developed an estimate oerair market value (or. minority interest in the equity o(Marin Recycling so u to independently ficiJitate the restructuring process NaD' Garbue Service Assisted the hauler develop its annua1 application for a refuse collection and recycling rate review. Supplied operational, analytical, and economic usistance in the compilation, development, and writing o( the company's rate appHcation. This required detailed cost 1IiCCO'~ and economic ana1ysis to produce and verifY figures required in a review o( projections Cor labor, equipment, and capital costs o( the 1-'''"'-, Also pelfonned financial modeling and analyses o( comparable rates to ensure the reasonableness of recommendations. Various ....,....ues ofreturns were used, including W ACe (Weiglot..d Average Cost o(Capital), CAPM (Capital Asset Pricins Model), OR (O(.e<ating Ratio) IIId ROA (Return on Assets). 10 ne City or Sa BeruardiDo Saala Cnaz Countv Retained by the County of Santa Cruz and the Cities ofWatsonville and Scots vaney to assist in defining a long-term plan for their combined waste management services. Scope included defining the County and Cities' service alternatives, and evaluating the financial implications of these alternatives. The strategic study encompassed all aspects ofwaste management including residential garbage and recycling collection, commercial collection, a material recovery W:ility, a compost fiu:ility, disposal, fui1ding altematiyes and inter-agency allocations. At the end of this project, the County and Cities were prepared to send request-for- proposals for all privately operated portions of its waste services, and to define operating requirements for any municipality-run service. South VaHey Disoosal A RecvcliDl!. In~ Developed a cIetailed rate application and supporting exhibits for a solid waste company involved in refuse collection, landfill operations, and recycling in three jurisdictions. Compiled historical cost, revenue, and operational data and developed projections for future operations. Allocated colts and revenues across the three jurisdictions. . .4prlI10. 1997 11 ,-u The City ofSaa BeraanIiDo April 10, 1997 APPENDIX B: PROJECf TEAM RESUMES MARK J. MAXSON Principal J'(orthern California Practice Director MarIe Maxson is a Principal and practice director for the Northern California Valuation Group practice. MarIe is responsible for the valuation and corporate finance consulting services provided to Northern California, Nevada, and Pacific Northwest clients. ~ He provides direction and technical review for engagements including business and securities valuations, business plans, purchase price allocations, feasibility studies. mteUectua1 property valuations, litigation support and related services which provide support to financial decision making. From a technical perspective, Mark sri_Ii,.... and has extensive experience in the valuation of business enterprises. marketable and closely held securities. and intellectual property. He bas been involved in a variety of complex tJ'9n..ctions and assisted both buyers and sellers in the analysis and formulation of purchase prices. These tr&nOlctions have been in the form of both asset and stock purcbases and relate to various forms of business ownership in a broad number of industries. Mark's corporate fi....""" and securities valuation experience bas entailed the valuation of the entire business enterprise, as well as both debt and equity securities. He bas valued both controlling and minority interests in the equity ofpublic and closely held corporations, partnerships, divisions, and joint ventures. These services have been performed for a variety of purposes. including: merger and acquisition pricing, restructuring, stock option planning, technology trlInsfer, corporate and tax planning, financing, initial public offerings, and litigation support. While MarIe bas provided valuation services to firms in a broad variety of business endeavors, he has developed particular expertise in the health care, high technology, restaurant and winery industries. MarIe nationally leads the valuation professionals dedicated to the health care and high technology industries. Mark's experience in the valuation of intangible assets and intellectual property is focused in the areas of purchase price allocation, for both tax and financial reporting requirements, and transaction pricing. He bas performed and directed valuation analyses of a broad 1'III8e of intangible assets, including: technology, customer 1ists and relationships, acquired research and development, computer software, income- producing portfolios, filvorable contracts, non- compete covenants, trademarks, trade names, and goodwill. Mark bas particular expertise with respect to the unique valuation requirements associ,t...! with taxable transactions, and he bas assisted clients in negotiating valuation issues with the Internal Revenue Service and the Securities and Exchange Commission. PREVIOUS EXPERIENCE Mark bas over a decade offocused experience in the valuation profession. Prior to joining De10itte 8; Touche to establish the San FranciJCO valuation practice in 1989, Mr. Maxson managed the Northern California financial valuation group of American Appraisal Associat~ Inc., another international valuation firm. u TIle City 01 SaD Bernarcliao April 1 O. 1997 LITIGATION EXPERIENCE MarIe has worked both individually and as part of a team in the support ora variety of litigation cases. He has been accredited as an expert and testified before the United States Tax: Court (m San Francisco), Superior Court (State of Washington), and the California Board of EqllAli7Jlltion (at the county level). Mark bas assisted attorneys as a consulting expert during depositions and bas been deposed on several occasions. EDUCATION Santa Clara University Bachelor of Science, Commerce and Fmance, Magna Cum Laude PROFESSIONAL AFFILIATIONS Business Valuation, Candidate, American Society of Appraisers (ASA Designation Pending) CburchiIl Club, Member ESOP Association, Member National1lestaurant AMociation, Member Hea1tbcare FmanciaI Management Association, Member BII~nesl Valuation Discipline, Director, American Society of AppraiterS, San FrancilCO Chapter MarIe is a member ofD&T's national Business Valuation Committee, a body responsible for development and communication of technical and client service starldal'lis. In that role, he leads both the Healthcare and High Technology ineJo.sny pradices for the Valuation Group. PROFESSIONAL PRESENTATIONS Mark has made numerous Vlluation based pc eJr-.;ons to a variety ofprofessiona1 organizations including the Semiconductor Executives' Breakfast Briefing, the National Atsociation of Accountants, the Director's Roundtable, and the San Francisco Bar Atsociation, and bas been a featured speaker at M&A as well as private company foc:used conferences. Presentation topics have included "The Valuation of Closely Held Businesses for Mergers and Acquisitions", "Cheap Stock Valuation Issues from the SEe Perspective" "Purchase Price Allocations for Tax and Fmancia1 Reporting", and "The Valuation ofPurcbased Research and Development." He bas also been a featured speaker at Detonte &: Touche sponsored seminars on structuring ESOP's, understanding income tax: considerations in asset acquisitions, technology valuations, SEC "hot topics", and planning estate and gift taxes for closely-held business owners. PUBLICATIONS Mark bas published several articles concerning business and securities Vlluation in VAluAtion ~ a D&:T newsletter provided to our clients. His article WiU YOII Get YOUT Money's Worth? addresses the relevance of PIE multiples and the cost of debt and equity c:apital in the valuation process. The article was published in the Mayflune, 1993 issue ofFmancial ElF".'-uti_ ....V7ine. 13 11Ie City 01 Sm Bernardino ERIK GILBERG Principal Erik is a Principal in the San Francisco, California office of the De10itte &; Touche Consulting Group. Erik has ~.I;~ his consulting services in the solid waste management industry. His experience bas encompassed the following areas: closure cost analysis; landfill rate review; waste rate review program; garbage rate application assistance; financial analysis; rate structure; and municipal accounting systems. ~ PREVIOUS EXPERIENCE Prior to joining Deloitte &; Touche, Erik wu a Systems Consultant in the Technical Support Department of Xerox Computer Services in San Francisco. He also served as a Project Manager at Watson &; Meehan, a distributorship of the Cllmming Engine Company. EDUCATION The Wharton School University of Pennsylvania Master of Business Administration, Decision Sciences Uniyersity of San Francisco Bachelor of Arts, History SELECl'ED CONSULTING EXPERIENCE . C1o.sure Cost Analysis: Directed a detailed review of dosure and post-dosure costs for a major California County t..ntIfl11 Provided JeCOIIIJ~"';ons on reascmability of dosure e-tUnSltoes and the appropriate aDocation of costs between municipal soUd waste and other users. . LandJiQ &lie RevIew: Mauapd the review of a 1smdfi11 tipping and tnnsfer stItion rate and Aprl110. 1997 determined the appropriate levels and allocations for closure and post..cJosure costs due to cbanges in regulations. . Waste Rate Review Program: Developed a standard regulatory rate-setting process to be applied by a municipality in establishing garbage collection and disposal rates. The procedures in the program defined allowable expenses, acceptable allocation methodologies, documentation requirements, and rate of return guidelines for the city's garbage franchisee. Implemented this program in a JW111ber of Northern California municipalities. . Garbage Rate Application Assistance: Assisted a municipality in the review of refuse and collection rates. Activities included verifying &ancbisee costs, evaluating reasonableness of proposed expenses, measuring the company's operating efficiency, and tracking year to year changes in projected costs. . FinanciDl Analysis: Evaluated the financial and refuse collection and disposal rate impact of an Employee Stock Option Plan transacti9D performed by the franchiIN' of a major California city. Identified the relevant regulatory rate setting issues and recommended preliminary regJlI.tnry po6cies. 14 ne C'1tJ 01 s.. BeI'lW'llillo NICHOLAS M. FLORIO PriDcip.J N'lCk Florio is a Principal in the Los Angeles, California, practice office of the Deloine &. Touche V.Juation Group. Nick leads our national Capital Asset Recovay Services practice which is focused in the areas of tangible uset appraisal, cost segregation, and construction project management and oversight services. Since joining Deloine &. Touche in 1984, he bas performed ~us valuation and depreciation studies IJld bas delivered ~es and written articles on valuation and depreciation related matters. Nick bas worked on valuations and depreciation studies in the aerospace/defense, fiJIand~ services, hospitality, mortgage banking, foocI services, manufiu:turing, communications and high technology industries. PREVIOUS EXPERIENCE Before joining Deloine &. Touche in 1984, Nick spent several years gaining valuation, ,.. ~ ering IJId lIIllII"8ement experience with a division of a Fortune 100 corporation. He bas mo worked with the Army Corps of Engineers. EDUCATION Columbia University Masten of IndMstriDl Economics and ~errI New York University APe, F"mance and Tu HofiItra University Bachelor of Science, 'MIstrial F.II8i..-.rins PROI'ESSIONAL AFFILIATIONS American Society of Appnisen, A.ccredited Senior A.ppraiser, B..":- Valuation AprIl 10, 1m PUBUCATIONS N'lCk c:o-authored the book R..an_ A.... V.h..ting. A/Wonti",. and ~ of Investment in Businus Acquisitions.. published by Little, Brown and Company. 15 TIle City .f s.a BerDardiDO .4.]1'1110. 1997 MARK S. KANGAS. CPA Senior Mana.er Mark Kangas is a Senior Manager in the San Francisco ofIice of the Deloitte & Touche Valuation Group. Mark sp-ill1i7ef in business valuation and financial consulting, corporate finance and strategic planning to middle market private companies. His experience has encompassed valuation of the entire business enterprise as well as debt, equity and derivative securities. ~ efforts are commonly utilized for mergers and acquisitions ua1ysis, strategic financial planning, financial structuring advice, dispute resolution, tax and regulatory compliance. Mark bas served as an expert witness on a number of oa:asions and has considerable experience in the preparation of expert witness testimony in litigation involving complex ti_ndal analysis. MarIe had extensive involvement in litigation related to, among others, Lincoln Savings and Loan, ZZZ2. Best, Apple Computer, Advanced Micro Devices, and Orange County. MarIe played a critical role in working with Federal Judge PoUack to distribute over Sl billion in settlement funds from litigation involving Drexel Burnham and Micbael Milken. In addition, MarIe was hired by the federal government through the Securities Investors Protection Corporation in valuing securities held by brokerage finDs on which they have foreclosed. PREVIOUS EXPERIENCE Before joiniDg Deloitte & Touche. Mark was an Executive VICe President of Princeton Venture Raearch ("PVR"). an investment banking and consu1ting company that spe<'i"li-. in private and pubic ti........ for new ventures and middle market .........-.ies. Prior to his twelve year taIUre at PVR, Mark worked at Sage Date, Inc. providing forec;asts to the chemical industry, and at Chase Econometrics providing regional economic forecasts to Fortune 500 companies. EDUCATION University of Pennsylvania The Wharton School Master of ManagemenJ, Fmance and Marketing ADegheny CoDege Bachelor of Science, Economics PROFESSIONAL AFFILIATIONS Institute of Chartered Fmancial Ana1ysts (CF A) American Society of Appraisers, Condidate, Business Valuation Security Analysts of San Francisco Association for Inv~....ut Management and Research 16 The Cd)' or s_ Beraardiao AprillD, 1997 ROSS E. WILSON. CPA Seaior Manaau Ross leads the De10itte " Touche Portland, Oregon, Management Solutions and Services practice. He provides a wide range of services to utility and so&d waste management c:lients in the Pacific Northwest. Ross has over seven years of consulting experience, and has worked extensively in the following areas: cost of service analysis; cost modeling and analysis; valuation; project ~ent and ac:c:ounting theory and practice. He bas knowledge ot; and has provided services to, the foDowing industries: electric power, solid waste management, te1ecormmmications, distribution, marwticturing, service, high technology and transportation. Ross has recently served the following clients: USA Waste, Rogue Waste Systems, Pendleton Sanitary Service, and HiI1sboro wdfin EDUCATION Brigham Y OUDS University Master of AOCOII1IIancy, Management Accounting and Infurmation Systems Brigham Y OUDS University Bachelor of Science, Acc:ounting and Economics PROFESSIONAL AFFILIATIONS American IPStitlrte of Certified Public: Accountants Oregon Society ofCer1ified Public: Accountants, Comprder Servicu, Management Advisory Servicu, and Litigation ServIces Committeu W,chiqgtnu Society of Certified Public AccouDtants, Litigation ServIces Committee SELEerED SOLID WASTE MANAGEMENT EXPERIENCE o Prepared new cost of service allocation study and rate case documentation for a local 1and1ill. The 1andfiD was asking to lower its rate beyond what the cost of service rate should have been in exchange for the opportunity to use competitive, site-specific: bids for non-local volumes. Presented educational briefings to regulatory advisory councU and testified before regulatory body. . Prepared a rate applic:ation for solid waste company that both collected and disposed of waste. Project included the creation of an economic model to c:a1c:ulate appropriate revenue requirement both under Cost of Service and Operating Ratio regulatory methodologies. Model was used to present a rate application to the city, as wen as an educational briefing for city commissioners on relevant issues of the rate application. Model also helped assess cost impact ofl.ndfin closure and construction of a transfer station. . Directed engagement to a regional landfill owner/operator to determine the costs of all 1andfill operations and general and administrative activities. The resu1ts were used to i11ustrate to the regulators the true costs of service of various customer types, and used as basis for new rate case. 11 The City of SaD BenardiDo April 10, 1997 HEATHER A. WELCH Senior CouultaDt Heather Welch is a Senior Consultant in the San Francisc:o office of the Deloitte &: Touche Valuation Group. She sp-;"Ii"... in the valuation of closely held businesses and seauities. Heather's efforts are commonly utilized for merger and acquisition pricing; IPO planning; estate and tax planning; litigation support and business plan due diligence. Heather has focused her couu1ting efforts in the high technology arena, and has additional industry experience in health care, financial institutions, and telecomnwnicatiODS. In May 1996, Heather returned &om a nine month transfec to Deloitte Touche Tohm"tllll'S Corporate Advisory Group in Wellington, New 7 .-I"nd. During her tenure in New Z-."ncI, she was responsible for managiDg several b1'...ess valuation engagements. PREVIOUS EXPERIENCE Before joining Deloitte &: Touche, Heather was employed as a financial analyst in the Global Security Services Department at Bank of MontreallHarris Trust and SaviDgs Bank in Chicago, DIinois. EDUCATION Stanford University Bochelor ofA.rIs with Distinction, Quantitative EcoDOmics PROFESSIONAL AFFILIATIONS Institute ofCbartered FmanciaI Analysts (CFA), Candidate, Level H . American Society of Appraisers, Candidate, BfISiness Vabiation Association for IJr,g....ent Management and Research Uniform Standards ofProfessiona1 Appraisal Practice (USP AP) certified 11 The City of San BenwdiDo CRAIG SUCH Senior Consaltant Craig Such is a Senior Consu1tant in the Sill Francisco office of the Deloitte &: Touche Valuation Group. Craig's responsibilities include business valuation for lllelJers and acquisitions pricing as well as strategic lIt......s pWmil\g Derivative security modeling and marIcet-based valuation techniques are two fields ofhis expertise. PREVIOUS EXPERIEJl!.CE Prior to joining Deloitte &: Touche. Craig held positions at GATX Capital Corporation, where be worked with the Corporate Fmance group on issues involving the valuation of asset-based financing transactions in the high technology industry. EDUCATION Carnegie Mellon University Graduate School of Industrial Administration Master of Science in Industrial Administration (MBA), Fmance and Strategy University of Arizona lJGchelm of Science, Business Administration, Fmance and Accounting April 10. 1997 l' TIle City or So Berardino AprlIIO. 1997 APPENDIX C: TERMS AND CONDmONS Deloitte &. Touche LLP ("D&T") performs the services (the "Services") set forth in the engagement letter (the "Engagement Letter") with the City of San Bernardino (the "Client"). of which these Terms and Conditions are a part, subject to the fonowing: lDf'ormation and Data. D&.T is entitled to assume, without independeni verification, the accuracy of an information and data that the Client and its representatives provide to MT. All information and data supplied by the Client and its representatives is complete and accurate to the best of the Client's knowledge. MT may use information and data furnished by others ifMT in good fiith believes such information and data to be reliable; however, D&.T shan not be respoDSl"ble for, and D&:T shan provide no assurance rigarding, the ~ of any such information or data. D&T assumes no responsibility for any fiaancial and tax reporting with respect to the property(ies) covered by MT's Services. The Client is responsible for an financial statement and tax reporting with respect to such property(ies). D&T may provide advice and reconunendations to the Client; however, all decisioos in colll1eCtion with the implementation of such advice and reconunendations are the Client's respoDSl"bi1ity. MT shan have no responsibi1ity for any decisions made by the Client relsting to MT's Services. D&T shal1 have no respoDSl"bility for any assumptions provided by the Client or its represet"mves, which assumptions shal1 be the respoDSlOi1ity of the Client. D&T shal1 have no respoDSloility to address any legal matters or questions ofIaw. Reports. Any report(s) prepared by MT is valid only when preset""'" in its entirety and only for the purpose stated therein. It is expressly understood that (a) D&:T's report(s), reconunendations, ana1yses aod conc1usions, ifany, do not, in whole or in part, constitute a Iiimess or so1venc:y opinion and (b) D&:T performs no review, audit or other attestation procedures with respect to financial information, as Mfined by the American Institute of Certified Public Accountants, and issues no opinion, report or other form of assurance with respect to any filUlnd,1 information, unless specifically stated otherwise in the Engagement Letter. Confidentiality. It is understood and agreed that all work product resuIting from D&:T's Services _in.. the exdusive property ofD&:T and that the Client willl"eserve the confid-fl.lity of the format IDd contents ofany reports, ana1yses or other documents prepared by D&:T. The Client agrees (a) DOt to n:&aence D&:T's name or any reports; ana1yses or other doa-.. prepared by D&:T, in whole or in part, in any documeut distributed to third parties, without D&:T's prior written consent and (b) that any reports, analyses or other docvments prepared by D&:T will be used only in compliance with these Terms and Conditions IDd applicable laws and regulations. D&:T will preserve the confidential uature of information received from the Client in IICCOrdance with D&:T's estab6sbed policies and practices. 20 Tbe City orSaa BeruardiDo Aprtl10, 1997 TERMS AND CONDmONS (CONTINUED) Property. To the extent that D&T utilizes any ofits property (UlCIuding, without limitation, any hardware or software) in connection with its Services, such property shall remain the property ofD&T, and the Client shall not acquire any right or interest in such property. D&T shall have ownership (mcIuding, without limitation, copyright ownership) and all rights to use and disclose its ideas, concepts, know-how, methods, techniques, processes and skills, and adaptations thereof (mcluding, without limitation, generalized features of the sequence, itructure and organization of any works of authorship) in conducting its business, and the Client shall not assert or cause to be asserted against D&T or its personnel any prolubition or restraint from so doing. LimitatiOD OD Warraaties. The Engagement Letter is a professional services agreement. D&T represents and warrants that it provides the Services in good fiIith. D&T clivl.i..... all other representations and warranties, whether express, implied or otherwise, including, without imitation, warranties of merchantability and fitness for a particular purpose. Iademaif'acatioD. The Client ind.....mf'ies and holds harmless D&T, its partners, principals, employees, agents and rep~-.tives, and their rapective successors aad assigns, from aad against any and all claims, liabilities, losses, damages, costs and expenses (UlCluding, without Hmitation, attorneys' fees and costs of litigation) ,...lIting to the use made by the Client ofD&T'. Services, regardless of form, whether in contract, _It.., strict liability, tort (mcludi,,& without limitlltinll, aegligenc:e), or otherwise, except to the extent that it is finaDy judiciaDy determined that such "J.m., liabilities, losses, d......r. costs or expenses were .....sed by bad &ith or wiIIfbI misconduct OD the part of ID indeomified party. LimitatiOD OD Damages. The liability ofD&T for any reaIOD whatsoever relating to its Services, regardless of form, whether in contract, statute, strict liability, tort (mcluding, without limitation, negligence), or otherwise, shall not exceed in the aggregate the amounts ICtually received by D&T for its Services. D&T will not be liable for any claim against the Client, its officers, directors, employees, agents or representatives by any third party, regardless ofform, whether in contract, statute, strict liability, tort (mcluding, without limitation, negligence), or otherwise, nor for any amounU representing 1011 of profit, 1011 of business or special, indirect, incidental, consequential or punitive damages, even if advised of the poSSIbility thereof. SubsequeDt Work. D&T, by reason of the Services, is not required to furnish additional work or services, or to give testimony, or to be in attendance in court with reference to the assets, properties, or business interesu in question. D&T will have no responsability to update any report, analysis or other document relating to its Services for any events or circumstances ocaming sUbsequent to the date of such report, analysis or other document. CooperatiOD. The Client shall cooperate with D&T in connection with the performance by D&T ofits Services, incIudi,,& without limitation, pnmding D&T with reasonsble facilities and timely access to the Client's information, data and personnel. 21 TIle City of Saa 8emardiDo Aprl110. 1997 TERMS AND CONDmONS (CONTINUED) Noa-Exdusivity. Nothing in the Engagement Letter, including these Terms and Conditions, sbaII be construed u precluding or limiting in any way the right ofD&T to provide consulting. ..vIitlf\S or other services of any kind or nature wbatsoever to any person or entity u D&T in its sole discretion deems appropriate. Force Majeure. D&T shall not be liable for any delays or &iiures resultingji'om circumstances or ""1'~ beyond its reuonable control. including. without limitation, fire or other casualty, act of God, strike or labor dispute, war or other violence, or any law, order or requirement of any governmental agency or authority. IDdepeadent Contractor. D&T is an ind.".-t""lt contractor and D&T's compensation is not contingent in any way upon its conclusions or RCOauneudations. Although it is not D&T's aormal practice, D&T reserves the right to use subcontractors. Complete Agreement. The Engagement Letter, inr.huliqg these Terms and Conditions, constitutes the entire agreement between the Client and D&T with respect to the subjec:t matter thereof and hereof; and supersedes an other oral or written ""'l" ~r-";'Dns, understandings and agrecmeuts bet........ the Client and D&T re1ating to the subject matteo" thereof and hereof: The Eugagement Letter, including these Terms and Conditions, cannot be changed, except by written instrument signed by both the Client and D&T. The Engagement Letter, including these Terms ad Conditions, shaD be binding on the Client and D&T, ad the Client's and D&T's .-witted suco-sors and usigns; however, l'eitho!r the CIieIIt IIOr D&T may usign the EDpsement Letter, iDclIuliIIg these Terms and Conditions, . without the prior written consent of the other, except that the Client and D&T may usign the Engagement Letter, including these Terms and Conditions, to any successor to an or substantially an of the business or wets of such party. inconsistencies. In the event of any contlict or inconsistency between the provisions set forth in the Engagement Letter and these Terms and Conditions, the provisions of these Terms and Conditions shall govern. --.......-..- 21