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::.~'~II~~!'I~iiiiiJi;H;("^ Advisory Services to Municipal Management 2175 N. California Boulevard, Suite 990 Walnut Creek, California 94596 Telephone: 925/977-6950 Fax: 925/977-6955 www.hfh-consultants.com Robert D. Hilton, CMC John W. Farnkopf, PE Laith B. Ezzet, CMC October 5,2007 Sent via e-mail Mr. Brian Ponty Finance Director City of Redwood City P.O. Box 391 Redwood City, CA 94063-0391 Subject: Revised Residential and Commercial Cart, Commercial Bin, and Commercial Compactor Rates Dear Mr. Ponty: The City of Redwood City (City) has requested that HF&H Consultants, LLC (HF&H) prepare an analysis of current rates and propose revised rates for residential and commercial carts, commercial bins, and commercial compactors in a uniform rate structure for residential and commercial can rates and a progressive rate structure for commercial bin and compactor rates. This letter communicates our proposed work scope for that project, as well as our projected fees. Work Scope 1. HF&H will contact Allied to obtain current rates and current customer count by type and level of service (Le., residential customers with one 32-gallon can, two 32-gallon cans, etc. and commercial customers with one 2-yard bin serviced 2 times per week, one 4-yard bin serviced 3 times per week, etc.). 2. HF&H will use the current information to obtain an average cost per-gallon for container service and an average cost per-yard for bin service. We will then develop revised rates based on a progressive per-gallon rate structure, including a frequency surcharge for service greater than once per week. We will develop a rate model comparing the present rate structure with: 1) a uniform per- gallon rate structure for residential and commercial can service; and, 2) a progressive per- gallon rate structure for commercial bin and compactor services. In addition, HF&H will provide a summary analysis of the changes and the impact on customers. We will work with City staff through different scenarios of the rate model. The rate schedules will be based on the then-current subscription levels and revenue requirement. The rate model will include a contingency for potential revenue loss due to account migration (customers downsizing their services as a result of increasing costs).