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Mr. Francisco Gutierrez November 14, 2011 Page 3 public safety staff that benefit the Water Enterprise by protecting property and personnel), (3) funding for the rental of the corporation yard, as well as well sites at park locations, and other facilities shared by the Water Enterprise(e.g., possibly based on a rate of return and depreciation calculation), and (4) other funding requirements that the Water Enterprise should make in return for benefits received (some of which may already be in place, such as funding for the stormwater program, but that may not currently provide full reimbursement). The City may request an enhancement of scope within the agreement, if necessary, upon mutual agreement (including cost) and within the authority of the City Manager only. At the conclusion of this task, we will produce a comprehensive list of options for cost- based transfers. The list will explain which of the current transfers are appropriate with any recommended refinements and any additional funding that should be provided by the Water Enterprise and establishing an appropriate category or label. Task 3. Present Funding Evaluation. The results of Tasks 1 and 2 will be summarized in a brief technical memorandum for review by City Staff. The report will summarize the current conditions and recommended modifications and additional funding options. Within the scope of this report, it may not be possible to quantify the options that are selected by the City. However, we will present the report to City Staff for review. Any further analytical assistance that is required by the City at that time can be assessed and a scope of services provided. III. Qualifications HFBzH is known to the City from our prior consulting on solid waste projects. The firm also provides water, sewer, and stormwater rate consulting throughout the western United States. In the course of doing rate studies, we carefully evaluate the funding issues discussed in this proposal to establish compliance with Proposition 218's substantive requirements. Since the passage of Proposition 218, I have been active with the League of California Cities regarding interpretations that are consistent with rate-making practices. I have served on League panels with its attorneys and public works officials to explain how rates need to be set to comply with Proposition 218's requirements. I have also worked with one of the State's foremost legal expertsl involving Proposition 218 for various clients. I have also conducted a study of municipal franchise fees in the wake of the RoseviZZe decision. The purpose of that study was to determine the rationale that cities with Reference: Michael Colantuono, Esq., 530-432-7359.