25A - AGMT - COMPREHENSIVE REPORT OF PROP 218 FEES

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SECTION 3: PROJECT UNDERSTANDING NBS' Overall Understanding and Approach to the Study We understand that the City of Santa Ana is embarking on a high-level and confidential third party Peer -review of its rates, fees, direct and indirect charges, and cross charges from other City agencies to its four enterprise funds: Refuse Collection, Water, Sanitary Sewer and Federal Clean Water Protection. In light of the increased scrutiny on utility rates due to recent Prop 218 rate -related court decisions, it is imperative to ensure the City's rates are in-Ilne with generally accepted industry standards and are defensible from a legal perspective. We realize this is an important project for the City and we have developed our proposal with this in mind. Our proposed deliverables for this project include an evaluation of whether the City's current practices align with industry standards and recommended technical approaches. Where a range of acceptable practices exists, we will endeavor to objectively describe the range. Our efforts will culminate in a report of strengths, weaknesses, and opportunities for improvement and, where appropriate, recommendations for implementation. This review consists of three major work plan components: 1. Utility Rates for the Water,, Sanitary Sewer, Refuse Collection and Federal Clean Water Protection Enterprise Funds 2. Direct, Indirect, and Cross Charges to the Enterprise Funds 3. Land Development and Permit Operation Fees Within the course of analysis of all Prop 218 and Prop 26 fees and charges, NBS will apply its decades of professional experience in the areas of developing utility rates, overhead cost allocation plans, evaluating Internal Service Fund charges, and establishing direct and indirect costs and charges. Our ultimate goal is to help the City ensure that all costs allocated to the enterprise funds are reasonable, are aligned with industry standards, and represent rational and defensible rate designs. NBS' review of fees and charges will also include fees charged for land development and permit operations, otherwise known as user and regulatory fees. These fees are governed primarily by Proposition 26, as well as subsequent government codes such as GC 66014 and GC 66016: In November 2010, California voters adopted Proposition 26 (Prop 26), which amended the California Constitution — prohibiting a local agency from adopting or increasing a levy, fee, or charge of any kind without voter approval unless a specific exemption contained in Prop 26 applies. If a levy, fee, or charge satisfies a specific exemption, it may be adopted by a simple majority of the local agency's legislative body. Permit fees for services such as improvement plan review, encroachment permit approval, and discretionary planning approvals, all fall under one of Prop 26's seven stated exceptions, the exception for Licenses and Permits: 'A charge imposed for the reasonable regulatory costs to a local government for issuing licenses and permits, performing investigations, inspections, and audits, enforcing agricultural marketing orders, and the administrative enforcement and adjudication thereof." O(� 1 City of Santa Ana 1 W BS RFP No. 17-081 Comprehensive Proposition 218 Fees and Charges Compliance Assessment 8 25A-24