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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
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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.
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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
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BE 1'l' RESOLVED BY THE MAYOR AND COMMON COUNCIL OF THE C
OF SAN BERNARDINO AS FOLWWS: i
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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
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1 RESOLUTION OF THE MAYOR AND COMMON COUNCIL AUTHORIZING AN
AMENDMENT WITH DEWITTE & TOUCHE REGARDING APPRAISAL OF REFUSE
2 DIVISION.
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4
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6 Council Members
7 NEGRETE
8 CURLIN
9 ARIAS
AYES
NAYS
ABSTAIN /ABSENT
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OBERHELMAN
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DEVLIN
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13
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ANDERSON
14 MILLER
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City Clerk
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The foregoing resolution is h~reby approved this day of
, 1997. I -
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21
22
Approved as to form
23 and legal content:
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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
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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
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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
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,
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
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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.
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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.
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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.
--.......-..-
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