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Cost Allocation Summary Based on the analysis performed above, Consultant will develop cost allocations summary and review analysis with City staff. If necessary, Consultant will revise assumptions and present revisions to City staff for inclusion in the 2019 solid waste rate setting process. Franchise Fees The City currently collects 13.4% of gross receipts as a franchise fee. The 0.4% was added to cover administrative costs related to the collection of solid waste. Consultant will review all costs that could be attributed to solid waste and compare the total to the franchise fees currently being collected. Overhead Allocation Franchise fees historically cover overhead allocations as well as a payment for the exclusive right to provide solid waste collection service in the City. Consultant will request and review the City's General Fund Overhead Allocation methodology as it applies to the overhead allocation attributed to public works. Consultant will also review the allocation of public works' overhead to the solid waste collection service. Where possible, Consultant will determine the costs attributable to the residential and commercial service sector. Consultant will summarize the allocated costs and compare the costs to the franchise fees collected. Additionally, Consultant will survey other neighboring agencies for the franchise fee percentage included in the solid waste rates and provide the comparison to the City. Task 5. Develop Rate Structure Scenarios Based on the information gathered in Tasks 1 and 2, Consultant will prepare up to 3 different rate structure scenarios based on preliminary discussions with City staff. The scenarios may include topics, such as: • Changes in City fees; • Funding of new programs; • Analysis of Commercial and Residential costs and revenues; • Analysis of residential container costs and rates; and, • Other areas as determined by the City The rate structure scenarios will project revenues and expenditures through 2023 allowing the City to anticipate future events. Task 6. Communicate Results Consultant will confer with City staff to review the model and discuss the alternative rate scenarios. Consultant will revise the rate scenarios, if necessary, and work with City staff to develop the final scenarios to present to the City's Utility Committee. Consultant will prepare a presentation to the City's Utility Committee and attend a Committee meeting. City staff may then choose the most suitable option from those presented. If requested, Consultant will attend a Committee meeting preceding this Page 11 of 13 REV: 12-12-17 MI ATTY/AGR.2017.288/HF&H Consultants, LLC - Solid Waste/Recycle Rates