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Page | 11 SBWMA Recology Negotiations FAX Report 4/20/17 3.6 Two-tiered Peer Review of Current Collections Operations Costs As a secondary step, a peer review was performed of the SVM pro forma by R.J. Proto Consulting Group (RJP) in order to evaluate its accuracy. After this review, RJP provided findings to SVM, who then developed a restated pro forma which included th ose findings. RJP reviewed the SVM Original Pro Forma and found it was a thorough, well-developed model, drawing numbers, formulas, and calculations from multiple interactive worksheets. The findings showed the Total Annual Cost of Operations variance between the SVM pro forma and Recology’s 2016 Actual Costs of 3/31/16 is -5.5%, (meaning the SVM pro forma costs were 5.5% lower than Recology’s 2016 costs as of 3/31/16) and that it was within a reasonable margin of error for this type of analysis. SVM took the findings from RJP’s analysis and made changes to the original pro forma, developing a Restated Pro Forma. The difference between the original and restated pro forma is mostly due to a pension cost variance which was only 0.5%, or $146,000 more than Recology Actual costs. SVM also attributed some of the other findings to timing differences. The restated pro forma has a variance of -1.8% meaning the SVM pro forma costs were 1.8% lower than Recology’s 2016 actual costs. The Total Annual Cost of Operations variance between the SVM original and restated pro formas and Recology’s Actual Costs as of 3/31/16 ranges between -5.5% to -1.8%. This variance is within a reasonable margin of error for this type of analysis. The results from this analysis can be found in Attachment C. 3.7 Member Agency Input Member Agency input is always highly-valued, and was specifically solicited by staff during the negotiation process in a variety of ways that are identified in this section. This feedback provided the SBWMA Negotiation Team (Team) with clarification on ratepayer satisfaction with Recology’s collection services, customer support, and rates. This clarification, in turn, shaped the Team’s discussion and deal points for the entire negotiation process with Recology. This stakeholder input process is detailed below. A. SBWMA TAC Meetings There were two SBWMA TAC meetings that allowed for participation by each Member Agency during the Recology negotiation process.  January 5, 2017: HF&H Consultants facilitated an agency-wide input session with the TAC and FAX members to identify and rank important discussion points for the Franchise Agreement negotiations. The results from this collaborative dialogue included a Context Map and Mandala Visioning session that provided clarity on the concerns and direction the Member Agencies would like to see. This session was attended by over forty Member Agency representatives. For further detail, see Attachment D.  April 13, 2017: A joint TAC and FAX committee meeting was held to provide context, share results and seek feedback on the recommendations by the Negotiation and FAX committee. This meeting was the first glimpse the TAC members had of the proposed changes and compensation package . The feedback was positive regarding the direction of the negotiations and the progress made to date. 7.A - Page 21