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HomeMy WebLinkAboutC-3890 - PSA for the Overhead Cost Allocation Plan and Model, and Cost of Services Study and ModelPROFESSIONAL SERVICES AGREEMENT WITH PUBLIC RESOURCE MANAGEMENT GROUP, LLC FOR THE OVERHEAD COST ALLOCATION PLAN AND MODEL, AND COST OF SERVICES STUDY AND MODEL THIS AGREEMENT is made and entered into as of this 30th day of November, 2006, by and between the City of Newport Beach, a Municipal Corporation ( "City "), and Public Resource Management Group, LLC, a California limited liability company, whose address is 1380 Lead Hill Boulevard, Suite 106, Roseville, California, 95661 ( "Consultant "), and is made with reference to the following: RECITALS A. City is a municipal corporation duly organized and validly existing under the laws of the State of California with the power to carry on its business as it is now being conducted under the statutes of the State of California and the Charter of City. B. City bases its fees upon a cost allocation model and a cost of services model which were developed from a study performed over ten years ago. The City must now hire a consultant to update the City's: 1) Cost Allocation Plan; and 2) Cost of Services Study. C. City desires to engage Consultant to affirm or update, as needed, the current cost allocation plan and model and the current cost of services study and model (the "Project"). D. Consultant possesses the skill, experience, ability, background, certification and knowledge to provide the services described in this Agreement. E. The principal member of Consultant for purposes of Project shall be J. Bradley Wilkes. F. City has solicited and received proposals from several companies, has reviewed the previous experience and evaluated the expertise of each company. The City desires to retain Consultant to render professional services under the terms and conditions set forth in this Agreement. NOW, THEREFORE, it is mutually agreed by and between the undersigned parties as follows: TERM • i The term of this Agreement shall commence on the above written date, and shall terminate on the 31st day of May, 2007, unless terminated earlier as set forth herein. 2. SERVICES TO BE PERFORMED Consultant shall diligently perform all the services described in the Scope of Services attached hereto as Exhibit "A" and incorporated herein by reference. The City may elect to delete certain tasks of the Scope of Services at its sole discretion. 3. TIME OF PERFORMANCE Time is of the essence in the performance of services under this Agreement and Consultant shall perform the services in accordance with the schedule included in Exhibit 'B ". The failure by Consultant to strictly adhere to the schedule may result in termination of this Agreement by City. Notwithstanding the foregoing, Consultant shall not be responsible for delays due to causes beyond Consultant's reasonable control. However, in the case of any such delay in the services to be provided for the Project, each party hereby agrees to provide notice to the other party so that all delays can be addressed. 3.1 Consultant shall submit all requests for extensions of time for performance in writing to the Project Administrator not later than ten (10) calendar days after the start of the condition that purportedly causes a delay. The Project Administrator shall review all such requests and may grant reasonable time extensions for unforeseeable delays that are beyond Consultant's control. 3.2 For all time periods not specifically set forth herein, Consultant shall respond in the most expedient and appropriate manner under the circumstances, by either telephone, fax, hand - delivery or mail. 4. COMPENSATION TO CONSULTANT City shall pay Consultant for its services in accordance with the provisions of this Section. Consultant's compensation for all work performed in accordance with this Agreement, including all reimbursable items and subconsultant fees, shall not exceed Forty -Seven Thousand Four Hundred and no1100 Dollars ($47,400.00) without prior written authorization from City. This amount is based upon Consultant's Project Budget, attached hereto as Exhibit "C ". No billing 2 0 i changes shall be made during the term of this Agreement without the prior written approval of City. 4.1 City shall pay Consultant no later than thirty (30) days after staffs approval of Consultant's final report. 4.2 City shall reimburse Consultant only for those costs or expenses specifically approved in this Agreement, or specifically approved in writing in advance by City. 4.3 Consultant shall not receive any compensation for Extra Work performed without the prior written authorization of City. As used herein, "Extra Work" means any work that is determined by City to be necessary for the proper completion of the Project, but which is not included within the Scope of Services and which the parties did not reasonably anticipate would be necessary at the execution of this Agreement. Compensation for any authorized Extra Work shall be paid in accordance with the Schedule of Billing Rates as set forth in Exhibit "D ". 5. PROJECT MANAGER Consultant shall designate a Project Manager, who shall coordinate all phases of the Project. This Project Manager shall be available to City at all reasonable times during the Agreement term. Consultant has designated J. Bradley Wilkes to be its Project Manager. Consultant shall not remove or reassign the Project Manager, or assign any new or replacement personnel to the Project without the prior written consent of City. City's approval shall not be unreasonably withheld with respect to the removal or assignment of non -key personnel. Consultant, at the sole discretion of City, shall remove from the Project any of its personnel assigned to the performance of services upon written request of City. Consultant warrants that it will continuously furnish the necessary personnel to complete the Project on a timely basis as contemplated by this Agreement. 6. ADMINISTRATION This Agreement will be administered by the Revenue Division. Glen Everroad shall be the Project Administrator and shall have the authority to act for City under this Agreement. The Project Administrator or his authorized representative shall represent City in all matters pertaining to the services to be rendered pursuant to this Agreement. 7. CITY'S RESPONSIBILITIES i s • In order to assist Consultant in the execution of its responsibilities under this Agreement, City agrees to provide access to the required staff, and upon request of Consultant, provide one copy of all existing relevant information on file at City. City will attempt to provide all staff access and materials in a timely manner so as not to cause delays in Consultant's Schedule of Work. 8. STANDARD OF CARE 8.1 All of the services shall be performed by Consultant or under Consultant's supervision. Consultant represents that it possesses the professional and technical personnel required to perform the services required by this Agreement, and that it will perform all services in a manner commensurate with community professional standards. All services shall be performed by qualified and experienced personnel who are not employed by City, nor have any contractual relationship with City. 8.2 Consultant represents and warrants to City that it has, shall obtain, and shall keep in full force in effect during the term hereof, at its sole cost and expense, all licenses, permits, qualifications, insurance and approvals of whatsoever nature that is legally required of Consultant to practice its profession. Consultant shall maintain a City of Newport Beach business license during the term of this Agreement. 8.3 Consultant shall not be responsible for delay, nor shall Consultant be responsible for damages or be in default or deemed to be in default by reason of strikes, lockouts, accidents, or acts of God, or the failure of City to furnish timely information or to approve or disapprove Consultant's work promptly, or delay or faulty performance by City, contractors, or governmental agencies. 9. HOLD HARMLESS To the fullest extent permitted by law, Consultant shall indemnify, defend and hold harmless City, its City Council, boards and commissions, officers, agents, volunteers, and employees (collectively, the "Indemnified Parties ") from and against any and all claims (including, without limitation, claims for bodily injury, death or damage to property), demands, obligations, damages, actions, causes of action, suits, losses, judgments, fines, penalties, liabilities, costs and expenses (including, without limitation, attorney's fees, disbursements and court costs) of every kind and nature whatsoever (individually, a Claim; collectively, "Claims "), which may arise from or in any manner relate (directly or indirectly) to any breach of the terms and conditions of this Agreement, any work performed or services provided under this Agreement or Consultant's presence or activities conducted on the Project (including the negligent and/or willful acts, errors and/or a • 0 omissions of Consultant, its principals, officers, agents, employees, vendors, suppliers, consultants, subcontractors, anyone employed directly or indirectly by any of them or for whose acts they may be liable or any or all of them). Notwithstanding the foregoing, nothing herein shall be construed to require Consultant to indemnify the Indemnified Parties from any Claim arising from the sole negligence or willful misconduct of the Indemnified Parties. Nothing in this indemnity shall be construed as authorizing any award of attorney's fees in any action on or to enforce the terms of this Agreement. This indemnity shall apply to all claims and liability regardless of whether any insurance policies are applicable. The policy limits do not act as a limitation upon the amount of indemnification to be provided by the Consultant. 10. INDEPENDENT CONTRACTOR It is understood that City retains Consultant on an independent contractor basis and Consultant is not an agent or employee of City. The manner and means of conducting the work are under the control of Consultant, except to the extent they are limited by statute, rule or regulation and the expressed terms of this Agreement. Nothing in this Agreement shall be deemed to constitute approval for Consultant or any of Consultant's employees or agents, to be the agents or employees of City. Consultant shall have the responsibility for and control over the means of performing the work, provided that Consultant is in compliance with the terms of this Agreement. Anything in this Agreement that may appear to give City the right to direct Consultant as to the details of the performance or to exercise a measure of control over Consultant shall mean only that Consultant shall follow the desires of City with respect to the results of the services. 11. COOPERATION Consultant agrees to work closely and cooperate fully with City's designated Project Administrator and any other agencies that may have jurisdiction or interest in the work to be performed. City agrees to cooperate with the Consultant on the Project. 12. CITY POLICY Consultant shall discuss and review all matters relating to policy and Project direction with City's Project Administrator in advance of all critical decision points in order to ensure the Project proceeds in a manner consistent with City goals and policies. 13. PROGRESS 5 Consultant is responsible for keeping the Project Administrator and /or his duly authorized designee informed on a regular basis regarding the status and progress of the Project, activities performed and planned, and any meetings that have been scheduled or are desired. 14. INSURANCE Without limiting Consultant's indemnification of City, and prior to commencement of work, Consultant shall obtain, provide and maintain at its own expense during the term of this Agreement, a policy or policies of liability insurance of the type and amounts described below and in a form satisfactory to City. A. Certificates of Insurance. Consultant shall provide certificates of insurance with original endorsements to City as evidence of the insurance coverage required herein. Insurance certificates must be approved by City's Risk Manager prior to commencement of performance or issuance of any permit. Current certification of insurance shall be kept on file with City at all times during the term of this Agreement. B. Signature. A person authorized by the insurer to bind coverage on its behalf shall sign certification of all required policies. C. Acceptable Insurers. All insurance policies shall be issued by an insurance company currently authorized by the Insurance Commissioner to transact business of insurance in the State of California, with an assigned policyholders' Rating of A (or higher) and Financial Size Category Class VII (or larger) in accordance with the latest edition of Best's Key Rating Guide, unless otherwise approved by the City's Risk Manager. D. Coverage Requirements. Workers' Compensation Coverage. Consultant shall maintain Workers' Compensation Insurance and Employer's Liability Insurance for his or her employees in accordance with the laws of the State of California. In addition, Consultant shall require each subcontractor to similarly maintain Workers' Compensation Insurance and Employer's Liability Insurance in accordance with the laws of the State of California for all of the subcontractor's employees. Any notice of cancellation or non - renewal of all Workers' Compensation policies must be received by City at least thirty (30) calendar days (10 calendar days written notice of non- payment of premium) prior to such change. The insurer shall agree to waive all rights of subrogation against City, its officers, agents, E. 0 0 employees and volunteers for losses arising from work performed by Consultant for City. ii. General Liability Coverage. Consultant shall maintain commercial general liability insurance in an amount not less than One Million and no /100 Dollars ($1,000,000.00) per occurrence for bodily injury, personal injury, and property damage, including without limitation, contractual liability. If commercial general liability insurance or other form with a general aggregate limit is used, either the general aggregate limit shall apply separately to the work to be performed under this Agreement, or the general aggregate limit shall be at least twice the required occurrence limit. iii. Automobile Liability Coverage. Consultant shall maintain automobile insurance covering bodily injury and property damage for all activities of the Consultant arising out of or in connection with work to be performed under this Agreement, including coverage for any owned, hired, non -owned or rented vehicles, in an amount not less than One Million and no /100 Dollars ($1,000,000.00) combined single limit for each occurrence. iv. Professional Errors and Omissions Insurance. Consultant shall maintain professional errors and omissions insurance, which covers the services to be performed in connection with this Agreement in the minimum amount of One Million and no /100 Dollars ($1,000,000.00). Endorsements. Each general liability and automobile liability insurance policy shall be endorsed with the following specific language: The City, its elected or appointed officers, officials, employees, agents and volunteers are to be covered as additional insureds with respect to liability arising out of work performed by or on behalf of the Consultant. ii. This policy shall be considered primary insurance as respects to City, its elected or appointed officers, officials, employees, agents and volunteers as respects to all claims, losses, or liability arising directly or indirectly from the Consultant's operations or services provided to City. Any insurance maintained by City, including any self- insured retention City may have, shall be considered excess insurance only and not contributory with the insurance provided hereunder. iii. This insurance shall act for each insured and additional insured as though a separate policy had been written for each, except with respect to the limits of liability of the insuring company. iv. The insurer waives all rights of subrogation against City, its elected or appointed officers, officials, employees, agents and volunteers. V. Any failure to comply with reporting provisions of the policies shall not affect coverage provided to City, its elected or appointed officers, officials, employees, agents or volunteers. vi. The insurance provided by this policy shall not be suspended, voided, canceled, or reduced in coverage or in limits, by either party except after thirty (30) calendar days (10 calendar days written notice of non - payment of premium) written notice has been received by City. F. Timely Notice of Claims. Consultant shall give City prompt and timely notice of claim made or suit instituted arising out of or resulting from Consultant's performance under this Agreement. G. Additional Insurance. Consultant shall also procure and maintain, at its own cost and expense, any additional kinds of insurance, which in its own judgment may be necessary for its proper protection and prosecution of the work. 15. PROHIBITION AGAINST ASSIGNMENTS AND TRANSFERS Except as specifically authorized under this Agreement, the services to be provided under this Agreement shall not be assigned, transferred contracted or subcontracted out without the prior written approval of City. Any of the following shall be construed as an assignment: The sale, assignment, transfer or other disposition of any of the issued and outstanding capital stock of Consultant, or of the interest of any general partner or joint venturer or syndicate member or cotenant if Consultant is a partnership or joint- venture or syndicate or cotenancy, which shall result in changing the control of Consultant. Control means fifty percent (50 %) or more of the voting power, or twenty -five percent (25 %) or more of the assets of the corporation, partnership or joint- venture. 16. SUBCONTRACTING The parties recognize that a substantial inducement to City for entering into this Agreement is the professional reputation, experience and competence of Consultant. Assignments of any or all rights, duties or obligations of the 8 i 0 Consultant under this Agreement will be permitted only with the express written consent of City. Consultant shall not subcontract any portion of the work to be performed under this Agreement without the prior written authorization of City. 17. OWNERSHIP OF DOCUMENTS Each and every report, draft, map, record, plan, document, analysis, spreadsheet and other writing produced (hereinafter "Documents "), prepared or caused to be prepared by Consultant, its officers, employees, agents and subcontractors, in the course of implementing this Agreement, shall become the exclusive property of City, and City shall have the sole right to use such materials in its discretion without further compensation to Consultant or any other party. Consultant shall, at Consultant's expense, provide such Documents to City upon prior written request. Documents, including drawings and specifications, prepared by Consultant pursuant to this Agreement are not intended or represented to be suitable for reuse by City or others on any other project. Any use of completed Documents for other projects and any use of incomplete Documents without specific written authorization from Consultant will be at City's sole risk and without liability to Consultant. Further, any and all liability arising out of changes made to Consultant's deliverables under this Agreement by City or persons other than Consultant is waived against Consultant and City assumes full responsibility for such changes unless City has given Consultant prior notice and has received from Consultant written consent for such changes. 18. CONFIDENTIALITY All Documents, including drafts, preliminary drawings or plans, notes and communications that result from the services in this Agreement, shall be kept confidential unless City authorizes in writing the release of information. 19. INTELLECTUAL PROPERTY INDEMNITY Consultant shall defend and indemnify City, its agents, officers, representatives and employees against any and all liability, including costs, for infringement of any United States' letters patent, trademark, or copyright infringement, including costs, contained in Consultant's Documents, drawings and specifications provided under this Agreement. 20. RECORDS Consultant shall keep records and invoices in connection with the work to be performed under this Agreement. Consultant shall maintain complete and accurate records with respect to the costs incurred under this Agreement and any services, expenditures and disbursements charged to City, for a minimum period of three (3) years, or for any longer period required by law, from the date of final payment to Consultant under this Agreement. All such records and invoices shall be clearly identifiable. Consultant shall allow a representative of City to examine, audit and make transcripts or copies of such records and invoices during regular business hours. Consultant shall allow inspection of all work, data, Documents, proceedings and activities related to the Agreement for a period of three (3) years from the date of final payment to Consultant under this Agreement. 21. WITHHOLDINGS City may withhold payment to Consultant of any disputed sums until satisfaction of the dispute with respect to such payment. Such withholding shall not be deemed to constitute a failure to pay according to the terms of this Agreement. Consultant shall not discontinue work as a result of such withholding. Consultant shall have an immediate right to appeal to the City Manager or his designee with respect to such disputed sums. Consultant shall be entitled to receive interest on any withheld sums at the rate of return that City earned on its investments during the time period, from the date of withholding of any amounts found to have been improperly withheld. 22. ERRORS AND OMISSIONS In the event of errors or omissions that are due to the negligence or professional inexperience of Consultant which result in expense to City greater than what would have resulted if there were not errors or omissions in the work accomplished by Consultant, the additional design, construction and/or restoration expense shall be borne by Consultant. Nothing in this paragraph is intended to limit City's rights under the law or any other sections of this Agreement. 23. CITY'S RIGHT TO EMPLOY OTHER CONSULTANTS City reserves the right to employ other Consultants in connection with the Project. 24. CONFLICTS OF INTEREST Consultant or its employees may be subject to the provisions of the California Political Reform Act of 1974 (the "Act "), which (1) requires such persons to disclose any financial interest that may foreseeably be materially affected by the 10 0 ! work performed under this Agreement, and (2) prohibits such persons from making, or participating in making, decisions that will foreseeably financially affect such interest. If subject to the Act, Consultant shall conform to all requirements of the Act. Failure to do so constitutes a material breach and is grounds for immediate termination of this Agreement by City. Consultant shall indemnify and hold harmless City for any and all claims for damages resulting from Consultant's violation of this Section. 25. NOTICES All notices, demands, requests or approvals to be given under the terms of this Agreement shall be given in writing, and conclusively shall be deemed served when delivered personally, or on the third business day after the deposit thereof in the United States mail, postage prepaid, first -class mail, addressed as hereinafter provided. All notices, demands, requests or approvals from Consultant to City shall be addressed to City at: Attn: Mr. Glen Everroad Revenue Division City of Newport Beach 3300 Newport Boulevard Newport Beach, CA, 92663 Phone: 949 - 644 -3144 Fax: 949 -644 -3073 All notices, demands, requests or approvals from CITY to Consultant shall be addressed to Consultant at: Attn: Mr. J. Bradley Wilkes Managing Principal Public Resource Management Group, LLC 1380 Lead Hill Blvd., Suite 106 Roseville, CA 95661 Phone: 916- 677 -4233 Fax: 916- 677 -2283 26. TERMINATION In the event that either party fails or refuses to perform any of the provisions of this Agreement at the time and in the manner required, that party shall be 0 0 deemed in default in the performance of this Agreement. If such default is not cured within a period of two (2) calendar days, or if more than two (2) calendar days are reasonably required to cure the default and the defaulting party fails to give adequate assurance of due performance within two (2) calendar days after receipt of written notice of default, specifying the nature of such default and the steps necessary to cure such default, and thereafter diligently take steps to cure the default, the non - defaulting party may terminate the Agreement forthwith by giving to the defaulting party written notice thereof. Notwithstanding the above provisions, City shall have the right, at its sole discretion and without cause, of terminating this Agreement at any time by giving seven (7) calendar days prior written notice to Consultant. In the event of termination under this Section, City shall pay Consultant for services satisfactorily performed and costs incurred up to the effective date of termination for which Consultant has not been previously paid. On the effective date of termination, Consultant shall deliver to City all reports, Documents and other information developed or accumulated in the performance of this Agreement, whether in draft or final form. 27. COMPLIANCE WITH ALL LAWS Consultant shall at its own cost and expense comply with all statutes, ordinances, regulations and requirements of all governmental entities, including federal, state, county or municipal, whether now in force or hereinafter enacted. In addition, all work prepared by Consultant shall conform to applicable City, county, state and federal laws, rules, regulations and permit requirements and be subject to approval of the Project Administrator and City. 28. WAIVER A waiver by either party of any breach, of any term, covenant or condition contained herein shall not be deemed to be a waiver of any subsequent breach of the same or any other term, covenant or condition contained herein, whether of the same or a different character. 29. INTEGRATED CONTRACT This Agreement represents the full and complete understanding of every kind or nature whatsoever between the parties hereto, and all preliminary negotiations and agreements of whatsoever kind or nature are merged herein. No verbal agreement or implied covenant shall be held to vary the provisions herein. 30. CONFLICTS OR INCONSISTENCIES 12 0 • In the event there are any conflicts or inconsistencies between this Agreement and Exhibit "A ", or any other attachments attached hereto, the terms of this Agreement shall govern. 31. INTERPRETATION The terms of this Agreement shall be construed in accordance with the meaning of the language used and shall not be construed for or against either party by reason of the authorship of the Agreement or any other rule of construction which might otherwise apply. 32. AMENDMENTS This Agreement may be modified or amended only by a written document executed by both Consultant and City and approved as to form by the City Attorney. 33. SEVERABILITY If any term or portion of this Agreement is held to be invalid, illegal, or otherwise unenforceable by a court of competent jurisdiction, the remaining provisions of this Agreement shall continue in full force and effect. 34. CONTROLLING LAW AND VENUE The laws of the State of California shall govern this Agreement and all matters relating to it and any action brought relating to this Agreement shall be adjudicated in a court of competent jurisdiction in the County of Orange. 35. EQUAL OPPORTUNITY EMPLOYMENT Consultant represents that it is an equal opportunity employer and it shall not discriminate against any subcontractor, employee or applicant for employment because of race, religion, color, national origin, handicap, ancestry, sex or age. [Signatures on following page.] 13 IN WITNESS WHEREOF, the parties have caused this Agreement to be executed on the day and year first written above. APPROVED AS TO FORM: Z4 G`- — C — City Attorney for the City of Newport Beach CITY OF NJFWPORT BEACH, A_Midiici.Dhl CoADoration / Mayor for the City of Newp each ATTEST: CONSULTANT: By: da6 By: til LaVonne Harkless, (Corporate Officer) City Clerk Title: VAVV"el lvv� Print Name: (Financial Officer) Title: I:T Am01ProT i Attachments: Exhibit "A" — Scope of Services Exhibit "B" — Schedule of Work Exhibit "C" — Project Budget Exhibit "D" — Schedule of Billing Rates 14 Exhibit "A" SCOPE OF SERVICES Consultant shall perform the following steps in the full cost of services study: Develop City's cost allocation plan. Consultant shall perform the following: a. Identify all layers of indirect costs to be allocated to user related services; b. Calculate department overhead cost; and C. Allocate the indirect costs to user services. 2. Develop Cost of Services Study. Consultant shall perform the following: a. Identify /Inventory the costs of providing General Fund related City services; b. Review fee structures in various departments (fixed fee vs. hourly rates and valuation fees vs. Nexus approach in building inspection); C. Calculate the direct cost of each service — i. Salary cost of direct staff supplying service; ii. Fringe benefits; and iii. Direct service and supplies; d. Full Cost Identification — i. Integrate indirect cost data from the cost allocation plan; ii. Integrate direct cost data; e. Develop a fully burdened hourly rate for each staff member who provides a user service f. Subsidy analysis; g. Develop a comparison of fee levels among other selected cities; h. Review cost recovery policy for user services; and i. Install PRM user fee software (Excel Worksheets) which would enable City to update cost information on an annual basis. Consultant's Work Plan is as follows: Step 1: Project Introductory Meeting Consultant shall meet with required City staff to: a. Explain the cost plan and cost of services analysis process; b. Explain the purpose of the full cost study; C. Describe how other cities use full costing; d. Provide example summary reports; and e. Answer any questions City staff may have. Step 2: Data Review 15 Consultant shall develop lists of basis data requirements which may include: a. lists of selected staff salary levels; b. benefit cost detail; C. operational budgets; d. transaction statistics; e. and other data which Consultant may require. Once the basic data is acquired, Consultant shall develop the cost plan and rate structures. Step 3: Cost Allocation Plan Development a. Department Interview Preparation: After the data above is acquired, Consultant shall develop forms for City department interviews. Consultant's interview forms shall be developed with questions related to staffing lists, actual salary level, staff titles, department expenditure report detail, development of pre - interview questions, etc. b. Departmental Interviews: Consultant shall interview allocating City departments to ensure that costs are spread in a manner that reflects: i. the work that was done; ii. the departments that benefited; and iii. which allocation bases are proper. Consultant shall also interview any departments involved with internal service funds that charge for service to ensure that indirect costs are allocated accurately so that they are included in the full cost analysis when calculating internal service fund rates. C. Department Personnel Staff Analysis: Consultant has developed Personnel Staff Analysis ( "PSA ") worksheets. These worksheets shall be completed with information gathered in the initial interviews. The PSA provides a basis for the distribution of departmental costs into departmental functions. During the interviews, Consultant shall discuss each employee's assignments and duties. Using timesheets, assignments, or interview notes, Consultant shall determine what percentage of each person's time should be divided into departmental functions. This information will be entered into the PSA worksheets to define departmental functions. Once staff members and their corresponding salaries are distributed to functions, other department costs, such as materials and supplies, will also be distributed into the same functions or cost pools. The process shall take a departmental budget unit and break it into functional cost pools, which can then be allocated throughout the City using a meaningful allocation base. d. Departmental Cost Distribution: Consultant shall develop this schedule, which allocates departmental costs of the central service department and any "incoming costs" being allocated from other service departments. Consultant shall utilize its is 0 0 software to analyze, display and allocate the indirect costs of each central service department in such detail so as to facilitate City's review. e. Developing Allocation Bases: After departmental functions are created, and costs are distributed across functions, a separate allocation base shall be selected that best reflects the benefit each department receives from the various services. The allocation base shall reflect a connection between the service provided and the service received. f. Cost Allocation Management Reports: After each central service department has been interviewed, the departmental costs distributed to functional cost pools, and each cost pool given an allocation base, Consultant shall produce the cost plan utilizing its own software. Step 4: User Service Direct Cost Analysis a. User Service Inventory: Consultant will develop an inventory of all current user service charges. The list will include all general fund services provided to the public for which fees are charged and those which a fee could reasonably be allocated. The objective of the inventory is to identify all general fund user fee charges and match them to the departments which supply the services. The following information will be reviewed: i. fee history; ii. rate increase history; iii. revenue history; iv. fee purpose; V. number of units completed each year; and vi. departments providing service. b. Departmental Interviews: With information from the user service inventory, Consultant will interview each department supplying the user services. Using the interview forms it has developed, Consultant shall gather the following data: i. names of staff members providing service; ii. amount of time — required to complete one unit of service, and per year supplying the service iii. activity statistics such as — number completed per year, number completed last fiscal year, and estimated number of units to be completed in the coming fiscal year. 17 0 0 The key statistics needed from a departmental interview are: individual staff estimates of time spent providing each service, and the number of units completed on an annual basis. In each department interview, Consultant shall ensure that 100% of each staff members time is identified such that no service, user fee related or not, is excluded from the full cost analysis. C. Financial Analysis: Once the basic time and workload transaction data is gathered from the departmental interviews, salary data, departmental service and supply cost data shall be entered by Consultant into Consultant's software. This departmental data shall be integrated with the indirect cost data developed within the Consultant's cost allocation plan module. The direct cost and indirect cost of each user service shall be calculated and displayed for review. Upon City staff approval, Consultant shall provide the City an electronic copy of the Consultant's software which illustrates the calculation of the financial analysis. d. User Service Management Reports: Consultant shall provide all the financial transaction and comparsion data in the final management reports. Each City department shall be provided at least two separate opportunities to review the costirevenue data. This shall ensure that the raw data will be as accurate as possible, for a more reliable final report. Step 5: Evaluation of Building Department Fees Consultant shall review the building department fees, and evaluate the relevance of the fees as they relate to the service provided. If Consultant concludes that the methodology upon which these building department fees are based must be updated, and if City approves, then Consultant shall conduct a "Nexus' study to develop a new method and basis for charging fees. The Nexus method makes a firm connection between hours and cost of service. If the City elects to transition from valuation to Nexus, Consultant shall work closely with the City's building department on each step of the Nexus process. The Nexus process includes the following tasks: a) Construct a comprehensive list of occupancy categories that encompassess all consturction activity within the city. b) Establish the plan check and inspection functions /disciplines employed by city staff. c) Establish "standard" occupancy sizes (square footage) and types of construction (fire ratings). 18 0 9 d) Develop times estimates for each plan check and inspection step /category conducted by the City (based on the standard occuapancy sizes, etc.). e) "Scale" the times estimates for other size categories to ensure that the model captures /recognizes the economies of scale that occur with larger sizes. f) Calculate the available /productive hours for building staff to enable full cost recovery g) Determine fully- burdened hourly rate for building staff, including: • Salaries and benefits • Services and supplies • Support and supervisory staff • Administrative overhead • Citywide overhead • Cross - departmental support costs (from other departments /divisions) • Off - budget or planned costs • Other costs related to fee activities h) As necessary, prepare differential hourly rates to reflect the costs for commercial versus residential services, as well as miscellaneous items and MP &E's. i) Apply hourly rates to the time estimates to determine the actual full cost of performing the services foe each standard occupancy. j) Divide the total calculated cost for each occupancy by its standard size to identify the cost per square foot for that size. k) "Scale" the cost per square foot to account for differences in effort required for different categories of construction types. 1) Prepare a comprehensive fee (actual cost) schedule that includes a base and incremental costs for each occupancy type, size range, and construction type. m) Establish a comprehensive list of items considered separate from the construction of a new occupancy. These miscellaneous items encompass various categories of alterations, additions, improvements, and remodels, as well as stand alone items. Examples include patios, fences and swimming pools. n) Develop time estimates for the plan check and inspection processes for each item. 19 0 0 o) Apply the Miscellaneous Items hourly rate to the times estimates to establish the actual full cost of providing the services. p) Establish a comprehensive list of "fixture based" sub -trade fees (MP &E's). The City will most likely need to maintain these fees for those permits which do not lend themselves to a square footage based fee (electrical panel permits, water heater permits, etc.) or for these items that are not related to new construction. q) Develop time estimates for the plan check and inspection processes for each item. r) Apply the MP &E hourly rate to the time estimates to establish the actual full cost of providing the services. Step 6: Study Presentation /Defense /Clarification Consultant shall meet with staff to clarify its final report. In addition, Consultant shall present its findings and final report to the City's Council, Finance Committee, or other authoritative body. J. Bradley Wilkes shall presents the Cost Allocation and Cost of Services report to the City Council, Finance Committee or any authoritative body with an elected official present. Step 7: Project Deliverables Consultant shall give the City the items listed below at the end of the Project. Consultant shall ensure that staff is trained a. An electronic report on PDF and Word format for: L Full Cost Allocation Plan ii. OMB A -87 Cost Allocation Plan iii. User Service Detail Worksheet b. An updateable electronic calculation worksheet on Excel format for: L Cost Allocation Model ii. OMB A -87 Cost Allocation Model iii. User Service Model c. Provide City staff on -site training in the use of models mentioned above. 20 0 9 Exhibit "B" SCHEDULE OF WORK Weeks One and Two: November 27 in and December 3rd: 1. Meet with City management team and department heads to review study goals and objectives. 2. Obtain budgets, salary levels, staff lists & expenditure data. 3. Begin meetings with City departments. 4. Begin structuring project data into PRM systems. Weeks Three — Ten: December 8 — February 26"': 1. Obtain any feedback from departments, continue communication with departments, and answer questions. 2. Enter transaction data into the PRM models. Weeks Eleven — Fourteen: March 5 — March 26 : 1. Produce any draft models completed. 2. Meet with City departments to review draft worksheets and discuss outstanding items. Weeks Fifteen — Nineteen: April 2" — April 30,n: 1. Produce final cost allocation plan. 2. Link cost allocation plan to user fee worksheets. 3. Produce second user fee draft worksheets. 4. Obtain feedback and comments from City. 21 0 0 Weeks Twenty — Twenty Three: May 7 — May 281n: Deliver an electronic copy of the final user service worksheets. 2. Develop final project reports. 3. Review final cost allocation plan and cost of services study with City departments and Finance Committee. (Scheduled at the city's request after final reports are complete) 4. Present final cost allocation plan and cost of services study at City Council Meeting. (Scheduled at the city's request after final reports are complete) 5. Deliver an electronic cost plan model. (Scheduled at the city's request after final reports are complete) 6. Deliver an electronic user service model. (Scheduled at the city's request after final reports are complete) Consultant shall submit weekly updates to the Project Administrator by e-mail describing the work performed during the preceding week. These updates shall include the name of the person who performed the work, a brief description of the services performed and /or the specific task in the Scope of Services and Schedule of Work to which it relates, the date the services were performed, and, if necessary, the number of hours spent on Extra Work billed on an hourly basis and a description of any reimbursable expenditures. 22 0 0 Exhibit "C" PROJECT BUDGET Consultant estimates the following number of hours for the Scope of Work: TASKS SR PRM STAFF PRM STAFF TOTAL Cost Allocation Plan 32 50 82 User Fee Calculation Analysis 80 90 170 Cost Plan Excel Model 8 8 16 User Fee Excel Model 1 8 16 1 24 Presentations 8 16 24 Totals: 136 180 316 Consultant's average hourly rate, which includes expenses, is $150. Consultant shall not be using subcontractors. Consultant's fees shall be as follows: General Fund User Fee Study: Full Cost Plan OMB Cost Plan Models: Presentations: Total Project: 23 $25,500 $10,300 $ 2,000 $ 6,000 $ 3,600 $47,400 Exhibit "D" SCHEDULE OF BILLING RATES E For Extra Work as defined in Section 4.3 of the Agreement, Consultant shall bill the City at the following rates: Managing Principal $190.00 /hr Senior Manager $190.00 /hr Manager $125.00 /hr The hourly rates include all expenses. 24 OCT i U 719(16 CITY OF NEWPORT BEACH CITY COUNCIL STAFF REPORT C -38go is Agenda Item No. October 10, 2006 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: Administrative Services Department Dennis C. Danner, Administrative Services Director (949) 644 -3123 ddanner@city.newport-beach.ca.us SUBJECT: CITYWIDE COST ALLOCATION PLAN AND COST OF SERVICES STUDY RECOMMENDATIONS: Authorize the City Manager to execute substantially similar form to the attache d Management, LLC. ( "PRM "), to develop identify and analyze the cost of providing a Professional Services Agreement in draft agreement with Public Resource a defensible cost allocation plan and to City services; 2. Approve a Budget Amendment in the amount of $47,400 (BA #07BA -018). DISCUSSION: Service fees are fees imposed to offset the cost of providing a government service. Generally, fees must be reasonably related to the cost of providing the service for which the fee is imposed, otherwise the fee may constitute a tax subject to voter approval. More specifically, Government Code Section § 66014 requires that application fees for zoning permits, building permits and similar approvals cannot exceed the cost of processing such applications. In 1996, the City contracted with KPMG Peat Marwick LLP to conduct a comprehensive cost allocation plan and cost of services study. That study identified and provided estimated costs for 156 services. Utilizing the results of that study, City Council adopted Chapter 3.36, which established the percentage of cost to be recovered for each service. Chapter 3.36 also provided that City Council will establish fees for each identified user service in a fee resolution, to be modified as each cost factor is modified. This list of user services and their related fees is the City's Master Fee Schedule. Nearly each year since the 1996 study, City Council has updated the Master Fee Schedule based on changes in the cost of living and salary adjustments. In addition, the Master Fee Schedule has evolved to include additional fees based upon Council Policy, commission findings, new ordinances, resolutions and new services. Today, the • Citywide Cost Allocation* and Cost of Services Study October 10, 2006 Page 2 Master Fee Schedule lists approximately 1000 user services and fees. City staff suspects, however, that the overhead cost and fees currently charged for City services are outdated. Moreover, as the numbers indicate, many services provided by the City today were not included in the 1996 study. During the January 10, 2006, City Council meeting, City Council recommended a new study be conducted (the "Project "). Staff prepared and distributed a request for proposal to conduct a cost allocation plan and cost of services study to twenty companies. Four companies submitted proposals with costs ranging from $32,920 to $49,500. A selection committee comprised of City staff interviewed the four companies last month. The selection committee unanimously recommended PRM based on PRM's experience, excellent proposal terms, professional presentation, and competitive pricing. PRM had also developed a comprehensive and flexible spreadsheet based on Microsoft Excel which would allow the City to easily make future adjustments to base fees. The Project will include two distinct elements described below (it shall not provide a review of development impact fees, utility rates or rental charges): Cost Allocation Plan and Model In order to accurately determine City service fees, PRM will develop a cost allocation plan that will: 1) ensure enterprise funds are allocated at full cost and all indirect costs are allocated to public service departments; 2) allocate all layers of overhead costs to the fully burdened hourly rates; and 3) develop an OMB A -87 plan related allocation for State and Federal claiming opportunities. In addition, PRM will provide a cost allocation model that will enable the City to easily and accurately update the cost allocations each year. Cost -of- Services Study and Model In order to accurately update the Master Fee Schedule, PRM will analyze the cost of providing services. PRM will: 1) identify the full costs for each service activity; 2) review fee structures in various departments (fixed fee vs. hourly rates vs. valuation based fee vs. Nexus approach in building inspections); 3) calculate the fully burdened hourly rates for all staff positions; • Citywide Cost Al location Ond Cost of Services Study October 10, 2006 Page 3 4) identify City services for which there may not be a current fee, determine the costs of those activities, and recommend the addition of those fees to the Master Fee Schedule; and 5) analyze and compare fee levels among other selected cities and do a subsidy analysis. Finally, PRM will develop a cost of services model that will allow the City to easily and accurately update service and fee information on an annual basis. City staff recommends that the City hire PRM to conduct the Project. The draft Professional Services Agreement and Exhibits are attached. Environmental Review: Environmental review is not required for this agenda item. Funding Availability: Upon approval of the recommended Budget Amendment, sufficient funds will be available in the following account for the project: Account Description Cost Allocation Plan and Cost of Services Study Prepared by: Account Number 0640 -8080 Submitted by: Amount $47,400.00 road, Revenue Manager D nnis Danner, Administrative Services Director Attachments: Draft Professional Services Agreement with Public Resources Management, LLC. ! • PROFESSIONAL SERVICES AGREEMENT WITH PUBLIC RESOURCE MANAGEMENT GROUP, LLC FOR THE OVERHEAD COST ALLOCATION PLAN AND MODEL, AND COST OF SERVICES STUDY AND MODEL THIS AGREEMENT is made and entered into as of this T day of September, 2006, by and between the City of Newport Beach, a Municipal Corporation ( "City"), and Public Resource Management Group, LLC, a California limited liability company, whose address is 1380 Lead Hill Boulevard, Suite 106, Roseville, California, 95661 ("Consultant'), and is made with reference to the following: RECITALS A. City is a municipal corporation duly organized and validly existing under the laws of the State of California with the power to carry on its business as it is now being conducted under the statutes of the State of California and the Charter of City. B. City bases its fees upon a cost allocation model and a cost of services model which were developed from a study performed over ten years ago. The City must now hire a consultant to review, and if necessary, update: 1) the overhead costs originated from the original study; and 2) the methodology upon which the costs were determined. C. City desires to engage Consultant to affirm or update, as needed, the current cost allocation plan and model and the current cost of services study and model (the "Project'). D. Consultant possesses the skill, experience, ability, background, certification and knowledge to provide the services described in this Agreement. E. The principal member of Consultant for purposes of Project, shall be J. Bradley Wilkes. F. City has solicited and received a proposal from Consultant, has reviewed the previous experience and evaluated the expertise of Consultant, and desires to retain Consultant to render professional services under the terms and conditions set forth in this Agreement. NOW, THEREFORE, it is mutually agreed by and between the undersigned parties as follows: 1. TERM • • The term of this Agreement shall commence on the above written date, and shall terminate on the 30th day of May, 2007, unless terminated earlier as set forth herein. 2. SERVICES TO BE PERFORMED Consultant shall diligently perform all the services described in the Scope of Services attached hereto as Exhibit "A" and incorporated herein by reference. The City may elect to delete certain tasks of the Scope of Services at its sole discretion. 3. TIME OF PERFORMANCE Time is of the essence in the performance of services under this Agreement and Consultant shall perform the services in accordance with the schedule included in Exhibit "B ". The failure by Consultant to strictly adhere to the schedule may result in termination of this Agreement by City. Notwithstanding the foregoing, Consultant shall not be responsible for delays due to causes beyond Consultant's reasonable control. However, in the case of any such delay in the services to be provided for the Project, each party hereby agrees to provide notice to the other party so that all delays can be addressed. 3.1 Consultant shall submit all requests for extensions of time for performance in writing to the Project Administrator not later than ten (10) calendar days after the start of the condition that purportedly causes a delay. The Project Administrator shall review all such requests and may grant reasonable time extensions for unforeseeable delays that are beyond Consultant's control. 3.2 For all time periods not specifically set forth herein, Consultant shall respond in the most expedient and appropriate manner under the circumstances, by either telephone, fax, hand - delivery or mail. 4. COMPENSATION TO CONSULTANT City shall pay Consultant for its services in accordance with the provisions of this Section. Consultant's compensation for all work performed in accordance with this Agreement, including all reimbursable items and subconsultant fees, shall be Forty -Seven Thousand Four Hundred and no /100 Dollars ($47,400.00) without prior written authorization from City. This amount is based upon Consultant's Project Budget, attached hereto as Exhibit "C ". No billing changes shall be made during the term of this Agreement without the prior written approval of City. 5. • • 4.1 City shall pay Consultant no later than thirty (30) days after staffs approval of Consultant's final report. 4.2 City shall reimburse Consultant only for those costs or expenses specifically approved in this Agreement, or specifically approved in writing in advance by City. 4.3 Consultant shall not receive any compensation for Extra Work performed without the prior written authorization of City. As used herein, "Extra Work" means any work that is determined by City to be necessary for the proper completion of the Project, but which is not included within the Scope of Services and which the parties did not reasonably anticipate would be necessary at the execution of this Agreement. Compensation for any authorized Extra Work shall be paid in accordance with the Schedule of Billing Rates as set forth in Exhibit "C ". PROJECT MANAGER Consultant shall designate a Project Manager, who shall coordinate all phases of the Project. This Project Manager shall be available to City at all reasonable times during the Agreement term. Consultant has designated J. Bradley Wilkes to be its Project Manager. Consultant shall not remove or reassign the Project Manager, or assign any new or replacement personnel to the Project without the prior written consent of City. City's approval shall not be unreasonably withheld with respect to the removal or assignment of non -key personnel. Consultant, at the sole discretion of City, shall remove from the Project any of its personnel assigned to the performance of services upon written request of City. Consultant warrants that it will continuously furnish the necessary personnel to complete the Project on a timely basis as contemplated by this Agreement. ADMINISTRATION This Agreement will be administered by the Revenue Division. Lourdes Cantore shall be the Project Administrator and shall have the authority to act for City under this Agreement. The Project Administrator or her authorized representative shall represent City in all matters pertaining to the services to be rendered pursuant to this Agreement. 7. CITY'S RESPONSIBILITIES 0 a In order to assist Consultant in the execution of its responsibilities under this Agreement, City agrees to provide access to the required staff, and upon request of Consultant, provide one copy of all existing relevant information on file at City. City will attempt to provide all staff access and materials in a timely manner so as not to cause delays in Consultant's Schedule of Work. 8. STANDARD OF CARE 8.1 All of the services shall be performed by Consultant or under Consultant's supervision. Consultant represents that it possesses the professional and technical personnel required to perform the services required by this Agreement, and that it will perform all services in a manner commensurate with community professional standards. All services shall be performed by qualified and experienced personnel who are not employed by City, nor have any contractual relationship with City. 8.2 Consultant represents and warrants to City that it has, shall obtain, and shall keep in full force in effect during the term hereof, at its sole cost and expense, all licenses, permits, qualifications, insurance and approvals of whatsoever nature that is legally required of Consultant to practice its profession. Consultant shall maintain a City of Newport Beach business license during the term of this Agreement. 8.3 Consultant shall not be responsible for delay, nor shall Consultant be responsible for damages or be in default or deemed to be in default by reason of strikes, lockouts, accidents, or acts of God, or the failure of City to furnish timely information or to approve or disapprove Consultant's work promptly, or delay or faulty performance by City, contractors, or governmental agencies. 9. HOLD HARMLESS To the fullest extent permitted by law, Consultant shall indemnify, defend and hold harmless City, its City Council, boards and commissions, officers, agents, volunteers, and employees (collectively, the "Indemnified Parties ") from and against any and all claims (including, without limitation, claims for bodily injury, death or damage to property), demands, obligations, damages, actions, causes of action, suits, losses, judgments, fines, penalties, liabilities, costs and expenses (including, without limitation, attorney's fees, disbursements and court costs) of every kind and nature whatsoever (individually, a Claim; collectively, "Claims "), which may arise from or in any manner relate (directly or indirectly) to any breach of the terms and conditions of this Agreement, any work performed or services provided under this Agreement or Consultant's presence or activities conducted on the Project (including the negligent and/or willful acts, errors a 0 • and/or omissions of Consultant, its principals, officers, agents, employees, vendors, suppliers, consultants, subcontractors, anyone employed directly or indirectly by any of them or for whose acts they may be liable or any or all of them). Notwithstanding the foregoing, nothing herein shall be construed to require Consultant to indemnify the Indemnified Parties from any Claim arising from the sole negligence or willful misconduct of the Indemnified Parties. Nothing in this indemnity shall be construed as authorizing any award of attorney's fees in any action on or to enforce the terms of this Agreement. This indemnity shall apply to all claims and liability regardless of whether any insurance policies are applicable. The policy limits do not act as a limitation upon the amount of indemnification to be provided by the Consultant. 10. INDEPENDENT CONTRACTOR It is understood that City retains Consultant on an independent contractor basis and Consultant is not an agent or employee of City. The manner and means of conducting the work are under the control of Consultant, except to the extent they are limited by statute, rule or regulation and the expressed terms of this Agreement. Nothing in this Agreement shall be deemed to constitute approval for Consultant or any of Consultant's employees or agents, to be the agents or employees of City. Consultant shall have the responsibility for and control over the means of performing the work, provided that Consultant is in compliance with the terms of this Agreement. Anything in this Agreement that may appear to give City the right to direct Consultant as to the details of the performance or to exercise a measure of control over Consultant shall mean only that Consultant shall follow the desires of City with respect to the results of the services. 11. COOPERATION Consultant agrees to work closely and cooperate fully with City's designated Project Administrator and any other agencies that may have jurisdiction or interest in the work to be performed. City agrees to cooperate with the Consultant on the Project. 12. CITY POLICY Consultant shall discuss and review all matters relating to policy and Project direction with City's Project Administrator in advance of all critical decision points in order to ensure the Project proceeds in a manner consistent with City goals and policies. 13. PROGRESS • • This insurance shall act for each insured and additional insured as though a separate policy had been written for each, except with respect to the limits of liability of the insuring company. iv. The insurer waives all rights of subrogation against City, its elected or appointed officers, officials, employees, agents and volunteers. V. Any failure to comply with reporting provisions of the policies shall not affect coverage provided to City, its elected or appointed officers, officials, employees, agents or volunteers. vi. The insurance provided by this policy shall not be suspended, voided, canceled, or reduced in coverage or in limits, by either parry except after thirty (30) calendar days (10 calendar days written notice of non - payment of premium) written notice has been received by City. F. Timely Notice of Claims. Consultant shall give City prompt and timely notice of claim made or suit instituted arising out of or resulting from Consultant's performance under this Agreement. G. Additional Insurance. Consultant shall also procure and maintain, at its own cost and expense, any additional kinds of insurance, which in its own judgment may be necessary for its proper protection and prosecution of the work. 15. PROHIBITION AGAINST ASSIGNMENTS AND TRANSFERS Except as specifically authorized under this Agreement, the services to be provided under this Agreement shall not be assigned, transferred contracted or subcontracted out without the prior written approval of City. Any of the following shall be construed as an assignment: The sale, assignment, transfer or other disposition of any of the issued and outstanding capital stock of Consultant, or of the interest of any general partner or joint venturer or syndicate member or cotenant if Consultant is a partnership or joint- venture or syndicate or cotenancy, which shall result in changing the control of Consultant. Control means fifty percent (50 %) or more of the voting power, or twenty-five percent (25 %) or more of the assets of the corporation, partnership or joint - venture. 16. SUBCONTRACTING The parties recognize that a substantial inducement to City for entering into this Agreement is the professional reputation, experience and competence of Consultant. Assignments of any or all rights, duties or obligations of the 8 • • Consultant under this Agreement will be permitted only with the express written consent of City. Consultant shall not subcontract any portion of the work to be performed under this Agreement without the prior written authorization of City. 17. OWNERSHIP OF DOCUMENTS Each and every report, draft, map, record, plan, document, analysis, spreadsheet and other writing produced (hereinafter "Documents "), prepared or caused to be prepared by Consultant, its officers, employees, agents and subcontractors, in the course of implementing this Agreement, shall become the exclusive property of City, and City shall have the sole right to use such materials in its discretion without further compensation to Consultant or any other party. Consultant shall, at Consultant's expense, provide such Documents to City upon prior written request. Documents, including drawings and specifications, prepared by Consultant pursuant to this Agreement are not intended or represented to be suitable for reuse by City or others on any other project. Any use of completed Documents for other projects and any use of incomplete Documents without specific written authorization from Consultant will be at City's sole risk and without liability to Consultant. Further, any and all liability arising out of changes made to Consultant's deliverables under this Agreement by City or persons other than Consultant is waived against Consultant and City assumes full responsibility for such changes unless City has given Consultant prior notice and has received from Consultant written consent for such changes. 18. CONFIDENTIALITY All Documents, including drafts, preliminary drawings or plans, notes and communications that result from the services in this Agreement, shall be kept confidential unless City authorizes in writing the release of information. 19. INTELLECTUAL PROPERTY INDEMNITY Consultant shall defend and indemnify City, its agents, officers, representatives and employees against any and all liability, including costs, for infringement of any United States' letters patent, trademark, or copyright infringement, including costs, contained in Consultant's Documents, drawings and specifications provided under this Agreement. 20. RECORDS Consultant shall keep records and invoices in connection with the work to be performed under this Agreement. Consultant shall maintain complete and • accurate records with respect to the costs incurred under this Agreement and any services, expenditures and disbursements charged to City, for a minimum period of three (3) years, or for any longer period required by law, from the date of final payment to Consultant under this Agreement. All such records and invoices shall be clearly identifiable. Consultant shall allow a representative of City to examine, audit and make transcripts or copies of such records and invoices during regular business hours. Consultant shall allow inspection of all work, data, Documents, proceedings and activities related to the Agreement for a period of three (3) years from the date of final payment to Consultant under this Agreement. 21. WITHHOLDINGS City may withhold payment to Consultant of any disputed sums until satisfaction of the dispute with respect to such payment. Such withholding shall not be deemed to constitute a failure to pay according to the terms of this Agreement. Consultant shall not discontinue work as a result of such withholding. Consultant shall have an immediate right to appeal to the City Manager or his designee with respect to such disputed sums. Consultant shall be entitled to receive interest on any withheld sums at the rate of return that City earned on its investments during the time period, from the date of withholding of any amounts found to have been improperly withheld. 22. ERRORS AND OMISSIONS In the event of errors or omissions that are due to the negligence or professional inexperience of Consultant which result in expense to City greater than what would have resulted if there were not errors or omissions in the work accomplished by Consultant, the additional design, construction and /or restoration expense shall be borne by Consultant. Nothing in this paragraph is intended to limit City's rights under the law or any other sections of this Agreement. 23. CITY'S RIGHT TO EMPLOY OTHER CONSULTANTS City reserves the right to employ other Consultants in connection with the Project. 24. CONFLICTS OF INTEREST Consultant or its employees may be subject to the provisions of the California Political Reform Act of 1974 (the "Act'), which (1) requires such persons to disclose any financial interest that may foreseeably be materially affected by the 10 25. 26, • • work performed under this Agreement, and (2) prohibits such persons from making, or participating in making, decisions that will foreseeably financially affect such interest. If subject to the Act, Consultant shall conform to all requirements of the Act. Failure to do so constitutes a material breach and is grounds for immediate termination of this Agreement by City. Consultant shall indemnify and hold harmless City for any and all claims for damages resulting from Consultant's violation of this Section. NOTICES All notices, demands, requests or approvals to be given under the terms of this Agreement shall be given in writing, and conclusively shall be deemed served when delivered personally, or on the third business day after the deposit thereof in the United States mail, postage prepaid, first -class mail, addressed as hereinafter provided. All notices, demands, requests or approvals from Consultant to City shall be addressed to City at: Attn: Ms. Lourdes Cantore Revenue Division City of Newport Beach 3300 Newport Boulevard Newport Beach, CA, 92663 Phone: 949 - 644 -3143 Fax: 949 -644 -3073 All notices, demands, requests or approvals from CITY to Consultant shall be addressed to Consultant at: Attn: Mr. J. Bradley Wilkes Managing Principal Public Resource Management Group, LLC 1380 Lead Hill Blvd., Suite 106 Roseville, CA 95661 Phone: 916- 677 -4233 Fax: 916- 677 -2283 TERMINATION In the event that either party fails or refuses to perform any of the provisions of this Agreement at the time and in the manner required, that party shall be 11 ® 0 deemed in default in the performance of this Agreement. If such default is not cured within a period of two (2) calendar days, or if more than two (2) calendar days are reasonably required to cure the default and the defaulting party fails to give adequate assurance of due performance within two (2) calendar days after receipt of written notice of default, specifying the nature of such default and the steps necessary to cure such default, and thereafter diligently take steps to cure the default, the non - defaulting party may terminate the Agreement forthwith by giving to the defaulting party written notice thereof. Notwithstanding the above provisions, City shall have the right, at its sole discretion and without cause, of terminating this Agreement at any time by giving seven (7) calendar days prior written notice to Consultant. In the event of termination under this Section, City shall pay Consultant for services satisfactorily performed and costs incurred up to the effective date of termination for which Consultant has not been previously paid. On the effective date of termination, Consultant shall deliver to City all reports, Documents and other information developed or accumulated in the performance of this Agreement, whether in draft or final form. 27. COMPLIANCE WITH ALL LAWS Consultant shall at its own cost and expense comply with all statutes, ordinances, regulations and requirements of all governmental entities, including federal, state, county or municipal, whether now in force or hereinafter enacted. In addition, all work prepared by Consultant shall conform to applicable City, county, state and federal laws, rules, regulations and permit requirements and be subject to approval of the Project Administrator and City. 28. WAIVER A waiver by either party of any breach, of any term, covenant or condition contained herein shall not be deemed to be a waiver of any subsequent breach of the same or any other term, covenant or condition contained herein, whether of the same or a different character. 29. INTEGRATED CONTRACT This Agreement represents the full and complete understanding of every kind or nature whatsoever between the parties hereto, and all preliminary negotiations and agreements of whatsoever kind or nature are merged herein. No verbal agreement or implied covenant shall be held to vary the provisions herein. 30. CONFLICTS OR INCONSISTENCIES 12 In the event there are any conflicts or inconsistencies between this Agreement and Exhibit "A ", or any other attachments attached hereto, the terms of this Agreement shall govern. 31. INTERPRETATION The terms of this Agreement shall be construed in accordance with the meaning of the language used and shall not be construed for or against either party by reason of the authorship of the Agreement or any other rule of construction which might otherwise apply. 32. AMENDMENTS This Agreement may be modified or amended only by a written document executed by both Consultant and City and approved as to form by the City Attorney. 33. SEVERABILITY If any term or portion of this Agreement is held to be invalid, illegal, or otherwise unenforceable by a court of competent jurisdiction, the remaining provisions of this Agreement shall continue in full force and effect. 34. CONTROLLING LAW AND VENUE The laws of the State of California shall govern this Agreement and all matters relating to it and any action brought relating to this Agreement shall be adjudicated in a court of competent jurisdiction in the County of Orange. 35. EQUAL OPPORTUNITY EMPLOYMENT Consultant represents that it is an equal opportunity employer and it shall not discriminate against any subcontractor, employee or applicant for employment because of race, religion, color, national origin, handicap, ancestry, sex or age. IN WITNESS WHEREOF, the parties have caused this Agreement to be executed on the day and year first written above. APPROVED AS TO FORM: CITY OF NEWPORT BEACH, A Municipal Corporation By: City Attorney Mayor for the City of Newport Beach for the City of Newport Beach 13 0 0 ATTEST: CONSULTANT: By: By: LaVonne Harkless, (Corporate Officer) City Clerk Print Name: By: (Financial Officer) Title: Print Name: Attachments: Exhibit "A" — Scope of Services Exhibit "B" — Schedule of Work Exhibit "C" — Project Budget 14 Exhibit "A" SCOPE OF SERVICES • Consultant shall perform the following steps in the full cost of services study: Develop City's cost allocation plan. Consultant shall review the following: a. Costs allocated — ensure all indirect costs are being allocated for use in a user fee study; b. Allocation base study; and C. Allocations of indirect costs to user fee services. 2. Develop User Fee Study. Consultant shall perform the following: a. Identify /Inventory all user fee related services; b. Review fee structures in various departments (fixed fee vs. hourly rates vs. Nexus approach in building inspection); C. Calculate the direct cost of each user fee service — i. Salary cost of direct staff supplying service; ii. Fringe benefits; and iii. Direct service and supplies; d. Full Cost Identification — L Integrate indirect cost data from the cost allocation plan; ii. Integrate direct cost data; e. Subsidy analysis; f. Develop a comparison of fee levels among other selected cities; g. Review user fee policy; and h. Install PRM user fee software (Excel Worksheets) which would enable City to update fee information on an annual basis. Consultant's Work Plan is as follows: Step 1: Project Introductory Meeting Consultant shall meet with required City staff to: a. Explain the cost plan and user fee analysis process; b. Explain the purpose of the full cost study; C. Describe how other cities use full costing; d. Provide example summary reports; and e. Answer any questions City staff may have. Step 2: Data Review Consultant shall develop lists of basis data requirements which may include: a. lists of selected staff salary levels; 15 • • b. benefit cost detail; C. operational budgets; d. transaction statistics; e. and other data which Consultant may require. Once the basic data is required, Consultant shall develop the cost plan and rate structures. Step 3: Cost Allocation Plan Development a. Department Interview Preparation: After the data above is acquired, Consultant shall develop forms for City department interviews. Consultant's interview forms shall be developed with questions related to staffing lists, actual salary level, staff titles, department expenditure report detail, development of pre- interview questions, etc. b. Departmental Interviews: Consultant shall interview allocating City departments to ensure that costs are spread in a manner that reflects: i. the work that was done; ii, the departments that benefited; and iii. which allocation bases are proper. Consultant shall also interview any departments involved with internal service funds that charge for service to ensure that indirect costs are allocated accurately so that they are included in the full cost analysis when calculating internal service fund rates. C. Department Personnel Staff Analysis: Consultant has developed Personnel Staff Analysis ( "PSA ") worksheets. These worksheets shall be completed with information gathered in the initial interviews. The PSA provides a basis for the distribution of departmental costs into departmental functions. During the interviews, Consultant shall discuss each employee's assignments and duties. Using timesheets, assignments, or interview notes, Consultant shall determine what percentage of each person's time should be divided into departmental functions. This information will be entered into the PSA worksheets to define departmental functions. Once staff members and their corresponding salaries are distributed to functions, other department costs, such as materials and supplies, will also be distributed into the same functions or cost pools. The process shall take a departmental budget unit and break it into functional cost pools, which can then be allocated throughout the City using a meaningful allocation base. d. Departmental Cost Distribution: Consultant shall develop this schedule, which allocates departmental costs of the central service department and any "incoming costs" being allocating from other service departments. Consultant shall utilize its software to analyze, display and allocate the indirect costs of each central service department in such detail so as to facilitate City's review. 16 1-J 0 e. Developing Allocation Bases: After departmental functions are created, and costs are distributed across functions, a separate allocation base shall be selected that best reflects the benefit each department receives from the various services. The allocation base shall reflect a connection between the service provided and the service received. f. Cost Allocation Management Reports: After each central service department has been interviewed, the departmental costs distributed to functional cost pools, and each cost pool given an allocation base, Consultant shall produce the cost plan utilizing its own software. Step 4: User Fee Direct Cost Analysis a. User Fee Inventory: Consultant will develop an inventory of all current user fee charges. The list will include all general fund services provided to the public for which fees are charged. The objective of the inventory is to identify all general fund user fee charges and match them to the departments which supply the services. The following information will be reviewed: L fee history; ii. rate increase history; iii. revenue history; iv. fee purpose; V. number of units completed each year; and vi. departments providing service. b. Departmental Interviews: With information from the fee inventory, Consultant will interview each department supplying user fee services. Using the interview forms it has developed, Consultant shall gather the following data: L names of staff members providing service; ii. amount of time — required to complete one unit of service, and per year supplying the service iii. activity statistics such as — number completed per year, number completed last fiscal year, and estimated number of units to be completed in the coming fiscal year. The key statistics needed from a departmental interview are: individual staff estimates of time spent providing each service, and the number of units completed on an annual basis. In each department interview, Consultant shall ensure that 100% of each staff 17 0 0 member's time is identified such that no service, user fee related or not, is excluded from the full cost analysis. C. Financial Analysis: Once the basic time and workload transaction data is gathered from the departmental interviews, salary data, departmental service and supply cost data shall be entered by Consultant into Consultant's user fee software. This departmental data shall be integrated with the indirect cost data developed within the Consultant's cost allocation plan module. The direct cost and indirect cost of each fee shall be calculated and displayed for review. d. User Fee Management Reports: Consultant shall provide all the financial transaction and comparsion data in the final management reports. Each City department shall be provided at least two separate opportunities to review the costirevenue data. This shall ensure that the raw data will be as accurate as possible, for a more reliable final report. Step 5: Evaluation of Building Department Fees Consultant shall review the building department fees, and evaluate the relevance of the fees as they relate to the service provided. If Consultant concludes that the methodology upon which these building department fees are based must be updated, and if City Attorney approves, then Consultant shall conduct a "Nexus" study to develop a new method and basis for charging fees. The Nexus method makes a firm connection between hours and cost of service. Step 6: Study Presentation /Defense /Clarification If required, Consultant shall meet with staff to clarify its final report. In addition, Consultant may be required to present its findings and final report to the City's Council, Finance Committee, or other authoritative body. In the event Consultant presents its report to the City Council, Finance Committee or any authoritative body with an elected official present, Consultant shall be represented by J. Bradley Wilkes. 18 L Weeks One and Two: [Insert Dates] Exhibit "B" SCHEDULE OF WORK Meet with City management team and department heads to review study goals and objectives. 2. Obtain budgets, salary levels, staff lists & expenditure data. 3. Begin meetings with City departments. 4. Begin structuring project data into PRM systems. Weeks Three and Four: [Insert Dates] Obtain any feedback from departments, continue communication with departments, and answer questions. 2. Enter transaction data into the PRM models. Week Five: [Insert Dates] Produce any draft models completed. 2. Meet with City departments to review draft worksheets and discuss outstanding items. Weeks Six and Seven: [Insert Dates] Produce final cost allocation plan. Link cost allocation plan to user fee worksheets. 3. Produce second user fee draft worksheets. 4. Obtain feedback and comments from City. 19 Weeks Eight and Nine: [Insert Dates] Deliver final user fee worksheets. 2. Develop final project reports. 3. Install cost plan model. 4. Install user fee model. 0 Consultant shall submit weekly updates to the Projec4 Administrator by e-mail describing the work performed during the preceding week. These updates shall include the name of the person who performed the work, a brief description of the services performed and /or the specific task in the Scope of Services and Schedule of Work to which it relates, the date the services were performed, the number of hours spent on all work billed on an hourly basis, and a description of any reimbursable expenditures. 20 • • Exhibit "C" PROJECT BUDGET Consultant estimates the following number of hours for the Scope of Work TASKS SR PRM STAFF PRM STAFF TOTAL Cost Allocation Plan 32 50 82 User Fee Calculation Analysis 80 90 170 Cost Plan Excel Model 8 8 16 User Fee Excel Model 8 16 24 Presentations 8 16 24 Totals: 136 180 316 Consultant's average hourly rate, which includes expenses, is $150. Consultant shall not be using subcontractors. Consultant's fees shall be as follows: General Fund User Fee Study: $25,500 Full Cost Plan $10,300 OMB Cost Plan $ 2,000 Models: $ 6,000 Presentations: $ 3,600 Total Project $47,400 21 Cir of Newport Beach NO. BA- 07BA -018 BUDGET AMENDMENT 2006 -07 AMOUNT: $a7,aoo.00 EFFECT ON BUDGETARY FUND BALANCE: Increase Revenue Estimates Increase in Budgetary Fund Balance X Increase Expenditure Appropriations AND X Decrease in Budgetary Fund Balance Transfer Budget Appropriations No effect on Budgetary Fund Balance SOURCE: from existing budget appropriations from additional estimated revenues Px from unappropriated fund balance EXPLANATION: This budget amendment is requested to provide for the following: To increase expenditure appropriations for a citywide cost allocation plan and cost of services study. ACCOUNTING ENTRY: BUDGETARY FUND BALANCE Fund Account Description 010 3605 Gen Fund - Fund Balance REVENUE ESTIMATES (3601) Fund /Division Account Description EXPENDITURE APPROPRIATIONS (3603) Signed: Signed: Manager Amount Debit Credit $47,400.00 $47,400.00 ma- City Council Approval: City Clerk Date Description Division Number 0640 Revenue Account Number 8080 Services - Prof & Tech NOC Division Number Account Number Division Number Account Number Division Number Account Number Division Number Account Number Signed: Financial Approval: Administratb/e Services Director Signed: Signed: Manager Amount Debit Credit $47,400.00 $47,400.00 ma- City Council Approval: City Clerk Date