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Corporate Yard, Central Stores, and Fuel Rate Study City of Santa Ana Fuel Mark -Up Rate The function of the City's Fueling Station is to purchase, store and distribute (sell) fuel to City departments. In order to cover the cost of operating and maintaining the Fueling Stations, the City marks -up the fuel as it is sold to City departments. The current mark-up is S1 per gallon of gasoline and diesel, $1.34 per gasoline -gallon equivalent of CNG, and currently there is not mark-up for propane. The intent of this study will be to update the mark-up rate in order to recover the cost of providing the service. The study will require the following steps: 1. Quantify the total annualized annual costs for running the Fueling Station services. This will include both operating costs as well as annualized, long-term capital costs for maintaining the facilities and we will attempt to differentiate between the costs associated with each type of fuel; 2. Quantify the average annual cost of each fuel supply purchases over the past 5 years; and 3. Calculate the mark-up (as a percentage) that would have been needed in order to generate sufficient revenues to offset the annualized costs of operating and maintaining the Fueling Station function for each type of fuel. Scope of Work Task 1: Study Initiation We will begin the project with a conference call with City staff to confirm the purpose, use and goals for the study to ensure that we have a common understanding of the project objectives. We will discuss the basis of the City's current rates and discuss the anticipated data needs and project schedule. Following the initial conference call, we will submit a detailed data request list and allow a few weeks for the City to provide the data. It is assumed that the City will be able to provide financial data regarding annual operating costs and annualized capital costs for the Corporate Yard, Central Stores and Fueling Stations. The capital costs may be based on planned capital improvement costs or based on the depreciation expense of existing assets. It is also assumed that the City will be able to provide data an the square footage of each type of space (see Project Approach). If the fuel mark-up is to be differentiated by fuel -type, we will need operating cost data and asset data that is specific to each type of fuel. Hildebrand Consulting will not conduct on -site measurements. Task 2: Rate Calculation Upon receipt of the requested data, we will develop the rates as described in the Project Approach. This process with be interactive with City staff and we will share our progress during periodic conference calls. We will use market data from available on-line resources such as(but not limited to) LoopNet.com, Crexi.com, and Reonomy.com. We will develop a dynamic spreadsheet that will allow for simply updates of operating costs, annualized capital costs, square footage data, and space weighting (based on market data). Page 3 ,, HILDEBRAND CONSULTING