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15-151 Matrix Consulting Group, Ltd. for Comprehensive Fee & Rate Study and Overhead Cost Allocation PlanComprehensive Fee & CAP Study August 2015 AGREEMENT BETWEEN THE CITY OF CUPERTINO AND MATRIX CONSULTING GROUP, LTD. FOR COMPREHANSIVE FEE & RATE STUDY AND OVERHEAD COST ALLOCATION PLAN THIS AGREEMENT, for reference dated August 24, 2015, is by and between CITY OF CUPERTINO, a municipal corporation (hereinafter referred to as "City"), and Matrix Consulting Group, Ltd., a California corporation, whose address is 201 San Antonio Circle, Suite 148, Mountain View, CA 94040 (hereinafter referred to as "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 Constitution and the statutes of the State of California and the Cupertino Municipal Code. B. Consultant is specially trained, experienced and competent to perform the special services which will be required by this Agreement; and C. City and Consultant desire to enter into an agreement for a Comprehensive Fee & Rate Study and Overhead Cost Allocation Plan upon the terms and conditions herein. NOW, THEREFORE, it is mutually agreed by and between the undersigned parties as follows: 1. TERM: The term of this Agreement shall commence on September 1, 2015, and shall terminate on June 30, 201~ unless terminated earlier as set forth herein. 2. SERVICES TO BE PERFORMED: Consultant shall perform each and every service set forth in Exhibit "A" which is attached hereto and incorporated herein by this reference. 3. COMPENSATION TO CONSULTANT: Consultant shall be compensated for services performed pursuant to this Agreement in the amount set forth in Exhibit "B" which is attached hereto and incorporated herein by this reference. Payment shall be made by checks drawn on the treasury of the City, to be taken from the General Fund. 4. TIME IS OF THE ESSENCE: Consultant and City agree that time is of the essence regarding the performance of this Agreement. 5. STANDARD OF CARE: Consultant agrees to perform all services hereunder in a manner commensurate with the standards of specially trained professionals in the San Francisco Bay Area and agrees that all City of Cupertino 1 I Page 2016-322 -------------- Comprehensive Fee & CAP Study August 2015 services shall be performed by qualified and experienced personnel who are not employed by the City nor have any contractual relationship with City. 6. INDEPENDENT PARTIES: City and Consultant intend that the relationship between them created by this Agreement is that of an independent contractor. 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 express terms of this Agreement. No civil service status or other right of employment will be acquired by virtue of Consultant's services. None of the benefits provided by City to its employees, including but not limited to, unemployment insurance, workers' compensation plans, vacation and sick leave are available from City to Consultant, its employees or agents. Deductions shall not be made for any state or federal taxes, FICA payments, PERS payments, or other purposes normally associated with an employer-employee relationship from any fees due Consultant. Payments of the above items, if required, are the responsibility of Consultant. 7. IMMIGRATION REFORM AND CONTROL ACT (IRCA): Consultant assumes any and all responsibility for verifying the identity and employment authorization of all of his/her employees performing work hereunder, pursuant to all applicable IRCA or other federal, or state rules and regulations. Consultant shall indemnify and hold City harmless from and against any loss, damage, liability, costs or expenses arising from any noncompliance of this provision by Consultant. 8. NON-DISCRIMINATION: Consistent with City's policy that harassment and discrimination are unacceptable employer/employee conduct, Consultant agrees that harassment or discrimination directed toward a job applicant, a City employee, or a citizen by Consultant or Consultant's employee or subcontractor on the basis of race, religious creed, color, national origin, ancestry, handicap, disability, marital status, pregnancy, sex, age, or sexual orientation will not be tolerated. Consultant agrees that any and all violations of this provision shall constitute a material breach of this Agreement. 9. HOLD HARMLESS: Consultant shall, to the fullest extent allowed by law, with respect to all services performed in connection with the Agreement, indemnify, defend, and hold harmless the City and its officers, officials, agents, employees and volunteers from and against any and all liability, claims, actions, causes of action or demands whatsoever against any of them, including any injury to or death of any person or damage to property or other liability of any nature, whether physical, emotional, consequential or otherwise, arising out, pertaining to, or related to the performance of this Agreement by Consultant or Consultant's employees, officers, officials, agents or independent contractors. Such costs and expenses shall include reasonable attorneys' fees of counsel of City's choice, expert fees and all other costs and fees of litigation. 10. INSURANCE: On or before the commencement of the term of this Agreement, Consultant shall furnish City with certificates showing the type, amount, class of operations covered, effective dates and dates of expiration of insurance coverage in compliance with paragraphs 10A, B, C, D and E. Such certificates, which do not limit Consultant's indemnification, shall also contain City of Cupertino 2 I Page Comprehensive Fee & CAP Study August 2015 substantially the following statement: "Should any of the above insurance covered by this certificate be canceled or coverage reduced before the expiration date thereof, the insurer affording coverage shall provide thirty {30) days' advance written notice to the City of Cupertino by certified mail, Attention: City Manager." It is agreed that Consultant shall maintain in force at all times during the performance of this Agreement all appropriate coverage of insurance required by this Agreement with an insurance company that is acceptable to City and licensed to do insurance business in the State of California. Endorsements naming the City as additional insured shall be submitted with the insurance certificates. A. COVERAGE: Consultant shall maintain the following insurance coverage: (1) Workers' Compensation: Statutory coverage as required by the State of California. (2) Liability: Commercial general liability coverage in the following minimum limits: Bodily Injury: $500,000 each occurrence $1,000,000 aggregate -all other Property Damage: $100,000 each occurrence $250,000 aggregate If submitted, combined single limit policy with aggregate limits in the amounts of $1,000,000 will be considered equivalent to the required minimum limits shown above. (3) Automotive: Comprehensive automotive liability coverage in the following minimum limits: Bodily Injury: $500,000 each occurrence Property Damage: $100,000 each occurrence or Combined Single Limit: $500,000 each occurrence (4) Professional Liability: Professional liability insurance which includes coverage for the professional acts, errors and omissions of Consultant in the amount of at least $1,000,000. B. SUBROGATION WAIVER: Consultant agrees that in the event of loss due to any of the perils for which he/she has agreed to provide comprehensive general and automotive liability insurance, Consultant shall look solely to his/her insurance for recovery. Consultant hereby grants to City, on behalf of any insurer providing comprehensive general and automotive liability insurance to either Consultant or City with respect to the services of Consultant herein, a waiver of any right to subrogation which any such insurer of said Consultant may acquire against City by virtue of the payment of any loss under such insurance. C. FAILURE TO SECURE: If Consultant at any time during the term hereof should fail to secure or maintain the foregoing insurance, City shall be permitted to obtain such insurance in the Consultant's name or as an agent of the Consultant and shall be compensated by the Consultant for the costs of the City of Cupertino 3 I Page Comprehensive Fee & CAP Study August 2015 insurance premiums at the maximum rate permitted by law and computed from the date written notice is received that the premiums have not been paid. D. ADDITIONAL INSURED: City, its City Council, boards and commissions, officers, employees and volunteers shall be named as an additional insured under all insurance coverages, except any professional liability insurance, required by this Agreement. The naming of an additional insured shall not affect any recovery to which such additional insured would be entitled under this policy if not named as such additional insured. An additional insured named herein shall not be held liable for any premium, deductible portion of any loss, or expense of any nature on this policy or any extension thereof. Any other insurance held by an additional insured shall not be required to contribute anything toward any loss or expense covered by the insurance provided by this policy. E. SUFFICIENCY OF INSURANCE: The insurance limits required by City are not represented as being sufficient to protect Consultant. Consultant is advised to confer with Consultant's insurance broker to determine adequate coverage for Consultant. 11. CONFLICT OF INTEREST: Consultant warrants that it is not a conflict of interest for Consultant to perform the services required by this Agreement. Consultant may be required to fill out a conflict of interest form if the services provided under this Agreement require Consultant to make certain governmental decisions or serve in a staff capacity as defined in Title 2, Division 6, Section 18700 of the California Code of Regulations. 12. PROHIBITION AGAINST TRANSFERS: Consultant shall not assign, sublease, hypothecate, or transfer this Agreement, or any interest therein, directly or indirectly, by operation of law or otherwise, without prior written consent of City. Any attempt to do so without said consent shall be null and void, and any assignee, sublessee, hypothecate or transferee shall acquire no right or interest by reason of such attempted assignment, hypothecation or transfer. However, claims for money by Consultant from City under this Agreement may be assigned to a bank, trust company or other financial institution without prior written consent. Written notice of such assignment shall be promptly furnished to City by Consultant. 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, shall be construed as an assignment of this Agreement. Control means fifty percent (50%) or more of the voting power of the corporation. 13. SUBCONTRACTOR APPROVAL: Unless prior written consent from City is obtained, only those people and subcontractors whose names and resumes are attached to this Agreement shall be used in the performance of this Agreement. In the event that Consultant employs subcontractors, such subcontractors shall be required to furnish proof of workers' compensation insurance and shall also be required to carry general, automobile and professional liability insurance in reasonable conformity to the City of Cupertino 4 I Page Comprehensive Fee & CAP Study August 2015 insurance carried by Consultant. In addition, any work or services subcontracted hereunder shall be subject to each provision of this Agreement. 14. PERMITS AND ~ICfNSES: Consultant, at his/her sole expense, shall obtain and maintain during the term of this Agreement, all appropriate permits, certificates and licenses including, but not limited to, a City Business License, that may be required in connection with the performance of services hereunder. 15. REPORTS: A. Each and every report, draft, work product, map, record and other document, hereinafter collectively referred to as "Report", reproduced, prepared or caused to be prepared by Consultant pursuant to or in connection with this Agreement, shall be the exclusive property of City. Consultant shall not copyright any Report required by this Agreement and shall execute appropriate documents to assign to City the copyright to Reports created pursuant to this Agreement. Any Report, information and data acquired or required by this Agreement shall become the property of City, and all publication rights are reserved to City. Consultant may retain a copy of any report furnished to the City pursuant to this Agreement. B. All Reports prepared by Consultant may be used by City in execution or implementation of: (1) The original Project for which Consultant was hired; {2) Completion of the original Project by others; (3) Subsequent additions to the original project; and/or (4) Other City projects as appropriate. C. Consultant shall, at such time and in such form as City may require, furnish reports concerning the status of services required under this Agreement. D. All Reports required to be provided by this Agreement shall be printed on recycled paper. All Reports shall be copied on both sides of the paper. E. No Report, information or other data given to or prepared or assembled by Consultant pursuant to this Agreement shall be made available to any individual or organization by Consultant without prior approval by City. 16. RECORDS: Consultant shall maintain complete and accurate records with respect to sales, costs, expenses, receipts and other such information required by City that relate to the performance of services under this Agreement. Consultant shall maintain adequate records of services provided in sufficie.nt detail to permit an evaluation of services. All such records shall be maintained in accordance with generally accepted accounting principles and shall be clearly identified and readily accessible. Consultant shall provide free access to such books and records to the representatives of City or its designees at all proper times, and gives City the right to examine and audit same, and to make transcripts therefrom as necessary, and to allow inspection of all work, data, documents, proceedings and activities related to this Agreement. Such records, together with supporting documents, shall be kept separate from other documents and records and shall be maintained for a period of three (3) years after receipt of final payment. If supplemental examination or audit of the records is necessary due to concerns raised by City's preliminary examination or audit of records, and the City's supplemental examination or audit of the records discloses a failure to adhere to appropriate internal financial controls, or City of Cupertino 5 I Page Comprehensive Fee & CAP Study August 2015 other breach of contract or failure to act in good faith, then Consultant shall reimburse City for all reasonable costs and expenses associated with the supplemental examination or audit. 17. NOTICES: All notices, demands, requests or approvals to be given under this Agreement shall be given in writing and conclusively shall be deemed served when delivered personally or on the second business day after the deposit thereof in the United States Mail, postage prepaid, registered or certified, addressed as hereinafter provided. All notices, demands, requests, or approvals from Consultant to City shall be addressed to City at: City of Cupertino 10300 Torre Ave. Cupertino CA 95014 Attention: Jaqui Guzman All notices, demands, requests, or approvals from City to Consultant shall be addressed to Consultant at: Matrix Consulting Group 201 San Antonio Circle, Suite 148 Mountain View, CA 94040 Attention: Courtney Ramos 18. TERMINATION: In the event Consultant fails or refuses to perform any of the provisions hereof at the time and in the manner required hereunder, Consultant shall be deemed in default in the performance of this Agreement. If such default is not cured within within the time specified after receipt by Consultant from City of written notice of default, specifying the nature of such default and the steps necessary to cure such default, City may terminate the Agreement forthwith by giving to the Consultant written notice thereof. City shall have the option, at its sole discretion and without cause, of terminating this Agreement by giving seven (7) days' prior written notice to Consultant as provided herein. Upon termination of this Agreement, each party shall pay to the other party that portion of compensation specified in this Agreement that is earned and unpaid prior to the effective date of termination. 19. COMPLIANCES: Consultant shall comply with all state or federal laws and all ordinances, rules and regulations enacted or issued by City. 20. CONFLICT OF LAW: This Agreement shall be interpreted under, and enforced by the laws of the State of California excepting any choice of law rules which may direct the application of laws of another jurisdiction. The Agreement and obligations of the parties are subject to all valid laws, orders, rules, and regulations of the authorities having jurisdiction over this Agreement (or the successors of those authorities.) City of Cupertino 6 I Page Comprehensive Fee & CAP Study August 2015 Any suits brought pursuant to this Agreement shall be filed with the courts of the County of Santa Clara, State of California. 21. ADVERTISEMENT: Consultant shall not post, exhibit, display or allow to be posted, exhibited, displayed any signs, advertising, show bills, lithographs, posters or cards of any kind pertaining to the services performed under this Agreement unless prior written approval has been secured from City to do otherwise. 22. WAIVER: A waiver by City 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. 22. 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 hereof. Any modification of this Agreement will be effective only by written execution signed by both City and Consultant. 23. INSERTED PROVISIONS: Each provision and clause required by law to be inserted into the Agreement shall be deemed to be enacted herein, and the Agreement shall be read and enforced as though each were included herein. If through mistake or otherwise, any such provision is not inserted or is not correctly inserted, the Agreement shall be amended to make such insertion on application by either party. 24. CAPTIONS: The captions in this Agreement are for convenience only, are not a part of the Agreement and in no way affect, limit or amplify the terms or provisions of this Agreement. IN WITNESS WHEREOF, the parties have caused the Agreement to be executed. MATRIX CONSULTING GROJJ-P_,-L-:JJ A California Corp7oratio.r' J-, By Richard Brady ~ Presi~9~,.,,/ __ Date~5 City of Cupertino CITY OF CUPERTINO A ,,~ora/l-- By David Brandt City Manager ~ Date: ~ --z i; ·-l!J RECOMMENDED FOR APPROVAL: Title~~----~~- 7 I Page Comprehensive Fee & CAP Study August 2015 APPROVED AS TO FORM: ~ City of Cupertino 8 I Page Comprehensive Fee & CAP Study August 2015 Exhibit A: Scope of Work COMPREHENSIVE FEE AND RATE STUDY The City of Cupertino is looking to evaluate the cost of fee-related services for all discretionary services provided by the city. The main goals of this study are to identify current cost recovery levels and subsidies, as well as provide the City with recommendations for increasing fees, and outlining implementation strategies for annual updates. Task 1 Determine and Review Initial Documentation Consultant will provide Cupertino with a written "Data Collection List" outlining documents and information needed prior to the first on site visit. This data request typically includes the following items: • Current Fiscal Year adopted budget for all Departments and Divisions involved in the study. • Revenue reports for all Departments and Divisions involved in the study. • List of all budgeted personnel by Department I Division. • List of all current fees being charged by Cupertino to be included in the analysis. Before the first on-site visit, Consultant will review this information to become familiarized with strengths, weaknesses and opportunities for improvement related to the City's existing fee structure. In addition, Consultant will become familiarized with the budgetary and staffing structures relevant to fees for service. • Provide list of basic data requirements for the Study Estimated Hours: 1 -2 hours for Finance • Provide basic data requirements for the Study as listed by Consultant (staffing, salary, budget, etc.) Task 2 Project Initiation -Establish the City's Goals and Objectives for the Study, and Identify Trends and Plans Which Impact Cost Recovery Analysis and Policy. To effectively analyze and present the full cost of providing City services, it is important that Consultant develops an understanding of key issues which impact and shape the City's service delivery and cost recovery policies. To develop this perspective and customize the structure of the project, Consultant will do the following: • Conduct an initial meeting with the City's management staff to solidify the exact parameters ofthe study. • Develop a detailed project management plan, including timelines and associated deliverables. • Conduct discussions regarding the City's current fee structure and any potential changes • Identify current cost recovery policies or established subsidies. City of Cupertino 9 I Page Comprehensive Fee & CAP Study August 2015 As a "user fee" study, the Consultant does not propose to evaluate any fines, taxes, utility rates, or impact fees. Services and activities included in the study are those that are defined specifically by an estimate of staff time. · Proje~tDe[iyerable'.d IV!t:6;·•· • On-site meeting with City management involved in or impacted by the Study • Project Management Plan • Designated project management representative • Approval of work plan as provided by the Consultant Estimated Hours: 0.5 hours per executive staff member attending the meeting. Task 3 Develop a Schedule of Current and Potential Fees for Service Current, as well as potential fees and charges will be identified and documented. Meetings with each department will identify the areas of greatest potential cost recovery, and structure and expand existing fee schedules for both optimum cost recovery and fairness and equitability to the applicant for services. Potential areas for discussion will include streamlining or expanding the fee schedule for ease of use by the end user or evaluating if current deposit based fees cover projected service costs. At this time, Consultant will request volume statistics to be used for staff utilization and cost/revenue comparisons later in the analysis. • On-site meeting to discuss and revise fee structures for each department • Thorough review of existing documentation and analyses that support City department's current fee structure and operations Estimated Hours: 3 hours per department • Participation in discussion of existing and proposed fee items for the analysis • Review, comment, and approval of fee structure report prepared by Consultant. Task4 Conduct Time and Activity Data Gathering Workshops Consultant will conduct a total of two workshops to gather time and activity estimates for each service included in the study, interviewing key personnel from each department and analyzing the various activities being performed within it that are both revenue and non- revenue generating. The following flowchart shows an example of the steps involved in processing a permit and the staff and time associated with each step. Intake and Processing •Permit • 15 min City of Cupertino • 10 min ~~ '"' • Engineer • 1 hr Fi~l~vie.;-j Issue Permit ·~--L_,,,/ •Engineer •30 min • Permit Tech • 15min 10 I Page • • Comprehensive Fee & CAP Study August 2015 As the flowchart on the previous page shows, basic process steps in application/ permit processing will be documented and provided in the Departmental detail for each department represented in the study . . · . Project Deliverab,le:.,., MCG · .. ·•. : 'ciiy·s~rvice·sRecjuired•··· ' ' ... · ... :.: ·') .. .. . • . . ·---. " Facilitation of two-days of meetings related • Attendance at workshop meetings to available net hour calculations, • Provision of follow up data or discussion as documentation of service levels. needed 1 -2 iterations of review to achieve a defensible and reasonable allocation of staff time to fee and non-fee activities Estimated Hours: 3 -7 hours per department Task 5 Perform a Total Cost Analysis The Consultant's costing model is built based on Cupertino's operations, budget detail and intended uses for the results. This method is a customized approach, specific to each jurisdiction, for cost analysis of user fee services. This costing method uses time and annual activity level data to establish the cost of providing services on both a unit and annual level. Once the time spent for a fee activity is determined for each individual or position, the team uses its fee and rate software to apply applicable City costs to the calculation of the full cost of providing each service. The following chart describes the typical costs considered as applicable to fees. Direct Dept. Citywide Plans, Overhead ·:;·.' (Salaries, Overhead (Costs Policies, User + + + etc. -Benefits, and (Dept. Admin I associated -Fee allowable Mgmt e.g. with Central (Technology, dept. supplies, Services such General Plan exenditures) utilties, etc.) as Payroll, HR, Update, etc.) etc.) Resulting costs are presented on a unit and annual level, and are compared to the existing fee schedule and revenue reports. Cupertino will obtain information about cost recovery surpluses and deficits on both a detailed (per unit) and global (annualized) level, as well as an understanding of cost components for each service (i.e. direct cost, indirect cost, technology cost, etc.) • Detailed documentation of current charges versus the actual cost of providing services from both a cost per unit and annual cost perspective Estimated Hours: 1 -3 hours per department City of Cupertino • Provision of follow up data or discussion as needed 11 I Page Comprehensive Fee & CAP Study August 2015 Task 6 Analysis of Recoverable Revenue Utilizing each department's volume and workload data, Consultant will analyze potential and actual recoverable revenue. This will help the City understand how workload volume impacts revenue and cost subsidies. While potential revenue can be identified, recoverable revenue is dependent upon the following factors: • Current policies and legal restrictions, which limit the City's ability to increase fees and thereby revenue recovery. • Economic and revenue impacts of proposed and recommended fee levels and methodologies, including compliance with policies and fee affordability for recreation classes or small projects and applications. These factors influence the actual recoverable revenue of a department and directly influence the self-sustainability of a department I division. City staff can use this information to shape or alter current or future City policies on cost recovery. • Discussion of internal and external policies limiting fee increases • Analysis of potential and actual recoverable revenue Estimated Hours: 2 -4 hours per department • Provide documentation regarding current City policies • Attendance at meetings related to discussion of revenue results Task 7 Conduct a Market Rate Survey to Similar Jurisdictions Consultant will work with the City to identify at least 5 comparable jurisdictions in Santa Clara County or throughout California targeted for the fee comparison survey. Consultant will also develop the survey tools and work with each City department to identify the most appropriate fee items for benchmarks. Then, Consultant will administer the survey, collect comparative data, conduct the comparison, and document the results. The following graph provides an example of how comparative survey results for Building Fees will be presented: $8,000 $7,000 gj $6,000 if $5,000 :!::! $4,000 E $3,ooo Cl.I a.. $2,000 $1,000 $--c:: (]) '-'-::J () I ~ i:3 City of Cupertino ?f2. 0 ~ o_ ID ..-(/) > @) 0 0 () t.) ~ (]) ·-n:: () Single Family Home -New Permit and Plan Check Fees N C'Q ~ £ £ i:3 () () 0. 0. 0. E E E 0 0 0 () () () "<!" ~ i:3 0. E 0 () I.() £ () 0. E 0 () 11 Plan Check 111 Permit 12 I Page Comprehensive Fee & CAP Study August 2015 Market surveys do not provide adequate or objective information about the relationship of a jurisdiction's costs to its fees, therefore, it is recommended that information contained in the market comparison of fees be used as a secondary decision-making tool, rather than as a tool for establishing price points for services. ·Projecroelivera~IE!•'"".·•M<:i;·'· • Survey of fees in similar jurisdictions • Written comparative summary of the results Estimated Hours: 1 hour per division or program • Review of proposed jurisdictions and list of comparable fees to be included in the survey Tasks Review/Revise the Fee Study Results with City Management and Departments Because the analysis of fees for service is based on estimates and information provided by City staff, it is extremely important that all participants are comfortable with the Consultant's methodology and with the data provided. Once City departments agree that the analysis reflects the reasonable costs of providing services, Consultant will present the results to City management. Management will have an opportunity to review the results. Consultant will address implementation strategies that consider both policy issues and goals for optimum cost recovery. While it is generally desirable to eliminate any subsidies, discussions regarding the feasibility of raising fees based on political climate, legal restrictions, and social and economic consequences must occur. • Approval of analytical results at the Department and City management levels • Formulation of cost recovery recommendations and associated revenue impacts Estimated Hours: 1 -3 hours per department Task 9 Prepare a Final User Fee Study Report • Review of final analytical model documentation • Attendance at meetings related to discussion of results and economic policy implications • Follow up data or discussion as needed Upon conclusion of the fee study, Consultant will prepare a detailed report that summarizes the results of each of the previous work tasks described above. This report will include the following: • A succinct executive summary discussing the study, the methodology, and the results. • A narrative describing the services included in the study, as well as any revenue enhancement and operational recommendations specific to City's organization and based on Consultant's extensive experience with hundreds of jurisdictions, as well as key decision making points to be considered. • Appendices that compare existing and potential cost recovery on a unit and annual basis by department. The report will be reviewed, revised and finalized with Department and City management. City of Cupertino 13 I Page Comprehensive Fee & CAP Study ··i>rojecf Pelivel:able";..'MCG · ·----. -- • Preparation and approval of the Final City- wide User Fee Study report • One (1) unbound and Five (15) Bound copies of the final report along with delivery of one (1) PDF file and One (1) Word file. • Delivery of technical model. • Detailed back-up documentation for each department included in the study. Estimated Hours: 1 hour per reviewer August 2015 • Review and approval of Final Report drafts. Task 10 Present the Final Report to the City Council The presentation of results to City officials and/or stakeholders is critical to the success of the overall engagement. Because the product from the study is often controversial, the objective of this final step is to present a succinct summary that provides decision makers with key information. The Consultant will attend and present the Study to the City's Fiscal Strategic Committee and Council. Additional meetings can be arranged at cost. • Presentation of Study results to City Council and Fiscal Strategic Committee Estimated Hours: 12 • Preparation discussion with the consultant and review of any presentation materials required for Board meetings • Preparation of City Staff Report Estimated Hours: 4 hours CMG/Finance Task 11 User Fee Software Model and Training Cupertino wishes to have the ability to update the final version of the service cost analysis, including the ability to add, revise or remove direct and indirect costs, or apply an annual cost factor to calculate fee increases in future years. Consultant's technical fee model, produced in Microsoft Excel, provides the ability for Cupertino to adapt and continuously update user fees from year to year as the organization changes. While the model is structured in Excel, the technical model is proprietary and for internal use by City staff only. By having the model based in Excel, the requirements for software training, cost of new software products, updates, licensing or other additional support, is minimized. After the final draft of the fee study is approved, at the discretion of Departmental staff, Consultant will meet with and train designated City employees on use of the Excel model. Staff will be provided with initial training that includes: a step-by-step PowerPoint presentation; a User's Manual which explains key concepts and defines basic terms; and a customized update checklist of data and information that needs to be entered. While staff training typically takes about four hours, the Consultant is committed to supporting City staff well after project completion, including answering questions and providing model support, for no additional costs. City of Cupertino 14 I Page Comprehensive Fee & CAP Study August 2015 .. . Project PelWerable ~MCG · •. . .. . .• • ·city Services· Required ': ', ,_;~ .. • Technical User Fee Model • Attend training session with Consultant • Four (4) hours of on-site training for appropriate Department staff. Estimated Hours: Training attendance -4 hours FULL COST AND OMB A-87 ALLOCATION PLANS The City is looking to review and update their previous Cost Allocation Plan and methodology, and identify any gaps prohibiting it from being compliant with federal and state guidelines. This study will develop two plans that will allow the City to ensure it is accurately accounting for the true cost of providing various services (Full Cost), and can receive overhead cost reimbursement through billable rates or from state and federal grants (OMB A-87). Along with preparing accurate and defensible plans, the City also wishes to have the ability to continue to update the plans internally from year to year. Task 1 Discuss Study Objectives Prior to the initial on-site meeting, the Consultant will provide City with a list of initial data requirements for the study. This will allow Consultant to review this information thoroughly in preparation for initial discussions with management and department staff. Consultant will then meet with City staff to further clarify the intended goals and purpose of the engagement, thus beginning the customization of the structure of the allocation model to meet the City's goals and objectives for the study. Once goals and objectives have been clarified and outlined Consultant will conduct a kick-off presentation to staff and member agencies regarding the scope, methodology, and detailed timeline for the project. Any internal or external stakeholders may be invited at the City's discretion. Discussions will include: • Review of the City's specific needs and critical issues surrounding development and implementation of the cost allocation plan. • Opportunities for improvement and restructuring of previous plans, and/or review and discussion of existing cost allocation methodologies. • Discussion of the uses of a cost allocation plan, as well as concerns or issues that should be addressed during the development of the plan. City of Cupertino 15 I Page • • • Comprehensive Fee & CAP Study Project.Dell\lera61e ~MCG List of basic data requirements for the Study • Kick-Off presentation to appropriate staff and member agencies On-site initia I meeting with Executive staff to • review goals, objectives, and project management plans • August 2015 •• City$e~iC:esRequired . Basic data requirements for the study as requested by the Consultant (staffing, salary, budget, etc.) Attendance at kick-off presentation and initial Executive staff meeting Designate City project management representative Estimated Hours: 2 hours for the Finance Department, and approximately 30 minutes for each attendee of the kick-off presentation and Executive staff meeting. Task 2 Interview Staff and Gather Data To structure a custom cost allocation model, Consultant will perform the following tasks: • Review and discuss the accounting (fund and organizational levels) and staffing structure of the City, as well as current fiscal year actual or budget information. • Meet with each administrative services department or other defined department, to identify its major services and document the most reasonable allocation basis of these costs to its benefiting departments, funds, and activities. The following is a sample flowchart visually representing the outcome of these discussions, the first level is the Central Service Department, the second level is the identified service category, and the third level is the basis by which costs will be allocated: HUMAN .·RESOURCES ;c~_: -:f~:~/J:;~~~~:::-,_:; : /~;;~;~; ~ ·yy~'~; ·:,:o~~ Recruitment #of Recruitments . ;t~~~~~l:e~k'F.i•i Worker's Comp #of Claims .. _· ... i:;>erJDep{ :.~::,~~jii~t ~~~i"_ .~/~~{~;-~~.,.~:~ ,'._, -,~,:. • Discuss alternative allocation procedures, including possible outcomes and potential impacts of each method. • Discuss options and impacts of how certain staff are budgeted and allocated. City of Cupertino 16 I Page Comprehensive Fee & CAP Study August 2015 ·.·PrdjectP£!li\f¢r~blE:!.·~ .IVICG···'·····.· • Staff interviews • Attendance at interviews • Data collection for the structure, functions, • Provide Consultant with data as requested costs and allocation bases needed to • Review and discussion of Consultant's initial complete the first draft of the Plan interpretation of the data Estimated Hours: Approximately 2 to 3 hours for each administrative function in the study. Task 3 Structure and Prepare Draft Custom Full Cost Allocation Plan Model Based upon units of service identified in Task 2, allowable administrative or other indirect costs are allocated to each benefiting City department, operating unit or fund. At this point Consultant will begin customizing the Cost Plan model in order to meet the City's specified needs, including: • Ensuring methodologies and assumptions comply with Federal regulations and general accounting principals. • Providing the ability to add or remove direct or indirect costs as future needs and programs change. • Customizing cost allocation summary schedules and narratives in a format that best allow the City to update and apply them prospectively for future budgets. • Develop justifiable internal and external overhead rates for reimbursement purposes either through user fees or federal and state grants. The draft Cost Allocation Plan will provide clear documentation regarding the basis for allocations, and the methodologies applied to achieve the plan's final result. The Draft Cost Allocation Plan will be discussed and reviewed with each participating department as well as Executive staff. • Delivery and discussion of the Draft Full Cost Allocation Plan and indirect rates • Draft narrative report that exp la ins the analysis • Review the Plan and provide requests for changes or points of discussion to the consultant Estimated Hours: Approximately 2 hours for each administrative function in the study. Task 4 Finalize and Present the Full Cost Allocation Plan Upon City review and acceptance of the revised Cost Allocation Plan, Consultant will prepare and provide to the City a final electronic version of the plan, including all necessary supporting documentation. Along with presenting the Cost Allocation Plan to the City's management group and City Council, at the City's discretion, Consultant will present the plan to stakeholders or receivers of cost in order to ensure understanding and consensus regarding the methodologies and assumptions used in the plan. The Consultant will also be available to staff during and after the project should the need arise to help defend the Cost Allocation Plan as a result of any audits or challenges. City of Cupertino 17 I Page Comprehensive Fee & CAP Study • One to two rounds of revisions to finalize the Full Cost Allocation plan • One (1) unbound and Five (15) Bound copies of the Final Full Cost Allocation Plan and e- version of the analytical model, as well as a Final narrative report that explains the analysis in Microsoft Word. • Discussion and advice on implementation. August 2015 • Review and approve final Full Cost Allocation plan Estimated Hours: Approximately 1 hour for each administrative function in the study. Task 5 Preparation of Draft OMB A-87 Compliant Cost Allocation Plan The work program to develop a detailed cost allocation plan that complies with the provisions of OMB Circular A-87 is concerned with the use of those costs to develop, submit, and secure approval for state and federal grant claims. Once the Full Cost Allocation Plan has been developed, this second phase can begin. In order to minimize any impacts on City staff, information and data needed to complete the OMB A-87 compliant plan will be gathered and discussed during meetings regarding the Full Cost Allocation Plan. Completion of the OMB A-87 Plan will revisit several of the tasks identified for the Full Cost Allocation Plan above, and will utilize its structure to update and modify select data components. A draft OMB A-87 Compliant Cost Allocation Plan will be provided to City staff for review, and will include a straightforward narrative summary of the results. • Delivery and discussion of the Draft OMB Cost Allocation Plan and indirect rates • Draft narrative report that explains the analysis • Review the Plan and provide requests for changes or points of discussion to the consultant Estimated Hours: Approximately 2 hours for each administrative function in the study. Task 6 Finalize and Present OMB A-87 Plan Once management has reviewed the plan, Consultant will present copies of the final version of the plan and remain available to assist City staff in the use of the plan. Consultant will also remain available to consult with City staff as needed to defend the methodology and resulting cost calculations. City of Cupertino 18 I Page • • Comprehensive Fee & CAP Study Revisions to finalize the OMB Cost Allocation • plan One (1) unbound and Fifteen (15) bound copies of the Final Full Cost Allocation Plan and e- version of the analytical model, as well as a Final narrative report that explains the analysis in Microsoft Word. August 2015 .··.•.Cit\' Services Requir~d Review and approve final Full Cost Allocation plan • Discussion and advice on implementation. Estimated Hours: Approximately 1 hour for each administrative function in the study. Task 7 Provide Cost Plan Analytical Summary Table and Model, as Well as Training for City Staff The City wishes to have the ability to update the final version of the Cost Allocation Plan, including the ability to add, revise or remove direct and indirect costs so the plan can be easily adapted to a range of activities both simple and complex. The Consultant's technical cost plan model, produced in Microsoft Excel, provides the ability for the City to adapt and continuously update the cost allocation plan from year to year as the organization changes. While the model is structured in Excel, the technical model is proprietary and for internal use by City staff only. By having the model based in Excel, the requirements for software training, cost of new software products, updates, licensing or other additional support, is minimized. After the final draft of the cost allocation plan is approved, at the discretion of City staff, Consultant will meet with and train designated City employees on use of the Excel model. City staff will be provided with initial training that includes: a step-by-step PowerPoint presentation; a User's Manual which explains key concepts and defines basic terms; and a customized update checklist of data and information that needs to be entered. While staff training typically takes about four hours, the Consultant is committed to supporting City staff well after project completion, including answering questions and providing model support, for no additional costs. • Computer based summary table of the final version of the Cost Allocation Plan and Technical Model • Four (4) hours of on-site training for appropriate Finance Department staff. Estimated Hours: Training attendance -4 hours City of Cupertino • Attend training session with Consultant 19 I Page Comprehensive Fee & CAP Study August 2015 Exhibit B: TIMELINE AND PRICING PROPOSED PROJECT SCHEDULE The following subsections present the proposed project schedule on a task-by-task basis. These project schedules take into account the City's proposed project completion date of February 16, 2016. (1) Comprehensive User Fee and Rate Study The typical timeframe for a study of this nature is three months, which should allow for the study to be completed by the City's deadline of December 2015. The following table outlines the proposed project schedule on a task-by-task basis. 1. Initial Documentation 2. Project Kick-off 3. Current & Potential Fees 4. Data Workshops 5. Total Cost Analysis 6. Analysis of Recoverable Revenue 7. Comparative Survey 8. Review/ Revise Results 9. Prepare Final Report All timelines can be adjusted based upon the City's schedule and other commitments in agreement with City. Presentation of results and adoption by the Council will occur after delivery and approval of the final report, at the discretion of the City. Additionally, delivery of technical model and on-site training will also occur after the adoption of the Final report. (2) Cost Allocation Plans The typical timeframe for a study of this nature is twelve weeks, which should allow for the study to be completed by the City's deadline of December 2015. The only issues that could impede achieving the City's requested timeline would be the availability of City staff or data. The table on the following page outlines the proposed project schedule on a task-by-task basis. ··.····>'T:a~k· 1. Discuss Study Objectives 2. Interview Staff and Gather Data 3. Structure Custom Full Cost Allocation Plan 4. Finalize Full Cost Allocation Plan 5. Prepare Draft OMB A-87 6. Finalize and Present Final OMB A-87 City of Cupertino 20 I Page I•·• 1- Comprehensive Fee & CAP Study August 2015 Technical models and training will be provided to staff after the acceptance of the Final Cost Allocation Plans by Council, or at the discretion of City management. PROPOSED PROJECT COST The Consultant will conduct the Comprehensive User Fee and Rate Study and Review of Cost Allocation Plan at the level of detail described in the scope of work (Exhibit A) for $45,200 for professional time within Consultant's hourly rates for the contract period. The following table provides a breakdown of team member hours and project costs by task for each of the requested scopes of work. __ , •·>· ~,--~-' -"_-_' x-----.• :<-'· -·-··c:_ .• ----.--_i>roje~t>, -. ' _:_·~)~-:--. ,::-{ --·--· -~:. ___ . ___ -.· . ~ -- --;. -~~ad'.t\n~Jv~t-~-· ___ •;•._ -"''< ->._--' rask ,,_A·~ _ _ --··--· --"-' . _, '· ~. Ma,n~!rer f-rotaJ;cosi COMPREHENSIVE USER FEE AND RATE STUDY 1. Initial Documentation 4 8 $1,520 2. Project Kick-off 8 8 $2,160 3. Current & Potential Fees 12 18 $3,900 4. Data Workshops 18 32 $6,400 5. Total Cost Analysis 16 28 $5,640 6. Analysis of Recoverable Revenue 8 16 $3,040 7. Comparative Survey 8 16 $3,040 8. Review I Revise Results 4 10 $1,740 9. Prepare Final Report 8 0 $1,280 10. Present Final Report 4 4 $1,080 Subtotal Comprehensive User Fee Study 90 140 $29,800 COST ALLOCATION PLAN 1. Discuss Study Objectives 8 4 $1,720 2. Interview Staff and Gather Data 12 24 $4,560 3. Structure Custom Full Cost Allocation Plan 8 24 $3,920 4. Finalize Full Cost Allocation Plan 8 12 $2,600 5. Prepare Draft OMB A-87 4 8 $1,520 6. Finalize and Present Final OMB A-87 4 4 $1,080 Subtotal CAP 44 76 $15,400 RATE PER HOUR $160 $110 COMPREHENSIVE FEE STUDY AND CAP COST $45,200 Due to the close proximity of Consultant's headquarters and location of key project staff, there are no travel costs for this study. Invoices will be billed for hours and expenses incurred upon completion of each project deliverable enumerated above and no payment shall be due from the City until the project deliverable is met to the satisfaction of the City. City of Cupertino 21 I Page MATRl-2 OP ID: TH ACORD* CERTIFICATE OF LIABILITY INSURANCE I DATE (MM/DDNYYY) ........__..... 08/18/2015 THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE HOLDER. THIS CERTIFICATE DOES NOT AFFIRMATIVELY OR NEGATIVELY AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW. THIS CERTIFICATE OF INSURANCE DOES NOT CONSTITUTE A CONTRACT BETWEEN THE ISSUING INSURER(S), AUTHORIZED REPRESENTATIVE OR PRODUCER, AND THE CERTIFICATE HOLDER. IMPORTANT: If the certificate holder is an ADDITIONAL INSURED, the policy(ies) must be endorsed. If SUBROGATION IS WAIVED, subject to the terms and conditions of the policy, certain policies may require an endorsement. A statement on this certificate does not confer rights to the certificate holder in lieu of such endorsement(s). PRODUCER ~2~~~cT Select Accounts Department Suhr Risk Services r.,vgNNEo Ext\: 408-510-5440 I FAX 5300 Stevens Creek Blvd. iAIC Nol: San Jose, CA 95129 E·MAIL ADDRESS: Select Accounts Department INSURER(S) AFFORDING COVERAGE NAIC# INSURER A, The Hartford 29424 INSURED Matrix Consulting Group LTD INSURER B : Landmark American Insurance 33138 201 San Antonio Circle, #148 INSURERC: Mountain View, CA 94040 INSURER D: INSURER E: INSURER F: COVERAGES CERTIFICATE NUMBER: REVISION NUMBER: THIS IS TO CERTIFY THAT THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED. NOTWITHSTANDING ANY REQUIREMENT, TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT TO WHICH THIS CERTIFICATE MAY BE ISSUED OR MAY PERTAIN, THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS, EXCLUSIONS AND CONDITIONS OF SUCH POLICIES. LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS. INSR TYPE OF INSURANCE ADDL SUBR (~~)ilgj'y~l (~~7~g~l LIMITS LTR INSD WVD POLICY NUMBER A x COMMERCIAL GENERAL LIABILITY EACH OCCURRENCE $ 2,000,000 -n CLAIMS-MADE 0 OCCUR PREMfSE~ Yta~~~~~nce l x x 57SBAAT1347 08/08/2015 08/08/2016 $ 1,000,000 MED EXP (Any one person) $ 10,000 - PERSONAL & ADV INJURY $ 2,000,000 ~ GEN'L AGGREGATE LIMIT APPLIES PER: GENERAL AGGREGATE $ 4,000,000 Fl DPRO-Owe PRODUCTS -COMP/OP AGG $ 4,000,000 POLICY JECT OTHER: $ AUTOMOBILE LIABILITY ~~~~~~~tf INGLE LIMIT $ 2,000,000 f-- A ANY AUTO x x 57SBAAT1347 08/08/2015 08/08/2016 BODILY INJURY (Per person) $ f--ALL OWNED -SCHEDULED AUTOS AUTOS BODILY INJURY (Per accident) $ -x x NON-OWNED PROPERTY DAMAGE $ HIRED AUTOS AUTOS IPer accidenO - $ UMBRELLA LIAB H OCCUR EACH OCCURRENCE $ 1,000,000 - A x EXCESS LIAB CLAIMS-MADE 57SBAAT1347 08/08/2015 08/08/2016 AGGREGATE $ 1,000,000 OED I x I RETENTION$ 10,000 $ WORKERS COMPENSATION I PER I I OTH- AND EMPLOYERS' LIABILITY X STATUTE ER Y/N A ANY PROPRIETOR/PARTNER/EXECUTIVE D 57WECV05142 08/08/2015 08/08/2016 E.L. EACH ACCIDENT $ 1,000,000 OFFICER/MEMBER EXCLUDED? N/A (Mandatory In NH) E.L. DISEASE· EA EMPLOYEE $ 1,000,000 If yes, describe under DESCRIPTION OF OPERATIONS below E.L. DISEASE· POLICY LIMIT $ 1,000,000 B Professional Liab LHR827307 08/08/2015 08/08/2016 Ea Claim 1,000,000 Aggregate 3,000,00(] DESCRIPTION OF OPERATIONS I LOCATIONS I VEHICLES (ACORD 101, Additional Remarks Schedule, may be attached If more space Is required) Those usual to the insured's operations. The City of Cupertino, its City Council, boards and commissionst officers, emfcloyees and volunteers are named as additional insureds wr he attached orm. Primary & non contributory wording applies. aiver of Subrogation applies per attached. CERTIFICATE HOLDER CANCELLATION SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE City of Cupertino THE EXPIRATION DATE THEREOF, NOTICE WILL BE DELIVERED IN ACCORDANCE WITH THE POLICY PROVISIONS. Attn: Jaqui Guzman 10300 Torre Ave. AUTHORIZED REPRESENTATIVE Cupertino, CA 95014 ~~u. ~y.\~ .. I © 1988-2014 ACORD CORPORATION. All rights reserved. ACORD 25 (2014/01) The ACORD name and logo are registered marks of ACORD POLICY NUMBER: 57 SBA AT1347 THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY. ADDITIONAL INSURED -PERSON-ORGANIZATION City of Cupertino, its City Council, boards and commissions, officers, employees and volunteers Form IH 12 00 11 85 T SEQ. NO. 001 Printed in U.S.A. Page 001 (CONTINUED ON NEXT PAGE) Process Date: 05/23/13 Expiration Date: 08/08/14 (6) When You Are Added As An Additional Insured To Other Insurance That is other insurance available to you covering liability for damages arising out of the premises or operations, or products and completed operations, for which you have been added as an additional insured by that insurance; or (7) When You Add Others As An Additional Insured To This Insurance That is other insurance available to an additional insured. However, the following provisions apply to other insurance available to any person or organization who is an additional insured under this Coverage Part: (a) Primary Insurance When Required By Contract This insurance is primary If you have agreed in a written contract, written agreement or permit that this insurance be primary. If other insurance is also primary, we will share with all that other insurance by the method described in c. below. (b) Primary And Non-Contributory To Other Insurance When Required By Contract If you have agreed in a written contract, written agreement or permit that this insurance Is primary and non~contributory with the additional insured's own insurance, this insurance is primary and we will not seek contribution from that other insurance. Paragraphs (a) and (b) do not apply to other insurance to which the additional insured has been added as an additional insured. When this insurance is excess, we will have no duty under this Coverage Part to defend the insured against any "suit" if any other insurer has a duty to defend the insured against that "suit". If no other insurer defends, we will undertake to do so, but we will be entitled to the insured's rights against all those other insurers. Form SS 00 08 04 05 BUSINESS LIABILITY COVERAGE FORM When this insurance is excess over other insurance, we will pay only our share of the amount of the loss, if any, that exceeds the sum of: (1) The total amount that all such other insurance would pay for the loss in the absence of this insurance; and (2) The total of all deductible and self- lnsured amounts under all that other insurance. We will share the remaining loss, if any, with any other insurance that is not described In this Excess Insurance provision and was not bought specifically to apply in excess of the Limits of Insurance shown in the Declarations of this Coverage Part. c. Method Of Sharing If all the other insurance permits contribution by equal shares, we will follow this method also. Under this approach, each insurer contributes equal amounts until it has paid its applicable limit of Insurance or none of the loss remains, whichever comes first. If any of the other insurance does not permit contribution by equal shares, we will contribute by limits. Under this method, each insurer's share is based on the ratio of its applicable limit of insurance to the total applicable limits of insurance of all insurers. 8. Transfer Of Rights Of Recovery Against Others To Us a. Transfer Of Rights Of Recovery If the insured has rights to recover all or part of any payment, including Supplementary Payments, we have made under this Coverage Part, those rights are transferred to us. The insured must do nothing after loss to impair them. At our request, the insured will bring "suit" or transfer those rights to us and help us enforce them. This condition does not apply to Medical Expenses Coverage. b. Waiver Of Rights Of Recovery (Waiver Of Subrogation) If the insured has waived any rights of recovery against any person or organization for all or part of any payment, Including Supplementary Payments, we have made under this Coverage Part, we also waive that right, provided the insured waived their rights of recovery against such person or organization in a contract, agreement or permit that was executed prior to the Injury or damage. Page 17 of 24 BUSINESS LIABILITY COVERAGE FORM F. OPTIONAL ADDITIONAL INSURED COVERAGES If listed or shown as applicable in the Declarations, one or more of the following Optional Additional Insured Coverages also apply. When any of these Optional Additional Insured Coverages apply, Paragraph 6. (Additional Insureds When Required by Written Contract, Written Agreement or Permit) of Section c., Who Is An Insured, does not apply to the person or organization shown in the Declarations. These coverages are subject to the terms and conditions applicable to Business Liability Coverage in this policy, except as provided below: 1. Additional Insured -Designated Person Or Organization WHO IS AN INSURED under Section C. is amended to include as an additional insured the person(s) or organization(s) shown in the Declarations, but only with respect to liability for "bodily injury", "property damage" or "personal and advertising injury" caused, in whole or in part, by your acts or omissions or the acts or omissions of those acting on your behalf: a. In the performance of your ongoing operations; or b. In connection with your premises owned by or rented to you. 2. Additional Insured -Managers Or Lessors Of Premises a. WHO IS AN INSURED under Section C. is amended to include as an additional insured the person(s) or organization(s) shown in the Dectarations as an Additional Insured • Designated Person Or Organization; but only with respect to liability arising out of the ownership, maintenance or use of that part of the premises leased to you and shown in the Declarations. b. With respect to the insurance afforded to these additional insureds, the following additional exclusions apply: This insurance does not apply to: {1) Any "occurrence" which takes place after you cease to be a tenant in that premises; or (2) Structural alterations, new Page 18 of 24 construction or demolition operations performed by or on behalf of such person or organization. 3. Additional Insured -Grantor Of Franchise WHO IS AN INSURED under Section C. Is amended to include as an additional insured the person(s) or organization(s) shown in the Declarations as an Additional Insured - Grantor Of Franchise, but only with respect to their liability as grantor of franchise to you. 4. Additional Insured -Lessor Of Leased Equipment a. WHO IS AN INSURED under Section C. is amended to include as an additional insured the person(s) or organization(s) shown in the Declarations as an Additional Insured -Lessor of Leased Equipment, but only with respect to liability for "bodily injury", "property damage" or "personal and advertising injury" caused, in whole or in part, by your maintenance, operation or use of equipment leased to you by such person(s) or organizatlon(s). b. With respect to the insurance afforded to these additional insureds, this insurance does not apply to any "occurrence" which takes place after you cease to lease that equipment. 5. Additional Insured -Owners Or Other Interests From Whom Land Has Been Leased a. WHO IS AN INSURED under Section c. Is amended to Include as an additional insured the person(s) or organization(s) shown In the Declarations as an Additional Insured -Owners Or Other Interests From Whom Land Has Been Leased, but only with respect to liability arising out of the ownership, maintenance or use of that part of the land leased to you and shown in the Declarations. b. With respect to the insurance afforded to these additional insureds, the following additional exclusions apply: This insurance does not apply to: (1) Any "occurrence" that takes place after you cease to lease that land; or (2) Structural alterations, new construction or demolition operations performed by or on behalf of such person or organization. 6. Additional Insured • State Or Political Subdivision -Permits a. WHO IS AN INSURED under Section C. is amended to include as an additional insured the state or political subdivision shown in the Declarations as an Additional Form SS 00 08 04 05 Insured -State Or Political Subdivision - Permits, but only with respect to operations performed by you or on your behalf for which the state or political subdivision has issued a permit. b. With respect to the Insurance afforded to these additional insureds, the following additional exclusions apply: This insurance does not apply to: (1) "Bodily injury", "property damage" or "personal and advertising injury" arising out of operations performed for the state or municipality; or (2) "Bodily injury" or "property damage" included in the "product·completed operations" hazard. 7. Additional Insured-Vendors a. WHO IS AN INSURED under Section C. is amended to include as an additional insured the person(s) or organization(s) (referred to below as vendor) shown in the Declarations as an Additional Insured - Vendor, but only with respect to "bodily injury" or "property damage" arising out of "your products" which are distributed or sold in the regular course of the vendor's business and only if this Coverage Part provides coverage for "bodily injury" or "property damage" included within the "products-completed operations hazard". b. The insurance afforded to the vendor is subject to the following additional exclusions: (1) This insurance does not apply to: (a) "Bodily injury" or "property damage" for which the vendor is obligated to pay damages by reason of the assumption of liability in a contract or agreement. This exclusion does not apply to liability for damages that the vendor would have in the absence of the contract or agreement; (b) Any express warranty unauthorized by you; (c) Any physical or chemical change in the product made intentionally by the vendor; (d) Repackaging, unless unpacked solely for the purpose of inspection, demonstration, testing, or the substitution of parts under instructions from the manufacturer, and then repackaged in the original container; Form SS 00 08 04 05 BUSINESS LIABILITY COVERAGE FORM (e) Any failure to make such inspections, adjustments, tests or servicing as the vendor has agreed to make or normally undertakes to make in the usual course of business, in connection with the distribution or sale of the products; (f) Demonstration, installation, servicing or repair operations, except such operations performed at the vendor's premises in connection with the sale of the product; (g) Products which, after distribution or sale by you, have been labeled or relabeled or used as a container, part or Ingredient of any other thing or substance by or for the vendor; or (h) "Bodily injury" or "property damage" arising out of the sole negligence of the vendor for its own acts or omissions or those of its employees or anyone else acting on its behalf. However, this exclusion does not apply to: (i) The exceptions contained in Subparagraphs (d) or (f); or (ii) Such inspections, adjustments, tests or servicing as the vendor has agreed to make or normally undertakes to make in the usual course of business, in connection with the distribution or sale of the products. (2) This insurance does not apply to any insured person or organization from whom you have acquired such products, or any ingredient, part or container, entering into, accompanying or containing such products. 8. Additional Insured -Controlling Interest WHO IS AN INSURED under Section C. is amended to include as an additional insured the person(s) or organization{s) shown in the Declarations as an Additional Insured - Controlling Interest, but only with respect to their liability arising out of: a. Their financial control of you; or b. Premises they own, maintain or control while you lease or occupy these premises. Page 19 of 24 BUSINESS LIABILITY COVERAGE FORM This Insurance does not apply to structural alterations, new construction and demolition operations performed by or for that person or organization. 9. Additional Insured -Owners, Lessees Or Contractors -Scheduled Person Or Organization a. WHO IS AN INSURED under Section C. is amended to include as an additional insured the person(s) or organization(s) shown in the Declarations as an Additional Insured -Owner, Lessees Or Contractors, but only with respect to liability for "bodily injury", "property damage11 or ''personal and advertising injury" caused, in whole or in part, by your acts or omissions or the acts or omissions of those acting on your behalf: (1) In the performance of your ongoing operations for the additional insured(s); or (2) In connection with "your work" performed for that additional insured and included within the "products~ completed operations hazard", but only if this Coverage Part provides coverage for "bodily injury" or "property damage" included within the "products-completed operations hazard". b. With respect to the insurance afforded to these additional insureds, this insurance does not apply to "bodily injury", "property damage" or "personal an advertising injury" arising out of the rendering of, or the failure to render, any professional architectural, engineering or surveying services, including: (1) The preparing, approving, or failure to prepare or approve, maps, shop drawings, opinions, reports, surveys, field orders, change orders, designs or drawings and specifications; or (2) Supervisory, inspection, architectural or engineering activities. 1 O. Additional Insured -Co-Owner Of Insured Premises WHO IS AN INSURED under Section C. is amended to include as an additional insured the person(s) or Organization(s) shown in the Declarations as an Additional Insured -Co- Owner Of Insured Premises, but only with respect to their liability as co-owner of the premises shown in the Declarations. Page 20 of24 The limits of Insurance that apply to additional insureds are described in Section D. -Limits Of Insurance. How this insurance applies when other insurance is available to an additional insured is described in the Other Insurance Condition in Section E. - Liability And Medical Expenses General Conditions. G. LIABILITY AND MEDICAL EXPENSES DEFINITIONS 1. "Advertisement" means the widespread public dissemination of information or Images that has the purpose of inducing the sale of goods, products or services through: a. {1) Radio; (2) Television; (3) Billboard; (4) Magazine; (5) Newspaper; b. The Internet, but only that part of a web site that is about goods, products or services for the purposes of inducing the sale of goods, products or services; or c. Any other publication that is given widespread public distribution. However, "advertisement" does not Include: a. The design, printed material, information or images contained in, on or upon the packaging or labeling of any goods or products; or b. An interactive conversation between or among persons through a computer network. 2. ''Advertising idea" means any idea for an "advertisement". 3. "Asbestos hazard" means an exposure or threat of exposure to the actual or alleged properties of asbestos and includes the mere presence of asbestos in any form. 4. "Auto" means a land motor vehicle, trailer or semi-trailer designed for travel on public roads, including any attached machinery or equipment. But "auto" does not include "mobile equipment". 5. "Bodily Injury" means physical: a. Injury; b. Sickness; or c. Disease sustained by a person and, if arising out of the above, mental anguish or death at any time. 6. "Coverage territory" means: Form SS 00 08 04 05