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HF&H CONSULTANTS, LLC Managing Tomorrow's Resources Today 201 North Civ €e Drive, Suite 230 Robert D. Hilton, CMC Walnut Creek, California 94396 John W. Famkopf, PE Tel: (925) 977 -6950 Laith ti. azet, CMC Fax: (925) 977 - 6955 Richard J. Simonsm -, CMC ltflr -� anstrttrrnts.cezrrr Marva M. Sheehan, CPA August 20, 2013 Ms. Sonia Carvalho, City Attorney Mr. Jos€ Sandoval, Chief Assistant City Attorney Office of the City Attorney City of Santa Ana 20 Civic Center Plaza M -29 Santa .Ana, CA 92702 Seat via ein ail Subject: Proposal, Update Wafter Enterprise Transfer Study Dear Ms. Carvalho and Mr. Sandoval: On behalf of HF &H Consultants, LLC, I am pleased to submit this proposal to update our analysis of the transfers from the Water Enterprise for related services. This proposal describes the project background, our proposed scope of services, the schedule, and the budget. 1. Background The City was advised by its auditors to review the basis for the Water Enterprise transfer to provide a cost justification. The auditors recommended that the City's practice, which was not thoroughly documented, should be updated to address recent legislation, such as Preposition 218, with its substantive provisions, and court decisions, such as the 2004 Roseville decision., which. addresses municipal franchise fees. Toward that end, the City retained HF &H to prepare a study of the transfer from the Water Enterprise to the General Fund for related services provided by other departments. Such services include public safety, the use of facilities funded by the General Fund that are used by the Water Enterprise, and the maintenance of rights -of- way in which water supply infrastructure is located. A draft study was completed in April. 18, 2012, Since completion of the study, the City has updated its two -year budget, which includes changes that warrant updating the 2012 study. One significant change concerns fire suppression services, which have been transferred to the County of Orange under a contractual services agreement. In order to reflect these changes, the City wants to update the 2012 study at this time. 11. Scope of Services We propose the following tasks to evaluate the Water Enterprise, transfer. Task 1. Update Model. We will update the analysis using the 201:2 model that derived the transfers for public safety, general facilities, and right -of -way maintenance. We will submit a