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Home My WebLink AboutDiamond Bar CAP Fees eProposal_MatrixCG (1).pdf Proposal to Conduct a Citywide Fee Study and Cost Allocation Plan DIAMOND BAR, CALIFORNIA February 9, 2024 Table of Contents A Cover Letter i B Project Team 1 C Firm’s Experience/References 6 D Methodology/Project Understanding 12 E Cost for Services 26 F Insurance 27 G Consultant Services Agreement 28 February 9, 2024 Dannette Allen Principal Management Analyst City of Diamond Bar 21810 Copley Drive Diamond Bar, CA 91765 Dear Ms. Allen: The Matrix Consulting Group is pleased to submit our proposal to conduct a Citywide Fee Study and Cost Allocation Plan for the City of Diamond Bar. The importance of establishing documented and defensible plans that facilitate the recovery of direct and indirect costs. Our experience in providing similar services and understanding of the impact and implementation issues faced by jurisdictions in Southern California comes from recent work with the following clients: Burbank, Glendale, Manhattan Beach, Pasadena, Pomona, South Pasadena, San Bernardino, and Walnut. At Matrix Consulting Group, we distinguish ourselves from our competitors through our commitment to delivering unparalleled value. Our key differentiators lie in the fusion of data-driven analysis and a team of cross-trained professionals. Our staff possess a deep understanding of service and process assumptions behind the cost of service. This dual expertise allows us to provide comprehensive insights and solutions that optimize eﬃciency and maximize our clients' value. We are committed to dedicating the time, personnel, and resources to the City’s effort as identiﬁed in this proposal. Studies of this nature typically take approximately 20 weeks to complete. I am the ﬁrm’s President and authorized to contractually bind the ﬁrm. Courtney Ramos, a vice president, can provide clariﬁcation regarding this proposal, which is valid for 90 days upon receipt. We can be reached at the letterhead locations or via email at rbrady@matrixcg.net and cramos@matrixcg.net Richard Brady, President Matrix Consulting Group, Ltd. mat rix consulting group Proposal to Conduct a Cost Allocation Plan and Citywide Fee Study Diamond Bar, CA Matrix Consulting Group 1 B Project Team The project team proposed by the Matrix Consulting Group comprises full-time employees of our ﬁrm. The following chart outlines the project team's roles and reporting structure. The table below provides an overview of our proposed project team’s experience and roles throughout this project. Khushboo Ingle Vice President Study Manager Experience: 12 years Ms. Ingle is a Vice President who manages cost allocation plan, user fee, development impact fee, and cost of service engagements. Her experience with the ﬁrm also includes participation in operational audit engagements focusing on organization, staﬃng, and internal processes. Khushboo has completed over 150 cost of service studies. Recent Southern California clients include Menifee, Manhattan Beach, Glendale, Burbank, Pasadena, South Pasadena, Adelanto, Walnut, Riverside, Redlands, and San Bernardino. Ms. Ingle is a CSMFO member and trained in Revenue Best Practices. Coordination of data collection, support City staff in data development, and populate models. Primary contact for the project, providing expertise in leading meetings, reviewing drafts, and presenting results. Project oversight and overall project approval.City of Diamond Bar Khushboo Ingle Project Manager Madison Dixson Analyst Abnash Minhas Analyst Proposal to Conduct a Cost Allocation Plan and Citywide Fee Study Diamond Bar, CA Matrix Consulting Group 2 Madison Dixson Senior Consultant, Data Analyst Experience: 3 years Ms. Dixson is a lead analyst who assists our study manager on cost allocation plan, user fee, development impact fee, and cost of service engagements. Madison has participated in over 30 cost of service studies. Recent Southern California clients include Glendale, Burbank, Pasadena, Menifee, Redlands, Walnut, and San Bernadino. Ms. Dixson is a CSMFO member and has also received training on user fee regulations. Abnash Minhas Consultant, Analyst Experience: 1 year Ms. Minhas is an analyst who has recently joined our ﬁrm to assist our staff on cost-of-service engagements including cost allocation plan, user fee, and development impact fee studies. Prior to joining the ﬁrm Ms. Minhas had extensive experience working on indirect rates and capturing overhead costs. Recently she has worked for California clients such as Pomona, Redlands, Glendale, Menifee, and Chula Vista. We understand that if any personnel changes occur during the contract period, we must notify the City and furnish the same information for review and approval. Resumes for our Project Team members have been included on the following pages. Proposal to Conduct a Cost Allocation Plan and Citywide Fee Study Diamond Bar, CA Matrix Consulting Group 3 KHUSHBOO INGLE VICE PRESIDENT Ms. Ingle is a Vice President who manages cost allocation plan, user fee, development impact fee, and cost of service engagements. Her experience with the firm also includes participation in operational audit engagements focusing on reviewing organizational, staffing, and internal processes to enhance services. Khushboo’s relevant experience include: • Completed over 150 cost of service studies for clients across the United States. • Analysis focuses on development and documentation of direct and indirect costs, fair and equitable allocation methodologies, defensible results. • Expertise also includes development of fiscal policies and procedures relating to cost of service and cost recovery. Experience Highlights Glendale, CA: Khushboo served as the Project Manager on this engagement which looked and conducting a citywide fee study. Key analysis includes: • Discussing time assumptions on current and future fees for service. • Documenting the cost of service assumptions for all city fee departments. Redlands, CA: Khushboo served as the project manager on this engagement which looked and developing a citywide cost plan, and comprehensive fee. Key analysis included: • Review of current administrative functions, and ensuring all appropriate functions were included in the plan. • Incorporating updated metrics to account for each service area. • Calculation of Indirect costs for enterprise fund reimbursements Role on This Engagement: Khushboo will serve as the Project Manager on this engagement, leading interviews and coordinating necessary data collection for the financial analysis, policy discussions, and working with the Analysts to compile and analyze data. Relevant CA Clients: Berkeley Citrus Heights Cupertino Dixon Elk Grove Fairfield Glendale Livermore Long Beach Manhattan Beach Orange Pacific Grove Pomona Redlands Redwood City Riverside San Bernardino County San Pablo San Mateo Santa Clara Santa Clara County Sonoma County South San Francisco Stanislaus County Sunnyvale Walnut Years of Experience: 12 Education: B.A., University of California – San Diego, International Economics M.A., University of California – San Diego, International Affairs Professional Association / Certification: California Society of Municipal Finance Officers OMB Cost Allocation Best Practices Proposal to Conduct a Cost Allocation Plan and Citywide Fee Study Diamond Bar, CA Matrix Consulting Group 4 MADISON DIXSON SENIOR CONSULTANT Ms. Dixson is a lead analyst on cost allocation plan, user fee, development impact fee, and cost of service engagements. Madison’s relevant experience include: • Completed over 50 cost of service studies for clients across the United States. • Analysis focuses on comparative review of services and fee levels. • Expertise also includes narrative analysis of cost of service studies. Experience Highlights Riverside, CA: Madison served as a project analyst on this engagement. She worked with the project team to input data into the model to develop the OMB Compliant Cost Plan for the City of Riverside. Glendale, CA: Madison supported our senior team members in collection, analysis, and distillation of allocation metrics for input into the Citywide Fee Model. This ensured accurate development of fee results, as well as clear backup documentation for the City. Redlands, CA: Madison worked as a project analyst, participating in interviews discussing support areas, reviewing and compiling agenda statistic information, and developing a cost allocation narrative to describe the services being allocated. Role on This Engagement: Madison will serve as the Lead Analyst on this engagement, collecting and reviewing data, inputting data into analytical models, and producing final results. Relevant CA Clients: Adelanto Burbank Cupertino Daly City Dixon Fairfield Fort Bragg Glendale Menifee Millbrae Palo Alto Pasadena Port of Long Beach Redlands Redwood City Riverside San Bernardino San Bernardino County San Mateo Santa Clara Stockton South San Francisco Sunnyvale Years of Experience: 3 Education: B.A., University of California, Irvine, Anthropology Professional Association / Certification: California Society of Municipal Finance Officers Revenue Cost Allocation Best Practices Proposal to Conduct a Cost Allocation Plan and Citywide Fee Study Diamond Bar, CA Matrix Consulting Group 5 ABNASH MINHAS CONSULTANT Ms. Minhas is an analyst on cost allocation plan, user fee, development impact fee, and cost of service engagements. Abnash’s relevant experience include: • Completed over 20 cost of service studies for clients across the United States. • Analysis focuses on data analysis of metrics. • Expertise also includes narrative analysis of cost-of-service studies. Experience Highlights Calimesa, CA: Abnash supported the project team on this engagement. She worked with the project team to clean up data and conduct comparative analyses for the fee study. Redlands, CA: Abnash worked as a project analyst, participating in comparative analyses, and putting together workbooks for city staff review. Malibu, CA: Abnash is currently assisting on a project for the City of Malibu, working on gathering comparative information, calculating hourly rates, and inputting data into models. Role on This Engagement: Abnash will serve as an Analyst on this engagement, collecting data, inputting data into analytical models, and assisting with development of reports. Relevant Clients: Burlingame Calimesa Chula Vista Glendale Los Altos Malibu Pacific Grove Pomona Redlands Redwood City San Mateo San Ramon Sonoma Fire South San Francisco Years of Experience: 3 Education: B.A., University of California – San Diego, Economics Professional Association / Certification: OMB Cost Allocation Best Practices Proposal to Conduct a Cost Allocation Plan and Citywide Fee Study Diamond Bar, CA Matrix Consulting Group 6 C Firm’s Experience/References The Matrix Consulting Group was formed by experienced consultants to pursue an operating model in which analytical work is performed by senior-level staff. Our ﬁrm’s history and composition are summarized below: • We were founded in 2003, incorporated in California, and have our headquarters there (in San Mateo with a Southern California satellite oﬃce in Irvine) and regional oﬃces in Edwardsville (IL), the Dallas Metroplex (TX), Portland (OR), and the Tampa (FL) area. • We are comprised of 27 full-time and seven part-time highly experienced management consultants who specialize in analyzing local government functions encompassing the entire spectrum of critical operational areas. We have a dedicated ﬁnancial services team. • Since our founding, we have worked with over 1,700 government agencies, conducting cost of service and management studies and providing recommendations for operations, improvements, and cost recovery. The market and service focus of the Matrix Consulting Group has always been ﬁnancial, management, staﬃng, and operations analysis of local government. The following outlines the core ﬁnancial services provided by our ﬁrm: OMB 2 CFR Part 200 Cost Plans User Fee Studies Full Cost Plans Development Impact Fee Studies Indirect Cost Rate Proposals Fully Burdened Hourly Rates Internal Service Fund Analyses Revenue Projections No other ﬁrm better understands how public agencies operate or how to help them thrive. Cost Allocation Plan Study Experience Our ﬁrm has extensive experience developing Full Cost and OMB compliant Cost Allocation Plans, as well as Indirect Cost Rate Proposals for various municipal organizations across the United States. Whether we are working with large cities, small towns, special districts, or individual departments, our goal is to document and deﬁne the services being provided, and accurately allocate costs to all beneﬁciaries. The following points highlight our experience with developing cost allocation processes and metrics: • Administrative Functions: Our ﬁrm has extensive experience in evaluating processes and functions associated with Finance, Human Resources, and Proposal to Conduct a Cost Allocation Plan and Citywide Fee Study Diamond Bar, CA Matrix Consulting Group 7 Purchasing. From basic tasks and responsibilities to process improvement and oversight controls, our project teams can: - Identify core service functions, such as payroll, employee benefits, budget preparation, agenda, and board support. - Review current data metrics, and work with staff to ensure resulting allocations are appropriate, fair, and equitable. - Recognize services that are not in direct support of departments, including land acquisition and stewardship, and ensure they are accurately identified, but not further allocated. Our project teams understand the core services associated with administrative functions, as well as the time associated with process completion, and are adept at helping staff determine daily, weekly, monthly, or annual time spent on a task. These assumptions form the core basis of a cost allocation plan, and should be defensible not only through documentation, but also by City staff. • Governmental Functions: The Matrix Consulting Group has worked with and been a part of managerial studies relating to Manager and Legal services. Additionally, we have extensive experience working with, and presenting to various boards, councils, subcommittees, and the public. Our understanding of the various types of services provided allow our project teams to assess what services are best for allocation, including: - Categorizing services and support that benefit the City as an organization, such as contract negotiation, and approval of internal policies. - Identifying services that benefit the City economically, such as lobbying, and economic development, which should not be allocated. Our team understands how these costs can and should be treated in both a Full Cost Plan and OMB compliant plan, including making staff aware of common practices, as well as aggressive allocation options. • Internal Services: The Matrix Consulting Group has significant experience evaluating services and functions associated with facilities maintenance, fleet services, and information technology. While these services can be part of the general fund or internal services, their allocation is important when trying to understand the indirect costs associated with any fund, department, or program. Our project teams work with these departments to: - Review existing allocation processes and metrics to ensure compliance with state and federal regulations. Proposal to Conduct a Cost Allocation Plan and Citywide Fee Study Diamond Bar, CA Matrix Consulting Group 8 - Determine if newer metrics, or metric alterations could provide more accurate allocations. • Indirect Cost Rate Proposals: Our firm’s experience with indirect cost rate proposals ranges from developing citywide proposals to departmental and divisional proposals. We look at all indirect costs related to the service and program area, determine if it is allowable and then set up the indirect cost rate calculation. Based upon the jurisdiction’s rate methodology we are versed in provisional, fixed final, and fixed carry forward rates. We work with our clients to review rates, outline appropriate applications, and customize templates based upon cognizant agency guidelines. The following table provides a sampling of California jurisdictions for whom we have provided similar services within the last ﬁve (5) years, including the types of services provided to each jurisdiction, relevant to cost allocation services: Jurisdiction Full Cost OMB Indirect Rates Annual Plan Adelanto, CA X Citrus Heights, CA X X Cupertino, CA X X Daly City, CA X Dixon, CA X X Downey, CA X X Elk Grove, CA X X X Fairfield, CA X X Livermore, CA X X X Manhattan Beach, CA X X X Menifee, CA X X Millbrae, CA X X Pacific Grove, CA X X Port of Long Beach, CA X X Redlands, CA X Redwood City, CA X X Riverside, CA X X Sacramento Regional Transit, CA X X X San Mateo, CA X X X Santa Clara, CA X X X South San Francisco, CA X X Sunnyvale, CA X X X We are happy to provide additional project details upon request. Fee Study Experience Our ﬁrm has extensive experience conducting comprehensive user fee studies for various municipal organizations and departments. When conducting comprehensive user fee studies, the focus is often on Community Development (building, planning, and Proposal to Conduct a Cost Allocation Plan and Citywide Fee Study Diamond Bar, CA Matrix Consulting Group 9 engineering) and Parks and Recreation services. The following points highlight our experience in these areas: • Community Development: Our ﬁrm has extensive experience evaluating development review permitting functions for Building, Planning, Engineering, and Fire Prevention. From the basic process steps for submitting, reviewing, inspecting, and approving applications and permits to the development of processes, procedures, and cost recovery goals, our project teams can address topics such as: - The best metric for assessing fees, such as building valuation, square footage, construction estimate, or number of fixtures. - Appropriate deposit amounts, guidelines, and processes to ensure actual cost recovery is achieved. - Setting fees at levels that both recover costs but are not cost-prohibitive. - Cost recovery and implementation options for support services including General Plan Updates, Technology Fees, GIS, etc. Beyond understanding processes and assessing time estimates provided, our project teams are aware of the cross-departmental support associated with application and permit services. These costs are included in the full cost calculation and can be expressed as part of the established fee or a separate fee. • Parks and Recreation: The Matrix Consulting Group has worked with every type of recreation function, including traditional parks and recreation, libraries, and open space preserves. Our experience spans master and strategic planning, park condition assessments, program staﬃng, and cost recovery. Our project teams are well versed in the areas that most impact cost recovery, including: - The best use of a tiered recovery approach, such as resident versus non- resident or profit versus non-profit. - Setting fees according to the cost recovery pyramid ensures that premium services have a higher cost recovery. The goal in reviewing parks and recreation costs for service is to ensure that fees and rates are set at a level that allows the City to continue to serve the community in a manner consistent with current goals and commitments. All our cost of service and user fee studies are developed in compliance with California State regulations including Propositions 218 and 26, as well as government codes 66014 and 66016 which stipulate that user fees charged by local agencies “…may not exceed Proposal to Conduct a Cost Allocation Plan and Citywide Fee Study Diamond Bar, CA Matrix Consulting Group 10 the estimated reasonable cost of providing the service for which the fee is charged”. The following table includes a sampling of California clients over the last ﬁve (5) years for whom we have conducted cost of service (user fee) studies: Jurisdiction Planning Building Engineering Fire Prev. Admin Utility Police Recreation Adelanto, CA X X X X X Citrus Heights, CA X X X X X X Commerce, CA X Cupertino, CA X X X X Daly City, CA X X X X X X Dixon, CA X X X X X X Downey, CA X X X X X X X X Elk Grove, CA X X X Livermore, CA X X X X Los Altos, CA X X X Los Altos Hills, CA X X X X Manhattan Beach, CA X X X X X X X X Millbrae, CA X X X X X X Mill Valley, CA X X X X X X Montebello, CA X X X X X X X X Orange, CA X X X X X X X X Pacific Grove, CA X X X X X X Redwood City, CA X X X X X X X X San Bernardino, CA X X San Mateo, CA X X X Santa Clara, CA X X X X X X X X South Pasadena, CA X X X X X X X So. San Francisco, CA X X X X X X X X Stockton, CA X X X X Winters, CA X X X X X X X Services provided to the above clients were delivered by our proposed project executive and project manager out of our San Mateo (headquarters) and Irvine, CA oﬃces. Proposal to Conduct a Cost Allocation Plan and Citywide Fee Study Diamond Bar, CA Matrix Consulting Group 11 References The following table references three clients for whom similar services were provided and managed by our project executive and project manager. Client Client Contact Project Type/Details Glendale, CA 141 N. Glendale Ave. Glendale, CA 91206 Mari Karamyan Budget Manager (818) 551-4608 MKaramyan@Glendaleca.gov Citywide Fee Study Development Impact Fee Study Oct. 2021-Dec. 2022 Menifee, CA 29844 Haun Road Menifee, CA 92586 Margarita Cornejo Financial Services Manager (951) 723-3716 mcornejo@cityofmenifee.us Cost Allocation Plan Citywide User Fee Study Development Impact Fee Study July 2021-Sept. 2022 Redlands, CA 125 W. Vine St. Redlands, CA 92373 Danielle Garcia Management Services Manager (909) 798-7555 dgarcia@cityofredlands.org Full Cost Allocation Plan Citywide User Fee Study October 2022 – Aug 2023 Additional details are available upon request. Proposal to Conduct a Cost Allocation Plan and Citywide Fee Study Diamond Bar, CA Matrix Consulting Group 12 D Methodology / Project Understanding The City of Diamond Bar is requesting two scopes of work: (1) a Full Cost Allocation Plan and (2) a Comprehensive User Fee Study. The following points outline the basic approach to each of these scopes, including a summary of the steps required for each study. • Cost Allocation Plan: will help the City establish a full cost allocation methodology for speciﬁc administrative overhead costs that will properly reimburse the General Fund and estimate anticipated reimbursements. The following chart outlines the basic process steps for developing a cost allocation plan. A Full Cost plan would be developed based on budgeted expenditures, and would be used for interfund transfers, development of fully burdened hourly rates, and incorporation into the User Fee Study. • Comprehensive User Fee Study: will document the direct and indirect costs associated with fee-based city services. This study would also identify services currently provided for which fees could be assessed and understand how services and fees compare within the region. The following chart outlines the basic process steps for conducting a comprehensive user fee study. The culmination of the citywide user fee study will provide the City with documentation outlining the full cost of providing fee-based services. This information, in conjunction with the jurisdictional survey will help the City determine where to set fees. Review existing allocation assumptons Determine cost categories and services for allocation Review indirect costs for allocation Develop allocation recommendations Review existing fees and services Establish time estimates and service level assumptions Calculate fully burdened hourly rates Conduct jurisdicitonal comparison Develop fee recommendations and master fee schedule Proposal to Conduct a Cost Allocation Plan and Citywide Fee Study Diamond Bar, CA Matrix Consulting Group 13 The results of this engagement will provide the City with documentation outlining the direct and indirect costs associated with providing services both internally and externally, and outline options for recovering costs through fees or other mechanisms. Project Approach The Matrix Consulting Group works with various clients ranging from small towns to major metropolitan cities in over 45 states across the U.S. and Canada. Every project is unique but is managed according to the following essential project approach: The approach chosen for completing this project allows us to deliberately review and categorize the allowability of indirect costs as well as determine the best and most tangible metrics for allocation. Project Management and Quality Control We believe very strongly in the science of our craft, especially as it relates to cost allocation and cost of service studies. As such, our ﬁrm utilizes quality control techniques which include: • Project Management: Ensuring our projects meet the needs and timelines of our clients are accomplished through the following: - The project manager and lead analyst develop general and project speciﬁc data collection plans and interview guides. - All project work activities are deﬁned in advance and tied to each project team member, deliverables, the schedule, and the budget. Understanding City-specific financial data. Working collaboratively wtih City staff through meetings and workshops. Applying industry standards, best management practices, and technical expertise for cost allocation and fee application. Calculating defensible results with buy-in from internal and external stakeholders. Providing recommendations and transferring knowledge and work products to City staff for sccessful implementation. Proposal to Conduct a Cost Allocation Plan and Citywide Fee Study Diamond Bar, CA Matrix Consulting Group 14 - We have frequent client review meetings to discuss the quality and direction of the project through interim deliverables and draft documents. • Numerical Results: Financial analyses are used to develop budgets and projections, and often are subject to public oversight and review. For this reason, our ﬁrm ensures data determined quality control through the following: - Expenditure data entered into cost models are tied to budget documents. - Allocation metrics are tied to published reports / data outputs. These project management approaches have resulted in all our projects being delivered at a high level of quality, on time and on budget. Work Plan/Methodology The requested scopes of work can be conducted concurrently, as there are economies of scale that can be achieved by doing so. The following subsections detail our approach to project-wide, cost allocation plan, and citywide fee study-speciﬁc tasks, including deliverables. Project-Wide Tasks There are four (4) key tasks will initiate and close out this project. The following tasks are related to both the cost plan and user fee study scopes of work. Task 1 Data Collection Prior to any initial meetings, the Matrix Consulting Group will provide the City with a list of initial data requirements for the study. This will allow our project team to review this information thoroughly in preparation for initial discussions with staff. A common list of data collection items include: • Budgeted expenditures on a fund, department, and line-item basis. • Copy of any prior studies • List of all budgeted personnel by fund, department, and division. • Most recent completed Fiscal Year revenue reports • List of all current fees being charged to be included in the analysis. • List of comparative jurisdictions to be included in the analysis. Proposal to Conduct a Cost Allocation Plan and Citywide Fee Study Diamond Bar, CA Matrix Consulting Group 15 The above list is a sampling of the type of information that will be requested. The provision of these items allows our project team to familiarize themselves with current ﬁnancial practices. Deliverable List of basic data requirements for the Study Meetings None Task 2 Study Objectives and Project Schedule Once the data has been collected, the project team will then meet with designated City staff to discuss any issues identiﬁed by the project team, as well as to clarify any existing concerns held by the City regarding current fee methodologies. Discussions will include: • Review of the City’s speciﬁc needs and critical issues surrounding development and implementation of the cost plan and fee studies. • Discussion of concerns or issues that should be addressed during the development of the study. • Discussions regarding current fee structure and any potential changes. • Review and identify existing cost recovery policies or established subsidies. At the culmination of the meeting, the project team and the designated City staff will leave with a greater understanding of the overall approach and methodology that will be taken by the project team to conduct both the User Fee study and cost allocation plan. Deliverable Project Schedule Meetings Kickoff Task 3 Present the Final Report to Key Stakeholders 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. We will attend and present the study at a minimum of three (3) meetings, to include City Council, appropriate sub-committees, or outside stakeholders. Deliverable Fee Study Presentation Meetings Min. of 4 City Committee / Council and Stakeholder Meetings Proposal to Conduct a Cost Allocation Plan and Citywide Fee Study Diamond Bar, CA Matrix Consulting Group 16 Task 4 Implementation and Future Support The Matrix Consulting Group is committed to helping our clients develop accurate and defensible cost-of-service methodologies and ensure that they can implement the results of these studies appropriately. Our project team will work with City staff to facilitate an understanding of the results and how to incorporate those results into budget and policy documents, informational handouts, and other City materials. Our Client support continues even after a ﬁnal report has been issued. We understand that questions can arise about the development of a study well after project completion and are committed to working with our clients to answer any questions about methodologies and applications of results. This support is provided to our clients at no extra cost. Cost Allocation Plan Tasks The following tasks provide our workplan for developing a full cost allocation plan. Task 1 Interview Staff and Gather Allocation Metrics The project team would review the City’s existing cost allocation plan and methodologies, as well as budget and ﬁnancial structure to identify departments and services to be allocated. To structure a custom cost allocation model, our project team would perform the following: • Review and discuss the accounting (fund and organizational levels) structure of the City based upon the budgeted expenditures to identify any anomalies from previous years. • Identify and meet speciﬁc central services departments to develop allocation bases and ensure that the plan reﬂects the following aspects: - All current services provided by the Department are identiﬁed and documented within the Cost Allocation Plan. - Allocation bases discussed to be utilized are reﬂective of the current level of effort and most relatable to the service being performed. The following is a sample ﬂowchart visually representing discussion outcome, the ﬁrst level is the central services department, the second level is the identiﬁed service category, and the third level is the basis by which costs will be allocated: Proposal to Conduct a Cost Allocation Plan and Citywide Fee Study Diamond Bar, CA Matrix Consulting Group 17 • Discuss alternative allocations, including outcomes and potential impacts. The points above provide examples of the types of detailed and in-depth discussions that the project team will have with City departments involved in the cost allocation process. At this point in the process, the project team would reach out to each department and ask for speciﬁc allocation metrics such as purchase orders, invoices, sq. ft. per facility, etc. Deliverable Allocation Metric Requests from Support Departments Meetings 1 hour per Department Task 2 Review of Draft Cost Allocation Metrics Based upon units of service identiﬁed in Task 3 and the allocation metrics collected, the project team would put together allocation statistic workbooks for review with speciﬁc Central Service Departments. The purpose of these workbooks is to review the initial results of the allocation metrics gathered. The following graphic shows an example of the allocation workbook: Fund Dept Desc # of AR Transactions per Fund/Dept Allocation % 1 10 City Manager 3 0.87% 1 16 Human Resources 30 8.75% 1 20 City Attorney 30 8.75% 1 30 Police 68 19.83% 1 35 Fire 1 0.29% 1 40 Development Services 7 2.04% 1 50 Public Works Streets 5 1.46% 1 50 Public Works Facilities 1 0.29% 1 50 Public Works Community Services 185 53.94% 10 Water 1 0.29% 14 Sewer 8 2.33% 29 Self-Insured Liability Fund 4 1.17% TOTAL 343 100.00% Finance Payroll # of Employees per Division Accounts Payable # of Invoices per Division Financial Reporting Actual Expenses per Division Proposal to Conduct a Cost Allocation Plan and Citywide Fee Study Diamond Bar, CA Matrix Consulting Group 18 In the sample graphic provided, based upon the number of AR Transactions per Fund/Department, the primary support is for Public Works Community Services (54%) for all the Parks and Recreation transactions, followed by Police (20%). Based upon the results of this sample, the project team would verify with Finance that the statistics were allocated to the appropriate fund/department and that the resulting percentage is reﬂective of the support being provided by the Accounts Receivable staff and function. This type of detailed review is critical for the development of a defensible cost allocation plan. It also ensures that departmental staff and city staff are comfortable with the use of the allocation metrics and the support that those metrics represent. Deliverable Draft Allocation Workbooks Meetings 1 hour per Department Task 3 Structure and Prepare Draft Full Cost Allocation Model Once the central service departments and administrative functional areas have agreed upon the appropriate allocation metrics for their services; allowable administrative or other indirect costs are allocated to each beneﬁting City department, operating unit, or fund. At this point the project team would begin developing the draft Full Cost Allocation Plan ensuring methodologies and assumptions comply with Federal and State regulations, as well as general accounting principles. During the development of the cost allocation plan, the project team will ensure that any expenses included in the plan are vetted and reviewed with Finance staff as well as incorporate any direct reimbursements. The results of the draft cost allocation model will be provided to City staff in numerical format in Excel before developing a draft report. Deliverable Draft Cost Allocation (Excel Results) Meetings 1 hour with Finance Task 4 Finalize the Full Cost Allocation Plan Upon review and approval of the draft full cost plan by central service departments and the Finance Department, the project team will ﬁnalize the Full Cost Allocation Plan and report. The ﬁnal deliverables associated with the Full Cost Allocation Plan would be: • Full cost allocation plan report: including all detailed allocation schedules, cost schedules, summary schedules, and narrative information regarding the central services included. • Excel summary schedule: the results of the full cost allocation plan in Excel format for ease of calculations, incorporation into City documents, and review by staff. Proposal to Conduct a Cost Allocation Plan and Citywide Fee Study Diamond Bar, CA Matrix Consulting Group 19 • Results Memo: summarizing the methodologies and uses of the Full Cost Plan. This type of ﬁnal work product ensures that information is available in a variety of formats for City staff to use. The detailed report serves as backup documentation, whereas the Excel results can be input into budget documents. The memo provides insight into major differences between current and proposed methodologies. Deliverable Final Full Cost Allocation Report Meetings None Comprehensive User Fee Study Tasks The following tasks provide our workplan for developing a Citywide Fee study. Task 1 Develop a Schedule of Current and Potential Fees for Service The scope of this effort will include all citywide fees charged by the City of Diamond Bar. The project team will work with staff to go through their current fee schedules in line-item by line-item detail. This meeting is critical in ensuring staff can incorporate any updates or changes to the fee study based on code, regulation, staﬃng, process, or technological changes. The focus of this meeting will be the following: • Renaming fees: Rewording or renaming fees to identify services more clearly. • Eliminating fees: Removing any outdated services or fees. • Adding new fees: Capturing any new services or breaking out existing fee categories to identify all the services being provided by City staff more clearly and identify potential fees for service that the City would like to provide. • Recategorization of fees: Collapsing or expanding multiple fee ranges to better capture the services provided. For example, eliminate lot ranges or acreages if those do not impact the review amount, but add categories based upon the approval body (i.e., Commission vs. Director level). It is important to note that this meeting occurs ﬁrst to ensure that any major proposed structural changes are captured prior to collecting time estimate information or developing draft fee results. However, there is the ability to make future adjustments. Deliverable Proposed Fee Structure(s) Meetings Fee Structure Meetings Proposal to Conduct a Cost Allocation Plan and Citywide Fee Study Diamond Bar, CA Matrix Consulting Group 20 Task 2 Conduct Time Data Gathering Workshops The project team will conduct workshops to gather time estimates for each service included in the study, interview key personnel from each department, and analyze the various activities. Below is an example of the steps involved in permit processing and the time associated with each step. As the chart above shows, basic process steps in application/permit processing will be documented and provided in detail for each department / division represented in the study. The project team will try to minimize the impact on staff by incorporating any baseline assumptions from prior city studies. The project team will conduct multiple time estimate workshop(s) for each department / division included in the study, and the workshop results will be an Excel-based workbook(s) that staff can review. Staff will be provided time for edits or comments on time estimate information. Deliverable Time Estimate Workbook(s) Meetings 2-3 Time Estimate Workshops Task 3 Develop Fully Burdened Hourly Rates Based on the City’s staﬃng and budget information, the project team will calculate fully burdened hourly rates, including direct and indirect costs. The following points highlight the cost components and factors included in fully burdened rates: • Direct costs: This component accounts for salary and beneﬁts associated with each employee or position and reﬂects City staﬃng and salary reports. Intake and Processing. Permit Tech: 15 minutes. Routing. Permit Tech: 10 minutes. Initial Review. Plan Checker: 1 hour. Final Review. Plan Checker: 30 minutes. Issue Permit. Permit Tech: 15 minutes. Proposal to Conduct a Cost Allocation Plan and Citywide Fee Study Diamond Bar, CA Matrix Consulting Group 21 • Indirect costs - departmental: This component accounts for administrative and management support provided to line-level staff, as well as operational services and supplies that are used in the execution of job duties. This cost component is developed through interviews with staff and an analysis of services and supply budgets. • Indirect costs - citywide: This component accounts for citywide support such as Finance, HR, and Solicitor support provided by other city departments. This cost component is derived from the City’s Cost Allocation Plan. The project team will develop an indirect rate if no Cost Plan is available. Once the cost components have been documented and developed, the project team will review MOUs and talk with departmental staff to determine appropriate productive hour calculations. This reduction in available hours will ensure that fully burdened hourly rates account for leave accruals (holiday, vacation, and sick), as well as meetings or training. The results of this analysis will be fully burdened hourly rates by position. The project team will utilize the results of this task along with Task 4 to calculate the full cost of services. Deliverable Fully Burdened Hourly Rates Meetings None Task 4 Perform a Total Cost Analysis The Matrix Consulting Group’s costing model is built based on the city’s operations, budget details, and intended uses for the results. This method is a customized approach speciﬁc to each jurisdiction for cost analysis of user fee services. It is a “bottom-up” approach, which is the most defensible methodology for calculating user fees. The methodology incorporates the time estimate information and fully burdened hourly rate information. The following graphic shows the cost calculation: This costing method uses time and annual activity level data to establish the cost of providing services on both a unit and an 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 the fully burdened hourly rates calculated in the previous task. Time Estimate Fully Burdened Rate Full Cost Fee Proposal to Conduct a Cost Allocation Plan and Citywide Fee Study Diamond Bar, CA Matrix Consulting Group 22 Resulting costs are presented on a unit and annual level and are compared to the existing fee schedule and revenue reports. The following graphic shows a sample presentation: Per Unit Fee Title Current Fee Total Cost Per Unit Surplus / (Deficit) Per Unit Cost Recovery % Lot Line Adjustment $900 $1,557 ($657) 58% Temporary Use Permit $40 $325 ($285) 12% AVERAGE COST RECOVERY PER UNIT 35% Annual Fee Title Workload Revenue at Current Fee Revenue at Full Cost Annual Surplus/ (Deficit) Lot Line Adjustment 4 $3600 $6,228 ($2,628) Temporary Use Permit 60 $2400 $19,500 ($17,100) TOTAL $6,000 $25,728 ($19,728) As the example in the graphic above indicates, the per unit subsidy for the Lot Line Adjustment at $657 is more than double the per unit subsidy for the Temporary Use Permit. However, the annual results help provide City management with some additional context, as due to the volume of activity, the larger impact on the Department is felt by the smaller subsidy for the Temporary Use Permit. The City will obtain detailed information like that presented in the previous graphic regarding 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. Deliverable Per Unit and Annual Fee Study Results Meetings 1-2 Draft Results Meetings Task 5 Conduct a Market Rate Survey to Similar Jurisdictions The project team will work with the City to identify jurisdictions within Los Angeles County for the fee comparison survey. This comparative survey activity will be conducted utilizing the following steps: • Developing fee scenarios for the department included in the study to be compared to other jurisdictions (e.g., Single Family Home 2,500 sq. ft. $325,000). • Graphing the results of the fee analysis for easy visual comparison purposes. The following graph provides an example of how comparative survey results for fees would be presented: Proposal to Conduct a Cost Allocation Plan and Citywide Fee Study Diamond Bar, CA Matrix Consulting Group 23 • Collecting contextual information such as population size, budget, staﬃng, last time fee study was done, and last fee schedule update. As market surveys do not provide adequate or objective information about the relationship of a jurisdiction’s costs to its fees, these steps ensure we provide the City with the most amount of information possible. Deliverable Comparative Graphs (included in Draft Report) Meetings None Task 6 Review / Revise Fee Study Results Because the analysis of fees for service is based on estimates and information provided by City and contract staff, all participants must be comfortable with our methodology and the data they have provided. Once the Department agrees that the analysis reﬂects the reasonable costs of providing services, City management will have an opportunity to review the results. Deliverable Revised Draft Results Meetings None Task 7 Prepare a Draft User Fee Study Report Upon conclusion of the fee study, we will prepare a detailed report summarizing the results of each of the previous work tasks described above. This report will include: • A succinct executive summary discussing the study, methodology, and the results. • A narrative describing the services included in the study. Proposal to Conduct a Cost Allocation Plan and Citywide Fee Study Diamond Bar, CA Matrix Consulting Group 24 • A section on proposed modiﬁcations to the current fee schedule, including removal or addition of new fees for service. • A section on per unit results for each fee included in the analysis, and annual results where workload data is available. • A comparative survey section outlining key fees and their comparison to other local jurisdictions and contextual information regarding budget, staﬃng, and when they last conducted fee studies. The draft report will be provided to City staff for any edits, comments, or revisions. Deliverable Draft Fee Study Report Meetings None Task 8 Master Fee Schedule and Backup Documentation / Future Updates Once the ﬁnal user fee study report is approved, the project team will develop a master fee schedule, consolidating all fees in a singular location. The master fee schedule will include a numbering system, the department name, the fee title, the unit of application, the current fee, the total cost per unit calculated through the study, the difference, the cost recovery, the relevant rule / regulation that applies to the fee type, the staff recommended fee, and staff recommended cost recovery level. This attachment is extremely helpful for staff as part of the staff report provided to the City Council upon adoption. During this task, we will also provide the City with backup Excel documentation for the fees, as well as the ability to include annual escalators to set up future fee increases. Deliverable Master Fee Schedule and Backup Documentation Meetings None Task 9 Finalize Fee Study Report Any edits or revisions to the draft user fee study report will be incorporated into the ﬁnalized fee study report. This ﬁnalized fee study report will include all elements of the draft fee study report and any additional cost recovery considerations and policy considerations for the Council’s review. Deliverable Final Fee Study Report Meetings None Proposal to Conduct a Cost Allocation Plan and Citywide Fee Study Diamond Bar, CA Matrix Consulting Group 25 Schedule Studies of this nature typically take approximately 4-5 months (20 weeks) to complete. The following table outlines our proposed project schedule on a task-by-task basis. Task Month 1 2 3 4 5 Project Wide Tasks Data Collection Study Objectives Presentations Cost Allocation Plan Interview Staff and Gather Data Review Allocation Metrics Structure Draft Full Cost Plan Finalize Full Cost Plan Citywide Fee Study Current & Potential Fees Data Workshops Fully Burdened Hourly Rates Total Cost Analysis Comparative Survey Review/Revise Results Draft Fee Study Report Prepare Final Report Develop Master Fee Schedule The City is looking for implementation on July 1, 2025; this means that fees must be ﬁnalized by January 1, 2025. The City is anticipating an award date in March / April 2024. If the City desires to utilize FY24-25 budget information, we recommend that the project commence in May / June 2024 to allow the use of the most accurate data in the study. Proposal to Conduct a Cost Allocation Plan and Citywide Fee Study Diamond Bar, CA Matrix Consulting Group 26 E Cost of Services The Matrix Consulting Group proposes to perform the tasks and services associated with the development of a Cost Allocation Plan and Citywide User Fee Study for a ﬁxed-price not-to-exceed fee of $63,450. The following table breaks our proposed project cost by estimated hours per task and position. Project Executive Project Manager Analyst Total Cost Project-Wide Tasks Data Collection 2 2 2 $1,050 Study Objectives 2 0 0 $500 Presentation of Fee Results 6 2 0 $1,800 Project-Wide Subtotal 10 4 2 $3,350 Cost Allocation Plan Interview Staff and Gather Data 4 2 2 $1,550 Review Allocation Metrics 4 2 6 $2,050 Structure Draft Full Cost Plan 2 4 10 $2,350 Final Full Cost Plan 4 2 6 $2,050 Cost Analysis Subtotal 14 10 24 $8,000 Comprehensive Fee Study Tasks Current & Potential Fees 2 8 8 $2,700 Data Workshops 4 12 12 $4,300 Fully Burdened Hourly Rates 6 16 20 $6,400 Total Cost Analysis 8 30 36 $11,000 Comparative Survey 2 6 24 $4,400 Review/Revise Results 8 14 18 $6,350 Draft Fee Study Report 12 20 24 $9,000 Prepare Final Report 6 10 12 $4,500 Develop Master Fee Schedule 4 8 10 $3,450 Fee Study Subtotal 52 124 164 $52,100 Total Hours 76 138 190 Hourly Rate $250 $150 $125 Total Professional Fees $19,000 $20,700 $23,750 $63,450 Total Project Cost $63,450 This price is a ﬁxed, not-to-exceed price contract, inclusive of all travel and any other expenses. Our typical practice is to bill for hours worked monthly. If any additional services are required, they will be billed at the hourly rates noted. Proposal to Conduct a Cost Allocation Plan and Citywide Fee Study Diamond Bar, CA Matrix Consulting Group 27 F Insurance We understand that Proof of insurance requirements addressed in the professional services agreement of the City’s RFP will be required by the selected Consultant. Proposal to Conduct a Cost Allocation Plan and Citywide Fee Study Diamond Bar, CA Matrix Consulting Group 28 G Consultant Services Agreement The Matrix Consulting Group agrees to the City’s Consultant Services Agreement terms and conditions.