Finance Committee
March 18, 2024

period. Any additional costs associated with employment would be at the responsibility of the City. This would include any one-time initial costs of PPE, tools and equipment, as well as covering any contract-negotiated cashouts. These costs are captured in Year 1 City Contribution below. If awarded and accepted, we will be able to maintain our constant staffing as well as add nine (9) relief firefighters to relieve the burden of the overtime and additional work hours for our firefighters.

FISCAL IMPACT:

The FY 2023 SAFER grant is 100% funded for Step B Firefighter wages and salary benefits for the three-year grant period and the total amount requested is $5,149,722. The City Contribution for Year 1 includes personal protective equipment, comp time cashout, holiday comp time cashout, new hire physicals and background checks, and 5% relief incentive pay. The City contribution for Years 2 and 3 includes comp time cashout, holiday comp time cashout, and 5% relief incentive pay. The reduction in overtime with the relief firefighter positions will net the City’s savings of: Year 1 - $430,000, Year 2 - $690,000, Year 3 - $679,500, for a total net savings of $1,799,500. Please see the below table for a breakdown of costs and savings:
9 Firefighters SAFER
Contribution
City
Contribution
Overtime
Savings
Annual Net
Savings to
Overtime
Year 1 $1,582,205 $ 470,000 $ 900,000 $ 430,000
Year 2 $1,735,831 $ 210,000 $ 900,000 $ 690,000
Year 3 $1,831,686 $ 220,500 $ 900,000 $ 679,500
Total Net
Savings:
$ 1,799,500
RECOMMENDED COMMITTEE ACTION:

Staff Recommendations:

Motion recommending the submission of an application and accepting an award for the Fiscal Year 2023 Staffing for Adequate Fire and Emergency Response (SAFER) Grant in the amount of $5,149,722 to fund nine (9) firefighter positions and forwarding to Council for approval.

Approved by:

Kevin Wise, Interim Fire Chief
Joseph P. Lopez, City Manager
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CITY OF MODESTO

COMMITTEE AGENDA REPORT
DATE OF MEETING:

March 18, 2024
Date: February 28, 2024
TO: Finance Committee
Nick Bavaro, Chair
Rose Escutia-Braaton, Vice-Chair
David Wright, Member
THROUGH: Joseph P. Lopez, City Manager
FROM: Christina Alger, Director of Human Resources
SUBJECT: Polling and Survey Administration Services Agreements CONTACT: Christina Alger, Director of Human Resources
[email protected], 209-571-5126
DESCRIPTION:

Consider an Agreement for Polling and Survey Administration services to Zencity Technologies, Inc. Wilmington, DE and the First Amendment to Probolsky Research, LLC, San Francisco, CA, for a combined amount not to exceed $839,900 over five years and forwarding to Council for approval. (Funding Source: Various Funds)
STRATEGIC PLAN ELEMENT:

This item supports the 2020-2025 Strategic Plan’s Quality of Life Goals and Strategies—Improve Community Safety and Invest in Beautification Efforts and the 2020-2025 Strategic Plan’s Service and Delivery Goals & Strategies – Promote Trust and Engagement and Build a High-Performance Organization.

BACKGROUND:

The City of Modesto seeks to have periodic public opinion surveys conducted among its residents, businesses, taxpayers, and employees to gauge satisfaction and support for City projects and policies. Survey findings will be used to prioritize policy recommendations, refine messaging to stakeholders, and measure customer satisfaction for specific services, projects, and policies of the City of Modesto.

DISCUSSION:

On November 20, 2023, the Human Resource Department issued RFP INF 24-21 for Polling and Survey Administration on the City’s PlanetBids public bidding website under various commodity codes.1 Prospective bidders were notified online and via email of the bid opportunity. Twentythree (23) companies downloaded the RFP document from PlanetBids.

On December 5, 2023, proposals were received and opened via email. Six (6) chose to respond, there was no local proposals received.
1 91800- Consulting Services, 91806-Administrative Consulting, 91858-Governmental Consulting, 96100-Miscellaneous Services, No. 1 (Not otherwise classified), 96160-Public Opinion Surveys, and 96200-Miscellaneous Services, No. 2 (Not otherwise classified)
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Finance Committee, March 18, 202
Polling and Survey Administration Services Agreements

An evaluation committee comprised of three (3) City staff members which included the Director of Finance, Director of Utilities, and the Human Resources Manager evaluated the proposals. The evaluation was based on the ability to address all RFP Requirements, Qualifications, References and Costs.

Based on being ranked highest in total evaluation criteria, the evaluation committee recommends the award of proposal for the Polling and Survey Administration services to Probolsky Research, San Francisco, CA, and Zencity Technologies, Inc, Wilmington, DE. Agreements with two firms will afford the City the specialized expertise needed to address the various polling and survey administration both internally with the City of Modesto employees and externally with the City of Modesto residents. The two selected firms have extensive experience conducting polls and surveys in local government.

A contract with the first firm chosen, Probolskly Research, was approved effective February 9, 2024 under the City Manager’s authority, in an amount not to exceed $79,100 due to the City’s needs to expedite an internal survey. Staff is bringing forward an amendment to this contract for long-term use. The second proposal for services with Zencity Technologies, Inc. is coming forward as an initial contract for long-term use.

Staff recommends the Agreement for Polling and Survey Administration Services to Zencity Technologies, Inc. Wilmington, DE, and the First Amendment to Probolsky Research, LLC, San Francisco, CA, on an as needed basis, for a two (2) year agreement with three (3) one-year extension options, for an annual estimated amount of $175,000 and a combined total not to exceed $839,900 over five years.

In accordance with Modesto Municipal Code Section 8-3.203 generally requires all purchases, which meet or exceed $100,000 for material, equipment, or contractual services to follow the formal bid procedures. In accordance with Modesto Municipal Code 8-3.204(a) Exceptions to Formal Bidding Requirements, Agreements for Professional Services are exempt from the bidding requirements of Modesto Municipal Code 8-3.203 if competitive quotations or proposals have been sought informally from at least three (3) qualified entities. The approval for Polling and Survey Administration Services to Probolsky Research and Zencity Technologies conforms to Modesto Municipal Code 8-3.204, subsection (a) as they are providing professional services.

However, staff received six (6) proposals and evaluated them based on the ability to address all the RFP requirements, Qualifications, References, and cost.

FISCAL IMPACT:

Below is a table that summarizes a five-year spending activity.

Polling and Survey
Firms Year 1 Year 2 Year 3 Year 4 Year 5 Total
Probolsky Research $79,100 $115,200 $115,200 $115,200 $115,200 $539,900 Zencity Technologies, Inc. $60,000 $60,000 $60,000 $60,000 $60,000 $300,000 $839,900
The total cost for these agreements will not exceed $839,900 for all services for the full term of the agreements. Funding for any polling and survey services will be absorbed within the applicable departments’ existing budget. Funds affected will be determined by the polling and survey needs over the term.
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Finance Committee, March 18, 202
Polling and Survey Administration Services Agreements

RECOMMENDED COMMITTEE ACTION:

Staff Recommendations:

Motion recommending the Agreement for Polling and Survey Administration Services to Zencity Technologies, Inc. Wilmington, DE, and the First Amendment to Probolsky Research, San Francisco, CA, for a two (2) year Agreement with three (3) one-year extension options, for an annual estimated amount of $175,000 and total amount not to exceed $839,900 over five years for the combined total of all agreements and forwarding to Council for approval.

Christina Alger, Director of Human Resources
Joseph P. Lopez, City Manager
Attachments:

1. Zencity Contract Agreement

2. First Amendment for Professional Services Agreement for Probolsky Research

3. Agreement for Professional Services Agreement for Probolsky Research with exhibits

4. RFP Evaluation Committee Scoring Sheet

5. Exhibit A- Zencity Proposal

6. Exhibit B- Zenicty Pricing
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City of Modesto
Polling and Survey Services Contract-Zencity
1 STANDARD AGREEMENT

FOR CONSULTANT SERVICES
THIS AGREEMENT, made and entered into in the City of Modesto, State of California, this day of , 2024, (“Effective Date”) by and between the CITY OF MODESTO, a municipal corporation of the State of California, hereinafter referred to as "City", and Zencity Technologies, Inc. a California Corporation, hereinafter referred to as "Consultant." This Agreement is made with regard to the following recitals:

A. The City has determined that it needs assistance with polling and survey administration externally with the City of Modesto residents.

B. Consultant represents that it is qualified, willing and able to provide the services to prepare said document(s).

NOW, THEREFORE, in consideration of this agreement, and the mutual promises, covenants, and stipulations hereinafter contained, the parties agree as follows:

1. SCOPE OF SERVICES.

Consultant shall undertake and complete the scope of work as set forth and described in the documents attached hereto and referred to as Exhibit "A" or "Project".

2. TERM OF AGREEMENT.

This Agreement is effective as of the date first written above for a two (2) year agreement with three (3) one-year extensions and will continue in effect until City’s acceptance of and payment for all services authorized by City and performed by Consultant, unless terminated earlier in accordance with the provisions of the termination clause in this Agreement.

City hereby gives Consultant notice to proceed with the preparation of the Project, as of the Effective Date of this agreement. Consultant shall diligently proceed with the completion of the Project within the time period set forth in Exhibit "A".

3. COMPENSATION.
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City of Modesto
Polling and Survey Services Contract-Zencity
2 Consultant agrees to accept a annual estimated amount of SIXTY-THOUSAND DOLLARS ($60,000) per year as full remuneration for performing all services and furnishing all staffing and materials for the City in accordance with Exhibit "A" and for performance by Consultant of all its duties and obligations under the term of this Agreement unless additional remuneration is otherwise approved by the City Manager or designee based on City polling and survey needs so long as the total polling and survey needs citywide does not exceed THREE-HUNDRED THOUSAND DOLLARS ($300,000) for the two-year term of this Agreement.

The Compensation shall be paid pursuant in the manner and at the times set forth below:

City shall pay Consultant on a time and materials basis for Consultant’s actual costs for all work called for in Exhibit “A” to this Agreement. All work to be performed under this Agreement shall be billed at the rates set forth in Exhibit “B” attached hereto. Consultant shall submit monthly invoices to City which include detailed tasks, hours worked, and billable rates for all work completed, and detailed receipts for any reimbursable expenses paid by Consultant and identified in Exhibit “B” or approved by the City in writing.

City shall pay Consultant Net 30 terms via City’s ePay Program,

4. OBLIGATIONS OF PARTIES.

Throughout the term of this Agreement, Consultant shall possess, or secure all licenses, permits, qualifications and approvals legally required to conduct business. Consultant warrants that it has all of the necessary professional capabilities and experience, as well as all tools, instrumentalities, facilities and other resources necessary to provide the City with the services contemplated by this Agreement. Consultant further warrants that it will follow the best current, generally accepted and professional practices to make findings, render opinions, prepare factual presentations, and provide professional advice and recommendations regarding this project.

City represents and warrants that (i) it has all right and authority necessary to enter into and perform this Agreement; (ii) it owns all right, title, and interest in and to all data, including without limitation, #6..
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City of Modesto
Polling and Survey Services Contract-Zencity
3 any Personal Data that may be included therein, provided to Consultant (if any) for use in connection with this Agreement, or possesses the necessary authorization thereto; and (iii) Consultant's use of such data or materials provided by City will not violate the rights of any third party.

5. PERFORMANCE BY KEY EMPLOYEE.

Consultant has represented to City that Nicky Kolios will be the person primarily responsible for the performance of the services referred to in this Agreement. City has entered into this Agreement in reliance on that representation by Consultant. Consultant therefore agrees that percent ( 100 %) or more of the time to be devoted to the project that is the subject of this Agreement will be that of the above-named person.

6. OWNERSHIP OF DOCUMENTS/TITLE TO DATA.

Ownership of Documents
All reports, drawings, designs, graphics, working papers and other incidental work or materials furnished hereunder shall become and remain the property of the City, and may be used by City as it may require without any additional cost to City. No reports shall be used by the Consultant for purposes other than this contract without the express prior written consent of City.

Title to Data
If, as a part of the agreement, Consultant is required to produce data such as, but not limited to, drawings, plans, specifications, calculations, models, flow diagrams, visual aids and other related materials, the originals of all such data generated under this agreement will be delivered to City upon the completion or termination of services under the contract. It is understood and agreed that the documents and other materials, including but not limited to those described above, prepared pursuant to this Agreement are prepared specifically for the City and are not necessarily suitable for any future or other use.

All materials, documents, data or information obtained from the City data files or any City medium furnished to Consultant in the performance of this Agreement will at all times remain the property #6..
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Polling and Survey Services Contract-Zencity
4 of the City. Such data or information may not be used or copied for direct or indirect use by Consultant after termination of this Agreement without written consent of the City.

7. NEWS AND INFORMATION RELEASE.

Consultant agrees that it will not issue any news releases in connection with either the award of this Agreement, or any subsequent amendment of or efforts under this Agreement, without first obtaining review and approval of said news releases from the City Manager.

8. CONFLICT OF INTERST.

Consultant warrants that it presently has no interest and shall not acquire any interest, direct or indirect, which would create a “conflict of interest”, as that term is defined in the Political Reform Act (Gov. Code § 81000 et seq), for the Consultant in the performance of this Agreement. . Consultant warrants that, in performance of this Agreement, Consultant shall not employ any person having any such interest. Consultant understands that, if this Agreement is made in violation of Government Code § 1090 et seq., the entire Agreement is void and Consultant will not be entitled to any compensation for services performed. Consultant agrees to file a Statement of Economic Interests with the City Clerk at the start and end of this contract if so, required at the option of City.

9. AMENDMENTS.

This Agreement, including the Exhibits attached hereto, may be amended only by a writing signed by both Parties. City will not be responsible to pay any charges Consultant may incur in performing services not identified in Exhibit ‘A’ unless first authorized by the City in writing

10. INDEPENDENT CONTRACTOR.

All acts of Consultant, its agents, officers, and employees and all others acting on behalf of Consultant relating to the performance of this Agreement, shall be performed as independent contractors and not as agents, officers, or employees of City. Except as City may specify in writing, Consultant has no authority to bind or incur any obligation on behalf of City. Consultant has no authority or responsibility to exercise any rights or power vested in the City. It is understood by both Consultant and City that this #6..
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City of Modesto
Polling and Survey Services Contract-Zencity
5 Agreement shall not under any circumstances be construed or considered to create an employer-employee relationship or a joint venture. Consultant, its agents, officers and employees are and, at all times during the terms of this Agreement, shall represent and conduct themselves as independent contractors and not as employees of City.

Consultant shall determine and control the method, details and means of performing the work and services to be provided by Consultant under this Agreement. Consultant shall be responsible to City only for the requirements and results specified in this Agreement, and, except as expressly provided in this Agreement, shall not be subjected to City's control with respect to the physical action or activities of the Consultant in fulfillment of this Agreement. Consultant is permitted to provide services to others during the same period service is provided to City under this Agreement. If necessary, Consultant has the responsibility for employing other persons or firms to assist Consultant in fulfilling the terms and obligations under this Agreement.

If in the performance of this Agreement any third persons are employed by Consultant, such persons shall be entirely and exclusively under the direction, supervision, and control of Consultant. All terms of employment including hours, wages, working conditions, discipline, hiring, and discharging or any other term of employment or requirement of law shall be determined by the Consultant.

It is understood and agreed that as an independent contractor and not an employee of City neither the Consultant or Consultant's assigned personnel shall have any entitlement as a City employee, right to act on behalf of the City in any capacity whatsoever as an agent, or to bind the City to any obligation whatsoever. It is further understood and agreed that Consultant must issue W-2 forms or other forms as required by law for income and employment tax purposes for all of Consultant's personnel.

11. ASSIGNMENT.

Neither this Agreement nor any portion thereof shall be subcontracted or assigned, other than noted in Exhibit ‘A’, without the express prior written consent of the City in each and every instance.

12. PATENT/COPYRIGHT MATERIALS.
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City of Modesto
Polling and Survey Services Contract-Zencity
6 Unless otherwise expressly provided in the contract, Consultant shall be solely responsible for obtaining the right to use any patented or copyrighted materials in the performance of this Agreement. Consultant shall furnish a warranty of such right to use to City at the request of City. Consultant retains all right, title, and interest in the Licensed Program and any future modifications and enhancements thereof, and all intellectual property rights (including all past, present, and future rights associated with works of authorship, including exclusive exploitation rights, copyrights, and moral rights, trademark, and trade name rights and similar rights, trade secret rights, patent rights, and any other proprietary rights in intellectual property of every kind and nature) therein. City is granted only a limited right of use to the Licensed Program and as set forth herein, which right of use is not coupled with an interest and is revocable in accordance with the terms of this Agreement

13. NOTICES.

Notice required by this Agreement shall be given in writing and shall be deemed given and effective upon delivery provided that such are delivered in accordance with the provisions of this Section.

Notices shall be delivered either by: (a) personal delivery; (b) overnight courier service which obtains confirmation of delivery; or (c) certified pail, return receipt requested, if delivery is confirmed by a return receipt; or (d) by electronic transmission subject to reasonable proof that the notice was both transmitted and received. Each such notice shall be sent to the parties at the address respectively set forth below or to such other address as a party may designate by written notice given in accordance with the provisions of this Section:

FOR CONSULTANT: Name: Zencity Technologies, Inc.

Address: 1313 North Market Street, Suite 1500
Wilmington, DE 19801
Attention: Mr. Lee Feldman
Phone: (954) 999-2115
FOR CITY: Name: City of Modesto
Address: P.O. Box 642
Modesto, CA 95353
Attention: Christina Alger, Director of Human Resources Phone: (209) 577-5126
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City of Modesto
Polling and Survey Services Contract-Zencity
7 14. INSURANCE REQUIREMENTS.

The Consultant shall provide at its own expense and maintain at all times the following insurance with insurance companies licensed in the State of California and shall provide evidence of such insurance to the City as may be required by the Risk Manager of the City. The policies or certificates thereof shall provide that, thirty (30) days prior to cancellation or material change in the policy, notices of same shall be given to the Risk Manager of the City via PINS Advantage Insurance Program, for all of the following stated insurance policies.

In the event the certificates of insurance required hereunder do not provide for notice of cancellation to the certificate holder and/or additional insureds, the Consultant shall provide, and shall require its subcontractors to provide, as an express condition precedent to payment hereunder, an endorsement from their insurers providing that the additional insureds identified herein shall be provided 30 days notice of the cancellation on the policies of insurance required hereunder (10 days notice if the policies are cancelled for nonpayment of premium). In addition, the named insured on all such policies shall provide to the additional insureds identified herein any notices of cancellation of said insurance policies within 5 business days of receipt of such notice. The Consultant shall, as a further express condition precedent to payment for work performed, affirm under penalty of perjury that the required insurance on the project remains in place and said insurance has not been cancelled.
(a) Worker's Compensation - in compliance with the statutes of the State of California, plus employer's liability with a minimum limit of liability of $1,000,000. (b) General Liability insurance with a minimum limit of liability per occurrence of $1,000,000 for bodily injury and property damage. If Commercial General Liability Insurance or other form with a general aggregate limit is used, either the general aggregate limit shall apply separately to this project/location or the general aggregate limit shall be twice the required occurrence limit. This insurance shall indicate on the certificate of insurance the following coverages and indicate the policy aggregate limit applying #6..
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City of Modesto
Polling and Survey Services Contract-Zencity
8 to: premises and operations; broad form contractual; independent consultants and subcontractors; products and completed operations as applicable.
(c) Automobile Liability insurance with a minimum limit of liability per occurrence of $1,000,000 for bodily injury and property damage. This insurance shall cover any automobile for bodily injury and property damage.
(d) Professional Liability insurance with a minimum limit of $1,000,000 per claim and policy aggregate. If coverage is on a claims made basis it shall be maintained for at least three (3) years following completion of the work.

If at any time any of said policies shall be unsatisfactory to the City, as to form or substance, or if a company issuing such policy shall be unsatisfactory to the City, the Consultant shall promptly obtain a new policy, submit the same to the Risk Manager for approval and submit a certificate thereof as hereinabove provided. Upon failure of the Consultant to furnish, deliver or maintain such insurance and certificates as above provided, this Agreement, at the election of the City, may be forthwith declared suspended or terminated. Failure of the Consultant to obtain and/or maintain any required insurance shall not relieve the Consultant from any liability under this Agreement, nor shall the insurance requirements be construed to conflict with or otherwise limit the obligations of the Consultant concerning indemnification. The City, its agents, officers, employees, and volunteers shall be named as an additional insured on all insurance policies required herein, except Workers' Compensation and Professional Liability. The Workers' Compensation insurer shall agree to waive all rights of subrogation against the City, its agents, officers, employees, and volunteers for losses arising from work performed by Consultant for the City. The Consultant's insurance policy(ies) shall include a provision that the coverage is primary as respects the City; shall include no special limitations to coverage provided to additional insured; and, shall be placed with insurer(s) with acceptable Best's rating of A:VII or with approval of the Risk Manager. The Consultant must deliver certificates evidencing existence of the insurance listed above to the City prior to the time the contract is signed. #6..
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City of Modesto
Polling and Survey Services Contract-Zencity
9 CONSULTANT shall provide CITY with separate endorsements evidencing proof of the CITY’s additional insured status as to both the general liability and automobile liability insurance policies. In addition, CONSULTANT shall provide CITY with a Workers Compensation subrogation waiver by way of a separate endorsement. All endorsements referenced above must include the applicable policy number.

For any claims related to this project, the CONSULTANT’S insurance coverage shall be primary insurance as respects the Entity, its officers, officials, employees, and volunteers. Any insurance or self-insurance maintained by the Entity, its officers, officials, employees, or volunteers shall be excess of the CONSULTANT’S insurance and shall not contribute with it.

15. TERMINATION OF AGREEMENT.

Termination for Default
In the event either party fails to perform under this AGREEMENT or breaches any condition contained herein, the other party shall notify in writing the breaching party of the non-performance.

Within 10 days after receipt of notification, the breaching party shall correct any non-performance to the reasonable satisfaction of the non-breaching party, or such other time as may be identified in the notice. Failure to correct any non-performance shall allow the non-breaching party to terminate this AGREEMENT for cause.

Termination by City for Convenience
City may terminate this Agreement at any time, with or without cause, upon 30 days prior to written notification to Consultant.

Post-Termination Procedure
Upon receipt of a written notice of termination, the Consultant shall:
a. Cease its work as directed in the notice of termination as of the termination date and see to it that its employees, subconsultants and agents are notified of such termination and act as specified in the notice of termination; b. Terminate all orders and Subcontractors except as necessary to complete any #6..
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City of Modesto
Polling and Survey Services Contract-Zencity
10 portion of the Work that is not terminated;
c. If directed in writing by the City to do so, assign all right, title and interest in subcontracts and materials in progress to City, in which case the City will have the right at its discretion to settle, or pay any or all claims arising out of the termination of such subconsultants, but in no event shall recovery by any Consultant or subconsultant include lost profits for portions of the Work not completed or undertaken, including materials not delivered; d. Deliver or otherwise make available to the City all data, drawings, specifications, reports, estimates, summaries and such other information and material as may have been accumulated by the Consultant in performing the Work whether completed or in process;
e. Settle outstanding liabilities and claims, subject to the approval of City; f. Complete performance of such part of the Project as has not been terminated; g. Take such other actions as may be necessary, or as may be directed by the City for the protection and preservation of the Project and/or property related to the Project;
h. If City so requests, and at City's cost, Consultant shall provide sufficient oral or written status reports to make City reasonably aware of the status of Consultant's work on the project.

City will pay Consultant for work actually completed prior to the receipt of the termination notice or otherwise completed in accordance with the notice of termination. The final payment to the Consultant after termination for convenience shall be limited to amounts due and owing under the Agreement at time of termination, including the following:
a. The cost of settling and paying valid claims arising out of the termination of the Work such as subconsultant agreements or contracts for materials; #6..
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City of Modesto
Polling and Survey Services Contract-Zencity
11 b. The Agreement price allocable to the portion of the Work properly performed or goods supplied to the work site by the Consultant as of the date of termination, as determined in accordance with the notice of termination, reduced by any sums previously paid to the Consultant.

16. INDEMNITY.

The Consultant shall hold the City, its agents, officers, employees, and volunteers, harmless from and save, defend and indemnify them against any and all claims, losses, liabilities, judgments or damages from every cause, including but not limited to injury to person or property or wrongful death, including reasonable costs and expenses of defense of any judicial or administrative action, arising directly or indirectly out of any negligent or intentional act or omission of Consultant, or its agents, officers, employees, or volunteers relating to the performance of its obligations under this Agreement.

Consultant's obligation to defend, indemnify, and hold the City, its agents, officers, and employees harmless under the provisions of this paragraph is not limited to or restricted by any requirement in this Agreement for Consultant to procure and maintain a policy of insurance.

In the event that Consultant or any employee, agent, or subcontractor of Consultant providing services under this Agreement is determined by a court of competent jurisdiction or the California Public Employees Retirement System (PERS) to be eligible for enrollment in PERS as an employee of City, Consultant shall indemnify, defend, and hold harmless City for the payment of any employee and/or employer contributions for PERS benefits on behalf of Consultant or its employees, agents, or subcontractors, as well as for the payment of any penalties and interest on such contributions, which would otherwise be the responsibility of City.

17. DISPUTE RESOLUTION.

Venue for all claims, controversies, or disputes arising out of, or relating to the formation of this Agreement, or the breach, termination execution, enforcement, interpretation, or validity of this Agreement, including the determination of the scope or applicability of this contract provision shall be in the Superior Court of Stanislaus County or the United States District Court for the Eastern District of California. #6..
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City of Modesto
Polling and Survey Services Contract-Zencity
12 18. ATTORNEYS’ FEES.

If a party to this AGREEMENT brings any action, including an action for declaratory relief, to enforce or interpret the provision of this AGREEMENT, the prevailing party shall be entitled to reasonable attorneys’ fees in addition to any other relief to which that party may be entitled. The court may set such fees in the same action or in a separate action brought for that purpose.

19. ENTIRE AGREEMENT.

This Agreement and its exhibits contain the entire understanding between Consultant and City. All previous proposals, offers and communications relative to this Agreement, whether oral or written, are hereby superseded except to the extent that they have been incorporated into this Agreement. .

20. PARTIAL INVALIDITY.

If any provision in this Agreement is held by a court of competent jurisdiction to be invalid, void, or unenforceable, the remaining provisions shall nevertheless continue in full force without being impaired or invalidated in any way.

21. WAIVER.

The waiver by any party to this Agreement of a breach of any provision hereof shall be in writing and shall not operate or be construed as a waiver of any other or subsequent breach hereof unless specifically stated in writing.

22. AUDIT.

The City's duly authorized representative shall have access at all reasonable times to all reports, contract records, contract documents, contract files, and personnel necessary to audit and verify Consultant's charges to City under this Agreement.

Consultant agrees to retain reports, records, documents, and files related to charges under this Agreement for a period of four (4) years following the date of final payment for Consultant services. City's representative shall have the right to reproduce any of the aforesaid documents.

23. GOVERNING LAW.
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City of Modesto
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13 This Agreement shall be governed according to the laws of the State of California.

24. HEADINGS NOT CONTROLLING.

Headings used in the Agreement are for reference purposes only and shall not be considered in construing this Agreement.

25. COMPLIANCE WITH LAWS.

Consultant shall insure compliance with all safety and hourly requirements for employees, in accordance with federal, state, and county safety and health regulations and laws. Consultant shall fully comply with all applicable federal, state, and local laws, ordinances, regulations and permits.

26. CITY BUSINESS LICENSE.

Consultant will have a City of Modesto business license.

IN WITNESS WHEREOF, the City of Modesto, a municipal corporation, has authorized the execution of this Agreement by its City Manager and attestation by its City Clerk under authority of Resolution No. 2024- , adopted by the Council of the City of Modesto on the day of , 2024 and Zencity Technologies, Inc., has caused this agreement to be duly executed as of the Effective Date. #6..
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FIRST AMENDMENT TO

STANDARD AGREEMENT FOR

CONSULTANT SERVICES
This First Amendment made and entered into in the City of Modesto, State of California, this day of ______________, 2024, (“Effective Date”) by and between the CITY OF MODESTO, a municipal corporation of the State of California, hereinafter referred to as "City", and Probolsky Research, LLC, a California Limited Liability Company, hereinafter referred to as "Consultant".

This First Amendment is made with regard to the following recitals:

A. On February 9th, 2024, the City and Consultant entered into an Agreement for polling and survey administration (“Agreement”).

B. CITY and CONSULTANT desire to amend the Agreement by increasing the previously approved not to exceed amount from $79,100 to a revised not to exceed amount of $539,900 over five years.

NOW, THEREFORE, in consideration of this First Amendment, and the mutual promises, covenants, and stipulations contained in the Agreement for polling and survey administration, the parties agree as follows:

1. COMPENSATION.

Section 3 of the Agreement, “Compensation,” is deleted in its entirety and replaced with the following
Consultant agrees to accept a sum not to exceed $539,900 as full remuneration for performing all services and furnishing all staffing and materials called for in Exhibit "A" and for performance by Consultant of all of its duties and obligations under this Agreement.

2. Except as modified and amended by this First Amendment, all other #6..
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provisions of the Agreement shall remain unchanged and in full force and effect.

IN WITNESS WHEREOF, the City of Modesto, a municipal corporation, has authorized the execution of this First Amendment by its City Manager and attestation by its City Clerk under authority of Resolution No 2024- adopted by the Council of the City of Modesto on the__________ day of _____________, 2024, and Probolsky Research, LLC, has caused this First Amendment to be duly executed as of the Effective Date. #6..
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RFP INF 24-12 Polling and Survey Administration Services Max Score
Probolsky FM3
Tulchin
Gallup
Zilo
Zencity
Requirements - Primary Selection Criteria - 100 total points possible Abilit to addresss all RFP Requirements 30 28 21 15 17 25 21 Qualifications 20 18 15 9 12 14 17
References 20 17 6 8 11 17 14
Cost 30 30 13 20 21 10 30
Total Score 100 93 55 52 61 66 82
Ranking 1 5 6 4 3 2
The Score for each is the AVERAGE of all committee member's scoring. #6..
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Zencity for
City of Modesto, CA
INF 24-12
Polling and Survey
Administration
December 4, 2023
Prepared By
Zencity Technologies US, Inc.

Lee R. Feldman
ICMA-CM (retired)
Senior Advisor for Local
Government Strategy
[email protected]
954-999-2115
1313 North Market Street
Suite 1500
Wilmington, DE 19801
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December 4, 2023
Kelly Rice-Ortiz, Executive Assistant
City of Modesto
P. O. Box 642
1010 Tenth Street, Suite 2200
Modesto, CA 95353
Dear Ms. Rice-Ortiz:

Zencity is pleased to present our proposal to provide polling and survey administration services for the outstanding City of Modesto.The Zencity team has carefully reviewed the RFP requirements and created the following response to showcase how we can meet and exceed your service expectations.

Zencity is in a strong position to respond to this RFP as we possess a deep working knowledge of city operations and the vital local services such as those provided by Modesto. Our unique team of professionals has unparalleled technical expertise, and the capability to develop and implement practical methodologies that achieve useful data driven survey results relevant to your community. We pride ourselves on not merely being a contractor delivering a survey service, we view ourselves as reliable partners in the process with local governments. Additionally, we have deep integration with key strategic organizations that support performance excellence in local governments across the nation. We believe our modern data driven technologically based methods will produce results that the Modesto team, management staff and residents can rely upon.

We are the best proposal for Modesto’s team to select because we specifically serve the needs of local government. Our team of experts know local government and have outstanding service credentials in this field. We have served the community survey needs of hundreds of local governments across the United States and North America, including Long Beach and Stockton and would be honored to serve your community as well. Zencity has a deep bench and the capacity to perform including offices in New York City, NY; Tel Aviv, Israel; and Vancouver, BC; as well as employees working remotely across the United States. Our team of over 120 employees focus on the needs of our customers and deliver positive/proven results.

In closing, please feel free to contact me directly [email protected], 954-999-2115 or Zencity’s RFP coordinator, Max Coonin, at [email protected], 301-520-3813.

In advance, thank you for your time and consideration.

Sincerely,
/s/ Lee R. Feldman, ICMA-CM (retired)
Senior Advisor for Local Government Strategy
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1. Executive Summary
Founded in 2015 and led by Eyal Feder and Ido Ivry, Zencity believes that all types of local governments are the most important civic institutions of our time. Local leaders are at the forefront of providing the most essential government services and are best positioned to improve quality of life. Zencity was built for local government/special districts with this in mind and now works with 300+ jurisdictions across the United States.

A full list of our customers and testimonials can be found here Zencity - Serving hundreds of local governments, as well as a list of case studies with our local government customers here Working with cities to better serve their residents (zencity.io).

We are a group of people who know our lives couldn't run without the vital services provided by local governments like the City of Modesto. Zencity is composed of a unique combination of distinguished former local government professionals as well as community assessment/survey experts. Our organization was designed to meet the service and data needs of our clients- local government!
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2. Project Team Members
Our team is highly experienced in working with hundreds of local governments, bringing together decades of expertise in providing exceptional services and cutting-edge software solutions. Zencity has an extensive track record of successful projects and a deep understanding of the unique needs and challenges faced by local governments across the nation. This background makes us ideal to meet your needs. We believe that we are well-equipped to deliver tailored solutions that drive efficiency, transparency, and innovation.

Our approach, methodology and execution are led by a team of experts, who have collectively led thousands of research activities within the public sector. See detailed listing below:

Dr. Rachel Levenstein - Survey Methodology Lead
Rachel Levenstein is the Head of Survey Research at Zencity and is based in Maryland. She has 13 years of experience serving as a survey methodologist in the academic, nonprofit, and for-profit sectors. She holds a B.S. in Psychology from the University of Massachusetts and a Ph.D. in Survey and Data Sciences from the University of Michigan.

Previously, Rachel was a Senior Survey Methodologist at Westat, where she led the design and administration of surveys on adult literacy as well as a cross-national student assessment. Prior to that role, she worked at the American Institutes for Research. There, she managed large-scale education surveys across the United States. In addition, she worked with state departments of education and labor on ways to use data to improve policy on education and the labor force.

As the Lead Survey Methodologist, Rachel will design and lead all survey methods employed, including oversight of questionnaire creation, survey distribution, and analysis.

Lee R. Feldman, ICMA-CM (Retired), Senior Advisor for Local Government Lee R. Feldman, ICMA-CM (Retired), is the Senior Advisor for Local Government Strategy at Zencity and a Principal at The Euclid Group. Previously, Mr. Feldman was the City Manager for the City of Gainesville, Florida. He previously served as the City Manager of the cities of Fort Lauderdale, Palm Bay and North Miami, Florida, and as Deputy City Manager for the City of North Miami and Assistant City Manager and Assistant to the City Manager for the City of North Miami Beach.
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In 2018, Mr. Feldman was elected a Fellow of the National Academy of Public Administration. He has served as a President of ICMA; and currently as a member of the Board of Directors of the National Civic League and Leading Cities. He is a past recipient of the Florida League of Cities’ “City Manager of the Year” Award. Lee will serve as an advisor on the project, supporting the project from the local government perspective.

Noa Cohen - Survey Research Analyst
Noa Cohen will serve as the Survey Research Analyst. Since earning her MA in Development Studies and Applied Development Economics from the London School of Economics and Political Science in 2020, she has served as a research officer for the Office for National Statistics in the UK and at Zencity as a Survey Research Analyst. She will manage reporting and analysis with oversight from the Survey Methodology Lead.

Lauren Hoffman - Customer Success Manager & Project Manager Lauren is a veteran Customer Success Manager. She has worked with a wide range of clients across the country, on both coasts, cities and counties, of all population sizes as well as with law enforcement. She holds a master's degree in services marketing. As Modesto’s Customer Success Manager, Lauren will serve as the main liaison between the City and Zencity and will assist with any and all needs that should arise.

Eyal Feder-Levy - CEO & Co-Founder
Eyal Feder is an urban planner and community engagement expert and has worked with hundreds of cities over the past 10 years to implement advanced technology and methodologies into their management and communication processes. Today, as the CEO of Zencity, he helps over 300 local governments impact the lives of millions of residents by supporting hundreds of government decision-makers daily. Before founding Zencity, Eyal had been part of the founding team of “City Center”, Tel-Aviv University’s Interdisciplinary Center for Cities and Urbanism, where he led the first projects to implement machine learning into city management in Israel.

Apart from Zencity and academic work, Eyal is part of the World Economic Forum's Future of Urbanism advisory board and was previously the youngest board member of the Israeli Urban Planners’ Association. As CEO & Co-Founder, Eyal has overseen the RFP response and will continue to support the project in an advisory capacity. 4 #6..
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3. General Services Approach
We use the most technologically advanced methods in our survey work to include always-on cadance and transformational survey delivery techniques. A comprehensive community input and insights platform, Zencity is bringing the voices of more residents into the decisions, big and small, that shape the communities in which they live. In 2022, we helped our partners reach over 121,910,000 voices. Surveys conducted by our firm included a wide range of locally oriented subjects from utility service delivery, to crime to how a local park is designed. Each survey engagement is headed by a dedicated project team leader who will work with the City’s designated point of contact to meet your delivery schedule and produce a usable product meaningful to your concerns, goals and objectives. It would be our pleasure to serve your needs as well and add Modesto to our growing list of satisfied customers.

Zencity Technologies US Inc. is a Delaware corporation, and a fully owned subsidiary of Zencity Technologies Ltd. ZenCity Technologies, Ltd., from Tel Aviv, Israel, is the parent company of Zencity Technologies US Inc.

The following pages describes, Zencity’s approach for delivering high quality results for this project. We will include tasks around survey development, data collection, analysis, and reporting.
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Zencity will work closely with Modesto to develop and administer an online survey on community sentiment regarding the key issue you are focused on for your residents.

The Community Survey will be conducted on the schedule determined with the City.

The Implementation Schedule to complete the project (from start tofinish) will generally take approximately 90 to 120 days. Again, that schedule may be adjusted based on your needs, goals and objectives.

Our data collection methods are proven to include hard-to-reach populations, including younger residents, businesses, residents of color, and Spanish-speaking populations to name just a few.

A live dashboard will also be available for the term of survey collection displaying the survey results for all surveys, allowing users to drill down to specific demographics (for the Community Survey) and/or geographic levels. The dashboard will display data from open-ended questions as they come in, and the scores from the closed-ended questions will be available immediately after the data collection period. A full PDF report in English will be provided for each survey and presented to the City. Please note we also have the capacity to translate into Spanish and other languages as well.

The City of Modesto will have a strategic partner in Zencity for understanding public perception. Using the data Zencity will provide City-wide, staff will be able to better measure and test what strategies are or are not working in the public’s eye, and investigate the critical factors driving sentiment. Throughout the entire project, a designated local government success manager is available for any questions or concerns, and our survey and engagement experts will be available as support.

Zencity will work with the City to develop and implement a survey on residents satisfaction to provide a survey of community opinions in the City related to satisfaction with City services; economic development; public safety; amenities; quality of life in the City; communication with residents and stakeholders; and to obtain feedback that would improve services for residents. We will also be able to devise methods and strategies to measure local business owners and stakeholders in Modesto while soliciting responses that are inclusive of race, age, gender, education and level of income. This random sample will be designed to reach Modesto residents- 18 years or older by targeted advertisement methodologies.

We will analyze and display the data, providing any benchmarks available for other known communities surviving local government services. In addition, Zencity will provide a platform for residents engagement and work with the City to implement a custom plan to 6 #6..
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reach all residents. In this section, we will detail the general methodology and the implementation plan for all tasks.

Onboarding
As part of the Zencity onboarding, we will train an unlimited number of users in the City.

Each user will receive dashboard training to understand how to navigate the Zencity dashboard. In addition, each user will receive specialized training on how to interpret and use the data collected through the survey and engagement platform. Additional training sessions for key users will include a tour of additional tools and features and can be requested at any time. Each of these sessions takes approximately 1 hour and will be led by our Onboarding Manager.

After onboarding is complete, a seamless transition will be made as you start to work directly with your customer success manager (CSM). The CSM will meet regularly with the team to review progress, make adjustments, complete any additional training, and discuss key findings. The CSM will be the City’s main point of contact throughout the entirety of the contract and will be available for any and all questions.

Survey Development
Zencity will work closely with the City to ensure that the questionnaires for the Community Survey are appropriate and applicable to the City’s services, stakeholders and business community. The development of the survey will be an iterative process, with Zencity’s survey experts drafting, revising and obtaining feedback from the City’s project team. We anticipate 2-3 iterations of survey review until we gain approval from the City for publication.

Zencity measures change in sentiment over time in core metrics. For that reason, we expect to keep some survey question content across cycles, and we will add additional content and new information as the City’s project team’s understanding of local sentiment evolves.

Zencity will translate the survey questions into Spanish. If additional languages are requested, Zencity will translate the survey at no additional cost.

Community Survey
Zencity has been conducting Community/residents Service Surveys in dozens of communities across the United States. Unlike other Community Survey providers, Zencity 7 #6..
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has a flexible data collection mechanism, which can report data on a semi-annual or even quarterly basis. The survey content includes a “base” section that includes the following:
● Overall quality of service
● Satisfaction with services provided
● Community characteristics and sentiments towards change In addition, Zencity offers space for up to five custom questions that can be modified once per cycle (bi-annually or annually). For example, some cities might choose to include extra questions about housing issues, Internet access, emergency preparedness, or other City priorities to include in the custom questions.

Survey Execution
Zencity will launch data collection and monitor responses. We recommend a regular cadence for the Community Survey to allow the City to understand how these sentiments are changing over time.

Sample Size: The more we survey a population, the more difficult it can be to obtain participation (Groves et al., 2009). Particularly because we suggest multiple surveys over time, we suggest balancing the need for a reliably large sample size with concerns about participation. We will achieve a margin of error of ± 2.5%. Roughly 1,600 respondents per year (800 per cycle) will be adequate to achieve this margin of error. Because this is a nonprobability survey, we will continue data collection until we achieve a representative sample of this size. In the next section, we will describe representation and how we achieve it.

Methods of data collection: Probability-based surveys have been used for decades and have long been considered the gold standard in survey research. However, probability-based surveys are not without limitations (Baker et al., 2013; Elliott & Valiant, 2017). Not all cases are included on the initial list from which the sample is drawn. This “coverage error” can mean that renters and other more mobile residents may be systematically excluded from some surveys. In telephone surveys, survey organizations often rely on vendors, and individuals without listed numbers may be omitted. In mail surveys, individuals who move frequently or who do not have a fixed address may also be omitted. If the source of address information is based on utilities, data for multi-family housing like apartment buildings may be unavailable or incorrect. Nonresponse error, separately, has also long been an issue. Response rates in traditional probability-based surveys have been declining over the past 50 years. And when response rates are low, the risk of bias in a specific estimate due to nonresponse increases (Groves, 2006). For example, if younger respondents do not respond at higher rates compared to older respondents, any estimate of age will be biased, as will any variable that is related to age. 8 #6..
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Because traditional surveys have been missing key populations, we use cutting-edge techniques to collect statistically valid data from a representative sample of the City’s residents using non-probability-based survey methods.

We recruit survey respondents where the vast majority of residents can be most readily reached: on their digital devices. Respondents are recruited on various digital platforms via any device they might be using, such as smartphones, tablets, or desktops, and the sites they visit every day. With the help of targeted ads to an online survey, Zencity will assemble a representative sample of the Modesto resident base and ensure that voices that might not be included in traditional survey formats are heard. Respondents are targeted on social media, mobile apps, and online panels.

The ads, designs, images, or videos that potential respondents are shown will be generic and would not mention issues likely to bias certain types of individuals to take or decline to take a survey; instead, for example, an ad may announce: “We have an important new study for Modesto residents.” Only after clicking into a survey and seeing the questions will a respondent see the specific topics the survey covers.

Zencity chose this distribution method for its ability to collect a large sample of diverse backgrounds quickly; according to a 2021 study by the Pew Research Center, 93% of adults in the United States use the internet, positioning it as a modern “public square” for reaching and hearing from a wide variety of voices; the same research shows just how widespread Internet adoption is across characteristics like race, gender, and community type, as well as hard to reach groups.

We ensure all targeted individuals are true residents of the City in several ways. Before data collection, we use social media platform metadata to determine who likely lives within the area. Panel providers and mobile app vendors provide records of potential respondent zipcodes. Based on this information, we target individuals we believe live in the City. During data collection, we ask respondents if they live in the City and for their zipcode. If they do not report living there or provide an invalid zipcode, we remove that response from the analysis.

When awarded the work, Zencity staff will produce a detailed work plan. The work plan will outline each step involved in conducting the survey. Zencity staff will also produce a specific summary of the survey methodology that will be included in the Community Survey report.

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At Zencity, we recognize the importance of engaging with under-represented segments of the population to ensure that our local government partners can make informed decisions that truly represent the needs and aspirations of the community. With our knowledge and expertise in community engagement, we are poised to develop strategies and approaches to connect with segments of the City's population who have historically been under-represented, including the Spanish-speaking population, local stakeholders, businesses and residents between the ages of 18 and 34, and those living in multi-family dwellings.

Spanish-speaking population: To engage with Modesto’s significant Spanish-speaking population, we will deploy several tailored strategies to ensure inclusivity and effective communication:
● Language Inclusivity: We will design our surveys with the option of switching between English and Spanish, ensuring that your Spanish-speaking residents can easily comprehend and respond, and will display survey questions in the default language supported by the device. Ads that invite respondents to the survey will also be shown in both English and Spanish. If there are other languages that are desired by the City, our staff has the resources, training and ability to accommodate such issues for our clients.
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● Targeted Distribution. For the Community Survey, we will identify popular Spanish-speaking social media platforms, forums, and online groups specific to the Modesto community and distribute our survey through these channels.

In addition to Spanish, Zencity offers unlimited translations as long as the language is spoken by at least 5% of the population. Most major languages can be supported. We currently support the following languages, but Zencity will add languages upon request:

Residents between the ages of 18 and 34: Zencity employs a variety of methods to reach under-represented respondents for the Community Survey, including social media, mobile app ad networks, and survey panels. We have found that younger residents can be more readily reached by our mobile app ad networks and survey panels than social media, and that using these platforms consistently lead to more representation of younger residents than traditional survey methods.

By leveraging the above strategies, Zencity will ensure that historically under-represented segments of the City’s population are not only informed about the survey but also feel encouraged to participate and share their valuable feedback. 12 #6..
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4. Work Plan- Outline/General Schedule
In addition to the work plan as outlined in the methodology above, Zencity has the team and experience to meet your stated timeline. We will work to achieve the milestones set forth in the published RFP as outlined below:

Time Frame Description of Work
Project start ● Meet with the Zencity team for introductions, goal setting, and planning
● Onboarding process begins for City staff to train all users on how to use the Zencity platform and understand the data provided effectively.

Weeks 1-3 ● Align on survey questionnaires to ensure they meets the City’s needs and prepare to launch
● Methodology presentation
Week 4 ● Survey launch
Weeks 5-26 ● Data collection and availability of live feed of open-ended comments
Week 27-28 ● Zencity researchers carefully review Community Survey data and prepare a full report of findings
● Presentation to the City Manager
Week 29* ● Presentation to Department Directors
● Presentation to City Council
Week 30 ● Make changes to the Community Survey questionnaire as needed for Cycle 2
NOTE: Exact schedule to be determined to meet the survey methodology and goals of the City
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5. Other Community Work Samples
Bettendorf, IA
The City of Bettendorf used Zencity’s platform to identify residents’ public online sentiment regarding specific adjustments to city services due to the COVID-19 pandemic.

With Zencity’s Artificial Intelligence (AI) capabilities, City officials followed resident concerns and opinions from public social media channels, those managed by the city and non-city-owned sources. Specifically, the City’s team wanted to understand residents’ reactions to two specific issues: changes to the City’s waste removal schedules and procedures, and policy towards the opening of the City’s golf course.

To protect the safety of Bettendorf’s sanitation workers and residents, the City enacted new policies to allow for social distancing and the safe removal of the City’s waste. Some residents complained about the changes and the inconvenience caused, which suggested that the City might need to issue a response or change its policies. By using Zencity, City officials followed the conversation as the discourse progressed, and saw that a majority of residents in fact supported and appreciated the City’s efforts during the challenging time.

By quantifying and comparing online support for the new policy to the opposition, the city was confident that it did not need to invest time and effort in intervening or changing course.

More information on Zencity’s work with the City of Bettendorf can be foundhere.

City of Decatur, IL
In deciding how to distribute its CARES Act funding, the City of Decatur faced two main hurdles. The first was actually understanding the most pressing needs and priorities of its residents – in a timely manner. The City wanted to understand where residents thought fiscal resources would be most beneficial. Getting this resident input on a very specific question with enough time to incorporate feedback into the planning process was imperative. Second, Decatur faced the age-old STP challenge – how can the City include input beyond that which is expressed by the more vocal minority or STP (Same Ten People)? The City needed to get its City Council members on board with its proposed CARES Act funding allocation plans by ensuring that the plans reflected a broad perspective.

In addition to using Zencity’s dashboard to monitor public discourse, in April of 2020, the City of Decatur issued a Zencity “COVID Awareness and Impact” Survey which received nearly 1700 responses.

With resident’s qualitative input quantified and analyzed into key themes, the City used these survey responses to build a well-informed grant program around the allocation of its 14 #6..
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CARES Act funding – including setting specific parameters for business relief grants that reflected the expressed needs of its residents.

More information on Zencity’s work with the City of Decatur can be foundhere. 15 #6..
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6. References
Long Beach, California
Lea Eriksen
Chief Information Officer and Director of Technology & Innovation [email protected]
Stockton, California
Harry Black
City Manager
[email protected]
Hercules, California
Dante Hall
City Manager
[email protected]
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7. Pricing
Name SKU Product Description Term Term
Price
Zencity
Community
Survey
+
Zencity
Pulse
ZC-CSS
ZC-PP
Community Survey - Recurring, online survey
measuring resident satisfaction, with ongoing
scores always viewable from a live dashboard and
representative results aggregated into a report.

Pulse Survey - Ad-hoc online survey for
generating quick results on timely issues. Zencity
handles distribution, with guaranteed
representative results.
*1 Pulse included along with Community Survey.
12 Months
$28,295
Zencity
Pulse
*Optional
ZC-PP Pulse Survey - Ad-hoc online survey for
generating quick results on timely issues. Zencity
handles distribution, with guaranteed
representative results.
*Paid per extra Pulse
$12,495
*Optional
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ZENCITY ORDER FORM
Modesto CA
This Order Form ("Order Form") is entered into between the Zencity entity detailed below ("Zencity"), and the entity identified below ("Customer", and jointly with Zencity the “Parties”)), as of the Effective Date (as defined below) which shall remain in effect for the duration of the Initial Term as defined below and any renewal term (the “Term”) unless agreed otherwise explicitly and in writing between the Parties.

This Order Form includes and incorporates the Zencity Terms and Conditions attached hereto as Appendix A (the “T&Cs”). In the event of any conflict between this Order Form and the T&Cs, the terms of this Order Form shall prevail. All prices are quoted in USD.

ZENCITY CUSTOMER
Entity (legal) name: Zencity Technologies US Inc. Entity (legal) name:

Modesto, California
Full address: 1313 N Market St, Suite 5100
Wilmington, DE 19801
Full address: 1010 10th Street
Modesto, CA 95354
Contact: Marta Slobodyanyuk,
Government Solutions Manager
Contact: Kelly Rice-Ortiz,
HR
Phone: (706) 222-3324 Phone: 209-577-5200
Email: [email protected] Email: [email protected]
Name SKU Product Description Yearly List
Price Term
Term
Discount
Yearly
Discounted
Price
Zencity
Community
Survey (4/y)
ZC - CSS Community Survey - Recurring, online survey
measuring resident satisfaction, with ongoing
scores always viewable from a live dashboard
and representative results aggregated into a
report.
$80,000 2 years 25% $60,000
Total Billed Yearly $60,000
Total Fees for Two Years $120,000
Any additional modules, quantity increases or other custom development and integration work requested by Customer during the Term shall require an Order Form executed by the Parties, and shall be subject to the prevailing Zencity rate card subject to amendment from time to time.
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ORDER FORM TERMS
Effective Date: To be decided
Initial Term: 2 years, commencing on the Effective Date. The city would have the option to extend the contract for 3 additional years at the same discounted yearly price ($60,000).

Fees: The Fees are exclusive of any applicable taxes (including sales tax) and withholdings, which will be added to the Fees and paid by Customer, to the extent applicable.

Payment Terms: The Fees shall be payable on an annual basis within 30 days of the Effective Date and on each annual anniversary thereof.

Customer Billing
Contact:

Name: Kelly Rice-Ortiz
Phone: 209-577-5200
Email: [email protected]
Customer PO #
(if applicable):

N/A
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CITY OF MODESTO

COMMITTEE AGENDA REPORT
DATE OF MEETING:

March 18, 2024
Date: February 28, 2024
TO: Finance Committee
Nick Bavaro, Chair
Rose Escutia-Braaton, Vice Chair
David Wright, Member
THROUGH: Joseph P. Lopez, City Manager
FROM: Christina Alger, Director of Human Resources
SUBJECT: Amending the Classification Plan
CONTACT: Christina Alger, Director of Human Resources
[email protected], 209-571-5126
DESCRIPTION:

Consider amending the Class Plan to move the positions of Park Ranger from range 1114 to range 1119 and EMS Coordinator from range 437 to range 442 and forwarding to Council for approval. (Funding Source: American Rescue Grants Fund and Measure H) STRATEGIC PLAN ELEMENT:

The recommended action supports the City of Modesto’s 2020-2025 Strategic Plan Initiative:

Service and Delivery Goal J: Building a High-Performing Organization by Attracting and Retaining High Performance Employees.

BACKGROUND:

The City implemented a new program to address quality of life issues in our park system. This program began as a pilot program using the Police Cadet classification. Once it was determined that the program was successful, the City took steps to make the positions permanent. The City created the position of Park Rangers in June of 2023.

The EMS Coordinator position was used by the Fire department to coordinate required training in CPR and AED as well as coordinate and monitor Basic and Advanced Life Support programs. This position was eliminated due to budget cuts during the pandemic. The Fire department recognized crucial program component oversight was lacking. Through the adoption of Measure H, the Fire department reallocated this position to ensure compliance. The City underwent negotiation and a compensation study during 22/23 fiscal year, however, this position was not included due to the elimination.

DISCUSSION:

Park Rangers are positions that are new to municipalities that have them. Placing these positions in a proper range was difficult due to the fact that they are not widely used. The City has been actively recruiting, however, it has been challenging to fill. In reviewing the market, the City would like to be positioned to better compete. The Human Resources department recommends moving from range 1114 to range 1119.
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Finance Committee, March 18, 2024
Amending the Classification Plan

The Fire department initiated a recruitment once the position was reallocated but were unsuccessful in finding a candidate. The Human Resources department performed a salary study and determined that the salary needed to be adjusted. The Human Resources department recommends moving from range 437 to range 442.

FISCAL IMPACT:

The full annual fiscal impact of moving the Park Ranger position from 1114 to 1119 for each position is $7,197. There are a total of twelve positions, bringing the full cost to $86,364. The full annual fiscal impact of moving the EMS Coordinator from range 437 to range 442 is $13,312 and only effects one position. Due to vacancies during the fiscal year, the increase in the range will be absorbed within the current fiscal year operating budget.

Position Fiscal Cost Per Position Number of Positions Fiscal Impact Park Ranger $7,197 12 $86,364
EMS Coordinator $13,312 1 $13,312
RECOMMENDED COMMITTEE ACTION:

Staff Recommendations:

Motion recommending the amendment of the Class Plan to move the positions of Park Ranger from range 1114 to range 1119 and EMS Coordinator from range 437 to range 442 and forwarding to Council for approval.

Christina Alger, Director of Human Resources
Joseph P. Lopez, City Manager
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CITY OF MODESTO

COMMITTEE AGENDA REPORT
DATE OF MEETING:

March 18, 2024
February 26, 2024
TO: Finance Committee
Nick Bavaro, Chair
Rosa Escutia-Braaton, Vice-Chair
David Wright, Member
THROUGH: Joseph P. Lopez, City Manager
FROM: Bill Sandhu, Public Works Director
SUBJECT: Consider accepting the final report and recommendations of HF&H Consultants, LLC.

CONTACT: Rosene Nguyen, Integrated Waste Program Manager, [email protected], 209-577-5453
DESCRIPTION:

Consider the Final Report and recommendations of HF&H Consultants, LLC., Walnut Creek, CA regarding City of Modesto 2023 Solid Waste Financial Review and Rate Analysis, which provide staff next steps for rate methodology development and haulers’ franchise agreement review and forwarding to Council for approval. (Funding Source: Not Applicable) STRATEGIC PLAN ELEMENT:

The recommended action supports the City’s Strategic Plan Area of Focus: Quality of Life, “Engage partners across the community to ensure the safety, resilience, and attractiveness of Modesto”, Goal A: “Improve community safety and quality of life through a combination of prevention and intervention efforts that address safety and its underlying issues”, Strategy 6:
“Motivate and encourage staff and community members to identify and mitigate blight issues”; and Goal B: “Increase pride in Modesto’s diverse neighborhoods and business districts through beautification efforts and by investing in community assets and amenities”, Strategy 3: “Evaluate current waste removal and city beautification policies and procedures.” BACKGROUND:

Modesto has contracts with two private sector companies (Haulers) for the exclusive right to collect residential, commercial, and industrial garbage, organics, and recycling in the City. The City does not set the actual rate the Haulers can charge to collect the solid waste; instead, the City sets the maximum rate to be charged for each type of service. Per the Service Agreement with the Haulers, rate adjustments shall be made effective on July 1 of each year if deemed necessary by the City Council. A computer modeling formula is used to analyze audited financial data submitted by the Haulers and the maximum rate is determined based on the lowest cost #8..
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Hauler’s rates. These maximum rates can also be reviewed and changed when costs increase or decrease.

For fiscal year 2022/2023 rate review, Haulers submitted audited financials per the standard rate setting methodology; however, City staff determined that the computer modeling formula was outdated and were unable to validate the data provided. On June 27, 2023, by Resolution No. 2023-314, Council approved an agreement with HF&H Consultants LLC., to conduct an audit and performance review of the Haulers, to analyze the current rate setting methodology and test it for validity, and to develop a new rate setting methodology.

DISCUSSION:

HF&H met with City staff and Haulers to gather the necessary information to conduct an audit and performance review of the Haulers, to analyze the current rate setting methodology and test it for validity, and to develop a new rate setting methodology. Where applicable, they requested more information from the City or Haulers, conducted selected deep analysis of data, and evaluated the methodology for gathering or analyzing data. This project consists of two phases. Phase one is the HF&H Audit summary and results, and phase two will include creating a new rate setting methodology.

Phase one:

HF&H conducted the following activities under guidance from City staff:
 Reviewed each Hauler’s audited financial information for the most recently completed fiscal year, the annual rate adjustment application, and the standard rate adjustment methodology to understand the mechanisms with which the annual rates are calculated.  Evaluated each Hauler’s allocation of costs to the City by reviewing the types of allocation factors applies to the Hauler’s financial statements and assessed whether the allocation factor was reasonable or standard for the industry.
 Benchmarked the residential, commercial, and residential bulky program costs against nearby jurisdictions or jurisdictions that have similar geographic structure and services.

They further inquired with each Hauler regarding costs that were higher than the benchmarked range.
 Examined the current disposal, transfer, and organics pre-processing arrangements for each Hauler, including compensation for these services and their connection with the City’s composting facility.
 Recalculated the Haulers’ tonnage reports to the City and analyzed detailed general ledgers for certain expenses in the general and administrative categories.

After concluding this review and analysis, HF&H made the following recommendations:

1. Third Party Review of Gilton Allocation: Because Gilton’s software for allocation of costs to the City is integrated with their accounting software, HF&H recommends that the software be reviewed periodically by a third party for accuracy and reasonableness. The cost for this review may be at the City’s or the Haulers’ expense. #8..
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2. City’s Compost Facility Per-Ton Rate: HF&H recommends the City consider creating a separate rate for contaminated organic material and the City and Haulers meet and confer to develop a load inspection program which will identify contaminated loads and a surcharge for loads determined to be contaminated.

3. Negotiate an Amendment to the Current Franchise Agreements: HF&H recommends negotiating an amendment to the current franchise agreement that addresses operational and informational concerns. HF&H also recommends the Haulers resubmit official cost and operations forms for the amendment to set a baseline to which future operations can be compared for reasonableness.

Modify Annual Rate Adjustment Methodology: The current annual rate adjustment process of using the ‘lowest cost Hauler’ does not provide sufficient guardrails to protect the City’s rate payers. HF&H recommends modifying the current annual rate adjustment process through the amendment to adjust expenses based on local collective bargaining agreements or regional and classification specific Consumers Price Index (CPI). HF&H recommends that the new rate adjustment methodology calculate the compensation for disposal and organics pre-processing and delivery based on a build-up of tons multiplied by the rate at the destination facility. HF&H recommends tying the annual increase in the organics pre-processing rate to an index or other annual metrics.

Acceptable Disposal Location Designations: HF&H recommends designating the disposal facilities in the franchise agreements to ensures material flow is managed and predictable.

4. Transfer / Organics Pre-Processing Rate Benchmarking: HF&H recommends the City review the transfer/pre-processing rate to ensure it is within the range of acceptable market rates.

5. Future Fee Component Removals: When performing the upcoming annual rate adjustment process, the following fees should be removed to not double-compensate the Haulers: Weekly Organics Collection, SB 1383 Collection Fee, Organics Waste PreProcessing.

6. Monthly Tonnage Reports: HF&H recommends the City either update and provide the Haulers with a revised reporting template or have the Haulers revise the current template for consideration by the City.

7. Detailed General Ledger Review: HF&H recommends placing a cap on annual increases to the general and administrative expenses through the annual rate adjustment methodology.

City staff have reviewed the recommendations provided by HF&H and agree that the actions they recommend will increase transparency and accuracy of the solid waste rate setting process.

Phase two:

Phase two will be conducted after Council’s approval to the findings and recommendations presented by HF&H and will complete the remaining tasks under Resolution No. 2023-314 between the City and HF&H, including analyzing the current rate setting methodology and developing a new rate setting methodology.
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FISCAL IMPACT:

This item is administrative in nature and does not have a fiscal impact. Future actions related to the HF&H’s recommendations that have a fiscal impact will be brought to Committee and Council for review.

RECOMMENDED COMMITTEE ACTION:

Staff Recommendations:

Motion recommending the Final Report and recommendations of HF&H Consultants, LLC., Walnut Creek, CA regarding City of Modesto 2023 Solid Waste Financial Review and Rate Analysis, which provide staff next steps for rate methodology development and haulers’ franchise agreement review and forwarding to Council for approval.

Approved by:
___________________________
Bill Sandhu, Public Works Director
___________________________
Joseph P. Lopez, City Manager
Attachments:

1. HF&H Report
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590 Ygnacio Valley Road, Suite 105 John W. Farnkopf, PE Walnut Creek, California 94596 Laith B. Ezzet, CMC
Telephone: 925/977-6950 Richard J. Simonson
www.hfh-consultants.com Marva M. Sheehan, CPA
Robert C. Hilton

February 23, 2024
Rosene Nguyen
Integrated Waste Program Manager
Public Works
1010 10th Street
Modesto, CA 95354
Subject: City of Modesto 2023 Solid Waste Financial Review and Rate Analysis Dear Rosene Nguyen:

The City of Modesto (City) requested HF&H Consultants, LLC (HF&H) review the annual rate adjustment methodology and related operational and financial documentation for its two franchised solid waste haulers to provide recommendations to modify the rate adjustment methodology. This report provides a summary of our findings and recommendations and is structured into the following sections:

1. Executive Summary

2. HF&H Review and Analysis

3. HF&H Findings

4. HF&H Recommendations

5. Conclusion

EXECUTIVE SUMMARY
The City of Modesto’s residents and businesses have solid waste collection service from either Bertolotti Modesto Disposal Inc. (Bertolotti) and Gilton Solid Waste Management Inc. (Gilton) (collectively the “Haulers”). The City requested HF&H to conduct an analysis of the Haulers’ collection operations, costs, and the current rate setting methodology in order to provide recommendations to modify the rate adjustment methodology. The City was concerned about both the accuracy of and allocation of the Hauler’s costs to service the City’s residents and businesses.

Due to the narrow reporting requirements for the Haulers under the current franchise agreements, there was limited information available to be reviewed. Some information required multiple requests and conversations with the Haulers to clarify the information aligned with the request. Therefore, HF&H determined a scope of work that best met the City’s needs and the information available.  HF&H reviewed each Hauler’s audited financial information for the most recently completed fiscal year and the annual rate adjustment application used to set current rates. We also reviewed the standard rate adjustment methodology to understand the mechanisms with which the annual rates are calculated.
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 HF&H evaluated each Hauler’s allocation of costs to the City by reviewing the types of allocation factors applies to the Hauler’s financial statements. HF&H assessed whether the allocation factor was reasonable or standard for the industry.
 HF&H benchmarked the residential, commercial, and residential bulky program costs against nearby jurisdictions or jurisdictions that have similar geographic structure and services. We inquired with each Hauler regarding costs that were higher than the benchmarked range.  HF&H examined the current disposal, transfer, and organics pre-processing arrangements for each Hauler, including compensation for these services and their connection with the City’s composting facility.
 HF&H recalculated the Haulers’ tonnage reports to the City and analyzed detailed general ledgers for certain expenses in the general and administrative categories.

The following discussion summarizes HF&H’s findings and recommendations.

Findings
• Gilton’s general and administrative allocation attributed an additional ~$96,000 in indirect expenses to the City based on an incorrect inclusion of commercial commodity revenue that is not part of the franchise. Because the current rates were set based on an inflation increase and not on this financial information, there is no impact to the current rates. • Bertolotti’s total costs per route are higher than the reasonable range from the benchmarks and the driving factor may be additional labor expenses for overtime. Gilton’s labor costs are higher than the reasonable range due to inclusion of other personnel within the driver labor category instead of the overhead category. Gilton’s overall per route costs, including fuel, are still slightly higher than the reasonable range.
• The Haulers’ annual rate adjustment application included costs that would double-compensate them for organics pre-processing services (firstly in direct costs and secondly through the per month fee). Because the current rates were set based on an inflation increase, the current rates do not double-compensate the Haulers for organics pre-processing.

Recommendations
Based on the above analysis, HF&H has summarized our recommendations for next steps below:

1. Third Party Review of Gilton Allocation: Because Gilton’s software for allocation of costs to the City is integrated with their accounting software, HF&H recommends that the software be reviewed periodically by a third party for accuracy and reasonableness. The cost for this review may be at the City’s or the Haulers’ expense.
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2. City’s Compost Facility Per-Ton Rate: HF&H recommends the City consider creating a separate rate for contaminated organic material and the City and Haulers meet and confer to develop a load inspection program which will identify contaminated loads and a surcharge for loads determined to be contaminated.

3. Negotiate an Amendment to the Current Franchise Agreements: HF&H recommends negotiating an amendment to the current franchise agreement that addresses operational, financial, and informational concerns. HF&H also recommends the Haulers resubmit official cost and operations forms for the amendment to set a baseline to which future operations can be compared for reasonableness. The following two paragraphs provide specific recommendations regarding the amendment:

Modify Annual Rate Adjustment Methodology: The current annual rate adjustment process of using the ‘lowest cost Hauler’ does not provide sufficient guardrails to protect the City’s rate payers. HF&H recommends modifying the current annual rate adjustment process through the amendment to adjust expenses based on local collective bargaining agreements or regional and classification specific CPI indices. HF&H recommends that the new rate adjustment methodology calculate the compensation for disposal and organics pre-processing and delivery based on a build-up of tons multiplied by the rate at the destination facility. HF&H recommends tying the annual increase in the organics pre-processing rate to an index or other annual metrics.

Acceptable Disposal Location Designations: Because the current franchise agreement does not state which landfill the solid waste material should be delivered, HF&H recommends designating the disposal facilities in the franchise agreements to ensures material flow is managed and predictable.

4. Transfer / Organics Pre-Processing Rate Benchmarking: HF&H recommends the City review the transfer/pre-processing rate to ensure it is within the range of acceptable market rates.

5. Future Fee Component Removals: When performing the upcoming annual rate adjustment process, the following fees should be removed to not double-compensate the Haulers: Weekly Organics Collection, SB 1383 Collection Fee, Organics Waste Pre-Processing.

6. Monthly Tonnage Reports: HF&H recommends the City either update and provide the Haulers with a revised reporting template or have the Haulers revise the current template for consideration by the City.

7. Detailed General Ledger Review: HF&H recommends placing a cap on annual increases to the general and administrative expenses through the annual rate adjustment methodology. #8..
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HF&H REVIEW AND ANALYSIS
Annual Rate Adjustment Application and Rates
Standard Methodology: Each Hauler submits audited financial information from the most recently completed fiscal year that is intended to reflect the costs to service the City. The City inputs these costs into the annual rate adjustment spreadsheet which compares Bertolotti’s and Gilton’s ‘per customer cost’ by customer class and determines the ‘lowest cost Hauler’. The lowest ‘per customer cost’ is selected for the hauler component of the rate for both Bertolotti and Gilton (Hauler Component). City fees are layered on top of the Hauler Component for City costs (e.g., landfills maintenance, compost facility improvements, City solid waste cost center).

There may be one additional adjustment made to the Hauler Component to account for anticipated increases in fuel costs based on the price of diesel. There are no adjustments to account for anticipated changes in tonnage, routes, labor, or other costs as the methodology assumes those changes will be reflected in the financial information when the applicable year is utilized for the annual rate adjustment process.

Most Recently Completed Annual Rate Adjustment Methodology: Each Hauler submitted its audited financial information from the most recently completed fiscal year (7/1/2021-6/30/22). The City input these costs into the annual rate adjustment spreadsheet to determine the ‘lowest cost Hauler’. Instead of utilizing the standard methodology with the ‘lowest cost Hauler’, the City enacted an increase to the current Hauler Components similar to the increase in the consumer price index. The City also layered various fees on top of the Hauler Component for City costs (landfills maintenance, non-containerized green waste, compost facility improvements, SB 1383 implementation, and City solid waste cost center) and additional Hauler costs not captured in their financial information (weekly organics collection, collect and process recycling, SB 1383 collection, and organic waste pre-processing). There were two adjustments made to the Hauler Component to account for anticipated increases in expenses: an increase in disposal costs based on consumer price index and an increase in fuel costs based on the price of diesel. The City chose to deviate from the standard methodology this year to account for the additional compensation for services required under SB 1383 and allow time to evaluate the impact of this rate adjustment methodology.

The City is allowed to approve, deny, delay, or enact a different rate increase than what was calculated per the annual rate adjustment applications. During the most recent annual rate adjustment, the City enacted a rate increase that was similar to the increase in the consumer price index rather than the full increase as calculated per the rate adjustment application. The rate adjustment application calculated a Hauler Component of $37.54 for residential services and $46.32 for commercial services; the City approved a $35.72 residential Hauler Component and a $43.57 commercial Hauler Component.

Hauler Allocation of Costs to Modesto
Bertolotti: Bertolotti reports its Modesto operations as a separate entity from its other corporations and franchises and provided the City with a separate set of audited financial statements. The separate set of #8..
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financial statements for the City are used in the annual rate adjustment application. Bertolotti stated that all costs associated with serving the City are coded within their internal system directly to the City’s reporting entity. The only allocation that is used in preparation of the financials is related to the corporate service fee for administrative and support services to most parts of Stanislaus County and select areas of the City (further explained in the notes to the financial statements) which is allocated by containers.

Therefore, all direct service-related costs (labor, vehicle, fuel, disposal, etc.) are directly charged to and reflected in the financial statements utilized in the annual rate adjustment application. HF&H did not find any issues with Bertolotti’s allocation of the corporate service fee.

Gilton: Gilton services parts of Stanislaus County, Merced County, San Joaquin County, and various cities, including the City of Modesto. It accounts for its operations and costs as a single entity and provides a combined set of audited financial statements. The City of Modesto’s financial information is a supplemental schedule of costs allocated to the City based on various allocation factors. These allocation factors have been provided to the City and include allocation by percentage of loads, percentage of trucks to a jurisdiction/material, number of containers, customers, and revenue. The allocation calculation agrees to the information presented in Gilton’s Accounting and Supplementary Data, in which the auditor states, “We did not audit or review the financial statements or supplementary information included in the accompanying prescribed form nor we were required to perform any procedures to verify the accuracy or completeness of the information provided by management.” HF&H was unable to review the allocation calculations quantitatively as the spreadsheet calculations were hard-coded and a combination of multiple allocation methodologies. When HF&H requested a formuladriven version of the allocations file, Gilton asserted the spreadsheet provided is not a database export.

Allocation percentages are included in an allocation module in their accounting software which allocates costs held in suspense accounts until year end. This means that all files provided to HF&H include the results of the cost allocations, but the allocation percentages are calculated and applied in Gilton’s accounting software. This methodology is the same as Gilton’s Stanislaus County allocation methodology.

Therefore, if additional quantitative assurance is desired, more direct approaches may need to be considered (e.g., a site visit to Gilton to view the input of these percentages and calculations, a full review of their allocation software). However, HF&H reviewed the allocation methodology qualitatively for reasonableness of the type of allocation to the corresponding expense category and found the allocation types to be reasonable except for the revenue allocation. Revenue allocations for overhead costs are not the most appropriate allocation factor as the revenue from rates set by jurisdictions are not the best indicator of how much overhead costs are incurred.

During HF&H’s general ledger testing (refer to the Hauler Detailed General Ledger Review section below) Gilton provided copies of the general and administrative expenditures and recalculations of the general and administrative allocations. General and administrative expenditures were allocated based on revenue. HF&H reviewed the general and administrative allocation by tying revenue to the financial statements and noted that the commercial revenue was higher than presented in the financial statements. HF&H inquired with Gilton to clarify where the additional revenue can be found in the financial information. Gilton’s response was, “this revenue is from specialty commodity bins, that should not have been included in the allocation. Prior to the enactment of SB 1383, our understanding was that #8..
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we were not required to include this in revenue as recycle bins were open to competition as recycle/reuse streams are outside of the franchise revenue.” The City informed HF&H that recycling service was not an approved service per the franchise agreement, and that Gilton should not be providing this service to customers. The City also informed HF&H that hauling of any waste, including recyclable materials prior to the implementation of the curbside recycling program, is exclusive to service agreements and is not open to competition within the City limits.

Gilton provided a spreadsheet calculating the impact of reducing the City’s general and administrative allocation from 13.82% to 12.35% and its impact on the indirect expenses allocated to the City (approximately $96,000). HF&H estimated that this reduction of indirect expenses could have reduced the commercial per yard rate by $0.73. Gilton noted that this correction would not have impacted the current rates as the City enacted a rate increase assuming an inflation adjustment and not based on the higher rate increase requested based on the financial information in the application. However, HF&H notes that a review of previous year’s allocations would be required to ascertain whether the overallocation of indirect expenses occurred in previous years as well.

Hauler Collection Benchmarking
HF&H requested operational statistics from Bertolotti and Gilton for the most recently completed fiscal year (July 1, 2021 – June 30, 2022). A copy of the operational statistics shall be provided to the City for recordkeeping. HF&H also received a copy of Bertolotti’s and Gilton’s financial statements for July 1, 2021 – June 30, 2022 and the corresponding annual rate adjustment application prepared by the City.

HF&H calculated key operational and cost ratios using the financial and operational information; this allowed HF&H to benchmark the Haulers’ efficiencies and costs for reasonableness. HF&H compiled nearby jurisdictions’ Haulers’ ratios, or jurisdictions that have similar geographic structure and services, and compared the key ratios. HF&H focused on cost per route, labor costs, and fuel costs for the residential and commercial sectors. Refer to the tables below for a high-level summary of the benchmarking results.

Table 1. Summary of Benchmark Results - Residential
Benchmark Ratio Bertolotti Gilton
Operating Cost per Route 5% - 10% Higher than Reasonable 10% - 15% Higher than Reasonable Total Cost per Route 0% - 5% Higher than Reasonable 20% - 25% Higher than Reasonable Total Labor Cost per Route Hour 10% - 15% Higher than Reasonable 5% - 10% Higher than Reasonable Total Fuel Costs per Route Reasonable 40% - 45% Higher than Reasonable Table 2. Summary of Benchmark Results - Commercial
Benchmark Ratio Bertolotti Gilton
Operating Cost per Route Reasonable Reasonable
Total Cost per Route 0% - 5% Higher than Reasonable 0% - 5% Higher than Reasonable Total Labor Cost per Route Hour Reasonable Reasonable
Total Fuel Costs per Route Reasonable Reasonable
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Residential route benchmarking indicated the need for further analysis. Refer to the sections below.

Commercial benchmarking indicated an overall reasonableness in costs and was not further analyzed.

Bertolotti Per Route Comparison: Because Bertolotti was higher than reasonable in three of the four residential benchmarking categories, HF&H performed a deeper analysis on Bertolotti’s residential operations. HF&H translated Bertolotti’s financial information by expense category (labor, vehicle, fuel, etc.) into a per route cost. Then HF&H compared Bertolotti Modesto’s per route costs to Bertolotti Stanislaus County’s per route costs as these two jurisdictions are directly serviced by the same hauler and have similar programs, geography, and cost of expenses. The results of this analysis further confirmed the higher than reasonable costs were related to the labor and benefits expense categories.

Bertolotti Residential Route: HF&H inquired with Bertolotti regarding their residential route statistics and financial information specifically related to labor and benefits.

Bertolotti asserted that the residential labor costs included driver supervisor, mechanics, delivery drivers, maintenance workers, and cart assistance wages and benefits. Bertolotti also asserted that the average driver is earning between $150,000 - $160,000 with benefits. Because the benchmarks aim to compare direct driver labor, Bertolotti’s labor costs should be adjusted to remove the estimated wages and benefits related to these positions. HF&H had insufficient information to remove all categories of wages and benefits listed above but was able to remove an estimated amount for supervisor and cart assistance personnel wages and benefits. Then HF&H recalculated the labor ratios and average wage with benefits per driver. The hourly wage before benefits is competitive to local collective bargaining agreement, however the hourly wage after inclusion of benefits is higher than local collective bargaining agreement.

HF&H recommends additional discussion when negotiating the amendment to the Agreement to tie the labor increases directly to a labor index based on the geographic area as Bertolotti’s divers are not under a collective bargaining agreement. However, the adjusted labor ratio (drivers per route per homes serviced) was still high in comparison to the benchmark’s reasonable range.

Bertolotti asserted that the residential Modesto service area is very dense and is located near the transfer and disposal facilities; they have trucks that are old with low mileage due to this geographic benefit.

Historically, HF&H has seen a reasonable range of residential customers serviced per route per day to be approximately 700-800 customers. However, Bertolotti’s residential routes are servicing on average 900 customers per route per day. This indicates to HF&H that Bertolotti is likely needing drivers to work some amount of overtime, even with the geographic benefit, to achieve this operating efficiency.

The above point indicated to HF&H that Bertolotti’s operating statistics may require revision surrounding the average hours per route per day. Bertolotti’s operating statistics indicate its drivers are working 10 hour route days, which include two hours of overtime. To achieve a reasonable number of homes serviced per route, HF&H calculated that each driver would work an average of 11 hours per day instead of the asserted 10. It is possible that not all homes set out their containers each week, but it would require a #8..
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significant number of customers choosing to not participate weekly. Set out information was not provided by Bertolotti in its operating statistics to verify this hypothesis.

In summary, this analysis indicates to HF&H that Bertolotti may have increased full-time employee equivalents through longer route days than reported on its operating statistics and that the additional labor expense for overtime may be the driving factor that is escalating the operating and total costs per route higher than the reasonable range from the benchmarks.

Gilton Per Route Comparison: Because Gilton was higher than reasonable in four of the four residential categories, HF&H performed a deeper analysis on Gilton’s residential operations. HF&H translated Gilton’s financial information by expense category (labor, vehicle, fuel, etc.) into a per route cost. Then HF&H compared Gilton Modesto’s per route costs to Gilton Stanislaus County’s per route costs as these two jurisdictions are directly serviced by the same hauler and have similar programs, geography, and cost of expenses. The results of this analysis further confirmed the higher than reasonable costs were related to operating costs such as labor and fuel.

Gilton Residential Route: HF&H reviewed the residential route’s operating efficiency and noted that Gilton appears to be serving less residential customers per route per day than the reasonable range of 700-800 customers. Gilton appears to be servicing approximately 600 customers per route per day, for a total of 15.4 routes. HF&H requested a service area map from the City to review density of service and location of transfer stations. See Figure 1 below for a copy of this map. Based on a brief review, both Bertolotti and Gilton service dense and sparce areas of the City, however Gilton’s service area is almost twice as large as Bertolotti’s. Because all material is brought to the Gilton Resource Recovery Transfer Facility, which is located on the far end of the City, there may be less operational efficiency for Gilton.

Additionally, Gilton Stanislaus County is operating at a similar level of efficiency of customers per route per day as Modesto. Therefore, Gilton’s operating efficiency appears reasonable. However, this does not account for why the per route cost is higher than the benchmark’s reasonable range. #8..
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Figure 1: City of Modesto Hauler Service Area Map
HF&H inquired about the number of personnel per route as Gilton’s operating statistics showed almost a 2:1 ratio of drivers to routes. Gilton clarified that all routes have one driver unless they are in training; the operating statistics includes bulky drivers, customer service reps, and other similar personnel. The labor costs also include their wages and benefits. Therefore, Gilton’s higher than reasonable labor costs are due to inclusion wages and benefits for personnel that the comparable jurisdictions include in the other or allocated G&A expense line. Detailed labor information was not available for HF&H to recalculate Gilton’s labor benchmark given this information but was sufficient explanation for Gilton’s position at 5%-10% higher than the benchmark.

Gilton’s benchmark for fuel prices is above the reasonable range from the benchmark analysis. Over the past few years, fuel prices have significantly increased. Some of the benchmarks used in HF&H’s analysis are from cost proposals or index reviews before the price increase in fuel was captured, which indicates that the reasonable range of fuel costs per route is lower than the actual current range. However, the Stanislaus County benchmark for Gilton, which uses actual fuel costs, shows the average fuel cost per Bertolotti
Transfer Station
Gilton Resource
Recovery
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route at approximately 75% of the fuel cost per route as in Modesto. Therefore, HF&H believes Gilton’s fuel costs in Modesto may still be higher than reasonable, but to a lesser extent.

In summary, Gilton’s higher than reasonable labor costs are due to inclusion of bulky drivers, customer service reps, and other personnel within the driver labor category instead of the overhead category.

However, the overall per route costs, including fuel, are still slightly higher than the reasonable range.

Hauler Residential Bulky Program Benchmarking
HF&H requested additional operational statistics and financial information for the residential bulky collection program from Bertolotti and Gilton for the most recently completed fiscal year (July 1, 2021 – June 30, 2022). A copy of this information is included as Attachment A and B. HF&H calculated the monthly cost per resident for the residential bulky program by dividing the bulky program costs by the number of residents served: Gilton costs $1.11 per month per resident and Bertolotti costs $1.19 per month per resident. HF&H calculated nearby jurisdictions’ cost per resident for residential bulky programs to compare for reasonableness.

The benchmarks for monthly residential bulky program costs ranged from $0.79 - $5.32. The higher cost programs have a more complete collection program that includes more types of acceptable items (e.g., tires, e-waste, hazardous materials) and a larger volume of material collected per visit. The lower cost programs have more limitations on the acceptable items and restrict overall volume. The City’s per resident program cost falls within the reasonable range and is in line with expectations due to the restrictions on type of acceptable items. The City’s program does not allow for automobile parts (including tires), household hazardous waste, computer monitors, tv’s, dead animals, C&D, or household garbage.

However, the City’s program does not limit the volume of material collected per visit. Based on a discussion the City had with the Haulers, the cost’s provided for the bulky program include costs for illegal dumping clean-up. Therefore, the true cost of the bulky collection program is less than the per resident calculated above and is more in line with the lower range of the benchmark.

Hauler Transfer and Disposal Review
Based on discussion with the City, both Haulers are required to take all garbage first to the Covanta Wasteto-Energy facility. If the Waste-to-Energy facility is at daily capacity or is shut down for the day, they are to dispose of the material at a landfill. The current agreement does not state which landfill, but the City maintained that the Haulers should use the Fink Road Landfill and are having both Haulers include in the monthly report which landfill they are using. However, the City asserts that the Haulers have been delivering solid waste to Manteca’s, Merced’s, or Livermore’s landfills. The City further explained that they do not know how much each Hauler pays at these facilities. Because the annual rate adjustment process does not include language to limit the disposal component of the adjustment to the rate charged at the Waste-to-Energy facility or the Fink Road Landfill (refer to the Annual Rate Adjustment Application section) there is no protection for the City against increased costs associated with disposal at alternative locations.
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HF&H requested a narrative from Bertolotti and Gilton describing their current disposal and transfer arrangements. HF&H intended to perform a build-up of the disposal component of the Haulers’ financial information and assess the reasonableness of this cost. Refer below for a summary from each Hauler.

Bertolotti: Bertolotti asserts that all loads of material (both solid waste and organics) are brought to the transfer station and then taken to their final disposal or processing location. Bertolotti asserted they are required to take all garbage to the Covanta Waste-to-Energy facility or the Fink Road Landfill, unless they are directed to take it to another landfill. The current transfer rate is $22.00 per ton, the Waste-to-Energy facility rate is $49.90 per ton, and the Fink Road Landfill rate is $29.00 per ton. Bertolotti did not provide HF&H with the transfer or disposal costs during the financial period used in the annual rate adjustment application. However, HF&H calculated an estimated cost per ton for disposal of solid waste tonnage based on Bertolotti’s operational statics and financial information and found that it is within a reasonable range of the cost per ton as provided by Gilton who has the same disposal arrangements and additional per ton detail.

Gilton: Gilton asserts that they bring all loads of material (both solid waste and organics) to the Gilton Resource Recovery Transfer Facility (GRR) where the material is weighed on a scale with documentation for route identification for future allocation of costs. GRR accumulates material and hauls it to the Covanta Waste-to-Energy facility or the Fink Road Landfill. Hospital waste is taken directly to the Waste-to-Energy facility. The City was informed by Gilton that not all materials go to the Waste-to-Energy facility because there is a tonnage limit per their agreement with the facility and material taken to Find Road Landfill is based on an agreed-upon minimum tonnage amount. The City notes that Gilton’s weekly report indicates that material is also brought to other landfills.

Gilton also provided a breakdown of the per ton cost for transfer and disposal of solid waste material.

Illegal dumping disposal costs was not included in this breakdown. HF&H recalculated the disposal and transfer costs based on the tonnage reported in the operating statistics and found they agree within an immaterial variance to the disposal and transfer costs as reported in Accounting and Supplementary Data used in the annual rate adjustment process. Refer to the table below for a summary of the per ton rates during the time period reviewed.

Table 3. Gilton Transfer and Disposal Per Ton Cost
7/1/21 - 9/30/21 10/2/21 - 6/30/22
Residential, Commercial, and Debris Box Disposal $43.00 $44.00 Bulky Item Disposal $48.00 $53.00
Transfer Station Fee (Any Material) $24.00 $27.00
Hauler Organics Pre-Processing Review
As mentioned previously in the Annual Rate Adjustment Application section above, the City layers on additional fees to the Hauler Component for various programs and services. One of these fees is for residential and commercial organics pre-processing before delivery. The City informed HF&H that all organic material collected by the Haulers within the City limit should be delivered to the City’s compost facility. Based on the R3 report, the organics’ pre-processing rate is established to pay for the Haulers to #8..
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pre-process the organic waste prior to delivery to reach the low contamination threshold of 1%. The City asserts that neither Hauler was pre-processing organic material from July 1, 2021 – June 30, 2022 as it was not part of their contracts; pre-processing began July 1, 2022 because of SB 1383 compliance. The additional component was also added to the rates beginning July 1, 2022. The current residential rate includes $1.72 per month and the current commercial rate includes $3.11 per month per cubic yard for organics pre-processing.

Bertolotti: Bertolotti’s narrative confirmed that it is required to deliver all organic material to the City’s compost facility. Bertolotti asserted that the transfer rate for solid waste materials is the same for organic materials, which is in alignment with the City’s narrative that Bertolotti was not pre-processing material during this time as the transfer rate for organic material would be higher to account for additional cleaning and grinding.

However, Bertolotti’s annual rate adjustment application included $157,890 for green waste cleaning.

Therefore, Bertolotti’s annual rate adjustment application included costs that would double-compensate them for organics pre-processing services. Because the rates were set based on an inflation increase, not the Hauler’s applications, Bertolotti was not double compensated for organics pre-processing. However, this indicates to HF&H that the current rate adjustment methodology allows for potential doublecompensation in areas where the Hauler is compensated separately from the Hauler Component of the rates.

Gilton: Gilton’s narrative confirmed that organic waste is delivered to the GRR facility where it is cleaned and ground to meet the City’s compost facility standards. Gilton’s breakdown of the per ton cost for transfer and disposal of solid waste included a breakdown of the cost to pre-process and transfer organic materials. HF&H confirmed with Gilton that the transfer rate for organic materials is inclusive of preprocessing and delivery of material to the City’s compost facility. The cost for pre-processing and transfer was $67.00 per ton from 7/1/21-9/30/21 and $71.00 from 10/1/21-6/30/22.

However, as mentioned above, the cost to pre-process organics is compensated through the additional per month fee and should not be included in each Hauler’s financial information. Therefore, Gilton’s annual rate adjustment application included costs that would double-compensate them for organics preprocessing services. If Gilton was the ‘lowest cost Hauler’, then the cost to pre-process organic material would be included twice (firstly in direct costs and secondly through the per month fee). Because the rates were set based on an inflation increase, the rates do not double-compensate Gilton for organics preprocessing. However, this indicates to HF&H that the current rate adjustment methodology allows for potential double-compensation in areas where the Hauler is compensated separately from the Hauler Component of the rates.

For the upcoming annual rate adjustment application, the costs to pre-process organic materials will be included in both of the Haulers’ financial information and the per month fee should be removed to avoid double-compensation regardless of which Hauler is the ‘lower cost Hauler’. #8..
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City Compost Facility Rate
Per discussions with the City, the City informed HF&H that the City’s compost facility reviews incoming organic material for compliance with the 1% contamination limit through a visual inspection. However, this inspection has been insufficient to identify incoming tonnage that is above the contamination level.

As such, the compost facility has been disposing of more material as garbage than anticipated and is incurring more costs to do so. The City’s compost facility has two per ton rates: an in-city and out-of-city rate. The facility does not have a separate rate for contaminated material to cover the additional costs.

Therefore, the current rates at the facility do not cover its costs.

Hauler Tonnage Review
The City discussed with HF&H its lack of confidence in the tonnage reports submitted by the Haulers to the City. The City also informed HF&H that the Recycling and Disposal Reporting System tonnage for the City of Modesto does not match the information provided to the City. HF&H performed a recalculation of the tonnage reports for Bertolotti and Gilton by material stream. The recalculation found that not only did the annual tonnage disagree with the annual tonnage reported in the operating statistics, but it also did not agree to subtotals within the individual reports. HF&H compared the tonnage reports to the tonnage reported in the operating statistics provided to HF&H and inquired about discrepancies.

HF&H inquired with both Bertolotti and Gilton regarding the tonnage discrepancies and received the following response: The tonnage reports were created by and provided to each Hauler to fill out. The intent of the forms was submission to Cal Recycle but has since changed due to SB 1383. Gilton noticed that some of the formulas on the tabs differed from the summary page but did not modify the form. Both Bertolotti and Gilton mentioned that self-haul and schools were not included in the operating statistics tonnage reported as they are not part of the franchise. In summary, the operating tonnage submitted to HF&H should differ from the tonnage reports and Gilton recommends the tonnage per the operating statistics should be used for our review purposes.

Hauler Detailed General Ledger Review
HF&H requested expenditure descriptions from Gilton and Bertolotti for the line items in their annual rate adjustment application. A copy of these descriptions is provided at Attachments C-1 and C-2. These descriptions allowed HF&H to remap the Haulers’ annual rate adjustment applications to compare similar types of expenditures to each other as Gilton and Bertolotti group some categories of expenditures differently. Then, HF&H requested detailed general ledgers from the Haulers for expenditure categories that were of interest to the City or were significantly higher than the other Hauler.

Bertolotti: HF&H reviewed the detailed general ledgers for the following categories: Advertising, Bank Charges, and Rent. Detailed review of these general ledgers confirmed that all expenses in these categories were business-related expenditures that were reasonable to incur in operating the business and did not appear to be related to specifically non-Modesto jurisdictions.

Gilton: HF&H reviewed the detailed general ledgers for the following categories: Bank Charges, Computer, Depreciation, Rent, and Telephone. Detailed review of these general ledger confirmed that all expenses #8..
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in these categories were business related expenditures that were reasonable to incur in operating a business and did not appear to be related to specifically non-Modesto jurisdictions.

At the City’s request, HF&H performed a deeper review of the Business Travel expenses incurred by Gilton.

HF&H reviewed the general ledger of Business Travel and noted that 62% of expenses were for travel to attend insurance related meetings, 20% of expenses were for business lunches with employees, vendors, and other business associates, and 18% of expenses were for business meals and travel for purposes of conventions, vendor negotiations, and equipment surveying.

Gilton also provided HF&H with additional background on their Business Travel: The Operations Manager’s duties include equipment/vehicle evaluations and purchases, safety coordinator, employment practices, and insurance insight. The Operations Manager also sits on the Board of Directors for Gilton’s Captive Insurance policies, which includes worker compensation, vehicle, and liability insurances. The Operations Manager attends safety meetings twice a year to ensure Gilton is in compliance and stays on top of industry changes. The Operations Manager and Richard Gilton attend board meetings for Captive Insurance twice a year. As part of the Board meetings there are educational classes regarding loss mitigation and other insurance related subjects.

After HF&H reviewed the general ledger and Gilton’s narrative, HF&H believes these types of business travel expenses appear reasonable to incur in operating a business.

FINDINGS
• Gilton’s general and administrative allocation attributed an additional ~$96,000 in indirect expenses to the City of Modesto based on an incorrect inclusion of commercial commodity revenue that is not part of the franchise. HF&H estimates the impact of this overallocation of expenses to be ~$0.73 per commercial cubic yard. Because the current rates were set based on an inflation increase and not on this financial information, there is no impact to the current rates. A review of prior period allocations would be required to ascertain whether the incorrect allocation was used in previous years.
• Bertolotti’s total costs per route are higher than the reasonable range from the benchmarks and the driving factor may be additional labor expenses for overtime. Gilton’s labor costs are higher than the reasonable range due to inclusion of bulky drivers, customer service reps, and other personnel within the driver labor category instead of the overhead category. The overall per route costs, including fuel, are still slightly higher than the reasonable range. • Bertolotti’s and Gilton’s annual rate adjustment application included costs that would doublecompensate them for organics pre-processing services (firstly in direct costs and secondly through the per month fee). However, because the current rates were set based on an inflation increase, the current rates do not double-compensate Bertolotti or Gilton for organics preprocessing. #8..
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HF&H RECOMMENDATIONS
Based on the above analysis, HF&H has summarized our recommendations for next steps below:

1. Third Party Review of Gilton Allocation: Because Gilton’s software for allocation of costs to the City is integrated with their accounting software, HF&H recommends that the software be reviewed periodically by a third party for accuracy and reasonableness. The cost for this review may be at the City’s or the Hauler’s expense. Additionally, HF&H recommends that the City provide direction to Gilton on appropriate allocators for each overhead cost category, such as customer count or overhead labor hours by jurisdiction.

2. City’s Compost Facility Per-Ton Rate: Based on discussions with the City regarding its compost facility, HF&H recommends the City consider creating a separate rate for contaminated organic material. This rate should cover the additional costs to further pre-process and dispose of contaminated material in the organics tonnage. Additionally, HF&H recommends the City and the Haulers meet and confer to develop a load inspection program which will identify contaminated loads and a surcharge for loads determined to be contaminated.

3. Negotiate an Amendment to the Current Franchise Agreements: Based on discussions with the City regarding past experiences under the current franchise agreements, operational and informational challenges with the Hauler, and the insufficient franchise agreement language to provide the City the guardrails and direction it desires, HF&H recommends negotiating an amendment to the current franchise agreement that addresses these concerns. HF&H also recommends the haulers resubmit official cost and operations forms for the amendment to set a baseline to which future operations can be compared for reasonableness.

Initially, HF&H recommends the City and Haulers and discuss how the current franchise agreement is functioning appropriately, and how it can be improved. This process could be navigated through use of a third party, like HF&H, to facilitate a pointed discussion on key points of the franchise agreement and document key issues and alternatives.

Modify Annual Rate Adjustment Methodology: Because the current annual rate adjustment process of using the ‘lowest cost Hauler’ does not provide any guardrails to protect the City from high inflation factors, operational inefficiencies, disposal costs at non-preferred locations, doublecompensation, and other operational issues that impact costs, HF&H recommends modifying the current annual rate adjustment process through the amendment to account for these possibilities. Some possibilities could include linking labor cost increases to local collective bargaining agreements or inflating expense categories based on regional and classification specific CPI indices. HF&H would be happy to discuss with the City the alternative rate setting methodologies used in other jurisdictions and discuss the pros and cons of those alternative methodologies.

Acceptable Disposal Location Designations: Because the current franchise agreement does not state which landfill the solid waste material should be delivered, the Haulers may choose where #8..
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to bring the material. This may increase the cost of delivery (additional fuel and labor time), and due to the current annual rate adjustment process, increased costs will directly flow to the rate payers. HF&H recommends designating the disposal facilities in the franchise agreements to ensures material flow is managed and predictable.

Additionally, HF&H recommends that the new rate adjustment methodology calculate the compensation for disposal and organics pre-processing and delivery based on a build-up of tons multiplied by the rate at the destination facility. The ‘clean material’ rate at the City’s compost facility should be used for organics because the Haulers are being compensated to pre-process material to the facility’s standards. If the City’s compost facility enacts a separate charge for contaminated loads, as recommended above, the Haulers would be responsible for covering the additional cost if the organic material does not meet contamination standards.

4. Transfer / Organics Pre-Processing Rate Benchmarking: Because Gilton Resource Recovery and Gilton Solid Waste are affiliated parties, HF&H recommends the City review the transfer/preprocessing rate to ensure it is within the range of acceptable market rates. Additionally, HF&H recommends negotiating with the Haulers to tie the annual increase in this rate to an index or some other annual metric.

5. Future Fee Component Removals: Because certain City fees are for services that the Hauler is currently performing, the costs to perform these services will be reflected in the Hauler’s future financial information. Therefore, these fees should be removed in the upcoming annual rate adjustment process to not double-compensate the Hauler. A list of these fees is included below for reference:
a. Weekly Organics Collection
b. SB 1383 Collection Fee (For collection and processing of recyclable materials) c. Organics Waste Pre-Processing

6. Monthly Tonnage Reports: Because the quarterly tonnage reports have mathematical inconsistencies and have changed their reporting intention, HF&H recommends the City either update and provide the Haulers with a revised reporting template, include a note on the template denoting the tonnages that would be excluded for the franchise, or have the Haulers revise the current template for consideration by the City.

7. Detailed General Ledger Review: HF&H’s review of selected general ledger accounts did not yield expenditures that were unallowable in nature. However, certain business-related decisions and practices that are at the discretion of the company (e.g., increasing driver wages to incentivize tenure, attending multiple instead of few industry conferences, purchasing additional IT software/security) will affect the City’s rate payers and the City has no influence on or ability to veto these expenses. A revision to the annual rate adjustment process that places a cap on general and administrative expenses, or limits specific categories of expenses, can provide the City with a #8..
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general enforcement mechanism while allowing the Haulers the opportunity to make these business decisions at their discretion.

CONCLUSION
HF&H reviewed the annual rate adjustment process, benchmarked the current programmatic costs and operating statistics, examined the current transfer, disposal, and pre-processing arrangements, and checked general and administrative expenses for reasonableness. HF&H recommends negotiating an amendment to the franchise agreement to modify the current rate adjustment methodology to align annual cost adjustments with indices or other third-party sources, inclusion of disposal and pre-processing guardrails to direct the flow of and quality of materials, and removal of future fee components to the next year’s rates to avoid double-compensation.
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ATTACHMENT A-1:

BERTOLOTTI BULKY PROGRAM STATISTICS
A B
Account Information
1 Customer Annual Collections 2,343 NONE
Labor Information
2 # of route/hourly personnel 2 NONE
3 # of spare personnel 0
4 # of salaried personnel 0
5 Total labor hours/year 2080
A B
# of routes per
6 ONE ROUTE 2 DAYS A WEEK Weekday 1 NONE
7 Saturday
8 Sunday
# of persons/route per
9 Weekday 2
10 Saturday
11 Sunday
# of route hours/day/route per
12 Weekday 20
13 Saturday
14 Sunday
# of route hours/year per
15 Weekday 2080 NONE
16 Saturday 0 0
17 Sunday 0 0
18 Total 2080 0
19 # of FTE routes 1 0
Vehicle Information
20 # of regular collection vehicles 2
21 # of spare collection vehicles
22 Total # of collection vehicles 2
Tonnage Information (annual)
23 Direct Haul
24 Transfer
25 Solid Waste Disposed 0 0
26 Recyclable materials
27 Organic materials
28 Total 0 0
29 Tonnage Disposed
30 Projected Processing Residue %

STATISTICAL & OPERATIONAL DATA
Modesto
Residential
Bulky
Commercial
Bulky
Residential
Bulky
Commercial
Bulky
#8..
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ATTACHMENT A-2:

BERTOLOTTI BULKY PROGRAM COSTS
Expenses
Wages 68,640 NONE
Benefits 18,139
OTHER P/R TAX, W/C INS, UNIFORMS 19,434
Total Labor Related Costs 106,213 -
Fuel 14,300 NONE
Vehicle Related Costs R&M 9,600
Depreciation 62,000
Other Direct Costs LIABILITY INS 2,450
Total Direct Costs 194,563 -
Allocated Costs - Labor, Vehicle & Other Costs
General & Administrative 12,000 NONE
Vehicle & Container Maintenance
12,000 -
Total Annual Cost of Operations 206,563 -
Pass Through Costs
Disposal 65,007 NONE
Transfer 14,402
Interest
Total Pass Through Costs 79,409
Total Contractor Cost before City Fees 285,972 -
Residential Bulky
Collection
Commercial
Bulky Collection
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ATTACHMENT B-1:

GILTON BULKY PROGRAM STATISTICS

A B
Account Information
1 Customer Annual Collections 14712
Labor Information
2 # of route/hourly personnel 3.2937
3 # of spare personnel
4 # of salaried personnel
5 Total labor hours/year 6851.01
A B
# of routes per
6 Weekday
7 Saturday
8 Sunday
# of persons/route per
9 Weekday
10 Saturday
11 Sunday
# of route hours/day/route per
12 Weekday 0
13 Saturday
14 Sunday
# of route hours/year per
15 Weekday 0 0
16 Saturday 0 0
17 Sunday 0 0
18 Total 0 0
19 # of FTE routes 0 0
Vehicle Information
20 # of regular collection vehicles 1.96
21 # of spare collection vehicles
22 Total # of collection vehicles 1.96
Tonnage Information (annual)
23 Direct Haul
24 Transfer 2408.65
25 Solid Waste Disposed 2408.65 0
26 Recyclable materials
27 Organic materials
28 Total 2408.65 0
29 Tonnage Disposed 2408.65
30 Projected Processing Residue %

STATISTICAL & OPERATIONAL DATA
Modesto
Residential
Bulky
Commercial
Bulky
Residential
Bulky
Commercial
Bulky
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ATTACHMENT B-2:

BILTON BULKY PROGRAM COSTS
Expenses
Wages 218,446
Benefits 100,315
Other (Please List) Laundry 1,108
Total Labor Related Costs 319,869 -
Fuel 71,682
Vehicle Related Costs 50,016
Depreciation 53,240
Other Direct Costs 7,736
Total Direct Costs 502,543 -
Allocated Costs - Labor, Vehicle & Other Costs
General & Administrative -
Vehicle & Container Maintenance 99,903
99,903 -
Total Annual Cost of Operations 602,446 -
Pass Through Costs
Disposal 124,106
Transfer 62,931
Interest
Total Pass Through Costs 187,037 -
Total Contractor Cost before City Fees 789,483 -
Residential Bulky
Collection
Commercial
Bulky Collection
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ATTACHMENT C-1:

BERTOLOTTI EXPENSE LINE ITEM DESCRIPTIONS
Expense Line Item
(Modesto Annual Rate Application
Expense Line Item
(Per Financial Statements) Expense Line Item Description Direct Costs:

Wages: Supervisor Wages, Salaries and Wages Salaries and wages for Bertolotti Modesto (BMDI) drivers and mechanics Other Payroll Expenses:

Comp Insurance Workmen's Comp. Workers comp insurance costs for drivers and mechanics Group Insurance Medical / Group Ins. Medical insurance cost for BMDI drivers and mechanics Payroll Taxes Payroll Taxes Payroll taxes for BMDI drivers and mechanics Profit Sharing Profit Sharing Profit sharing for 401K BMDI drivers and mechanics Truck Expenses:

Depreciation Depreciation Depreciation for BMDI fixed assets Fuel Fuel, Oil, & Lube Fuel costs for BMDI trucks
Licenses Licenses / DMV City business licenses and DMV costs for BMDI Repairs Repairs & Maint. All R&M costs (except for fuel and tires) for BMDI trucks/equipment Tires Tires Tires costs for BMDI trucks
Vehicle/Liab Insurance Vehicle Insurance Liability/Physical damage coverage for BMDI vehicles Other Operating Expenses:

Bulky Item Disposal Fee Bulky Item Disposal Fee Disposal fee for Bulky items Green Waste Cleaning Green Waste Cleaning Cleaning costs for sorting and cleaning of organics Green Waste Hauling Green Waste Hauling Hauling costs for organics Green Waste Tip Fee Green Waste Tip Fee Tip fee for organics Laundry Laundry & Uniforms Uniform costs for BMDI employees Transfer Station fee Transfer Fees Hauling fees charged by Bertolotti Transfer Station G&A Expenses:

Accounting Accounting Services Costs paid to outside CPA for audit, financials and tax return prep Advertising Advertising Earth Day 2023 booth and supplies Advertising paid to City Advertising Paid to City Modesto billed advertising fee Bad Debts Bad Debts Write-offs of uncollectible receivables Bank Charges Bank Charges Bank servicing and credit card processing fees City Billing Fees City Billing Fees Modesto billing fees City Pollution Insurance City Pollution Insurance Bertolotti's portion of Modesto's pollution policy Computer Exp Computer / Data Process. Desktop support from outside IT consultant and small computer items Depreciation & Amort. Depreciation Depreciation of fixed assets Employee Benefits (Medical/Group InMedical/Group Ins. Medical insurance for BMDI office employees Indirect Liability insurance Indirect Liability Insurance General liability coverage Insurance (Workmen's Comp Ins) Workmen's Comp. Ins. Workers comp insurance for BMDI office employees Office Supplies Office Supplies Small Office supplies for BMDI (paper, pens, etc) Other Taxes Other Taxes and Licenses Misc taxes and licenses for BMDI (annual SOS filing, business license) Outside Services/Security Outside Services Outside temps Payroll Taxes Payroll Taxes Payroll taxes for BMDI office employees Postage Postage General postage and freight
Professional Fees/Services Professional Services
Legal costs (corporate minutes, employment liability assessment, defense costs)
Profit Sharing (Def Comp) Profit Sharing Profit sharing for office employees Property Taxes Property Taxes Real and personal property taxes Rent Rent Office and equipment rent
Salaries Salaries & Wages Salaries and wages for BMDI office employees Security Security 3 rotating security guards
Telephone Telephone VOIP Costs, Cell Phones, Radios, Fiber Internet Travel & Enter Meals & Entertainment Travel, meals, and entertainment (conventions, meals for office) Utilities Utilities BMDI utilities (TID, PGE)
Total G&A Exp:
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ATTACHMENT C-2:

GILTON EXPENSE LINE ITEM DESCRIPTION
Expense Line Item
(Modesto Annual Rate Application
Expense Line Item
(Per Financial Statements) Expense Line Item Description Direct Costs:

Wages: Wages

GROSS PAY FOR NON-ADMINISTRATIVE AND NON-MANAGEMENT INCLUDING REGULAR, OVERTIME,

VACATION, SICK, PTO AND HOLIDAY PAY (EXCLUDES SHOP)
Other Payroll Expenses:

Comp Insurance Compensation Insurance

WORKERS COMPENSATION INSURANCE PAID/ACCRUED DURING THE FISCAL YEAR FOR NON-ADMIN AND

NON-MANAGEMENT STAFF
Group Insurance Group Insurance

MEDICAL, DENTAL AND VISION PAYMENTS MADE TO INSURANCE PROVIDERS AS WELL AS SELF-INSURED

PLANS ON BEHALF OF NON-ADMIN, NON-MANAGEMENT STAFF
Payroll Taxes Payroll Taxes

EMPLOYERS SHARE OF SOCIAL SECURITY, MEDICARE, FEDERAL UNEMPLOYMENT INSURANCE, CA STATE

UNEMPLOYMENT INSURANCE AND EMPLOYER TRAINING TAX
Profit Sharing Profit Sharing EMPLOYER MATCH OF SECTION 401 (k) PAYMENTS FOR EMPLOYEE RETIREMENT PLAN Truck Expenses:

Depreciation Depreciation
ANNUAL STRAIGHT-LINE COST OF HAULER'S COLLECTION VEHICLES AND TRAILERS, E.G. AUTOMATED, FRONT LOADER, ROLL-OFF, BULKY ETC.

Fuel Fuel COST OF GAS AND DIESEL EXPENSE RELATED TO HAULER COLLECTION VEHICLES Licenses Licenses

COST OF COLLECTION VEHICLE RELATED FEDERAL AND STATE TAXES, LICENSING, PERMITTING AND

REGISTRATION FOR BOTH INITIAL PURCHASE AND RENEWALS
Repairs Repairs COLLECTION VEHICLE RELATED REPAIRS COSTS INCLUDING OIL, GREASE AND FLUIDS (PARTS AND LABOR) Tires Tires PURCHASE, INSTALLATION AND/OR REPAIR OF HAULER COLLECTION VEHICLE TIRES Vehicle/Liab Insurance Vehicle // Liability Insurance COST TO INSURE HAULER COLLECTION VEHICLES INCLUDING PROPERTY AND VEHICLE RELATED LIABILITY Other Equipment Expenses:

Depreciation Depreciation

DEPRECIATION ON CONTAINERS, LEASEHOLD IMPROVEMENTS AND OFFICE FURNITURE, FIXTURES AND

EQUIPMENT
Other Operating Expenses:

Laundry Laundry LAUNDERED UNIFORMS, MATS, TOWELS
Supplies Supplies CLEANING, JANITORIAL, DRIVER SUPPLIES, AND OTHER MISCELLANEOUS SUPPLIES Transfer Station fee Transfer Station Fee TIPPING FEE AND PROCESSING FEE PAID TO TRANSFER STATION Indirect Costs:

Officer Salaries
Shop Expense Shop Expense
ALL NON-SPECIFIC SHOP OVERHEAD (E.G. WAGES, REPAIRS, FUEL, WC, LAUNDRY, INSURANCE, SUPPLIES, ETC. NOT DIRECTLY ALLOCATED)
G&A Expenses:

Accounting Accounting COST PAID TO EXTERNAL AUDITORS, ACCOUNTANTS AND CONSULTANTS Advertising Advertising GENERAL PROMOTIONAL ITEMS
Bad Debts Bad Debts UNPAID AND UNCOLLECTABLE CUSTOMER BILLS REMOVED FROM ACCOUNTS RECEIVABLE Bank Charges Bank Charges BANK SERVICE CHARGES AND CREDIT CARD AND ELECTRONIC PAYMENT MERCHANT FEES Cash O/S Cash Over / Short MISC. CASH/OVER SHORT FROM CASH DRAWER City Billing Fees Billing Expenses

COST PAID TO THE CITY OF MODESTO FOR BILLING/COLLECTIONS (CITY WITHHOLDS THIS FROM AMOUNT

PAID TO HAULER)
Community Education/Support Public Education Costs INVOICES FROM THE CITY OF MODESTO FOR PUBLIC EDUCATION Computer Exp Computer Expenses

SERVER HARDWARE AND SOFTWARE LICENSING AND MAINTENANCE, REPORT DESIGN, DATA STORAGE,

COMPUTER AND NETWORK RELATED HARDWARE AND SOFTWARE
Contributions Contributions INDUSTRY RELATED NOT-FOR -PROFIT CONTRIBUTIONS Depreciation & Amort. Depreciation and Amortization ANNUAL STRAIGHT-LINE COST OF SUPPORT VEHICLES AND AMORTIZATION OF LOAN FEES Employee Safety Exp Employee Safety Expenses LITERATURE, TRAINING, SAFETY EVENTS AND INCENTIVES Insurance (Workmen's Comp Ins) Insurance HEALTH, DENTAL, VISION AND LIFE INSURANCE, WORKERS COMPENSATION Office Supplies Office Supplies
COPY PAPER, STAPLES, PAPER CLIPS, PENS, CALCULATOR TAPE, OTHER SMALL OFFICE ITEMS, 10-KEY CALCULATORS ETC.)
Other Taxes Other Taxes EMISSIONS COMPLIANCE, PCORI TAX, CITY OF MODESTO ANNUAL BUSINESS LICENSE Outside Services/Security Outside Services FIRE AND SECURITY ALARM SERVICES, PEST CONTROL AND, VEHICLE FUEL SERVICING FEES Payroll Taxes Payroll Taxes

EMPLOYERS SHARE OF SOCIAL SECURITY, MEDICARE, FEDERAL UNEMPLOYMENT INSURANCE, CA STATE

UNEMPLOYMENT INSURANCE AND EMPLOYER TRAINING TAX
Penalties Penalties LATE FEES AND OTHER PENALTIES
Permits/Licenses Permits STATE OF CALIFORNIA MOTOR CARRIER PERMIT FEE Postage Postage COST OF POSTAGE, POSTAGE EQUIPMENT LEASE, MAILING SERVICE AND POSTAGE SUPPLIES Professional Fees/Services Professional Fees LEGAL FEES, DIRECT PAYMENTS TO MEDICAL FACILITIES, 3RD PARTY ADMIN FEES, BROKER FEES Profit Sharing (Def Comp) Profit Sharing EMPLOYER MATCH OF SECTION 401 (k) PAYMENTS FOR EMPLOYEE RETIREMENT PLAN (ADMIN/MGMT) Property Taxes Property Taxes
STANISLAUS COUNTY UNSECURED PROPERTY TAX FOR OPERATING EQUIPMENT (E.G. CONTAINERS) USED

BY THE CITY OF MODESTO
Rent Rent OFFICE LEASE AND/OR TEMPORARY EQUIPMENT RENTALS Repairs (Repair & Maintenance) Repairs REPAIR SERVICES INCLUDING PARTS AND LABOR RELATED TO THE BUILDINGS AND GROUNDS Salaries Salaries

GROSS PAY FOR ADMINISTRATIVE SUPPORT, CSR, IT AND MANAGEMENT INCLUDING SALARY, VACATION,

SICK, PTO AND HOLIDAY PAY
Subscriptions (& Dues) Subscriptions INDUSTRY RELATED MEMBERSHIPS DUES AND FEES Telephone Telephone

CELL PHONE, TABLETS GPS SERVICES, DRIVER/FLEET MANAGEMENT, ANALOG LAND LINES, DEDICATED

FIBER/INTERNET, VOIP PHONE SYSTEM, FIREWALL
Travel & Enter Travel & Entertainment BUSINESS RELATED TRAVEL AND ACCOMPANYING EXPENSES (DOES NOT CONTAIN ENTERTAINMENT) Utilities Utilities WATER, SEWER, GARBAGE, NATURAL GAS, ELECTRICITY FOR OFFICES AND SHOP Vehicle Exp Vehicle Expenses

FUEL, REPAIRS AND MAINTENANCE, TIRES, LICENSING/REGISTRATION AND GENERAL UPKEEP OF SUPPORT

VEHICLES
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CITY OF MODESTO

COMMITTEE AGENDA REPORT
DATE OF MEETING:

March 18, 2024
Date: March 10, 2024
TO: Finance Committee
Nick Bavaro, Chair
Rosa Escutia-Braaton, Vice-Chair
David Wright, Member
THROUGH: Joseph P. Lopez, City Manager
FROM: Steve Christensen, Budget Manager
SUBJECT: Fiscal Year 2023-24 General Fund Mid-Year Update Report CONTACT: Steve Christensen, Budget Manager, [email protected] 209-577-5390
DESCRIPTION:

Consider the informational Fiscal Year 2023-24 General Fund Mid-Year Update Report and forwarding the report and recommended adjustments to the major General Fund revenues and expenditures to Council for acceptance and approval. (Funding Source: General Fund).

STRATEGIC PLAN ELEMENT:

This item supports the City of Modesto 2020-2025 Strategic Plan focus on Governance and Service Delivery under Goal H: Achieve Financial Sustainability.

BACKGROUND:

Periodically, the Budget Division presents updates to the Finance Committee and Council on the status of the General Fund, including recommended adjustments to the Annual Operating, Capital Improvement and Multi-year Project budgets. The purpose of the update is to summarize financial results and to present any recommended adjustments to the Operating Revenue and Expense budgets as needed. In addition, the update will highlight any potential issues, concerns, or items of interest.

DISCUSSION:

The attached Fiscal Year 2023-24 Mid-Year General Fund Update report focuses on the performances of the City’s General Fund major revenue sources, as well as the various expenditures across the operating departments. The revenue data gathered through February 29, 2024 begins to show important trends in the revenue and expenditure data which has provided important insight into the projections that are described within the report pertaining to the General Fund’s fiscal year-end.
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Finance Committee, March 18, 2024
Fiscal Year 2023-24 General Fund Mid-Year Update Report

To date, the General Fund has receipted 56% of the budgeted revenues through February 29, 2024. In terms of total revenues received, this is not uncommon at this point in the fiscal year, because some revenues tend to be delayed in terms of when they are receipted. Sales Tax also falls into this category as it is receipted two months in arrears. This means that the revenue received for the month of February will reflect actual sales tax receipts for the month of December 2023. In terms of the overall percentages shown in the attached report, this lag time contributes to some of the delay in revenues being receipted.

When compared to the total amount expended as a percentage, overall expenditures show that the City departments are slightly behind in their expenditure budgets. Additionally, the General Fund has expended 63% of the total expense budget. This is slightly lower than the expected amount of 67% for this point in the fiscal year. However, there are contributing factors associated with the 4% difference as indicated. The primary reason for the variance is caused by vacant positions resulting in salary savings across several General Fund departments:

Community Economic Development Department, Police Department, and Parks, Recreation and Neighborhoods Department.

FISCAL IMPACT:

This item contains multiple recommendations from staff to increase major General Fund revenue categories to correspond with the estimated projections for the fiscal year-end. The recommended revenue increases/decreases are as follows:

Account - Description Current Budget
Increase/
(Decrease) Revised Amount Category
41101 - Property Taxes - CY Secured Taxes $ 19,680,525 $ 349,576 $ 20,030,101 Property Tax - Property 41111 - Property Taxes - CY Unsecured $ 944,819 $ 114,982 $ 1,059,801 Property Tax - Property 42157 - Intergov - State - VLF Swap Adjustment $ 21,637,453 $ 445,661 $ 22,083,114 Property Tax - VLF Swap 41201 - Sales and Use Taxes $ 41,706,191 $ (800,000) $ 40,906,191 Sales Tax 42121 - Intergov - State - Motor Vehicle License Fee $ 165,000 $ 57,653 $ 222,653 Motor Vehicle Fees Grand Totals $ 84,133,988 $ 167,872 $ 84,301,860 The total recommended increases/decreases across the major General Fund revenues totals $167,872 for Fiscal Year 2023-24 and are explained in more detail in the Fiscal Year 2023-24 Mid-Year General Fund Update report.

No increases/decreases are being recommended for General Fund expenditure budgets at this time. However, staff will continue to monitor the General Fund expenditure budget and will return any changes of note to Council via the monthly budget adjustment process.

RECOMMENDED COMMITTEE ACTION:

Staff Recommendation:

Motion recommending the informational Fiscal Year 2023-24 General Fund Mid-Year Update Report and forwarding the report and recommended adjustments to the major General Fund revenues and expenditures to Council for acceptance and approval.

Approved by:

Joseph P. Lopez, City Manager
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Finance Committee, March 18, 2024
Fiscal Year 2023-24 General Fund Mid-Year Update Report

Attachments:

1. Fiscal Year 2023-24 General Fund Mid-Year Update
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FISCAL YEAR 2023-24

MID-YEAR GENERAL FUND
UPDATE REPORT:

The Mid-Year General Fund Update Report is created by the Budget Division through the direction of the City Manager to provide a general update concerning the health of the City’s General Fund as well as any adjustments to its revenues and/or expenditures.

Information contained within this report seeks to provide data on the performance of the General Fund as the revenues are collected, and the expenditures continue through February of the current fiscal year.

Please note that the expenditures and revenues reported herein are through February 29, 2024 and may not reflect final figures for the month.

Created by the
Budget Division
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General Fund Revenues
(Overview)
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eneral Fund revenues are classified into three categories: tax revenues, fee revenues, and other departmental revenues. Through February 29, 2024, the total General Fund revenues receipted are $103.5 million or approximately 56% of the total budgeted revenues for Fiscal Year 2023-24. This is representative of the normal rate of receipts at this time of the year for the General Fund. For comparison, at the same time last fiscal year, the City had received 55% of the total budgeted revenues (approximately $95.5 million). The main reason for the lag in terms of the percent received at this point in the fiscal year is due to the two months that the receipt of sales tax runs behind in terms of receipt of revenues, as well as the timing of some of the large payments related to Franchise Fees and Utility Users Tax as the year progresses.

The revenues received to date are spread across all three major revenue types and are broken down further in the chart below: Category Current Budget Actuals (as of Feb 29, 2024) Amount Outstanding % Received to Date Tax Revenues: Property Tax - Property $ 21,948,430 $ 13,050,445 $ 8,897,985 59% Property Tax - VLF Swap $ 21,637,453 $ 11,041,557 $ 10,595,896 51% Sales Tax $ 41,706,191 $ 19,184,917 $ 22,521,274 46%
Utility Users Tax $ 21,546,214 $ 11,595,100 $ 9,951,114 54% Transient Occupancy Tax $ 3,680,000 $ 1,869,131 $ 1,810,869 51% Business License/Mill Tax $ 16,594,603 $ 9,157,438 $ 7,437,165 55% Cannabis Tax $ 4,000,000 $ 2,003,202 $ 1,996,798 50%
Total Tax Revenues $ 131,112,891 $ 67,901,790 $ 63,211,101 52% Fee Revenues: Franchise Fees $ 5,582,755 $ 1,668,709 $ 3,914,046 30% Motor Vehicle Fees $ 390,000 $ 411,653 $ (21,653) 106% Construction Revenues $ 2,533,654 $ 1,730,434 $ 803,220 68% Total Fee Revenues $ 8,506,409 $ 3,810,796 $ 4,695,613 45% Other Revenues: Departmental Revenues $ 39,621,163 $ 31,836,087 $ 7,785,076 80% American Rescue Plan Act Funds $ - $ - $ - Measure H (General Fund Budget Structural Deficit) $ 6,178,633 $ - $ 6,178,633 0% Transfers In $ 628,640 $ - $ 628,640 0%
Total Other Revenues $ 46,428,436 $ 31,836,087 $ 14,592,349 69% Total Revenues $ 186,047,736 $ 103,548,673 $ 82,499,063 56% *Please note that Departmental Revenues category includes an amount of $5.6M in revenue for the Oakdale Fire Contract, $7.4M in revenue for the Ceres Fire Contract, $396K in revenue for Stanislaus Consolidated Fire contract, $375K in revenue for Turlock Fire contract, and $1.8M in revenue for Salida Fire contract which are all used to pay for offsetting expenditures.

Tax Revenues
Tax revenues represent 70.5% of the total General Fund operating revenue budget at $131.1 million of the total $186 million revenue operating budget for Fiscal Year 2023-24. As of February 29, 2024, $67.9 million of the budgeted $131.1 million has been received to date. This represents approximately 52% of the tax revenue budget being received. This is on target for this point-in-time during the year. The reason the percentage is slightly behind is due to the lag in the receipt of sales tax revenues of two months. What this means is that the sales tax received for the month of February is really for receipts for the month of December, which is two months prior.

Fee Revenues
Fee Revenues represent 4.6% of the total General Fund operating revenue budget at $8.5 million of the total $186 million revenue operating budget for Fiscal Year 2023-24. Many of the fee revenues G
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are generated from Franchise Fees which are collected as “rent” paid for the use of public right of way. These are negotiated costs to allow utility companies (telecommunications, natural gas, garbage, etc.) to access structures like transmission towers, sewage systems, and roads. The City collects approximately $5.58 million in franchise fees annually. Through February 29, 2024, $1.7 million has been collected in this revenue category (30% of the budgeted amount). This amount is behind what is expected for this time of the year only due to a timing of a payment in the Garbage Franchise Fee category. The payment is expected to come in the month of March/April and will get this revenue category back on track with estimated budget amounts.

Construction Revenues
Construction revenues are a sub-category of Fee Revenues and include all revenues collected in the Building Safety Division and the Planning Division in the Community and Economic Development Department (CEDD). These revenues represent approximately 1.4% of the total budgeted General Fund operating revenues for Fiscal Year 2023-24. They are budgeted at $2.5 million as of February 29, 2024.

Construction revenues received through February 29, 2024, are at approximately 68% of the budgeted amount. This is trending higher than the amounts collected in the previous fiscal year in terms of percentage collected (68% vs 60%) and total revenues ($1.73M vs $1.68M). This is positive news as strong construction revenues mean that there is continued activity in the building industry in the area. This is especially important as the City continues to look toward strengthening its economic development endeavors.

Other Revenues
Other Revenues represent 25% of the total General Fund operating revenue budget at $46.4 million of the total $186 million revenue operating budget for Fiscal Year 2023-24.

Other revenues include any revenue source that is received by departments and is not included in the tax or fee revenues categories as well as transfers into the General Fund from other funds.

These revenues are accounted for under the generating department and include a wide range of revenue sources such as direct charge revenue (all departments), fire inspection fees (Fire Department), league and facility rental fees (Parks, Recreation & Neighborhoods), and the McHenry Tax Sharing Agreement revenues (Non-Departmental).
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General Fund Revenues
(Analysis)
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Property Tax Revenues Analysis
As of February 29, 2024, the first payment has been received in one of the sub-categories that makes up the property tax revenues, Property Tax – Property. The first payment for the second sub-category, Property Tax – Vehicle License Fee (VLF) Swap has also been received. These two payments are significant indicators of how the property tax revenues for the entire fiscal year will finish for the year. With both payments receipted a clearer picture can start to be made for this major tax revenue category for Fiscal Year 2023-24.

Property Tax – Property
In Fiscal Year 2023-24, the first installment of property tax was received in January in the amount of $11.02 million. This first payment is receipted under current year secured property taxes and is the bulk of the property tax revenue that is received. Other revenues that fall under Property Tax – Property include, current year unsecured, delinquent, delinquent unsecured, supplemental roll, and Redevelopment Property Tax Trust Fund (RPTTF) allocation. These revenue accounts make up the total amounts that sum up to the total Property Tax – Property amount received by the City.

With the first payment received, estimates for fiscal year-end 2023-24 show that the amounts for this revenue category are on track to be somewhat higher than the adopted budget amounts. Yearend estimates show that a total of $22.4 million is expected to be received based off the $11.02 million first payment which is higher than the current budgeted amount for Property Tax – Property. Staff will recommend an overall increase to this revenue by approximately $464 thousand for Fiscal Year 2023-24 based upon estimates for remaining revenues to be receipted.

Staff is recommending an increase to this category of revenue in the amount of $464,558 for Fiscal Year 2023-24.

Property Tax – VLF Swap
Property Tax – VLF Swap is the second portion of the revenues that makes up the total Property Tax category for the City. This revenue source came into effect with the passing of the State of California Budget in 2004 by then Governor Schwarzenegger. The budget included a swap of city and county vehicle license fee revenues for an additional property tax share. These additional VLF backfill funds, which equate to a dollar-for-dollar like amount of property taxes, also increase annually in proportion to the growth in assessed valuation in the local jurisdictions.

The first Property Tax – VLF Swap payment for the City has been received in the amount of $11.04 million in the month of February. The amount received in the first payment, is usually around 50% of the total payment that will be received for the year. With the Property Tax – VLF Swap revenue coming in higher than anticipated with this first payment, staff recommends increasing this revenue by an amount of $445 thousand for the fiscal year.

Staff is recommending an increase to this category of revenue in the amount of $445,661 for Fiscal Year 2023-24.
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Property Tax Charts:

Annual Property Tax
Annual Property Tax – Property
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Annual Property Tax – VLF – Swap
The preceding property tax charts show the trends that have been occurring since fiscal year 2015.

There has been a steady growth in both the Property Tax and VLF swap categories of this revenue source. At this point, the growth is expected to continue as the housing market remains strong and valuation of homes continues to grow because of the increased prices of homes. This revenue source will continue to be monitored as there will be a point in time when the prices will begin to decline and the City will want to stay ahead of any revenue decreases as much as possible. #9..
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Sales Tax Revenues Analysis
As of February 29, 2024, Sales Tax revenues received to date are approximately $19.1 million. This represents 46% of the total Sales Tax budgeted for the fiscal year ($41.7 million). Sales Tax is received by the City on a monthly basis but is receipted with a two-month lag time, meaning that the receipts received in any particular month are for the actual sales tax receipts two months prior.

For example, sales tax revenues accounted for in the month of February are for actual sales tax receipts made in the month of December (two months prior). This continuous two-month lag time is something that is closely monitored by Budget Division staff as estimates are created for fiscal year-end.

In Fiscal Year 2023-24, there have been a few categories of Sales Tax that have been on the decline in the last few quarters for the City. These have been in the industries of general retail, food products, and construction. Certain sub-categories within the larger areas of industries have also seen decline in the third quarter of 2023 (covering the months of July through September). These areas included restaurants, miscellaneous retail, department stores, and building materials – wholesale.

Countywide Pool Sales Tax
The City continues to receive a significant portion of the County Pool related to the “origin sourcing” portion of sales tax. “Origin sourcing” is a sales tax practice under which sales tax for purchases of goods that are shipped to purchasers are generally sourced to the business location of the retailer where the sale originates.

Under current California Department of Tax and Fee Administration (CDTFA) regulations, a substantial portion of local use tax collections are allocated through a countywide pool to local jurisdictions, like Modesto, where the purchased property is put to its first functional use. Under the pool system, the tax is reported by the taxpayer to the countywide pool of use and then distributed to each jurisdiction in that county on a pro-rata share of taxable sales. If there is a situation where a county of use cannot be determined, then the allocation goes to the state pool for pro-rata distribution on a statewide basis.

The City of Modesto consistently receives anywhere between 32% to 38% of the allocation of the countywide pool described above. This share of sales tax can represent anywhere between $950 thousand to $1.8 million on a quarterly basis. These amounts contribute to the total sales tax figures that are shown in the annual figures reported by the City.

At this time current year-end projections are showing sales tax figures that are coming in lower than the prior fiscal year and lower than what was initially budgeted for the fiscal year when the budget was adopted. When the initial estimates for the current year were made, they were done with some optimism about some growth trends that were being seen in Fiscal Year 2022-23 with the analysis that they would continue into the current fiscal year. This has, so far, not been the case.

Inflation has seemed to impacted residents spending in ways that were unexpected due to the duration that inflation has continued. As inflation has continued through Fiscal Year 2023-24, the #9..
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impacts are being felt through somewhat diminished consumer and business spending in various categories. Categories that were growing in the prior fiscal year as inflation had yet to truly take hold, are now on the decline as belts begin to tighten on household incomes. Sales Tax will continue to be monitored through the year and as changes occur, staff will bring any updates back to City Council as needed.

Staff is recommending a decrease of $800,000 for this category for Fiscal Year 2023-24. #9..
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Sales Tax Charts
Annual Sales Tax Chart
Quarterly Sales Tax Chart
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Cannabis Tax Revenue Analysis
Cannabis Tax is beginning to be a normalized source of revenue and we are now beginning to see some annualized trends in the revenues each fiscal year. When the revenue began to be receipted back in the latter half of fiscal year 2018-19, it started slowly as there were not the full amount of Council approved dispensaries up and running at the time. Over the next six to eight months the dispensaries began to gain traction and permitted dispensaries became fully operational. Revenues began to increase steadily over the next fiscal year and a half and steadily rose to a consistent $400k+ per month in receipted revenues per month to the City. Since that time, cannabis revenues have dropped to an average of $285K per month in Fiscal Year 2023-24.

As of February 29, 2024, $2.0 million in Cannabis Tax revenue have been received for Fiscal Year 2023-24. This is approximately 50% of the budgeted amount of $4 million. Currently, staff is not recommending any changes in this revenue category. The average monthly revenues have increased from the prior fiscal year and have remained steady throughout Fiscal Year 2023-24. The Cannabis Tax revenues that have been receipted this year have not experienced the ups and downs that have been seen in the last two fiscal years and seem to be steadying. Staff will continue to monitor this revenue category and will evaluate the amount projected for Fiscal Year 2024-25.

Staff is recommending no change to this category of revenue for Fiscal Year 2023-24. #9..
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Cannabis Tax Revenue Charts
Monthly Cannabis Tax Revenues
Annual Cannabis Tax Revenues
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The preceding charts show the trends for Cannabis Tax revenues and the growth initially seen and then the declines that have been seen since annually. The chart also shows that through the end of Fiscal Year 2022-23 through the current month of Fiscal Year 2023-24, the revenue trends have steadied for Cannabis Tax. It is expected that Fiscal year 2024-25 will continue to see steady revenues but not much of an increase in terms of growth in this category as the market continues to reach saturation in terms of number of dispensaries and market demand.

Other Tax Revenues
Business License/Mill Tax is tracking at a slightly slower pace to the previous fiscal year. To date 55% of the total budgeted revenue of $16.59 million. With Business License/Mill Tax larger total payments are typically received in the months of February and January. January in Fiscal Year 2023-24 had larger amounts received than in the prior fiscal year ($2.7M compared to $2.3M) and overall, the revenue received is approximately $394K higher than the prior fiscal year. Staff will continue to monitor this revenue source closely as the final amounts are receipted during the remainder of the fiscal year.

Staff is recommending is not recommending any change in the Business License/Mill Tax category currently for Fiscal Year 2023-24.

Other Fee Revenues
Motor Vehicle Fees are currently being receipted at a higher amount than the current budget ($390K budget vs $411K receipted as of February 29, 2024). It is estimated that an additional $36,000 will be receipted for the remainder of the year based on prior year historical receipts and what is typically collected in the months of March through June. Accordingly, staff is recommending an increase in this category of revenue.

Staff is recommending an increase in the Motor Vehicle Fees category for Fiscal Year 2023-24 in the amount of $57,653.

Departmental Revenue Analysis
Departmental revenues are coming in higher than anticipated at this time, but it will be an area that we continue to monitor. The revenues received are inflated by one revenue source that is tracked in the non-Departmental area as the Fair Market Value. This amount changes monthly as the amount is distributed amongst the various funds in the City. As of February, this amount is inflating the revenues shown in the Departmental Revenue category by approximately $10 million.

There are no other major areas of concern currently, and we continue to see strong revenues in areas like the McHenry Tax Sharing agreement. If anything changes in this category, the Budget Division will bring an item through the monthly budget adjustment process and be sure to update Council on any changes in these categories.

Staff is recommending is not recommending any changes to this category currently. #9..
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Summary of Recommended Revenue Changes
Category Current Budget
Recommended Increase/
(Decrease) Revised Amount
Property Tax - Property $ 21,948,430 $ 464,558 $ 22,412,988 Property Tax - VLF Swap $ 21,637,453 $ 445,661 $ 22,083,114 Sales Tax $ 41,706,191 $ (800,000) $ 40,906,191
Motor Vehicle Fees $ 390,000 $ 57,653 $ 447,653
Grand Totals $ 85,682,074 $ 167,872 $ 85,849,946
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General Fund Expenditures
(Analysis)
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eneral Fund expenditures make up the total budgets from which departments pay for costs related to one of four expenditure categories. These categories include salary and benefit costs, internal service fund costs, discretionary costs, and transfers out to other funds. In the General Fund, there are 13 Operating Departments and one category for Transfers Out of the General Fund to other funds. The 13 Operating Departments make up a total General Fund operating expenditure budget of $191.7 million with the Transfers Out having a budget of $9.88 million. Including the variance rate of a credit of $7.5M, the total current General Fund operating expenditure budget in Fiscal Year 2023-24 is $194.1 million.

The table below shows the current budget and expenditures through February 29, 2024.

General Fund Department Expenditures
Department Current Budget Actuals (as of Feb 29, 2024) % of Budget Expended Police Department $ (85,706,476) $ (52,688,679) 61%
Fire Department $ (49,395,954) $ (34,139,812) 69%
Oakdale Fire Contract Expense $ (5,654,780) $ (3,940,841) 70% Ceres Fire Contract Expense $ (7,382,975) $ (5,125,366) 69% Stanislaus Consolidated Fire Contract Expense $ (389,819) $ (308,353) 79% Turlock Fire Contract Expense $ (300,754) $ (246,369) 82% Salida Fire Contract Expense $ (1,790,536) $ (1,250,165) 70% Parks, Recreation, and Neighborhoods $ (17,562,176) $ (10,022,734) 57% Community and Economic Development $ (5,712,735) $ (3,207,607) 56% Engineering Department $ (1,254,560) $ (693,442) 55%
City Council $ (529,831) $ (354,688) 67%
City Manager's Office $ (3,816,078) $ (2,309,330) 61%
Human Resources $ (1,916,205) $ (1,278,932) 67%
City Attorney's Office $ (1,946,616) $ (1,061,339) 55%
City Clerk's Office $ (950,241) $ (499,805) 53%
Office of the City Auditor $ (644,353) $ (157,834) 24%
Finance Department $ (6,291,973) $ (3,879,321) 62%
Non-Departmental $ (473,400) $ (80,380) 17%
Total Departmental Expenses $ (191,719,462) $ (121,244,995) 63% Transfers Out $ (9,880,825) $ (1,471,260) 15%
Variance Rate (5%) $ 7,490,471 $ - 0%
Total Department Expenses $ (194,109,816) $ (122,716,254) 63% At the point in time that the expenditure data was collected, one could expect an estimated expenditure rate of approximately 67% (8 months elapsed out of the fiscal year). The chart shows that the overall General Fund expenditures are below this rate at 63% expended. Like the overall rate of expenditure last fiscal year, we are seeing salary savings in some of the departments due to vacant positions which are resulting in some of the decreased level of expenditures now. The rate of expenditure of 63% would be much lower if it were just the salary savings that were factoring in, but there are also increases in other areas that are bringing up overall expenses such as the increased cost of goods, and the increased costs of contract services. These competing factors are growing the level of expenditures at the discretionary level just at a lower rate than that of the vacancy savings.

G
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Below is a table that shows the breakdown of the expenditures from each department by appropriation unit category. As reminder the breakdown of expenditure categories is as follows:
 Appr Unit A – Salaries and Benefits
 Appr Unit AA – Intrafund Labor
 Appr Unit B – Internal Service Fund Charges
 Appr Unit C – Discretionary Charges
 Appr Unit D – Transfers Out
Department Current Budget
Actuals (as of
February 29, 2024)
Amount
Available % Expended
City Attorney's Office
Salaries and Benefits (Appr Unit A) $ 679,436 $ 449,048 $ 230,388 66% ISF Chargers (Appr Unit B) $ 138,932 $ 91,532 $ 47,400 66% Discretionary Charges (Appr Unit C) $ 1,128,248 $ 520,758 $ 607,490 46% City Attorney's Office Total $ 1,946,616 $ 1,061,339 $ 885,278 55% City Clerk's Office
Salaries and Benefits (Appr Unit A) $ 502,626 $ 393,632 $ 108,994 78% ISF Chargers (Appr Unit B) $ 50,039 $ 33,128 $ 16,911 66% Discretionary Charges (Appr Unit C) $ 397,576 $ 73,045 $ 324,531 18% City Clerk's Office Total $ 950,241 $ 499,805 $ 450,436 53% City Council
Salaries and Benefits (Appr Unit A) $ 366,924 $ 241,500 $ 125,424 66% ISF Chargers (Appr Unit B) $ 106,744 $ 70,670 $ 36,074 66% Discretionary Charges (Appr Unit C) $ 56,163 $ 42,518 $ 13,645 76% City Council Total $ 529,831 $ 354,688 $ 175,143 67%
City Manager's Office
Salaries and Benefits (Appr Unit A) $ 2,972,484 $ 1,754,051 $ 1,218,433 59% Intrafund Labor (Appr Unit AA) $ - $ (509) $ 509 N/A
ISF Chargers (Appr Unit B) $ 215,704 $ 142,906 $ 72,798 66% Discretionary Charges (Appr Unit C) $ 627,890 $ 412,881 $ 215,009 66% City Manager's Office Total $ 3,816,078 $ 2,309,330 $ 1,506,748 61% Community & Economic Development
Salaries and Benefits (Appr Unit A) $ 4,558,572 $ 2,470,607 $ 2,087,965 54% Intrafund Labor (Appr Unit AA) $ (266,242) $ (121,693) $ (144,549) 46% ISF Chargers (Appr Unit B) $ 654,371 $ 433,933 $ 220,438 66% Discretionary Charges (Appr Unit C) $ 766,034 $ 424,759 $ 341,275 55% Community & Economic Development Total $ 5,712,735 $ 3,207,607 $ 2,505,128 56% Engineering Department
Salaries and Benefits (Appr Unit A) $ 957,158 $ 554,418 $ 402,740 58% Intrafund Labor (Appr Unit AA) $ (28,898) $ (1,381) $ (27,517) 5% ISF Chargers (Appr Unit B) $ 78,634 $ 52,382 $ 26,252 67% Discretionary Charges (Appr Unit C) $ 247,666 $ 88,023 $ 159,643 36% Engineering Department Total $ 1,254,560 $ 693,442 $ 561,118 55% Finance Department
Salaries and Benefits (Appr Unit A) $ 4,741,910 $ 2,912,292 $ 1,829,618 61% Intrafund Labor (Appr Unit AA) $ (52,810) $ (32,322) $ (20,488) 61% ISF Chargers (Appr Unit B) $ 521,889 $ 345,948 $ 175,941 66% Discretionary Charges (Appr Unit C) $ 1,080,984 $ 653,404 $ 427,580 60% Finance Department Total $ 6,291,973 $ 3,879,321 $ 2,412,652 62% Fire Department
Salaries and Benefits (Appr Unit A) $ 41,511,871 $ 29,903,059 $ 11,608,812 72% Intrafund Labor (Appr Unit AA) $ (4,560) $ - $ (4,560) 0% ISF Chargers (Appr Unit B) $ 1,824,460 $ 1,216,307 $ 608,153 67% Discretionary Charges (Appr Unit C) $ 6,064,183 $ 3,020,446 $ 3,043,738 50% Fire Department Total $ 49,395,954 $ 34,139,812 $ 15,256,143 69% #9..
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Fiscal Year 2023-24 General Fund Mid-Year Update
18 | P a g e
Fire Department - Ceres Salaries and Benefits (Appr Unit A) $ 6,778,397 $ 4,776,385 $ 2,002,012 70% ISF Chargers (Appr Unit B) $ 261,952 $ 174,635 $ 87,317 67% Discretionary Charges (Appr Unit C) $ 342,626 $ 174,347 $ 168,279 51% Fire Department - Ceres Total $ 7,382,975 $ 5,125,366 $ 2,257,608 69% Fire Department - Oakdale
Salaries and Benefits (Appr Unit A) $ 5,145,521 $ 3,626,134 $ 1,519,387 70% ISF Chargers (Appr Unit B) $ 123,116 $ 82,077 $ 41,039 67% Discretionary Charges (Appr Unit C) $ 386,143 $ 232,630 $ 153,513 60% Fire Department - Oakdale Total $ 5,654,780 $ 3,940,841 $ 1,713,939 70% Fire Department - Salida
Salaries and Benefits (Appr Unit A) $ 1,660,832 $ 1,207,618 $ 453,214 73% ISF Chargers (Appr Unit B) $ 50,958 $ 33,972 $ 16,986 67% Discretionary Charges (Appr Unit C) $ 78,746 $ 8,575 $ 70,171 11% Fire Department - Salida Total $ 1,790,536 $ 1,250,165 $ 540,371 70% Fire Department - Stanislaus Consolidated
Salaries and Benefits (Appr Unit A) $ 378,216 $ 279,914 $ 98,302 74% ISF Chargers (Appr Unit B) $ 11,603 $ 7,735 $ 3,868 67% Discretionary Charges (Appr Unit C) $ - $ 20,704 $ (20,704) N/A Fire Department - Stanislaus Consolidated Total $ 389,819 $ 308,353 $ 81,466 79% Fire Department - Turlock
Salaries and Benefits (Appr Unit A) $ 288,936 $ 216,316 $ 72,620 75% ISF Chargers (Appr Unit B) $ 11,818 $ 7,879 $ 3,939 67% Discretionary Charges (Appr Unit C) $ - $ 22,174 $ (22,174) N/A Fire Department - Turlock Total $ 300,754 $ 246,369 $ 54,385 82% Human Resources Salaries and Benefits (Appr Unit A) $ 1,800,337 $ 1,219,815 $ 580,522 68% Intrafund Labor (Appr Unit AA) $ (138,733) $ (92,489) $ (46,244) 67% ISF Chargers (Appr Unit B) $ 193,998 $ 128,363 $ 65,635 66% Discretionary Charges (Appr Unit C) $ 60,603 $ 23,242 $ 37,361 38% Human Resources Total $ 1,916,205 $ 1,278,932 $ 637,273 67% Non-Departmental
Discretionary Charges (Appr Unit C) $ 473,400 $ 80,380 $ 393,020 17% Non-Departmental Total $ 473,400 $ 80,380 $ 393,020 17% Office of the City Auditor Salaries and Benefits (Appr Unit A) $ 529,705 $ 63,662 $ 466,043 12% ISF Chargers (Appr Unit B) $ 34,353 $ 22,810 $ 11,543 66% Discretionary Charges (Appr Unit C) $ 80,295 $ 71,361 $ 8,934 89% Office of the City Auditor Total $ 644,353 $ 157,834 $ 486,519 24% Parks, Recreation & Neighborhoods Salaries and Benefits (Appr Unit A) $ 9,144,361 $ 4,846,779 $ 4,297,582 53% Intrafund Labor (Appr Unit AA) $ (502,875) $ (358,784) $ (144,091) 71% ISF Chargers (Appr Unit B) $ 1,598,297 $ 1,067,711 $ 530,586 67% Discretionary Charges (Appr Unit C) $ 7,322,393 $ 4,467,028 $ 2,855,366 61% Parks, Recreation & Neighborhoods Total $ 17,562,176 $ 10,022,734 $ 7,539,442 57% Police Department
Salaries and Benefits (Appr Unit A) $ 66,732,548 $ 41,766,828 $ 24,965,720 63% Intrafund Labor (Appr Unit AA) $ (10,805) $ (304,159) $ 293,354 2815% ISF Chargers (Appr Unit B) $ 5,772,208 $ 3,847,948 $ 1,924,260 67% Discretionary Charges (Appr Unit C) $ 13,212,525 $ 7,378,062 $ 5,834,463 56% Police Department Total $ 85,706,476 $ 52,688,679 $ 33,017,796 61% Transfers Out
Transfers Out $ 9,880,825 $ 1,471,260 $ 8,409,565 15%
Transfers Out Total $ 9,880,825 $ 1,471,260 $ 8,409,565 15% Variance Rate Variance Rate $ (7,490,471) $ - $ (7,490,471) 0% Variance Rate Total $ (7,490,471) $ - $ (7,490,471) 0%
Grand Total $ 194,109,816 $ 122,716,254 $ 71,393,561 63% #9..
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Fiscal Year 2023-24 General Fund Mid-Year Update
19 | P a g e
The main takeaway from the information above is the Salaries and Benefits expenditures for departments like Parks, Recreation and Neighborhoods, Police, and Community and Economic Development. These departments, along with a few others, are seeing salary savings due to vacancies in positions within the departments. These vacancy savings are contributing to the somewhat lower overall expenditure rate in totality that is seen in the General Fund as of February 29, 2024. While other discretionary expenditures costs are rising due to inflation for the City as well, these costs are not rising at the same rate as the amount of savings that is being experienced due to position vacancies at this time. This will continue to be monitored closely by staff as the fiscal year continues to ensure that budget remain with current appropriations.

One area that has the potential to impact the fiscal year-end are the subsidies that are provided through transfers out to the Centre Plaza and the Parking Fund. The Centre Plaza and Parking Fund continue to experience heavy losses in revenues. Due to this, the General Fund has provided subsidies to these funds in past fiscal years. Should the either fund fall into a negative fund balance any subsidy would need to be funded by the General Fund. This will be closely watched by staff as we continue through the current fiscal year.

These revenues and expenditures will continue to be monitored for each of these funds in the next few months for potential impacts on the General Fund and will be reported back to Council if necessary.

Expenditure Conclusions
Overall expenditures are trending slightly lower than would be expected at this time in the fiscal year. This is being driven mainly by salary and benefit savings due to vacant positions that have occurred in the current fiscal year. Discretionary spending will continue to be monitored as well as the possibility of increased subsidy needs from the Centre Plaza and Parking Funds.

Staff is recommending no change to department expenditure budgets for Fiscal Year 2023-24 at this time.
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CITY OF MODESTO

COMMITTEE AGENDA REPORT
DATE OF MEETING:

March 18, 2024
Date: February 13, 2024
TO: Finance Committee
Nick Bavaro, Chair
Rosa Escutia-Braaton, Vice-Chair
David Wright, Member
THROUGH: Joseph P. Lopez, City Manager
FROM: William Wong, Director of Utilities
SUBJECT: Consider Hot Patch Services Agreements
CONTACT: Jeremy Parnell, Acting Water Division Manager, [email protected], 209- 342-4599
DESCRIPTION:

Consider the Agreement for Hot Patch Services with Adams Underground III of Waterford, CA, and United Pavement Maintenance, Inc. of Hughson, CA, for a total combined amount not to exceed $20,570,000 over five years and forwarding to Council for approval. (Funding Source:

Various Funds)
STRATEGIC PLAN ELEMENT:

The recommended action supports the City’s 2020-2025 Strategic plan Initiatives: Provide safe, efficient, and reliable infrastructure through proactive community investment, maintenance, and sustainability efforts.

BACKGROUND:

City Departments request contractual assistance to perform hot patch work throughout Modesto, as well as outlying areas in the City’s regional water systems, including Salida, Del Rio, Grayson, Empire, and sections within Ceres and Turlock. Hot patch work consists of permanent asphalt repairs when street cuts are made to complete repairs and improvements to City infrastructure.

Due to the unpredictable nature of the work, it is not always possible for staff to know what their immediate need will be. Departments assume the highest-need scenarios when estimating annual amounts for hot patch work. Divisions utilizing the current Agreement include Water, Wastewater, and Storm Drain from the Utilities Department, the Streets Division from the Public Works Department, and Park Operations from the Parks, Recreation, and Neighborhoods Department.

On May 22, 2018, by Resolution 2018-188, Council approved the award of bids for furnishing of hot patch work for the Utilities Department’s Water and Wastewater Divisions, to two firms:

Garrett Thompson Construction, Inc. of Modesto, CA (“Garrett Thompson”), for an annual cost #10..
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Finance Committee, March 18, 2024
Consider Hot Patch Services Agreements

not to exceed $4,106,500; and United Pavement Maintenance of Hughson, CA (“United Pavement”), for an annual cost not to exceed $200,000.

Both were awarded two-year agreements with three one-year extension options, with each oneyear extension requiring approval by City Council, for a total combined annual cost not to exceed $4,306,500.

On December 4, 2018, staff provided Council with an informational report on the hot patch agreements. The report included information on the Utilities Department’s progress on hot patch work, on-site job inspections, invoice review, certified payroll review, and contractor status review. The results of this review identified that all the work being performed by Garrett Thompson and United Pavement met all agreement obligations at that time.

However, in May 2019, the City terminated the agreement with Garrett Thompson for failure to maintain insurance coverage as required by the agreement, resulting in United Pavement being designated the primary vendor and generating the need for a secondary provider to maintain primary and back-up contractor support for the agreement.

On July 9, 2019, by Resolution 2019-344, Council authorized the agreement with Patch Crew of Modesto, CA for an annual estimated amount of $400,000, and a total annual combined amount of $4,306,500 between United Pavement and Patch Crew, making Patch Crew the secondary service provider.

On March 10, 2020, by Resolution 2020-128, Council authorized the first one-year extension option with both United Pavement and Patch Crew without exceeding a total annual combined amount of $4,306,500 between both providers.

On April 6, 2021, by Resolution 2021-106, Council authorized the second one-year extension option with both United Pavement and Patch Crew without exceeding a total annual combined amount of $4,306,500 between both providers.

On April 5, 2022, by Resolution 2022-155, Council authorized the third one-year extension option with United Pavement without exceeding a total annual amount of $3,906,500. During this extension option, Patch Crew declined to execute the final extension option because City Staff had not utilized the agreement.

On April 4, 2023, by Resolution 2023-133, Council authorized the First Amendment to the Agreement with United Pavement to amend the estimated annual amount from $200,000 to a revised estimated annual amount of $3,906,500 and to extend the term of the Agreement from May 21, 2023, to May 21, 2024.

DISCUSSION:

On July 31, 2023, the City Manager authorized the Purchasing Manager to solicit the procurement for Hot Patch Services. On October 06, 2023, the Purchasing Division issued Invitation for Bids (IFB) No. 2324-16, Hot Patch Services, on the City’s Planetbids public bidding website under various commodity codes.1
Prospective bidders were notified online and via email
of the bid opportunity. Nineteen (19) downloaded the IFB document from PlanetBids. 1 74500 Road And Highway Building Materials (Asphaltic) 75500 Road And Highway Asphalt and Concrete Handling And Processing Equipment 91200 Construction Services, General (Incl. Maintenance And Repair Services 91336 Construction, Parking Lot And Alley
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Finance Committee, March 18, 2024
Consider Hot Patch Services Agreements

On November 14, 2023, bids were formally opened in the City Clerk’s Office and broadcast via Microsoft Teams Livestream. Four (4) chose to respond, there was no local bids received; all four were found to be responsive. Based on providing the lowest responsive and responsible bids, City staff recommends the award of bids for the furnishing of hot patch services to Adams Underground III of Waterford, CA, as primary contractor, and to the second lowest bidder, United Pavement Maintenance, Inc. of Hughson, CA, as secondary contractor for a two (2) year agreement with three (3) one-year extension options for an estimated annual amount of $3,500,000 and a combined not to exceed amount of $20,570,000 over five years. Staff is requesting to give the City Manager the approval to adjust agreement totals between vendors based on availability and department needs.

Modesto Municipal Code Section 8-3.203 generally requires all purchases which meet or exceed $100,000 for material, equipment, or contractual services to follow formal bid procedures. An Award of Bid and Agreement for hot patch services for the Utilities and Public Works Departments to use Adams Underground III of Waterford, CA, and United Pavement Maintenance, Inc. of Hughson, CA, conforms to the Modesto Municipal Code because the City complied with formal bid procedures, and Adams Underground III and United Pavement Maintenance, Inc. were the lowest responsive and responsible bidders.

FISCAL IMPACT:

Actual expenditures for the current hot patch asphalt repair agreement are listed below:

Contract Year Total
CY 1 1,787,052
CY 2 2,195,746
CY 3 1,654,218
CY 4 1,898,325
CY 5 1,218,219
Ext Yr. 1 1,314,914
Grand Total 10,068,474
Compared to current pricing, Adam’s Underground submitted a 33.01% price increase and United Pavement submitted a 39.22% increase for linear and spot repairs.

Adam's
Underground United Pavement
Current Agreement Current
Price
New Price
Primary
Increase
%
New Price
Secondary
Increase
%
Hot Mix Asphalt -
Linear $ 8.95 $ 11.25 25.70% $ 10.00 11.73%
Hot Mix Asphalt -
Spot $ 10.95 $ 11.75 7.31% $ 13.96 27.49%

33.01% 39.22%
91371 Maintenance And Repair, Highway And Road (To Include The Removal Of Asphalt, Concrete, Bitumens, Etc)
91396 Paving/Resurfacing. Street (Major And Residential) #10..
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Consider Hot Patch Services Agreements

Staff anticipates that the need for hot patch asphalt repair services will increase over the next several years due to aging infrastructure and an increasing number of “Strengthen and Replace” projects planned across multiple departments. With the increased pricing per IFB No. 2324-16 and accounting for potential Consumer Price Index (CPI) increases and diesel fuel fluctuations over the next five years, staff estimates an annual estimated cost of $3,500,000 between both vendors, and a total amount not to exceed $20,570,000 over five years.

Funds are allocated in the following accounts:

Water Fund 4100-45040-53150 $2,000,000
Storm Drain Fund 4480-44222-53100 $ 500,000
Wastewater Fund 4210-44211-53100 $ 350,000
Surface Transportation Fund - Streets 1700-59998-53150 $ 100,000 General Fund - Park Operations 0100-35220-53150 $ 50,000 Citywide Fund Varies $ 500,000
Total estimated Year 1: $3,500,000
Year 1 05/22/24 – 05/21/25 $ 3,500,000
Year 2 05/22/25 – 05/21/26 $ 3,780,000
Year 3 05/22/26 – 05/21/27 $ 4,090,000
Year 4 05/22/27 – 05/21/28 $ 4,420,000
Year 5 05/22/28 – 05/21/29 $ 4,780,000
Total Not to Exceed over Five Years: $20,570,000
RECOMMENDED COMMITTEE ACTION:

Staff Recommendations:

Motion recommending the Award of Bid and Agreement for Hot Patch Services to Adams Underground III of Waterford, CA, and United Pavement Maintenance, Inc. of Hughson, CA, for a two (2) year Agreement with three (3) one-year extension options, for an annual estimated amount of $3,500,000 and a total amount not to exceed $20,570,000 over five years and forwarding to Council for approval.

Approved by:

William Wong, Director of Utilities
Joseph P. Lopez, City Manager
Attachments:

1. Agreement – Adams Underground

2. Agreement – United Pavement

3. Exhibit B, Bid Submittal – Adams Underground

4. Exhibit B, Bid Submittal – United Pavement
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Consider Hot Patch Services Agreements

5. Exhibit C – IFB 2324-16, Hot Patch Services

6. Financial Interest Disclosure – Adams Undergrand

7. Financial Interest Disclosure – United Pavement

8. Cost Abstract IFB 2324-16
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1 ANNUAL AGREEMENT NO 264948

FOR HOT PATCH SERVICES

ADAMS UNDERGROUND III
This agreement, hereinafter called AGREEMENT, made and entered into in the City of Modesto, State of California, this ____________ day of _______________, 2024, by and between the City of Modesto, a municipal corporation of the State of California, hereinafter called CITY, and Adams Underground III of Waterford, CA, a corporation, hereinafter called CONTRACTOR.

W I T N E S S E T H:

WHEREAS, the Modesto City Council adopted Resolution No. 2024-________ authorizing the Award of Bid and agreement for Hot Patch Services to CONTRACTOR, attached hereto as Exhibit “A” and made a part hereof, and
WHEREAS, the CONTRACTOR provided a responsive and responsible submittal that best meets the CITY needs, attached hereto as Exhibit “B” and made a part hereof, and WHEREAS, the CITY and CONTRACTOR shall enter into an agreement for Hot Patch Services as described in IFB 2324-16, attached hereto as Exhibit “C” and made a part hereof (hereinafter called IFB).

NOW, THEREFORE, the parties hereto mutually agree as follows:

1. THE WORK:
a. CONTRACTOR shall furnish all labor, materials, equipment, fuel, tools, licenses, bonds and insurance necessary to perform and complete the required work as specified in Exhibit “C”, and in strict accordance with the conditions of the complete AGREEMENT. #10..
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2 b. CONTRACTOR shall do and perform the work contemplated hereby in a good workmanlike manner under the direction of and to the satisfaction of the CITY Representative. c. CONTRACTOR shall maintain proper insurance with the CITY for the duration of the AGREEMENT.
d. CONTRACTOR shall maintain a CITY business license for the duration of the AGREEMENT.
e. CONTRACTOR shall furnish said services at the following AGREEMENT rates for an estimated annual amount $2,450,000. The total amount paid by CITY to CONTRACTOR over the full term of the AGREEMENT shall not exceed $14,399,000. Unless the services provided are for a lump sum or flat fee, fees for work performed by CONTRACTOR on an hourly basis shall not exceed the amounts shown on Bid attached hereto as Exhibit B.

AGREEMENT PRICING
Description Unit Multiplier Extended Price
Hot Mix Asphalt (4-in Lift) Linear Sq. Ft 1.00 $11.25
Hot Mix Asphalt (4-in Lift) Spot Sq. Ft 1.00 $11.75
Per Square Foot
depth, in cf ton
Base Multiplier (per sq
ft)
1 0.08 0.0060 0.4375
2 0.17 0.0121 0.6250
3 0.25 0.0181 0.8125
4 0.33 0.0242 1.0000
5 0.42 0.0302 1.1875
6 0.50 0.0363 1.3750
7 0.58 0.0423 1.5625
8 0.67 0.0483 1.7500
9 0.75 0.0544 1.9375
10 0.83 0.0604 2.1250
11 0.92 0.0665 2.3125
12 1.00 0.0725 2.5000
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3 2. PREVAILING WAGES:

In accordance with California Labor Code Section 1771, CONTRACTOR shall pay all workers, and shall ensure its subcontractors pay all of their workers, engaged in performing the services described in Exhibit “C” not less than the general prevailing rate of per diem wages for work of a similar character in the locality in which the services described in Exhibit “C” are to be performed, and not less than the general prevailing rate of per diem wages for holiday and overtime work as provided in the California Labor Code. In accordance with California Labor Code Section 1773.2, the City has obtained the general prevailing wages in the locality in which the services described in Exhibit A are to be performed for each craft or type of work needed to be as published by the State of California Department of Industrial Relations, Division of Labor Statistics and Research, a copy of which is on file in the CITY’s Purchasing Department and shall be made available on request. Contractor must comply with all applicable laws and regulations that apply to wages earned in performance of the services described in Exhibit “C”, including those set forth in Labor Code section 1770 et. seq. and in the IFB.

DIR Project ID#: 507504

3. CITY REPRESENTATIVE:

CITY Representative is:

Jeremy Parnell, Water Superindendent, (209) 342-4599 [email protected] Purchasing Contact is:

Melvin Rosal, Buyer, (209) 577-5420, [email protected] The CITY Representative is not authorized to commit the CITY to changes in specifications, requirements, or scope of work, changes in price(s), period of performance or delivery date(s) or method of shipment. Changes of a contractual or business nature shall be effective only by written change to the AGREEMENT, issued by the City of Modesto, Purchasing Division. #10..
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4 4. TERM OF AGREEMENT:

The term of the AGREEMENT shall be for a period of two (2) years, with three (3) one-year extension options at the sole discretion of CITY, for a total of up to five years.

Year 1: May 22, 2024 through May 21, 2025
Year 2: May 22, 2025 through May 21, 2026
Year 3: May 22, 2026 through May 21, 2027
Year 4: May 22, 2027 through May 21, 2028
Year 5: May 22, 2028 through May 21, 2029
Pricing as set forth in Section 1.e. above shall remain firm for the first two years of the AGREEMENT.

Price increases for any subsequent AGREEMENT years following the second year, shall not exceed the percentage change in the Consumer Price Index (CPI) for West Urban Area in any one AGREEMENT year, and shall be negotiated through the Purchasing Division. Requests for price increases shall be submitted by CONTRACTOR in writing, 90 days prior to the annual anniversary date of the AGREEMENT to be effective for the subsequent year.

5. LIABILITY INSURANCE:

The CONTRACTOR shall provide, at its own expense, and maintain at all times the following insurance with insurance companies licensed in the State of California and shall provide evidence of such insurance to the CITY as may be required by the City Clerk of the CITY. The policies or certificates thereof shall provide that, at least 30 days prior to cancellation or material change in the policy, notices of same shall be given to the Risk Manager of the CITY via PINS Advantage Insurance Program, for all of the following stated insurance policies.
a. General Liability – insurance with a minimum limit of liability per occurrence of $1,000,000 for bodily injury and property damage. If Commercial General Liability Insurance or other form with a general aggregate limit is used, either the general aggregate limit shall apply separately to this project/location or the general aggregate limit shall be twice the required occurrence limit. The insurance shall indicate on the certificate of insurance the following coverage and indicate the policy aggregate limit applying to: premises and operations; #10..
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5 broad form contractual; independent contractors and subcontractors; products and completed operations; and/or professional liability.
b. Automobile Liability – insurance with a minimum limit of liability per occurrence of $1,000,000 for bodily injury and property damage and transportation related pollution liability. This insurance shall cover any automobile for bodily injury and property damage.
c. Workers' Compensation – in compliance with the statutes of the State of California, plus employer's liability with a minimum limit of liability of $1,000,000 per accident for bodily injury or disease.

If at any time any of said policies shall be unsatisfactory to the CITY, as to form or substance or if a company issuing such policy shall be unsatisfactory to the CITY, the CONTRACTOR shall promptly obtain a new policy, submit the same to the CITY’s Risk Manager for approval and submit a certificate thereof as hereinabove provided. Upon failure of the CONTRACTOR to furnish, deliver or maintain such insurance and certificates as above provided, this AGREEMENT, at the election of the CITY, may be forthwith declared suspended, or terminated. Failure of the CONTRACTOR to obtain and/or maintain any required insurance shall not relieve the CONTRACTOR from any liability under this Agreement, nor shall the insurance requirements be construed to conflict with or otherwise limit the obligations of the CONTRACTOR concerning indemnification.

The CITY, its officers, officials, employees, agents, and volunteers shall be named as an additional insured on all insurance policies required herein, except Workers' Compensation.

The Workers' Compensation insurer shall agree to waive all rights of subrogation against the CITY, its officers, officials, employees, agents, and volunteers for losses arising from work performed by CONTRACTOR for the CITY.

The CONTRACTOR’s insurance policy(ices) shall include a provision that the coverage is primary as respects the CITY; shall include no special limitations to coverage provided to additional insured; and, shall be placed with insurer(s) with acceptable Best's rating of A:VII or with approval of the CITY’s Risk Manager.

For any claims related to this AGREEMENT, the CONTRACTOR’s insurance coverage shall be primary insurance as respects CITY, its officers, officials, employees, agents, and volunteers. Any insurance or #10..
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6 self-insurance maintained by CITY, its officers, officials, employees, agents, and volunteers shall be excess of the CONTRACTOR’s insurance and shall not contribute with it.

6. PAYMENT:

CONTRACTOR shall invoice CITY not less than once per month based on the cost for services performed and reimbursable costs incurred prior to the invoice date. All invoices shall be paid in full the following payment terms within thirty days after completion and acceptance of the Services by the CITY, and receipt of a properly prepared invoice, CITY will pay CONTRACTOR Net 30 terms via CITY’s ePay Program.

The CITY is exempt from payment of Federal Excise Tax, and all invoices shall be exclusive of such excise tax.

Invoice to: City of Modesto
Attn: Accounts Payable
P.O. Box 642
Modesto, CA 95353
Email to: [email protected]
At a minimum, invoices shall state the following:
 This AGREEMENT number 264948
 CITY department/division name and address
 Billing period
 Service hours worked day and week
 Unit price, extended price, sales tax and total

7. INDEMNITY:

The CONTRACTOR shall hold the CITY, its officers, officials, employees, agents, and volunteers, harmless from and save, defend and indemnify them against any and all claims, losses, liabilities, judgments or damages from every cause, including but not limited to injury to person or property or wrongful death, including reasonable costs and expenses of defense of any judicial or administrative action, arising directly or indirectly out of any negligent or intentional act or omission of CONTRACTOR, or its officers, officials, employees, agents, and volunteers relating to or during the performance of its obligations under this AGREEMENT. CONTRACTOR’s obligation to defend, indemnify, and hold the CITY, its agents, officiers, #10..
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7 officials, and employees harmless under the provisions of this paragraph is not limited to or restricted by any requirement in this AGREEMENT for CONTRACTOR to procure and maintain a policy of insurance.

8. VENUE & GOVERNING LAW:

Venue for any dispute or claim arising or related to this AGREEMENT its performance, breach, or interpretation (including issues about its validity or enforceability), shall be exclusively in the Superior Court of Stanislaus County or the United States District Court for the Eastern District of California This AGREEMENT shall be deemed made in, governed by, performed in, and construed and enforced in accordance with the laws of the State of California, without giving effect to its conflicts of laws provisions or principles.

9. ATTORNEYS’ FEES:

If a party to this AGREEMENT brings any action, including an action for declaratory relief, to enforce or interpret the provision of this AGREEMENT, the prevailing party shall be entitled to reasonable attorneys’ fees in addition to any other relief to which that party may be entitled. The court may set such fees in the same action or in a separate action brought for that purpose.

10. COMMENCEMENT AND COMPLETION OF THE WORK:

The work contemplated herein shall be commenced as immediately after the agreement administrator receives and has on file:

Proofs of insurance (approved by CITY Risk Manager); and Executed Agreement;
a. Resolution No.2024-_______;
b. CONTRACTOR Bid submittal;
c. IFB No. 2324-16;
d. Contractor’s City of Modesto business license

11. TERMINATION OF SERVICES:

Termination for Default: In the event either party fails to perform under this AGREEMENT or breaches any condition contained herein, the other party shall notify in writing the breaching party of the non- #10..
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8 performance. Within 10 days after receipt of notification, the breaching party shall correct any non-performance to the reasonable satisfaction of the non-breaching party, or such other time as may be identified in the notice.

Failure to correct any non-performance shall allow the non-breaching party to terminate this AGREEMENT for cause.

Termination by City for Convenience: The City may also terminate this AGREEMENT the Contractor's performance under the Agreement, either in whole or in part, at its own discretion and without cause.

Post-Termination Procedure
Upon receipt of a written notice of termination pursuant to either of the foregoing paragraphs, the CONTRACTOR shall:
a. Cease its work as directed in the notice of termination as of the termination date and see to it that its employees, subcontractors and agents are notified of such termination and act as specified in the notice of termination;
b. Terminate all orders and subcontracts except as necessary to complete any portion of the SERVICES that are not terminated;
c. If directed in writing by the CITY to do so, assign all right, title and interest in subcontracts and materials in progress to CITY, in which case the CITY will have the right at its discretion to settle, or pay any or all claims arising out of the termination of such, but in no event shall recovery by any CONTRACTOR or subcontractor include lost profits for portions of the SERVICES not completed or undertaken, including materials not delivered;
d. Deliver or otherwise make available to the CITY all data, drawings, specifications, reports, estimates, summaries and such other information and material as may have been accumulated by the CONTRACTOR in performing the SERVICES whether completed or in process;
e. Settle outstanding liabilities and claims, subject to the approval of CITY; f. Complete performance of such part of the SERVICES as has not been terminated; #10..
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9 g. Take such other actions as may be necessary, or as may be directed by the CITY for the protection and preservation of the SERVICES and/or property related to the SERVICES;
h. If CITY so requests, and at CITY's cost, CONTRACTOR shall provide sufficient oral or written status reports to make CITY reasonably aware of the status of CONTRACTOR’s work on the SERVICES.
i. CONTRACTOR understands and agrees that CITY may, in CITY’s sole discretion, refuse to pay CONTRACTOR for that portion of CONTRACTOR's SERVICES which were performed by CONTRACTOR on the project prior to the termination date and which remain unacceptable and/or not useful to CONTRACTOR as of the termination date.

CITY will pay CONTRACTOR for SERVICES actually completed prior to the receipt of the termination notice or otherwise completed in accordance with the notice of termination. The final payment to the CONTRACTOR after termination for convenience shall be limited to amounts due and owing under the AGREEMENT at time of termination, including the following:
a. The cost of settling and paying valid claims arising out of the termination of the SERVICES such as subcontractor agreements or contracts for materials; b. The AGREEMENT price allocable to the portion of the SERVICES properly performed or goods supplied to the work site by the CONTRACTOR as of the date of termination, as determined in accordance with the notice of termination, reduced by any sums previously paid to the CONTRACTOR for such SERVICES.

12. COMPLIANCE WITH ALL LAWS:

CONTRACTOR hereby agrees that CONTRACTOR and its subcontractors, if any, in the performance of the SERVICES described herein, will comply with all federal, state, county and municipal laws, rules and regulations which may be applicable to the work herein contracted for, whether now in existence or hereafter adopted.
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10 13. FAILURE TO PERFORM SATISFACTORY WORK:

It is agreed and understood that if the CONTRACTOR fails to perform the SERVICES as specified herein, CITY's representative may:
a. Consent to accept such unsatisfactory service with an appropriate adjustment in contract price, based on established cost factors,
b. Have such required work done by CITY forces or otherwise, and charge the cost thereof to the CONTRACTOR, or
c. Recommend termination of AGREEMENT between said the CONTRACTOR and the City of Modesto.

Those discrepancies and deficiencies in the SERVICES that remains uncorrected after the date set for correction may be the necessary justification for a billing adjustment in the month following the occurrence. Unless otherwise negotiated, billing adjustments for this incomplete or uncorrected work shall be permanent retention of 100% of the estimated monthly cost for the SERVICES not corrected or completed.

14. ASSIGNMENT OF RIGHTS:

The CONTRACTOR offers and agrees, and will require all subcontractors and suppliers to agree, to assign to the CITY all rights, title, and interest in and to all causes of action it and they may have under Section 4 of the Clayton Act (15 United States code, Section 15) or under the Cartwright Act (Business and Professions Code, Section 16700 et seq.), arising from the acquisition of goods, services, or materials pursuant to this AGREEMENT or any allowed subcontract. The assignment made by CONTRACTOR and all assignments made by subcontractors and suppliers shall be made and become effective at the time the CITY makes final payment to The CONTRACTOR, without further acknowledgment by the parties (Government Code, Sections 4550-4554).

15. CITY PROCESS/PROCEDURE APPROVALS:

CITY approval of any process or procedure shall not relieve CONTRACTOR of its responsibility to furnish the required SERVICES meeting all specifications contained herein. #10..
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11 16. DIR REGISTRATION:

Pursuant to Labor Code section 1771.1, CONTRACTOR may not engage in the performance of the Services set forth in Exhibit “C”, unless currently registered and qualified to perform public work pursuant to Section 1725.5 thereof. As required in Section 7029.1 of the Business and Professions Code or by Section 10164 or 20103.5 of the Public Contract Code, that during term of this AGREEMENT, CONTRACTOR shall be registered to perform public work pursuant to Section 1725.5 thereof.

17. CONTRACTOR'S RESPONSIBILITY FOR DAMAGES:

If CONTRACTOR damages any property belonging to the CITY or a third party, the CONTRACTOR will be required to make repairs immediately, at CONTRACTOR’s sole cost and expense, to the satisfaction of the CITY. In the event that CONTRACTOR fails to perform the necessary repairs, the CITY may either retain from the money due to CONTRACTOR an amount sufficient to repair the damage or perform the repairs and send an invoice to the CONTRACTOR for such costs, which shall be paid within thirty (30) days.

18. NOTICES:

Any notice, payment or instrument required or permitted by this AGREEMENT to be given or delivered to either party shall be deemed to have been received when personally delivered, or one calendar week following deposit of the same in any United States Post Office, registered or certified mail, postage prepaid, addressed as follows:

CONTRACTOR: Adams Underground III
Edmond Adams III – Owner
407 S. Reinway Ave.

Waterford, CA 95386
CITY: City of Modesto
Purchasing Division
P.O. Box 642
Modesto, CA 95353
Each party may change its address for delivery of notice by delivering written notice of such change of address to the other party.
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12 19. SIGNATORY(IES) FOR CONTRACTOR:

Each signatory for CONTRACTOR below warrants and represents that it is legally competent to, and have full authority to, execute the AGREEMENT.

20. QUANTITIES:

No minimum or maximum is guaranteed or implied.

21. FUNDING:

All annual extensions are based upon continuous funding for that purpose by the City Council.

Failure to fund any annual extension shall result in an immediate termination of the AGREEMENT without redress.

22. OTHER GOVERNMENT/PUBLICLY FUNDED AGENCIES:

If mutually agreeable to all parties, the issuance of any resultant contract/purchase order referencing these specifications and modified by mutual agreement between all parties may be extended to other government or publicly funded agencies. It shall be understood that all terms and conditions as specified herein shall apply.

23. NON-DISCRIMINATION:
a. During the performance of this AGREEMENT, CONTRACTOR and any allowed subcontractors shall not unlawfully discriminate against any employee or applicant for employment because of race, color, ancestry, religion, sex, national origin, marital status, age, medical condition (cancer related), physical handicap (including AIDS), sexual orientation, or any other basis prohibited by Federal or California law. Equal employment opportunity extends, but is not limited to recruitment, compensation, benefits, layoff, termination, and all other conditions of employment. The CONTRACTOR and any allowed subcontractors shall ensure that the evaluation and treatment of their employees and applicants for employment are free of such discrimination.

The CONTRACTOR and any allowed subcontractors shall comply with the provisions of the Fair Employment and Housing Act (Government Code, Section 12900 et seq.) and the applicable regulations promulgated thereunder (California Administrative Code, Title 2, and Section 7285.0 et seq.). The applicable regulations of the Fair Employment and Housing Commission implementing Government Code, Section 12900, set forth in #10..
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13 Chapter 5 of Division 4 of Title 2 of the California Administrative Code are incorporated into this contract by reference and made a part hereof as if set forth in full. b. The CONTRACTOR and any allowed subcontractors shall give written notice of their obligations under this clause to labor organizations with which they have a collective bargaining or other agreement. c. The CONTRACTOR shall include the nondiscrimination and compliance provisions of this clause in any allowed subcontracts to perform SERVICES.
d. The Contractor shall permit access by representatives of the Department of Fair Employment and Housing and the CITY upon reasonable notice at any time during the normal business hours, but in no case less than 24 hours notice, to such of its books, records, accounts, other sources of information and its facilities as said Department or CITY shall require to ascertain compliance with this AGREEMENT. e. By executing this AGREEMENT, CONTRACTOR certifies that it shall follow and be in compliance with the Americans with Disabilities Act of 1990, the applicable administrative requirements promulgated in response thereto, and any other applicable Federal laws and regulations relating to handicap discrimination and participation, and will continue to do so for at least the duration of the AGREEMENT and any extensions thereof.

24. CONTRACTOR LICENSES & PERMITS:

CONTRACTOR warrants and represents that it possesses and shall maintain all licenses, and shall secure and maintain all necessary permits, necessary to perform the SERVICES.

25. RECORDS:

All final versions of reports, data, maps, models, charts, studies, surveys, photographs, memoranda, plans, studies, specifications, records, files, or any other documents or materials, in electronic or any other form, that CONTRACTOR prepares or obtains pursuant to this Agreement and that relate to the matters covered hereunder shall be the property of the CITY. CONTRACTOR hereby agrees to deliver those documents to the CITY upon termination of the AGREEMENT, and the CITY may use, reuse or otherwise dispose of the documents without CONTRACTOR’s permission. It is understood and agreed that the documents #10..
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14 and other materials, including but not limited to those described above, prepared pursuant to this AGREEMENT are prepared specifically for the City and are not necessarily suitable for any future or other use.

26. FACILITIES AND EQUIPMENT:

Except as set forth herein, CONTRACTOR shall, at its sole cost and expense, provide all facilities and equipment that may be necessary to perform the services required by this AGREEMENT. CITY shall make available to CONTRACTOR only the facilities and equipment listed in EXHIBIT “B” and “C”, and only under the terms and conditions set forth herein.

27. INDEPENDENT CONTRACTOR; NOT AGENT:

At all times during the term of this AGREEMENT, CONTRACTOR shall be an independent contractor and shall not be an employee of CITY. CITY shall have the right to control CONTRACTOR only insofar as the results of CONTRACTOR’s services rendered pursuant to this AGREEMENT. Except as City may specify in writing, CONTRACTOR shall have no authority, express or implied, to act on behalf of CITY in any capacity whatsoever as an agent. CONTRACTOR shall have no authority, express or implied, pursuant to this AGREEMENT to bind City to any obligation whatsoever.

28. DRUG FREE WORKPLACE:

CONTRACTOR certifies that it is following and in compliance with Sections 8350 - 8355 of Chapter 5.5 of the Government Code, Drug Free Workplace Act whereby each person or organization awarded a contract/purchase order or grant for the procurement of any property or service from any state agency (city) shall certify to the contracting or granting agency that it will provide a drug free workplace.

29. ASSIGNMENT:

Neither this AGREEMENT nor any SERVICES hereunder shall be subcontracted or assigned by CONTRACTOR without the prior written consent of the CITY in each and every instance.

30. WAIVER:

The waiver by any party to this AGREEMENT of a breach of any provision hereof shall be in writing and shall not operate or be construed as a waiver of any other or subsequent breach hereof unless specifically stated in writing.
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15 31. HEADINGS NOT CONTROLLING:

Headings used in the Agreement are for reference purposes only and shall not be considered in construing this AGREEMENT.

32. MISCELLANEOUS:

Time is of the essence in CONTRACTOR’s performance under each provision of this AGREEMENT.

33. ENTIRE AGREEMENT:

This Agreement and its exhibits contain the entire understanding between CONTRACTOR and CITY. Additional or new terms contained in this AGREEMENT which vary from CONTRACTOR’S bid are controlling and are deemed accepted by CONTRACTOR by performance of any SERVICES or other commencement of performance hereunder. The terms and conditions of the IFB, attached hereto as Exhibit C, are incorporated herein. In the event of a conflict between the IFB and this AGREEMENT, this AGREEMENT shall control. All previous bids, offers and communications relative to this Agreement, whether oral or written, are hereby superseded except to the extent that they have been incorporated into this Agreement. No future waiver or exception to any of the terms, conditions, and provisions of this AGREEMENT shall be considered valid unless specifically agreed to in writing by the parties.

34. PARTIAL INVALIDITY:

If any provision in this AGREEMENT is held by a court of competent jurisdiction to be invalid, void, or unenforceable, the remaining provisions shall nevertheless continue in full force without being impaired or invalidated in any way.
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16 IN WITNESS WHEREOF, the CITY OF MODESTO, a municipal corporation, has authorized the execution of this Agreement by its City Manager and attested by its City Clerk under authority of Resolution No. 2024-_______, adopted by the Council of the City of Modesto on the _____________ day of _____________________, 2024 and _____________________has caused this Agreement to be duly executed.
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1 ANNUAL AGREEMENT NO 264949

FOR HOT PATCH SERVICES
UNITED PAVEMENT MAINTENANCE, INC.

This agreement, hereinafter called AGREEMENT, made and entered into in the City of Modesto, State of California, this ____________ day of _______________, 2024, by and between the City of Modesto, a municipal corporation of the State of California, hereinafter called CITY, and United Pavement Maintenance, Inc. of Hughson, CA, a corporation, hereinafter called CONTRACTOR.

W I T N E S S E T H:

WHEREAS, the Modesto City Council adopted Resolution No. 2024-________ authorizing the Award of Bid and agreement for Hot Patch Services to CONTRACTOR, attached hereto as Exhibit “A” and made a part hereof, and
WHEREAS, the CONTRACTOR provided a responsive and responsible submittal that best meets the CITY needs, attached hereto as Exhibit “B” and made a part hereof, and WHEREAS, the CITY and CONTRACTOR shall enter into an agreement for Hot Patch Services as described in IFB 2324-16, attached hereto as Exhibit “C” and made a part hereof (hereinafter called IFB).

NOW, THEREFORE, the parties hereto mutually agree as follows:

1. THE WORK:
a. CONTRACTOR shall furnish all labor, materials, equipment, fuel, tools, licenses, bonds and insurance necessary to perform and complete the required work as specified in Exhibit “C”, and in strict accordance with the conditions of the complete AGREEMENT. #10..
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2 b. CONTRACTOR shall do and perform the work contemplated hereby in a good workmanlike manner under the direction of and to the satisfaction of the CITY Representative. c. CONTRACTOR shall maintain proper insurance with the CITY for the duration of the AGREEMENT.
d. CONTRACTOR shall maintain a CITY business license for the duration of the AGREEMENT.
e. CONTRACTOR shall furnish said services at the following AGREEMENT rates for an estimated annual amount of $1,050,000. The total amount paid by CITY to CONTRACTOR over the full term of the AGREEMENT shall not exceed $6,171,000. Unless the services provided are for a lump sum or flat fee, fees for work performed by CONTRACTOR on an hourly basis shall not exceed the amounts shown on Bid attached hereto as Exhibit B.

AGREEMENT PRICING
Description Unit Multiplier Extended Price
Hot Mix Asphalt (4-in Lift) Linear Sq. Ft 1.00 $10.00
Hot Mix Asphalt (4-in Lift) Spot Sq. Ft 1.00 $13.96
Per Square Foot
depth, in cf ton Base Multiplier (per sq ft)
1 0.08 0.0060 0.4375
2 0.17 0.0121 0.6250
3 0.25 0.0181 0.8125
4 0.33 0.0242 1.0000
5 0.42 0.0302 1.1875
6 0.50 0.0363 1.3750
7 0.58 0.0423 1.5625
8 0.67 0.0483 1.7500
9 0.75 0.0544 1.9375
10 0.83 0.0604 2.1250
11 0.92 0.0665 2.3125
12 1.00 0.0725 2.5000
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3 2. PREVAILING WAGES:

In accordance with California Labor Code Section 1771, CONTRACTOR shall pay all workers, and shall ensure its subcontractors pay all of their workers, engaged in performing the services described in Exhibit “C” not less than the general prevailing rate of per diem wages for work of a similar character in the locality in which the services described in Exhibit “C” are to be performed, and not less than the general prevailing rate of per diem wages for holiday and overtime work as provided in the California Labor Code. In accordance with California Labor Code Section 1773.2, the City has obtained the general prevailing wages in the locality in which the services described in Exhibit A are to be performed for each craft or type of work needed to be as published by the State of California Department of Industrial Relations, Division of Labor Statistics and Research, a copy of which is on file in the CITY’s Purchasing Department and shall be made available on request. Contractor must comply with all applicable laws and regulations that apply to wages earned in performance of the services described in Exhibit “C”, including those set forth in Labor Code section 1770 et. seq. and in the IFB.

DIR Project ID#: 507507

3. CITY REPRESENTATIVE:

CITY Representative:

Jeremy Parnell, Water Superintendent, (209) 342-4599, [email protected] Purchasing Contact:

Melvin Rosal, Buyer, (209) 577-5420, [email protected] The CITY Representative is not authorized to commit the CITY to changes in specifications, requirements, or scope of work, changes in price(s), period of performance or delivery date(s) or method of shipment. Changes of a contractual or business nature shall be effective only by written change to the AGREEMENT, issued by the City of Modesto, Purchasing Division. #10..
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4 4. TERM OF AGREEMENT:

The term of the AGREEMENT shall be for a period of two (2) years, with three (3) one-year extension options at the sole discretion of CITY, for a total of up to five years.

Year 1: May 22, 2024 through May 21, 2025
Year 2: May 22, 2025 through May 21, 2026
Year 3: May 22, 2026 through May 21, 2027
Year 4: May 22, 2027 through May 21, 2028
Year 5: May 22, 2028 through May 21, 2029
Pricing as set forth in Section 1.e. above shall remain firm for the first two years of the AGREEMENT.

Price increases for any subsequent AGREEMENT years following the second year, shall not exceed the percentage change in the Consumer Price Index (CPI) for West Urban Area in any one AGREEMENT year, and shall be negotiated through the Purchasing Division. Requests for price increases shall be submitted by CONTRACTOR in writing, 90 days prior to the annual anniversary date of the AGREEMENT to be effective for the subsequent year.

5. LIABILITY INSURANCE:

The CONTRACTOR shall provide, at its own expense, and maintain at all times the following insurance with insurance companies licensed in the State of California and shall provide evidence of such insurance to the CITY as may be required by the City Clerk of the CITY. The policies or certificates thereof shall provide that, at least 30 days prior to cancellation or material change in the policy, notices of same shall be given to the Risk Manager of the CITY via PINS Advantage Insurance Program, for all of the following stated insurance policies.
a. General Liability – insurance with a minimum limit of liability per occurrence of $1,000,000 for bodily injury and property damage. If Commercial General Liability Insurance or other form with a general aggregate limit is used, either the general aggregate limit shall apply separately to this project/location or the general aggregate limit shall be twice the required occurrence limit. The insurance shall indicate on the certificate of insurance the following coverage and indicate the policy aggregate limit applying to: premises and operations; #10..
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5 broad form contractual; independent contractors and subcontractors; products and completed operations; and/or professional liability.
b. Automobile Liability – insurance with a minimum limit of liability per occurrence of $1,000,000 for bodily injury and property damage and transportation related pollution liability. This insurance shall cover any automobile for bodily injury and property damage.
c. Workers' Compensation – in compliance with the statutes of the State of California, plus employer's liability with a minimum limit of liability of $1,000,000 per accident for bodily injury or disease.

If at any time any of said policies shall be unsatisfactory to the CITY, as to form or substance or if a company issuing such policy shall be unsatisfactory to the CITY, the CONTRACTOR shall promptly obtain a new policy, submit the same to the CITY’s Risk Manager for approval and submit a certificate thereof as hereinabove provided. Upon failure of the CONTRACTOR to furnish, deliver or maintain such insurance and certificates as above provided, this AGREEMENT, at the election of the CITY, may be forthwith declared suspended, or terminated. Failure of the CONTRACTOR to obtain and/or maintain any required insurance shall not relieve the CONTRACTOR from any liability under this Agreement, nor shall the insurance requirements be construed to conflict with or otherwise limit the obligations of the CONTRACTOR concerning indemnification.

The CITY, its officers, officials, employees, agents, and volunteers shall be named as an additional insured on all insurance policies required herein, except Workers' Compensation.

The Workers' Compensation insurer shall agree to waive all rights of subrogation against the CITY, its officers, officials, employees, agents, and volunteers for losses arising from work performed by CONTRACTOR for the CITY.

The CONTRACTOR’s insurance policy(ices) shall include a provision that the coverage is primary as respects the CITY; shall include no special limitations to coverage provided to additional insured; and, shall be placed with insurer(s) with acceptable Best's rating of A:VII or with approval of the CITY’s Risk Manager.

For any claims related to this AGREEMENT, the CONTRACTOR’s insurance coverage shall be primary insurance as respects CITY, its officers, officials, employees, agents, and volunteers. Any insurance or #10..
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6 self-insurance maintained by CITY, its officers, officials, employees, agents, and volunteers shall be excess of the CONTRACTOR’s insurance and shall not contribute with it.

6. PAYMENT:

CONTRACTOR shall invoice CITY not less than once per month based on the cost for services performed and reimbursable costs incurred prior to the invoice date. All invoices shall be paid in full the following payment terms within thirty days after completion and acceptance of the Services by the CITY, and receipt of a properly prepared invoice, CITY will pay CONTRACTOR Net 45 Days via manual check. The CITY is exempt from payment of Federal Excise Tax, and all invoices shall be exclusive of such excise tax.

Invoice to: City of Modesto
Attn: Accounts Payable
P.O. Box 642
Modesto, CA 95353
Email to: [email protected]
At a minimum, invoices shall state the following:
 This AGREEMENT number 264949
 CITY department/division name and address
 Billing period
 Service hours worked, day and week
 Unit price, extended price, sales tax and total

7. INDEMNITY:

The CONTRACTOR shall hold the CITY, its officers, officials, employees, agents, and volunteers, harmless from and save, defend and indemnify them against any and all claims, losses, liabilities, judgments or damages from every cause, including but not limited to injury to person or property or wrongful death, including reasonable costs and expenses of defense of any judicial or administrative action, arising directly or indirectly out of any negligent or intentional act or omission of CONTRACTOR, or its officers, officials, employees, agents, and volunteers relating to or during the performance of its obligations under this AGREEMENT. CONTRACTOR’s obligation to defend, indemnify, and hold the CITY, its agents, officers, #10..
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7 officials, and employees harmless under the provisions of this paragraph is not limited to or restricted by any requirement in this AGREEMENT for CONTRACTOR to procure and maintain a policy of insurance.

8. VENUE & GOVERNING LAW:

Venue for any dispute or claim arising or related to this AGREEMENT its performance, breach, or interpretation (including issues about its validity or enforceability), shall be exclusively in the Superior Court of Stanislaus County or the United States District Court for the Eastern District of California This AGREEMENT shall be deemed made in, governed by, performed in, and construed and enforced in accordance with the laws of the State of California, without giving effect to its conflicts of laws provisions or principles.

9. ATTORNEYS’ FEES:

If a party to this AGREEMENT brings any action, including an action for declaratory relief, to enforce or interpret the provision of this AGREEMENT, the prevailing party shall be entitled to reasonable attorneys’ fees in addition to any other relief to which that party may be entitled. The court may set such fees in the same action or in a separate action brought for that purpose.

10. COMMENCEMENT AND COMPLETION OF THE WORK:

The work contemplated herein shall be commenced as immediately after the agreement administrator receives and has on file:

Proofs of insurance (approved by CITY Risk Manager); and Executed Agreement;
a. Resolution No.2024-_______;
b. CONTRACTOR Bid submittal;
c. IFB No. 2324-16;
d. Contractor’s City of Modesto business license

11. TERMINATION OF SERVICES:

Termination for Default: In the event either party fails to perform under this AGREEMENT or breaches any condition contained herein, the other party shall notify in writing the breaching party of the non- #10..
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8 performance. Within 10 days after receipt of notification, the breaching party shall correct any non-performance to the reasonable satisfaction of the non-breaching party, or such other time as may be identified in the notice.

Failure to correct any non-performance shall allow the non-breaching party to terminate this AGREEMENT for cause.

Termination by City for Convenience: The City may also terminate this AGREEMENT the Contractor's performance under the Agreement, either in whole or in part, at its own discretion and without cause.

Post-Termination Procedure
Upon receipt of a written notice of termination pursuant to either of the foregoing paragraphs, the CONTRACTOR shall:
a. Cease its work as directed in the notice of termination as of the termination date and see to it that its employees, subcontractors and agents are notified of such termination and act as specified in the notice of termination;
b. Terminate all orders and subcontracts except as necessary to complete any portion of the SERVICES that are not terminated;
c. If directed in writing by the CITY to do so, assign all right, title and interest in subcontracts and materials in progress to CITY, in which case the CITY will have the right at its discretion to settle, or pay any or all claims arising out of the termination of such, but in no event shall recovery by any CONTRACTOR or subcontractor include lost profits for portions of the SERVICES not completed or undertaken, including materials not delivered;
d. Deliver or otherwise make available to the CITY all data, drawings, specifications, reports, estimates, summaries and such other information and material as may have been accumulated by the CONTRACTOR in performing the SERVICES whether completed or in process;
e. Settle outstanding liabilities and claims, subject to the approval of CITY; f. Complete performance of such part of the SERVICES as has not been terminated; #10..
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9 g. Take such other actions as may be necessary, or as may be directed by the CITY for the protection and preservation of the SERVICES and/or property related to the SERVICES;
h. If CITY so requests, and at CITY's cost, CONTRACTOR shall provide sufficient oral or written status reports to make CITY reasonably aware of the status of CONTRACTOR’s work on the SERVICES.
i. CONTRACTOR understands and agrees that CITY may, in CITY’s sole discretion, refuse to pay CONTRACTOR for that portion of CONTRACTOR's SERVICES which were performed by CONTRACTOR on the project prior to the termination date and which remain unacceptable and/or not useful to CONTRACTOR as of the termination date.

CITY will pay CONTRACTOR for SERVICES actually completed prior to the receipt of the termination notice or otherwise completed in accordance with the notice of termination. The final payment to the CONTRACTOR after termination for convenience shall be limited to amounts due and owing under the AGREEMENT at time of termination, including the following:
a. The cost of settling and paying valid claims arising out of the termination of the SERVICES such as subcontractor agreements or contracts for materials; b. The AGREEMENT price allocable to the portion of the SERVICES properly performed or goods supplied to the work site by the CONTRACTOR as of the date of termination, as determined in accordance with the notice of termination, reduced by any sums previously paid to the CONTRACTOR for such SERVICES.

12. COMPLIANCE WITH ALL LAWS:

CONTRACTOR hereby agrees that CONTRACTOR and its subcontractors, if any, in the performance of the SERVICES described herein, will comply with all federal, state, county and municipal laws, rules and regulations which may be applicable to the work herein contracted for, whether now in existence or hereafter adopted.
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10 13. FAILURE TO PERFORM SATISFACTORY WORK:

It is agreed and understood that if the CONTRACTOR fails to perform the SERVICES as specified herein, CITY's representative may:
a. Consent to accept such unsatisfactory service with an appropriate adjustment in contract price, based on established cost factors,
b. Have such required work done by CITY forces or otherwise, and charge the cost thereof to the CONTRACTOR, or
c. Recommend termination of AGREEMENT between said the CONTRACTOR and the City of Modesto.

Those discrepancies and deficiencies in the SERVICES that remains uncorrected after the date set for correction may be the necessary justification for a billing adjustment in the month following the occurrence. Unless otherwise negotiated, billing adjustments for this incomplete or uncorrected work shall be permanent retention of 100% of the estimated monthly cost for the SERVICES not corrected or completed.

14. ASSIGNMENT OF RIGHTS:

The CONTRACTOR offers and agrees, and will require all subcontractors and suppliers to agree, to assign to the CITY all rights, title, and interest in and to all causes of action it and they may have under Section 4 of the Clayton Act (15 United States code, Section 15) or under the Cartwright Act (Business and Professions Code, Section 16700 et seq.), arising from the acquisition of goods, services, or materials pursuant to this AGREEMENT or any allowed subcontract. The assignment made by CONTRACTOR and all assignments made by subcontractors and suppliers shall be made and become effective at the time the CITY makes final payment to The CONTRACTOR, without further acknowledgment by the parties (Government Code, Sections 4550-4554).

15. CITY PROCESS/PROCEDURE APPROVALS:

CITY approval of any process or procedure shall not relieve CONTRACTOR of its responsibility to furnish the required SERVICES meeting all specifications contained herein. #10..
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11 16. DIR REGISTRATION:

Pursuant to Labor Code section 1771.1, CONTRACTOR may not engage in the performance of the Services set forth in Exhibit “C”, unless currently registered and qualified to perform public work pursuant to Section 1725.5 thereof. As required in Section 7029.1 of the Business and Professions Code or by Section 10164 or 20103.5 of the Public Contract Code, that during term of this AGREEMENT, CONTRACTOR shall be registered to perform public work pursuant to Section 1725.5 thereof.

17. CONTRACTOR'S RESPONSIBILITY FOR DAMAGES:

If CONTRACTOR damages any property belonging to the CITY or a third party, the CONTRACTOR will be required to make repairs immediately, at CONTRACTOR’s sole cost and expense, to the satisfaction of the CITY. In the event that CONTRACTOR fails to perform the necessary repairs, the CITY may either retain from the money due to CONTRACTOR an amount sufficient to repair the damage or perform the repairs and send an invoice to the CONTRACTOR for such costs, which shall be paid within thirty (30) days.

18. NOTICES:

Any notice, payment or instrument required or permitted by this AGREEMENT to be given or delivered to either party shall be deemed to have been received when personally delivered, or one calendar week following deposit of the same in any United States Post Office, registered or certified mail, postage prepaid, addressed as follows:

CONTRACTOR: United Pavement Maintenance, Inc.

Rodolfo Ruvalcaba - President
P.O. Box 1017
Hughson, CA 95326
CITY: City of Modesto
Purchasing Division
P.O. Box 642
Modesto, CA 95353
Each party may change its address for delivery of notice by delivering written notice of such change of address to the other party.
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12 19. SIGNATORY(IES) FOR CONTRACTOR:

Each signatory for CONTRACTOR below warrants and represents that it is legally competent to, and have full authority to, execute the AGREEMENT.

20. QUANTITIES:

No minimum or maximum is guaranteed or implied.

21. FUNDING:

All annual extensions are based upon continuous funding for that purpose by the City Council.

Failure to fund any annual extension shall result in an immediate termination of the AGREEMENT without redress.

22. OTHER GOVERNMENT/PUBLICLY FUNDED AGENCIES:

If mutually agreeable to all parties, the issuance of any resultant contract/purchase order referencing these specifications and modified by mutual agreement between all parties may be extended to other government or publicly funded agencies. It shall be understood that all terms and conditions as specified herein shall apply.

23. NON-DISCRIMINATION:
a. During the performance of this AGREEMENT, CONTRACTOR and any allowed subcontractors shall not unlawfully discriminate against any employee or applicant for employment because of race, color, ancestry, religion, sex, national origin, marital status, age, medical condition (cancer related), physical handicap (including AIDS), sexual orientation, or any other basis prohibited by Federal or California law. Equal employment opportunity extends, but is not limited to recruitment, compensation, benefits, layoff, termination, and all other conditions of employment. The CONTRACTOR and any allowed subcontractors shall ensure that the evaluation and treatment of their employees and applicants for employment are free of such discrimination. The CONTRACTOR and any allowed subcontractors shall comply with the provisions of the Fair Employment and Housing Act (Government Code, Section 12900 et seq.) and the applicable regulations promulgated thereunder (California Administrative Code, Title 2, and Section 7285.0 et seq.). The applicable regulations of the Fair Employment and Housing Commission implementing Government Code, Section 12900, #10..
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13 set forth in Chapter 5 of Division 4 of Title 2 of the California Administrative Code are incorporated into this contract by reference and made a part hereof as if set forth in full. b. The CONTRACTOR and any allowed subcontractors shall give written notice of their obligations under this clause to labor organizations with which they have a collective bargaining or other agreement.
c. The CONTRACTOR shall include the nondiscrimination and compliance provisions of this clause in any allowed subcontracts to perform SERVICES. d. The Contractor shall permit access by representatives of the Department of Fair Employment and Housing and the CITY upon reasonable notice at any time during the normal business hours, but in no case less than 24 hours notice, to such of its books, records, accounts, other sources of information and its facilities as said Department or CITY shall require to ascertain compliance with this AGREEMENT. e. By executing this AGREEMENT, CONTRACTOR certifies that it shall follow and be in compliance with the Americans with Disabilities Act of 1990, the applicable administrative requirements promulgated in response thereto, and any other applicable Federal laws and regulations relating to handicap discrimination and participation, and will continue to do so for at least the duration of the AGREEMENT and any extensions thereof.

24. CONTRACTOR LICENSES & PERMITS:

CONTRACTOR warrants and represents that it possesses and shall maintain all licenses, and shall secure and maintain all necessary permits, necessary to perform the SERVICES.

25. RECORDS:

All final versions of reports, data, maps, models, charts, studies, surveys, photographs, memoranda, plans, studies, specifications, records, files, or any other documents or materials, in electronic or any other form, that CONTRACTOR prepares or obtains pursuant to this Agreement and that relate to the matters covered hereunder shall be the property of the CITY. CONTRACTOR hereby agrees to deliver those documents to the CITY upon termination of the AGREEMENT, and the CITY may use, reuse or otherwise dispose of the documents without CONTRACTOR’s permission. It is understood and agreed that the documents #10..
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14 and other materials, including but not limited to those described above, prepared pursuant to this AGREEMENT are prepared specifically for the City and are not necessarily suitable for any future or other use.

26. FACILITIES AND EQUIPMENT:

Except as set forth herein, CONTRACTOR shall, at its sole cost and expense, provide all facilities and equipment that may be necessary to perform the services required by this AGREEMENT. CITY shall make available to CONTRACTOR only the facilities and equipment listed in EXHIBIT “B” and “C”, and only under the terms and conditions set forth herein.

27. INDEPENDENT CONTRACTOR; NOT AGENT:

At all times during the term of this AGREEMENT, CONTRACTOR shall be an independent contractor and shall not be an employee of CITY. CITY shall have the right to control CONTRACTOR only insofar as the results of CONTRACTOR’s services rendered pursuant to this AGREEMENT. Except as City may specify in writing, CONTRACTOR shall have no authority, express or implied, to act on behalf of CITY in any capacity whatsoever as an agent. CONTRACTOR shall have no authority, express or implied, pursuant to this AGREEMENT to bind City to any obligation whatsoever.

28. DRUG FREE WORKPLACE:

CONTRACTOR certifies that it is following and in compliance with Sections 8350 - 8355 of Chapter 5.5 of the Government Code, Drug Free Workplace Act whereby each person or organization awarded a contract/purchase order or grant for the procurement of any property or service from any state agency (city) shall certify to the contracting or granting agency that it will provide a drug free workplace.

29. ASSIGNMENT:

Neither this AGREEMENT nor any SERVICES hereunder shall be subcontracted or assigned by CONTRACTOR without the prior written consent of the CITY in each and every instance.

30. WAIVER:

The waiver by any party to this AGREEMENT of a breach of any provision hereof shall be in writing and shall not operate or be construed as a waiver of any other or subsequent breach hereof unless specifically stated in writing.
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15 31. HEADINGS NOT CONTROLLING:

Headings used in the Agreement are for reference purposes only and shall not be considered in construing this AGREEMENT.

32. MISCELLANEOUS:

Time is of the essence in CONTRACTOR’s performance under each provision of this AGREEMENT.

33. ENTIRE AGREEMENT:

This Agreement and its exhibits contain the entire understanding between CONTRACTOR and CITY. Additional or new terms contained in this AGREEMENT which vary from CONTRACTOR’S bid are controlling and are deemed accepted by CONTRACTOR by performance of any SERVICES or other commencement of performance hereunder. The terms and conditions of the IFB, attached hereto as Exhibit C, are incorporated herein. In the event of a conflict between the IFB and this AGREEMENT, this AGREEMENT shall control. All previous bids, offers and communications relative to this Agreement, whether oral or written, are hereby superseded except to the extent that they have been incorporated into this Agreement. No future waiver or exception to any of the terms, conditions, and provisions of this AGREEMENT shall be considered valid unless specifically agreed to in writing by the parties.

34. PARTIAL INVALIDITY:

If any provision in this AGREEMENT is held by a court of competent jurisdiction to be invalid, void, or unenforceable, the remaining provisions shall nevertheless continue in full force without being impaired or invalidated in any way.
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16 IN WITNESS WHEREOF, the CITY OF MODESTO, a municipal corporation, has authorized the execution of this Agreement by its City Manager and attested by its City Clerk under authority of Resolution No. 2024-_______, adopted by the Council of the City of Modesto on the _____________ day of _____________________, 2024 and _____________________has caused this Agreement to be duly executed.
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1 INVITATION FOR BIDS (“IFB”) NO. 2324-16
FOR

HOT PATCH SERVICES

THE PAYMENT OF PREVAILING WAGES IS REQUIRED
BID OPENING: NOVEMBER 14, 2023 at 11:00 A.M.

CITY OF MODESTO CONTACT: Melvin Rosal, Buyer
E-MAIL ADDRESS: [email protected]
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INVITATION FOR BIDS # 2324-16

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2 Table of Contents PAGE
NOTICE TO BIDDERS ............................................................................................................................. 3 CALENDAR OF EVENTS ........................................................................................................................ 5 CITY CONTACT ....................................................................................................................................... 5 PRECEDENCE........................................................................................................................................... 5 VIRTUAL BID OPENING......................................................................................................................... 6 GENERAL BID REQUIREMENTS .......................................................................................................... 7 A. BID SUBMITTAL....................................................................................................................... 7 E. CITY ACCEPTANCE/REJECTION OF IRREGULAR BIDS:.................................................. 7 F. COMPLETE BID DOCUMENT:.................................................................................................... 7 G. COMPLIANCE/NON-COMPLIANCE:...................................................................................... 8 K. PREVAILING WAGE:................................................................................................................ 9 M. BID PROTEST AND APPEAL PROCEDURES:..................................................................... 10 BID SUBMITTAL CHECKLIST............................................................................................................. 15 BID FORM A - IFB ACKNOWLEDGEMENT .................................................................................. 16 BID FORM B – BIDDER COMPANY INFORMATION................................................................... 19 BID FORM C - PRICING SCHEDULE .............................................................................................. 21 BID FORM D – BIDDER EXCEPTIONS, CLARIFICATIONS, AMENDMENTS.......................... 24 BID FORM E – BIDDER CUSTOMER REFERENCES .................................................................... 25 BID FORM F - FINANCIAL INTEREST DISCLOSURE.................................................................. 27 BID FORM G – SUPPORT OF LOCAL VENDORS.......................................................................... 29 BID FORM H - BIDDER COMPANY HISTORY STATEMENT..................................................... 30 BID FORM I - ADDENDA ACKNOWLEDGEMENT ...................................................................... 31 BID FORM J – BIDDER WARRANTY STATEMENTS................................................................... 32 BID FORM K – BIDDER EXPERIENCE AND CERTIFICATIONS................................................ 33 BID FORM L - SUBCONTRACTOR LIST ........................................................................................ 34 TECHNICAL SPECIFICATIONS AND REQUIREMENTS ................................................................. 35

1.1 SCOPE OF WORK:........................................................................................................................ 35

1.2 TECHNICAL SPECIFICATIONS:................................................................................................ 35 SAMPLE ANNUAL AGREEMENT – HOT PATCH SERVICES......................................................... 40 #10..
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HOT PATCH SERVICES
3 NOTICE TO BIDDERS
NOTICE IS HEREBY GIVEN that the City of Modesto, County of Stanislaus, State of California (“City”), will receive at the City Clerk’s office, 1010 Tenth Street, Suite 6600, Modesto, CA 95354 sealed Bids (each, a “Bid”) from qualified Bidders (each, a “Bidder”) for the furnishing of Hot Patch Services equipment, materials, supplies and/or related services (the “Services”) for the City of Modesto, Utilities Department, Water Division, Wastewater Division, and Public Works Division.

All equipment, materials, and supplies shall be furnished F.O.B. City of Modesto (delivery charges borne by Bidder, included in the Services pricing herein, and not separately charged to the City).

Bidders are highly recommended to download all IFB documents from the City’s Purchasing Division website at http://www.modestogov.com/257/Contracting-Bid-Opportunities; such IFB documents shall include all specifications necessary for Bidders to submit a responsive Bid..

Each Bid shall be sealed and filed with the City Clerk’s office, 1010 Tenth Street, Suite 6600, Modesto, CA 95354 prior to Tuesday, November 14, 2023 at 11:00 A.M., at which time Bids will be opened, read and recorded. The opening of bids will not be physically open to the public, but may be viewed simultaneously via video conferencing in the manner provided for herein. All Bids shall be available for review following City Council award approval at the Purchasing Division, 1010 Tenth Street, 5th Floor, Suite 5300, Modesto, CA 95354.

Bids will be received only at the address shown above, and prior to the time indicated. Any Bid received at or after said time and/or date, or at a place other than the stated address cannot be considered and will be returned to the Bidder unopened.

All Bids, whether delivered by an employee of the Bidder, U.S. Postal Service, courier or package delivery service must be received and time stamped at the stated address prior to the time designated.

The City Clerk’s time stamp shall be considered the official timepiece for the purpose of establishing the actual receipt of Bids. Bids will not be accepted by email or facsimile. The City of Modesto assumes no responsibility for delay in the delivery of the Bid. #10..
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HOT PATCH SERVICES
4 On the outside of the Bid envelope and courier envelope, if any, the Bidder shall indicate the following:
“NAME AND ADDRESS OF BIDDER
BID IN RESPONSE TO INVITATION FOR BIDS # 2324-16
BID OPENING DATE: NOVEMBER 14, 2023 AT 11:00 A.M.”
Bidder must deliver your Bid by a preferred method to the appropriate location below:

MAIL TO: CITY CLERK DELIVER/ COURIER TO: CITY CLERK

CITY OF MODESTO CITY OF MODESTO
P.O. BOX 642 1010 10TH STREET, SUITE 6600
MODESTO, CA 95353 MODESTO, CA 95354
The City reserves the right to reject any or all Bids or to waive any informalities or minor irregularities in a Bid.

No Bidder may withdraw its Bid for a period of 90 days after the date set for the opening thereof. #10..
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5 CALENDAR OF EVENTS
Event Date
IFB Issued OCTOBER 6, 2023
Written Questions Due via Email OCTOBER 13, 2023
Addendum Issued (if required) OCTOBER 20, 2023 (approximate date) Bid Due Date & Time PRIOR 11:00 A.M. on Tuesday, NOVEMBER 14, 2023 Agreement Award Approximately NOVEMBER, 2023

CITY CONTACT
All questions regarding these specifications, terms, and conditions shall be submitted in writing via email to the City’s Purchasing Division contact named on the cover page of this IFB (“City Contact”) by the date listed in the CALENDAR OF EVENTS above. The City will respond to pertinent questions through issuance of an Addendum to be available to all Bidders. All contact between Bidder and the City regarding the Bid process shall be through the City Contact. Attempts by the Bidder to contact other City personnel regarding this IFB and associated process may result in disqualification of the Bidder. Notwithstanding the foregoing, information intentionally or un-intentionally provided by any person other than the City Contact may not be correct and will not be binding upon the City.

BIDDER FAMILIARITY WITH SERVICE CONDITIONS
It is the responsibility of each Bidder to become familiar with all of the specifications, terms and conditions and the site condition (if applicable). The Bidder agrees to and acknowledges all IFB specifications, terms, and conditions and indicates the ability to perform by submission of a Bid. By the submission of a Bid, the Bidder certifies that if awarded a contract it will make no claim against the City based upon ignorance of conditions or misunderstanding of the specifications.

CALIFORNIA LABOR CODE SECTION 1771.1 (a)
The California Labor Code states that, “A contractor or subcontractor shall not be qualified to Bid on, be listed in a Bid proposal, subject to the requirements of Section 4104 of the Public Contract Code, or engage in the performance of any contract for public work, as defined in this chapter, unless currently registered and qualified to perform public work pursuant to Section 1725.5. It is not a violation of this section for an unregistered contractor to submit a Bid that is authorized by Section 7029.1 of the Business and Professions Code or by Section 10164 or 20103.5 of the Public Contract Code, provided the contractor is registered to perform public work pursuant to Section 1725.5 at the time the contract is awarded.” This IFB is subject to the registration requirement set forth above.

PRECEDENCE
Bidder agrees that any agreement resulting from City’s acceptance of its Bid, together with the terms in any City purchase order and associated specifications provided by the City to Bidder therewith, shall comprise the entire agreement between City and Bidder. Moreover, Bidder agrees that any additional or contrary terms contained in Bidder’s acknowledgement of, shall be null and void. #10..
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HOT PATCH SERVICES
6 VIRTUAL BID OPENING
The City of Modesto will be broadcasting Bid openings live electronically via Microsoft Teams at 11:00 a.m. (Pacific Time) on Tuesday, NOVEMBER 14, 2023 the City Clerk Record of Bid document should be available on Planet Bids by the end of the same day.

The public Bid opening for this Invitation for Bids will be available using the URL link containing the Number and Title of the Bid on the cover page, provided below. By submitting your Bid for the abovestated IFB you acknowledge, understand, and agree to this modified Bid opening procedure.

URL: https://teams.microsoft.com/l/meetup
join/19%3ameeting_NTI0YzBiMDMtNDQ0Yi00YjNlLWIwZjYtYzg4ZDVjMDdkM2Mz%40thread.v2 /0?context=%7b%22Tid%22%3a%22125ccacf-fc61-463c-9976-
189f876ff90b%22%2c%22Oid%22%3a%229715c333-c997-4dd7-8984-12cd4deaa705%22%7d Join Microsoft Teams Meeting (Click here to join the meeting) • +1 (469)-998-7409
• Conference ID: 961 656 049#
Should you have any questions regarding this, please do not hesitate to contact the Purchasing Department Contact listed on the Cover Page.
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7 GENERAL BID REQUIREMENTS
A. BID SUBMITTAL: Bidders should submit two “inked” (preferably blue ink) signed original Bid document, plus three copies of the signed original Bid document, and one electronic copy submitted via USB. The original Bid document shall be clearly marked. Photocopies do not constitute an original Bid. FAILURE TO FURNISH AT LEAST ONE “INKED” SIGNED ORIGINAL BID DOCUMENT MAY RESULT IN DISQUALIFICATION.

B. CONFIDENTIAL BIDDER INFORMATION: It is the responsibility of the Bidders to identify information in their Bid submission that they may consider to be confidential under the California Public Records Act. To the extent that the City agrees with that designation, such information will be held in confidence whenever possible. All other information will be considered public.

C. BIDDER COSTS INCURRED IN RESPONDING TO IFB: All costs associated with the preparation and submission of a Bid shall be borne by the Bidder.

D. BIDDER EXCEPTIONS: All exceptions taken to this IFB and associated specifications shall be specifically and clearly identified on Exceptions, Clarifications and Amendments form.

Failure to comply with this provision may deem the Bid as non-responsive. Please review the Sample Agreement and make note on the Exceptions, Clarifications, and Amendments form for any changes. Exceptions taken shall not affect the overall performance and quality of equipment, materials and/or provision of Services required by the City. The Purchasing Manager or designated agent shall make the final decision regarding the acceptability of equipment, materials and/or provision of Services with exceptions.

E. CITY ACCEPTANCE/REJECTION OF IRREGULAR BIDS: An agreement shall be awarded to the Bidder whose Bid most closely satisfies the needs of the City and is deemed the most advantageous to the City. The City reserves the right to reject any or all Bids or to waive any informalities or minor irregularities in a Bid.

F. COMPLETE BID DOCUMENT: The following forms constitute the makeup of a complete Bid document and shall be signed wherever indicated and submitted to the City in the order listed ):
• Bid Form A - IFB Acknowledgement
• Bid Form B – Bidder Company Information
• Bid Form C - Pricing Schedule
• Bid Form D – Bidder Exceptions, Clarifications, Amendments • Bid Form E – Bidder Customer References
• Bid Form F - Financial Interest Disclosure
• Bid Form G – Support of Local Vendors
• Bid Form H – Bidder Company History Statement
• Bid Form I - Addenda Acknowledgement Page (if applicable) #10..
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HOT PATCH SERVICES
8 • Bid Form J – Bidder Warranty Statements
• Bid Form K– Bidder Experience and Certifications
• Bid Form L - Subcontractor List
Failure to furnish any of these documents may result in disqualification.

G. COMPLIANCE/NON-COMPLIANCE: If Bidder cannot comply with a specification requirement in this IFB, note on the Exception, Clarifications, Amendments form of the specification paragraph, your exception, and your recommendation. The Purchasing Manager will evaluate your recommendation. If after evaluation it is determined that the Bidder is not in compliance with the specification, the Bid may be rejected.

H. PROPOSED PRICING FORMAT:
• The cost of labor, equipment, fuel, licenses, bonds, permits, and insurance necessary to perform the required provision of Services shall be included in Bid pricing, along with Bidder’s profit margin and any other cost factors.
• Unless otherwise stated, the Bidder agrees that, in the event of a price decline, the benefit of such lower pricing shall be extended to the City.
• The City of Modesto shall not pay mileage charges or travel time from the Contractor’s place of business to the job site, or from site to site, or for the Contractor’s travel time to pick up materials.
• Bidder shall use the pricing schedule provided in this IFB to present Bid pricing. No other form or format shall be accepted. Bid must be submitted on the Pricing Schedule provided. No alterations may be made to the pricing schedule. Any exceptions, amendments or adjustments should be noted on the Exception, Clarification, Amendments Form.

I. AWARD OF BID:
• The City may award one or more agreements to one or more Bidder in order to provide for backup, or in case the “primary” contractor is unable to meet the City’s needs. • The City reserves the right to decline to award any agreement if it is determined that the proposed pricing is not competitively priced based on similar agreements with public agencies within the State of California or if the bids received fail to meet the City’s requirements.
• The City reserves the right to select that Bid, which best suits the City’s needs. In addition to price, consideration will be given to the quality and performance of the #10..
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HOT PATCH SERVICES
9 service to be purchased, and the criteria listed in Modesto Municipal Code Section 8-

3.203(f). Regardless of City staff’s recommendation, the City Council reserves the right to award an agreement to the Bidder that best suits the City’s needs as determined by the City Council whether or not said award is consistent with City staff’s recommendation for award.

I. SUPPORT OF LOCAL VENDORS: Should the Bidder that submits the lowest responsive Bid or and would otherwise normally qualify to receive the Bid pursuant to Sections 8-3.203 and 8-

3.204 of the Modesto Municipal Code (MMC) not be a local business as defined herein, the lowest Bid or quote submitted by a local business that is within 5%of the lowest Bid, whether or not that Bidder is the second lowest Bidder, may be deemed to be the lowest Bidder if the local Bidder agrees to reduce its Bid to match the Bid or quote of the lowest Bidder in writing within five business days after notification by City Purchasing staff, provided that said local Bidder is deemed to be a responsible Bidder as determined by the Purchasing Manager. To qualify as a local Bidder, the Bidder must have a physical business location within the City of Modesto and a current City of Modesto business license.

J. INDEMNITY: The successful Bidder (the “Contractor”) will be required to hold the City, its agents, officers, employees, and volunteers, harmless from and save, defend and indemnify them against any and all claims, losses, liabilities, judgements or damages from every cause, including but not limited to injury to person or property or wrongful death, including reasonable costs and expenses of defense of any judicial or administrative action, arising directly or indirectly out of any negligent or intentional act or omission of the Contractor, its agents, officers, employees, and volunteers relating to or during the performance of its obligations under this Bid. Contractor’s obligation to defend, indemnify, and hold the city, its agents, officers, and employees harmless under the provisions of this paragraph is not limited to or restricted by any requirement for Contractor to procure and maintain a policy of insurance. With reference to the foregoing, the parties agree that all risk of loss, including but not limited to damages, property losses and defense of third-party suits, arising out of or relation to the operation of City-owned vehicles by Contractor’s employees will be apportioned to Contractor in accordance with the provisions contained in indemnity.

K. PREVAILING WAGE: Bidder’s workers must be paid no less than the prevailing wage rate as published by the State of California Department of Industrial Relations (DIR), and the successful Bidder shall maintain certified payroll. For additional information regarding Prevailing Wages, please contact the DIR at www.DIR.CA.gov or call its Labor Research and Statistics Unit, Prevailing Wage Unit at 415-703-4774. The City standards available at the following web address shall also apply to the performance of the Bid: City Standards Website:
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10 L. BIDDER REPRESENTATION: Bidder represents that:
• Bidder has had an opportunity to examine and has examined any and all of the documents, including specifications, any resultant contract and supporting data, and that it has, from the information contained in such documents, specifications, and data, fully acquainted itself with all conditions relevant to the work. • Bidder has made all reasonable investigations essential to a full understanding of the difficulties, which may be encountered in performing the work. • Bidder will complete the proposed provision of Services for the compensation stated in any resultant agreement.
• Bidder assumes full and complete responsibility for all conditions relevant to the proposed provision of Services and all risks in connection therewith. • Bidder represents that it is fully qualified to perform the proposed provision of Services in accordance with the terms of any resultant agreement within the time specified therein.

M. BID PROTEST AND APPEAL PROCEDURES: Bidders wishing to protest or appeal a contract award decision by the City of Modesto must follow the procedures provided in this section. Protests or appeals which are not submitted in accordance with these procedures will not be reviewed.

Definitions
For the purposes of these procedures: "Days" means working days in which City Hall is open for business, excluding holidays and weekends.
"Bid" includes the term "offer" or "proposal" as used in the context of formal, informal, or negotiated procurements.
"Announced Decision" includes the term “Notice of Intent to Award Letter”. Once the City has issued an Announced Decision, the date noted will begin the time that a Bidder may lodge a protest.

Protest Procedures
• Only a Bidder who has actually submitted a Bid is eligible to submit a protest against the City’s Announced Decision.
• Subcontractors are not eligible to submit bid protests. #10..
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11 • A Bidder may not rely on the bid protest submitted by another bidder, but must timely pursue its own protest.
• A written protest to an Announced Decision must be made to the City of Modesto's Director of Finance no later than ten days after the date of the Announced Decision. • The protest shall be delivered or sent by registered mail and received by the City by the deadline, or protest will be automatically rejected. Protestors who choose to be represented by legal counsel are responsible for the associated expenses. • The protest shall be accompanied by a certified or cashier's check in the amount of $300.00, (except for protests of Federally Funded agreements), made payable to the Clerk of the City of Modesto. Protests filed without the requisite fee will be rejected without any additional review.
• The protest filed with the Director of Finance shall:
a. Include the name, address, email address and business telephone number of the protestor;
b. Identify the protest by name, Invitation for Bid (IFB) or Request for Proposal (RFP) number, and IFB/RFP date;
c. The bid protest must contain a complete statement of the basis for the protest and all supporting documentation. The protest must refer to the specific portion or portions of the Contract Documents upon which the protest is based; d. Include all supporting documentation, if any. Documentation submitted after filing deadline will not be reviewed.
• Bid Protests: A Bidder shall follow, in order, the following steps:
a. Protest to Director of Finance: Upon receipt of a complete and timely protest, the Director of Finance shall review all the submitted materials and shall create and retain a written record of the review. The Director of Finance shall respond at least generally to each material issue raised in the protest not later than ten days after receipt of the protest. Notice of the Director of Finance's decision may be given by letter mailed through U.S. Postal Service.

All protests to the Director of Finance shall either be delivered to:

City Clerk’s Office
Attn: Director of Finance
1010 Tenth St. Suite 6600
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HOT PATCH SERVICES
12 Modesto CA 95354
Or mailed to:

City Clerk’s Office
Attn: Director of Finance
PO Box 642
Modesto CA 95353
b. Appeal to Deputy City Manager: At the protestor’s discretion, the decision of the Director of Finance may be appealed in writing to the City of Modesto's Deputy City Manager(s) no later than ten days after the date of the Director of Finance’s Decision. The scope of the appeal shall be limited by the issues raised in the initial protest to the Director of Finance. The Deputy City Manager shall not be permitted to review any newly raised issues. The Deputy City Manager shall review the appeal, accompanying supporting documents, if any and the written records of the protest review by the Director of Finance. A written record of the Deputy City Manager's review shall be created and maintained. The Deputy City Manager shall give notice of their decision to the protestor within ten days after receipt of appeal.

Further protest appeals shall either be delivered to:

City Clerk’s Office
Attn: Deputy City Manager
1010 Tenth St. Suite 6600
Modesto CA 95354
Or mailed to:

City Clerk’s Office
Attn: Deputy City Manager
PO Box 642
Modesto CA 95353
d. Appeal to City Council: Any protestor seeking to appeal to the decision of the Deputy City Manager may appeal in writing to the City Council by filing with the City Clerk a written notice of such appeal not later than ten days after the date of the Deputy City Manager's decision. The City Clerk will calendar the protest for Council hearing and give notice of the time and place of the hearing as provided in Modesto Municipal Code Sections 1-4.01 through 1-4.05. The City Council’s decision on the appeal shall be final.
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13 All protest appeals to the City Council shall either be delivered to:

City Clerk’s Office
Attn: City Council
1010 Tenth St. Suite 6600
Modesto CA 95354
Or mailed to:

City Clerk’s Office
Attn: City Council
PO Box 642
Modesto CA 95353
e. Optional Alternative Process for Protests of Procurement Actions Exceeding $250,000: A Bidder protesting procurements exceeding $250,000 shall comply with the procedures contained herein, except that in lieu of appeal to the Deputy City Manager a protestor may request that the protest be heard and decided at an administrative hearing.

A written request for administrative hearing shall be accompanied by a certified or cashier's check in the amount of $1,500, (except for protests of Federally Funded projects); The request for hearing shall include the specific grounds of the appeal.

The City of Modesto shall select and engage an impartial and qualified person to act as hearing officer in the pending protest. The protestor shall have the right to twice reject the selected hearing officer, provided that the City is notified of such rejection within three days of notice to protestor of the name of the hearing officer.

The protest shall be heard not later than twenty days after receipt of protestor's request for hearing and the selection of a hearing officer. Protests not made in a timely manner shall be deemed withdrawn, unless the City and the protestor mutually agree otherwise in writing. The protestor’s failure to accept a hearing officer after the third attempt by City staff to identify an impartial hearing officer shall be deemed a withdrawal of the protest.

The costs of the hearing officer and expenses of the protest shall be borne by the protestor. The sums deposited with the request for hearing shall be credited to the costs of the hearing officer and other hearing expenses. #10..
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14 f. Mandatory Alternative Process for Protests of Procurements Obtained with Federal Funds: If the protested procurement involves federal funds, the Deputy City Manager, City Council, or hearing officer shall give notice, accompanying their respective decisions, to the protestor that he or she has the right to appeal to the appropriate federal agency, for which an agency name, contact (where available) and address shall be provided by City staff. Such an appeal shall be filed with the appropriate agency within seven business days of the dispatch or rejection notices to the protestor. Federal agencies may entertain protests alleging that the City has failed to adopt written protest procedures or has failed to follow such procedures. The City Council is the highest authority of the City of Modesto and its decisions are final. A disappointed Bidder for a contract involving expenditures of Federal funds shall have the right to appeal the City Council decision directly to the federal agency as described herein. #10..
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15 BID SUBMITTAL CHECKLIST

BID SUBMITTAL CHECKLIST
The Bidder shall provide a complete Bid in a sealed envelope by the required deadline on the Bid Opening Date. Failure to provide all the required documents may cause the Bid to be considered nonresponsive.

Bidder’s Bid must contain the following applicable elements completed and signed as described morefully herein. The following checklist is provided solely for Bidder’s use in reviewing the completeness of your submission:

COMPLETE BID ELEMENTS 
Bid Form A – IFB Acknowledgement
Bid Form B – Bidder Company Information
Bid Form C – Pricing Schedule
Bid Form D – Bidder Exceptions, Clarifications, Amendments Bid Form E – Bidder Customer References
Bid Form F – Financial Interest Disclosure
Bid Form G – Support of Local Vendors
Bid Form H – Bidder Company History Statement
Bid Form I – Addenda Acknowledgement
Bid Form J – Bidder Warranty Statements
Bid Form K – Bidder Experience and Certifications
Bid Form L – Subcontractor List

Bidder’s submission should include all City of Modesto forms. If any form is not applicable, Bidder should write or type “Not Applicable” on it but still include the form in your submission. #10..
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16 BID FORM A - IFB ACKNOWLEDGEMENT
The City is soliciting Bids from qualified firms (each a “Bidder” to fulfill the City’s requirements per the specifications, terms and conditions contained in this Invitation for Bids (“Invitation for Bids” or “IFB”).

This Bid Acknowledgement must be completed, signed by an authorized responsible officer or employee, dated and submitted with the Bid response. Obligations assumed by such signature will include the following:

1. Preparation of Bids: (a) All prices and notations must be printed in ink or typewritten. No erasures permitted. Errors may be crossed out and corrections printed in ink or typewritten adjacent and must be initialed in ink by person signing the Bid. (b) Quote price as specified in Bid. No alterations or changes of any kind shall be permitted to the Bid Form. Responses that do not comply shall be subject to rejection in total.

2. Failure to Submit Bid: If you are not submitting a Bid but want to remain on the mailing list and receive future Bids, complete, sign and return this Bid Acknowledgement and state the reason you are not pricing.

3. Taxes and Freight Charges: (a) Unless otherwise required and specified in the IFB, the prices quoted herein do not include Sales, Use or other taxes. (b) No charge for delivery, drayage, express, parcel post packing, cartage, insurance, license fees, permits, costs of bonds, or for any other purpose, except taxes legally payable by City, will be paid by the City unless expressly included and itemized in the Bid. (c) Amount paid for transportation of property to the City is exempt from Federal Transportation Tax. An exemption certificate is not required where the shipping paper shows the consignee as one (1) of the City; as such papers may be accepted by the carrier as proof of the exempt character of the shipment. (d) Articles sold to the City are exempt from certain Federal excise taxes. The City will furnish an exemption certificate.

4. Award: (a) Unless otherwise specified by the Bidder or the IFB gives notice of an all-or-none award, the City may accept any item or group of items of any Bid. (b) Bids are subject to acceptance by the City at any time within 45 days of opening, unless otherwise specified in the IFB. A Bidder shall not change its bid if accepted within such time. (c) A valid, contract based on the sample agreement attached to the IFB and the submitted bid shall be mailed, or otherwise furnished, to the successful Bidder within the time for acceptance specified, and such contract shall be a binding agreement without further action by either party. The contract shall be interpreted, construed and given effect in all respects according to the laws of the State of California.

5. Patent Indemnity: Bidders who do business with the City shall hold the City, its officers, agents and employees, harmless from liability of any nature or kind, including cost and expenses, for infringement or use of any patent, copyright or other proprietary right, secret process, patented or unpatented invention, article or appliance furnished or used in connection with the contract or purchase order.
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17 6. Samples: Samples of items, when required, shall be furnished free of expense to the City and if not destroyed by test may upon request (made when the sample is furnished), be returned at the Bidder’s expense.

7. Rights and Remedies of City for Default: (a) In the event any item furnished by the Bidder in the performance of the contract or purchase order should fail to conform to the specifications therefore or to the sample submitted by the Bidder with its Bid, the City may reject the same, and it shall thereupon become the duty of the Bidder to reclaim and remove the same forthwith, without expense to the City, and immediately to replace all such rejected items with others conforming to such specifications or samples; provided that should the Bidder fail, neglect or refuse to do so, the City shall thereupon have the right to purchase in the open market, in lieu thereof, a corresponding quantity of any such items. City may deduct from any moneys due or that may there after come due to Bidder, or send an invoice to the Bidder which shall be paid within thirty (30) days, the difference between the prices named in the contract or purchase order and the actual cost thereof to the City. In the event that the Bidder fails to make prompt delivery as specified for any item, the same conditions as to the rights of the City to purchase in the open market and to reimbursement set forth above shall apply, except when delivery is delayed by fire, strike, freight embargo, or Act of God or the government. (b) Cost of inspection or deliveries or offers for delivery, which do not meet specifications, will be borne by the Bidder. (c) The rights and remedies of the City provided above shall not be exclusive and are in addition to any other rights and remedies provided by law or under the contract.

8. Payment Terms and Methods: Bidder will be able to choose from either of the following payment methods and associated timings:
(a) Option A (Preferred): City of Modesto ePay Payment: This secure payment methodology is preferred by an increasing number of the City’s suppliers. On Net 30 day timing, you will receive a single-use Master Card number with a detailed remittance for each payment. You will process the payment though your POS/Card terminal. The payment remittance will be sent from [email protected] via email and will contain the following information:
• 16-digit credit card number
• Expiration date
• Security code
• Total dollar amount of invoices to be paid
• Invoices reference numbers and corresponding amounts
ePay results in small percentage rebate of 1.0% to the City through the card issuer. That rebate amount will be considered by the City in its evaluation of Bidder’s pricing proposal hereunder.

Information about enrolling in MasterCard ePay program can be obtained from the City’s contact listed on the Cover Page of this IFB.
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18 (b) Option B – Manual Check: On Net 45 Day timing, the City will mail a hardcopy check to Bidder. The payment will be deemed to have been made when the check envelope is mailed via US Postal Service First Class Mail. The timing of the mailing will be at the end of the Net 45 Day period. Additional time should be estimated by the Bidder for the check to be in transit, and to await deposit and clearance by Bidder staff.

9. California Government Code Section 4552: In submitting a Bid to the City, the Bidder offers and agrees that if the Bid is accepted, it will assign to the City all rights, title, and interest in and to all causes of action it may have under Section 4 of the Clayton Act (15 U.S.C. Sec. 15) or under the Cartwright Act (Chapter 2, commencing with Section 16700, of Part 2 of Division 7 of the Business and Professions Code), arising from purchases of Services, materials, or services by the Bidder for sale to the purchasing body pursuant to the Bid. Such assignment shall be made and become effective at the time the purchasing body tender’s final payment to the Bidder.

10. No Guarantee or Warranty: The City makes no guarantee or warranty as to the condition, completeness or safety of any material or equipment that may be traded under a contract or purchase order resulting from this Bid.

11. Two “Inked” Signed Original Bids Document Required: Failure to furnish two “inked” signed original Bid document may result in disqualification. These must be accompanied by one copy and one electronic document recorded onto a USB storage device.

12. Minor Irregularities. The City reserves the right, in its sole discretion, to waive any informalities or minor irregularities in a Bid.

The undersigned acknowledges receipt of the referenced IFB and/or Addenda and offers and agrees to furnish the articles and/or services specified on behalf of the Bidder indicated in Bidder’s Bid Forms A through L, attached hereto and made a part hereof, for the pricing proposed on the Pricing Schedule.

Bidder Company Name:

Bidder Headquarters Address:

City/State/Zip:

Signature/Title/Date:
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19 BID FORM B – BIDDER COMPANY INFORMATION
A. Bidder Company Full
Legal Name
B. Bidder Company
Marketplace (or DBA)
Name
C. Type of Legal Entity: ___ Corporation, registered in ____________________ (State) ___ Limited Liability Company, registered in _________________(State) ___ Partnership, registered in ________________(State)
___ Sole Proprietorship, registered in ____________(State) ___ Other ___________________________________________(Describe) D. Headquarters Address
(Street Address, City,
State, Country, Postal
Code):

E. Website Address: www.___________
F. Contact Person Details: Name:

Title:

Phone (Office):

Phone (Mobile):

Mailing Address (Street Address, City, State, Postal Code):

Fax Number:

Email:

G. Federal Taxpayer
Identification Number
(TIN):

H. Dun & Bradstreet
(DUNS) Number:

I. Names and Titles of
Top Three Bidder
Officers:

J. Years in Business:

K. Bidder Office Address
Closest to City of
Modesto (Street
Address, City, State,
Country, Postal Code):

L. City of Modesto
Business License
Number (note –
provide only if
available now - - but
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20 not required until any
contract begins):

M. State of California
Contractor License
Number and Expiration
Date (if available):

N. State of California
Department of
Industrial Relations
(DIR) Registration
Number and Expiration
Date (if available):
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21 BID FORM C - PRICING SCHEDULE
All labor, materials, equipment, tools, fuel, licenses, bonds, insurance and other expenses necessary for Bidder to perform the required services shall be included in Bid pricing. Bid must be submitted on the below Pricing Schedule provided. No alterations should be made to the pricing schedule. Any exceptions, amendments or adjustments should be noted on Bid Form D – Bidder Exceptions, Clarifications, Amendments.

Pricing shall include traffic control work within City or County right-of-way which includes lane closures but does not involve an intersection.

Bid pricing is based on a square foot unit cost per 4-inch lift. For depths less than or greater than 4 inches, the City-specified fixed multiplier will be used for basis of payment. The fixed multipliers for each depth is:

Per Square Foot
depth, in cf ton Base Multiplier (per sq ft)
1 0.08 0.0060 0.4375
2 0.17 0.0121 0.6250
3 0.25 0.0181 0.8125
4 0.33 0.0242 1.0000
5 0.42 0.0302 1.1875
6 0.50 0.0363 1.3750
7 0.58 0.0423 1.5625
8 0.67 0.0483 1.7500
9 0.75 0.0544 1.9375
10 0.83 0.0604 2.1250
11 0.92 0.0665 2.3125
12 1.00 0.0725 2.5000
For example, if your Unit Price is $4.00 per square foot, and the raw asphalt material cost is $1.00 of the $4.00 unit price, your ratio (percent) would be 0.25 or 25 percent.

Description Est. Annual
Quantity
Unit Multiplier Unit Price Extended Price
Hot Mix Asphalt (4-in
Lift) Linear
96,350 Sq. Ft 1.00 $ $
Hot Mix Asphalt (4-in
Lift) Spot 435,450 Sq. Ft 1.00 $ $
TOTAL PRICE $
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22 Formula for calculating invoice pricing:

Base Unit Price x Depth Multiplier x Total Square Feet = Total Price For future price adjustments, Raw Material cost versus Unit Price:

Ratio Percent
Raw Material/Unit Price x 100 =
The payment of Prevailing Wages is required for this project.

Labor Craft Direct Labor Rate*
Fringe Benefit
Rate**
Labor
Markup
(percent)
Price Per
Service
$ /HR $ /HR % $ /HR
$ /HR $ /HR % $ /HR
$ /HR $ /HR % $ /HR
*Direct Labor Rate cannot be less than the minimum state prevailing wage. **Provide a copy of the current Fringe Benefit Statement. During the term of the agreement, ensure the City has a copy of the current, applicable statement on file.
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23 Payment Terms:

Check which of the following payment terms/methodology Bidder accepts (a description of each can be found in Bid Form A – IFB Acknowledgement):

Choose One:
• Option A (Preferred): City of Modesto ePay Payment on Net 30 Day Timing: ___ Choose by checking () here. If selected, for bid comparison purposes, Bidder’s pricing will be reduced by the City of Modesto’s average ePay card program rebate percentage; or ePay Email Address: _____________________________
• Manual Check Payment Mailed by US Postal Service First Class Mail Only on Net 45 Day Timing:
___ Choose by checking () here.

THE undersigned acknowledges receipt of the referenced IFB and any associated Addenda and offers to furnish the articles and/or services specified, in accordance with the specifications, terms and conditions of this IFB and these Bid documents, for the pricing indicated on the Pricing Schedule.

Bidder Company Name:

Name of Bidder Signatory:

Signature of Bidder Representative:
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24 BID FORM D – BIDDER EXCEPTIONS, CLARIFICATIONS, AMENDMENTS Exceptions to the City of Modesto’s IFB package, sample agreement, and associate specifications are not encouraged and may cause Bidder to be considered not responsible and/or its Bid to be considered not responsive. Therefore, if no exceptions, clarifications or amendments are proposed by Bidder, it is preferred that Bidder so indicate by typing or writing “Not Applicable” in the Description field in the first item row below. Less preferred, Bidder may indicate no exceptions, clarifications or amendments are proposed by leaving this form out of its’ Bid submission.

Nonetheless, Bidder may request Bid clarifications and exceptions below, if any, sign and submit with your Bid response.

Any requested exception, clarification or amendment may not be accepted and may deem the Bidder as non-responsive.

Item # Reference To: Description
Page # Section or
Paragraph #
Bidder Company Name:

Name of Bidder Signatory:

Signature of Bidder Representative:
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25 BID FORM E – BIDDER CUSTOMER REFERENCES
Bidder must provide a list of five current or former customers able to discuss prior experience with similar type of services requested by the City in the above-referenced IFB. Bidder’s references shall have similar volume and requirements to the City of Modesto’s as described in the above-referenced IFB. Bidders failing to provide references may be deemed as non-responsive.

The City may contact some or all of the references provided in order to determine the Bidder’s performance record on services similar to that described in the above-referenced IFB. The City reserves the right to contact references other than those provided in Bidder’s submission and to use the information gained from them in the award process.

Company Name:

Address:

City, State, Zip Code:

Contact Person:

Email Address:

Telephone Number:

Type of Business or
Governmental
Agency:

Date Range of
Service:

Annual Contract Value $
Company Name:

Address:

City, State, Zip Code:

Contact Person:

Email Address:

Telephone Number:

Type of Business or
Governmental
Agency:

Date Range of
Services:

Annual Contract Value $
Company Name:

Address:

City, State, Zip Code
Contact Person:

Email Address:

Telephone Number:
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26 Type of Business or
Governmental
Agency:

Date Range of
Services:

Annual Contract Value $
Company Name:

Address:

City, State, Zip Code
Contact Person:

Email Address:

Telephone Number:

Type of Business or
Governmental
Agency:

Date Range of
Services:

Annual Contract Value $
Company Name:

Address:

City, State, Zip Code
Contact Person:

Email Address:

Telephone Number:

Type of Business or
Governmental
Agency:

Date Range of
Services:

Annual Contract Value $
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27 BID FORM F - FINANCIAL INTEREST DISCLOSURE
Any contract award to result from this IFB process and Bidder’s submission of a Bid therewith will require approval by a majority vote of the City of Modesto’s City Council. In order to have full transparency in any City of Modesto commercial actions, the City Council may not approve an agreement between the City and the Bidder until all person with a direct or indirect financial interest of greater than $2,000 in the Bidder are identified by name.

Bidder must therefore complete this Bid Form F – Financial Interest Disclosure, listing by name all parties that have a material financial interest in the agreement, contract or development right.

PLEASE NOTE, any Council action that requires a Financial Interest Disclosure cannot be considered by the City Council until the required reporting is made. That means that City Council agenda items without the disclosure will be removed from the Council agenda.

Financial Interest Disclosure to City of Modesto
The Bidder shall identify any person with a financial interest in the Bidder by name, below.

For the purposes of this disclosure, a “Financial Interest” shall have the meaning contained in Modesto Municipal Code section 2-10.02.

Persons having an aggregate economic interest in the Bidder less than two thousand dollars ($2,000.00) at all times prior to final Council action of the proposed contract are not required to be listed on the Financial Interest Disclosure.

Notwithstanding the foregoing, a Financial Interest Disclosure is not required for a Bidder meeting the financial criteria for listing on the New York or the Pacific Stock exchanges unless it is reasonably foreseeable that a City Council decision will increase or decrease that entity's gross revenues or expenses by one million dollars ($1,000,000) or more and the requirements of Modesto Municipal Code Section 2-

10.03(h) are satisfied.

It is the legal obligation of all applicants for approval of an agreement or of an application for development rights to verify in writing, under penalty of perjury, that the identity of each person having a material financial interest in the Bidder is true, correct and complete. By signing below, the applicant understands that this information is provided under penalty of perjury, and that intentionally supplying misinformation or deception may result in either invalidation of the agreement or application, or criminal prosecution for misdemeanor violation of the Modesto Municipal Code, or both. Negligent provision of misinformation shall be grounds for invalidation. In accordance with the Modesto Municipal Code, each applicant has a continuing obligation to maintain the truth, accuracy and completeness of the financial interest disclosure information provided below until after final consideration by the City Council of any matter arising out of or relating to the agreement or application.

Print Names of Persons Having a Financial Interest in Bidder Receiving this Agreement:

First Name, Last Name
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28 First Name, Last Name
First Name, Last Name
First Name, Last Name
First Name, Last Name
First Name, Last Name
First Name, Last Name
First Name, Last Name
First Name, Last Name
First Name, Last Name
First Name, Last Name
First Name, Last Name
First Name, Last Name
First Name, Last Name
First Name, Last Name
By signing this document, I agree to the information contained within.

Bidder Company Name:

Name of Bidder Signatory:

Signature of Bidder Representative:
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29 BID FORM G – SUPPORT OF LOCAL VENDORS
Notice Pursuant to Modesto Municipal Code section 8.3-206 - Should the Bidder which submits the lowest responsive Bid (and would otherwise normally qualify to receive the Bid pursuant to Sections 8-3.203 and 8-

3.204 of the Modesto Municipal Code) not be a local business as defined herein, the lowest Bid or quote submitted by a local business that is within five percent (5%) of the lowest Bid or quote, whether or not that Bidder is the second lowest Bidder, may be deemed to be the lowest Bidder if the local Bidder agrees to reduce its Bid to match the Bid of the lowest Bidder in writing within five business days after notification by City Purchasing staff, provided that said local Bidder is deemed to be a responsible Bidder as determined by the Purchasing Manager.

Notwithstanding the foregoing, award to the local Bidder must still be approved by the City Council as would have the typical award.

To qualify as a local Bidder, the Bidder must have a physical business location within the City of Modesto and a current City of Modesto business license.

This document is only required should the Bidder request to be considered for the Support of Local Vendor preference, and meets the criteria noted above.

Check here:

I declare I am a local business per the above criteria
Bidder Company Name:

City of Modesto Address (Street,
City, State, Postal Code:

City of Modesto Business License
Number:

Under penalty of perjury, the undersigned declares that the foregoing information is true and correct:

Print/Type Name:

Title:

Signature:

Date:
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30 BID FORM H - BIDDER COMPANY HISTORY STATEMENT
Bidder shall have been in business for a minimum of three continuous years (immediately prior to the time of the City’s solicitation) providing the services described in this Invitation for Bids (IFB).

The Bidder’s company history overview statement shall be approximately one to three pages in length and inserted below:

Bidder Company Legal Name: Insert Bidder Logo Here (if existent):

Insert Bidder Company History Overview Statement Beginning Here:
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31 BID FORM I - ADDENDA ACKNOWLEDGEMENT
In order to obtain any addenda information, throughout the IFB period, Bidder is responsible for regularly checking the City of Modesto’s Planet Bid website at https://pbsystem.planetbids.com/portal/14999/bo/bosearch for the IFB number listed on the Cover Page and in the header of each subsequent page of this IFB, and in any event, no later than the day prior to Bid opening.. The changes identified in any addenda issued will modify this IFB and specifications. The addenda now become a part of this IFB and Bidder’s resultant Bid.

Signing the Bid on the signature portion thereof, the Bidder is acknowledging that the Bidder has confirmed that it has received all addenda issued for IFB, and has included costs for such in the Bid submitted. Failure to list and acknowledge all addenda numbers may cause Bidder’s Bid to be considered nonresponsive.

Do not attach any of the addenda to this sheet nor include them with the Bid.

If no addenda have been issued against this IFB solicitation, Bidder may write “Not Applicable” and return this Bid Form as part of its submission. Alternatively, Bidder may leave this Bid Form out of its submission.

But if any addenda have been issued by the City of Modesto this document is required to be completed and returned.

The Bid is submitted with respect to the changes to the IFB included in addenda numbers:

List All Addenda Numbers, Separated by Commas
(“,”):

Bidder Company Name:
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32 BID FORM J – BIDDER WARRANTY STATEMENTS
As a material part of its Bid, Bidder shall insert below a written statement detailing any materials and workmanship warranties, term and conditions in conformance with the specifications and requirements set forth in this IFB.

Notwithstanding any other provisions of this IFB, Bidder warrants that the materials, supplies, or other services furnished under any contract or purchase order resulting from its Bid shall be on the most suitable grade and meet or exceed the standards set forth in this IFB. Such warranty shall include the following; performance, workmanship, labor, materials, and Bidder design or engineering contributions. If a defect is discovered in any item of the materials, assemblies, components, supplies or services covered in this Bid, Bidder shall correct at its sole expense, all such defects as are reported within 30 days of City’s final acceptance. Upon expiration of the applicable warranty period, all such liability shall terminate except for fraud or such gross mistakes as amount to fraud, latent defects, or specific failure to comply with the terms or any resultant purchase order.

All materials, parts, labor, assemblies and components shall by subject to the warranty conditions and terms unless specifically exempted in writing by the City of Modesto.

Bidder Company Legal Name: Insert Bidder Logo Here (if existent):

Insert Bidder Warranty Statement Beginning Here:
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33 BID FORM K – BIDDER EXPERIENCE AND CERTIFICATIONS
Bidder shall provide below a summary covering the following:

A. Experience: The Contractor and its employees directly involved in providing inspections, services and repairs shall have a minimum of three years’ experience providing the types of services requested in this IFB:
i. Identify key personnel and their position within your organization. ii. Provide a biographical summary or resume detailing the experience, level of expertise and qualifications of the key individuals providing the types of services requested herein. iii. If you plan to subcontract work, you must also indicate in Bid Form L – Subcontractor List the name and address of each firm and the type of work or tasks the subcontractor will perform. Identify key personnel assigned to the project, their position, qualifications and representative experience.

B. Certifications: Bidder shall provide copies of all relevant certifications held for both company and any individuals required to perform the services requested herein.

C. Required Licenses: The successful bidder shall provide proof of valid State of California contractor’s license of one of the following types; General Engineering, Class A; Earthwork and Paving, class C-12; or Pipeline Contractor, C-34. The Contractor shall maintain a valid State of California contractor’s license of one of the preceding types for the duration of the contract. If at any time, the Contractor no longer possesses a valid State of California contractor’s license of one of the preceding types, the City of Modesto can terminate the agreement without notice or compensation.

Prior to beginning any service that shall be furnished under this specification, the bidder shall secure the appropriate Business/Delivery license from the City of Modesto. Business/Delivery license information may be obtained by calling (209) 577-5389.

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34 BID FORM L - SUBCONTRACTOR LIST
Bidder shall list the name and the address of the place of business for each subcontractor who will perform work or labor or render services to the Bidder. In addition, list the type of work the subcontractor will perform, and; (if applicable) its Department of Industrial Relations (DIR) registration number and its California Contractor’s license number:

Name of
Subcontractor
Address Type of Work Contractor
License # (if any)
DIR
Registration #
(if any)
Bidder Company Name:
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35 TECHNICAL SPECIFICATIONS AND REQUIREMENTS

1.1 SCOPE OF WORK:

The City of Modesto is requesting contractual assistance to perform hot patch work throughout Modesto and the outlying areas included in the City of Modesto’s regional water system including Salida, Del Rio, parts of Ceres, parts of Turlock, Grayson, Empire and other County areas just outside the City limits. Hot patch work consists of asphalt repairs when street cuts are made in order to make repairs and improvements to City Utilities. The Scope-of-Work is for ongoing annual services not for a specific job.

The successful Contractor will receive an ongoing assignment list for the requesting division. The assignment list will include ten (10) to twenty (20) geographically located addresses requiring work. There may be times, due to emergency circumstances, where the Contractor will be required to stop work in a geographical area to perform hot patch work within the City’s regional water system. Occasionally, there may be times where the contractor will be required to work after hours, nights, and/or weekends as needed.

The successful bidder shall furnish all labor, materials, equipment, tools, licenses and insurance necessary to perform the work described in this IFB.

Water meter installation is approximately 50% of the total patching. A typical size cut is 30 sq. ft. (SPOT), approximately 5' x 6'. Some cuts may be larger or smaller. Cuts may also include trench repair (LINEAR). The City of Modesto anticipates an estimated total of 500,000 sq. ft. annually.

1.2 TECHNICAL SPECIFICATIONS:

A. Hot patch work shall meet all current City of Modesto and current Stanislaus County Standard Specifications. All hot patch work shall be authorized by the using Department, and shall be completed by the Contractor within thirty (30) calendar days from the date the Contractor receives the assignment list of work. Some work will need to be timed according to construction being done by sub-developer and other contractors. The Contractor shall complete all “emergency” work within forty-eight (48) hours of receiving the assignment.

B. Bidders shall refer to current City of Modesto and Stanislaus County Standard Specifications.

C. Pave street patching-asphalt 4" minimum or to existing, whichever is greater, 2" lift for each layer.

D. Pave alley patching-asphalt 3" minimum, 2" lifts.

E. For work within Stanislaus County right-of-way, Contractor can work under City’s encroachment permit with the county.

F. Existing concrete and asphalt surfaces must be prepared and tack coat (Asphaltic Emulsion, Grade SS1) applied prior to new asphalt paving. Contractor is responsible for Tack Coat material and application rate per Caltrans Standard Specifications. No slurry/sand seal.

G. Stanislaus County and City of Modesto Standard Specifications requires neat and clean saw cuts for hot patch work.
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36 H. Valve boxes, manholes, and all other utility boxes shall be set to finished grade. The City estimates twenty percent (20%) of sites will have valve boxes or manholes. Contractor is not required to pour concrete around collar.

I. Contractor is required to maintain work sites to be free of debris and sediment while utilizing best management practices (BMPs).

J. Settling or poor workmanship shall be redone by Contractor at Contractor expense within a 12 month period from job completion.

K. The Contractor shall be responsible for providing all run off and storm protection (aka water pollution control), traffic control equipment, and personnel while performing hot patch work. Traffic control will vary. Hot patch work will be associated with various street classifications: local streets, minor/major collectors, minor/principal arterial and multiple lane expressways.

Flagger requirements will vary, depending on traffic control, type of street and location of assigned work. A typical flagging situation will require two (2) flaggers, some situations may require more.

For traffic control requirements, the Contractor shall conform to the latest California Manual of Uniform Traffic Control Devices (CA MUTCD).

L. The material for hot patch work shall meet all Stanislaus County and City of Modesto Standard Specifications. Asphalt concrete shall be 1/2-inch gradation, Type A Hot Mix Aspalt with a maximum of 15 percent Reclaimed Asphalt Pavement (RAP). A paint binder of asphaltic emulsion (prime coat) shall be applied to all surfaces in conformance with Section 39-4 of State Standards. For Caltrans sites, the Contractor is required to meet their standards. The City does not anticipate more than twelve (12) per year in Caltrans right of ways.

M. Temporary pavement or “cutback” will be present and shall be removed by the Hot Patch Contractor. If specifications are followed, settling will not be held against the contractor. (Removed materials will be hauled by Contractor to a City-designated spoils dump site).

N. Bid pricing is based on a square foot unit cost per 4-inch lift. For depths less than or greater than 4 inches, the City-specified fixed multiplier will be used for basis of payment. The fixed multipliers for each depth is:

Per Square Foot
depth, in cf ton
Base Multiplier (per sq
ft)
1 0.08 0.0060 0.4375
2 0.17 0.0121 0.6250
3 0.25 0.0181 0.8125
4 0.33 0.0242 1.0000
5 0.42 0.0302 1.1875
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37 6 0.50 0.0363 1.3750
7 0.58 0.0423 1.5625
8 0.67 0.0483 1.7500
9 0.75 0.0544 1.9375
10 0.83 0.0604 2.1250
11 0.92 0.0665 2.3125
12 1.00 0.0725 2.5000
O. Contractor shall set valve boxes to grade. Stand 1/32-inch above asphalt grade.

P. City is responsible for replacement of permanent traffic striping, markings and devices.

Q. Contractor is not required to do base work, except re-compaction of finished top of base material where disturbed during removal of temporary patchwork/cutback.

R. Contractor is responsible for full depth saw cuts (and/or grinding when specified in the work order) at all sites. Slot cutting is not acceptable.

S. Contractor will be provided with a work order schedule of locations in a geographical area.

T. The City estimates ninety-five percent (95%) of the work in streets, five percent (5%) alleyways.

U. The City of Modesto and Stanislaus County Standard Specifications in Attachment B

1.3 CITY REPRESENTATIVE:

Work under any resulting contract shall be performed under the general technical guidance and direction of the "City Representative". The City Representative is not authorized to commit the City to changes in specifications, requirements, or scope of work, changes in price(s), period of performance or delivery date(s) or method of shipment. Changes of a contractual or business nature shall be effected only by written change to the contract, issued by the City of Modesto, Purchasing Division.

1.4 CHARACTER OF WORKERS:

If any person employed by the Contractor fails or refuses to carry out safe and lawful direction of the City Representative, or appears to be incompetent or acts in a disorderly or improper manner, that person shall be discharged immediately from the job on the request of the City Representative or Purchasing Manager, and such person shall not again work on any City job.

1.5 BARRICADES:

The Contractor shall place barricades and/or safety ribbon as necessary to restrict access to the work areas. The Contractor shall be responsible for maintaining access control of the work areas from the time construction starts until the time the work site is returned to its pre-project condition, including paving and cleanup.

1.6 ADDITIONAL AND EMERGENCY PROTECTION:
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38 Whenever, in the opinion of the City Representative, the Contractor has not taken sufficient precautions for the safety of the public, or property and structures adjacent to the work site, the City Representative may provide suitable protection with or without first notifying the Contractor. The cost and expense of such protection provided by the City shall be borne by the Contractor. The City shall deduct the cost of such protection from any monies due or to become due to the Contractor.

1.7 CLEANUP:

Prior to requesting a final inspection, the Contractor shall carefully cleanup and remove all surplus materials and/or debris of any type resulting from the Contractors’ work from the work site, and shall dispose of all of the materials and debris in a proper manner. The work site shall be left clean and neat.

1.8 DISPOSAL OF MATERIALS:

The Contractor shall certify that any materials and debris removed from the site shall be disposed of in accordance with applicable Federal, State and Local laws, regulations or ordinances. If requested by the City, Contractor shall furnish proof of disposal.

1.9 CONTRACTOR’S RESPONSIBILITY FOR WORK:

Until the formal acceptance of the work by the City Representative, the Contractor shall be responsible for and have care, custody, and control of the work and of the parts, materials and equipment to be used therein, including parts, materials and equipment delivered to the work site. The Contractor shall bear full risk of loss, injury or damage to any part of the work and parts, material or equipment by action of the elements, or from any other cause, whether arising from the execution or non-execution of the work. The Contractor shall rebuild, repair, restore and make whole, all loss or damage to any portion of the work, parts or materials, before final acceptance, and shall bear the expense thereof, except for such loss or damage caused by the acts of the City, State, or Federal Government, or by an act of God as defined in Section 4150 of the California Government Code.

Suspension of work for any cause whatsoever shall not relieve the Contractor of his/her responsibility for the work or parts and materials as specified on the work request.

The Contractor shall be responsible for and remedy all defects arising from faulty, improper or inferior workmanship, or parts and materials discovered in any part of the work, during one year after the completion and acceptance of the work.

The Contractor shall be responsible for any damage his/her activities cause to adjacent public or private property. The Contractor shall take all measures necessary to protect the surrounding area from debris or other damage resultant from the project activities.

1.10 DELAY BY THE CITY:

Any act or omission of any kind by the City of Modesto, its officers, agents or employees, which causes the Contractor delay in the completion of the work shall be grounds for extension of time on the part of the Contractor to complete the work, but shall give the Contractor no damages for such delay. #10..
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39 TERM OF AGREEMENT
The term of the agreement shall be for a period of two (2) years, with (3) one-year extension options at the sole discretion of City, for a total up to (5) years.

A. Pricing shall remain firm for the first two (2) years of the agreement, which may be awarded pursuant to this IFB.

B. During the course of any subsequent agreement (or amendments thereto) in years 3, 4, or 5, oil price fluctuations may be a cause to adjust prices. Any adjustment in pricing shall be based upon Caltrans Asphalt Price Index located at:
http://www.dot.ca.gov/hq/construc/crudeoilindex/
The California Statewide Crude Oil Price Index is determined each month on a or about the third business day of the month by the Department using the average of the posted crude oil prices in effect for the previous month as posted by Cheveron, Exxon Mobile and ConocoPhillips for the Buena Vista and Midway Sunset fields. A thirty (30) day written notice of a request for an adjusted price is required in writing. Any price adjustment shall be negotiated by the Purchasing Division.

No price increase shall be effective until accepted by the City. Until the change has been accepted, the Contractor must continue to accept order with the original Bid price, terms and conditions. Unless otherwise stated, the bidder agrees that, in the event of a price decline, the benefit of such lower pricing shall be extended to the City.
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40 SAMPLE AGREEMENT
SAMPLE ANNUAL AGREEMENT – HOT PATCH SERVICES
This agreement, hereinafter called AGREEMENT, made and entered into in the City of Modesto, State of California, this ____ day of ____________________ , 2023, by and between the City of Modesto, a municipal corporation of the State of California, hereinafter called CITY, and _________________, a ______ _______, hereinafter called CONTRACTOR.

W I T N E S E T H:

WHEREAS, the Modesto City Council adopted Resolution No. 2023-xx authorizing the Award of Bid and agreement for the HOT PATCH WORK to CONTRACTOR, attached hereto as Exhibit “A” and made a part hereof, and
WHEREAS, the CONTRACTOR provided a responsive and responsible submittal that best meets the CITY needs, attached hereto as Exhibit “B” and made a part hereof, and WHEREAS, the CITY and CONTRACTOR shall enter into an agreement for the HOT PATCH WORK as described in IFB 2324-16 attached hereto as Exhibit “C” and made a part hereof (hereinafter called IFB).
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41 NOW, THEREFORE, the parties hereto mutually agree as follows:

1. THE WORK:
a) CONTRACTOR shall furnish all labor, materials, equipment, fuel, tools, licenses, and insurance necessary to perform and complete the required work as specified in Exhibit “C”, and in strict accordance with the conditions of the complete AGREEMENT. b) CONTRACTOR shall do and perform the work contemplated hereby in a good workmanlike manner under the direction of and to the satisfaction of the CITY Representative. c) CONTRACTOR shall maintain proper insurance with the CITY for the duration of the AGREEMENT.
d) CONTRACTOR shall maintain a CITY business license for the duration of the AGREEMENT.
e) CONTRACTOR shall furnish said services at the following AGREEMENT rates for an estimated annual amount $_________________. The total amount paid by CITY to CONTRACTOR over the full term of the AGREEMENT shall not exceed $____________. Unless the services provided are for a lump sum or flat fee, fees for work performed by CONTRACTOR on an hourly basis shall not exceed the amounts shown on Bid attached hereto as Exhibit B.

AGREEMENT PRICING
Description Unit Multiplier Extended Price
Hot Mix Asphalt (4-in Lift)
Linear
Sq. Ft 1.00 $
Hot Mix Asphalt (4-in Lift)
Spot Sq. Ft 1.00
$
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42 Per Square Foot
depth, in cf ton
Base Multiplier (per sq
ft)
1 0.08 0.0060 0.4375
2 0.17 0.0121 0.6250
3 0.25 0.0181 0.8125
4 0.33 0.0242 1.0000
5 0.42 0.0302 1.1875
6 0.50 0.0363 1.3750
7 0.58 0.0423 1.5625
8 0.67 0.0483 1.7500
9 0.75 0.0544 1.9375
10 0.83 0.0604 2.1250
11 0.92 0.0665 2.3125
12 1.00 0.0725 2.5000

2. PREVAILING WAGES:

In accordance with California Labor Code Section 1771, CONTRACTOR shall pay all workers, and shall ensure its subcontractors pay all of their workers, engaged in performing the services described in Exhibit “C” not less than the general prevailing rate of per diem wages for work of a similar character in the locality in which the services described in Exhibit “C” are to be performed, and not less than the general prevailing rate of per diem wages for holiday and overtime work as provided in the California Labor Code. In accordance with California Labor Code Section 1773.2, the City has obtained the general prevailing wages in the locality in which the services described in Exhibit A are to be performed for each craft or type of work needed to be as published by the State of California Department of Industrial Relations, Division of Labor Statistics and Research, a copy of which is on file in the CITY’s Purchasing Department and shall be made available on request. Contractor must comply with all applicable laws and regulations that apply to wages earned in performance of the services described in Exhibit “C”, including those set forth in Labor Code section 1770 et. seq. and in the IFB.
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43 DIR Project ID#: _________________

3. CITY REPRESENTATIVE:

CITY Representative is:

Jeremy Parnell, Water Superintendent, (209) 342-4599. [email protected] Purchasing Contact: Melvin Rosal, Buyer, (209) 577-5420 , [email protected] The CITY Representative is not authorized to commit the CITY to changes in specifications, requirements, or scope of work, changes in price(s), period of performance or delivery date(s) or method of shipment. Changes of a contractual or business nature shall be effective only by written change to the AGREEMENT, issued by the City of Modesto, Purchasing Division.

4. TERM OF AGREEMENT:

The term of the AGREEMENT shall be for a period of two years, with three one-year extension options at the sole discretion of CITY, for a total of up to five years.

Year 1: May 22, 2024 through May 21, 2025
Year 2: May 22, 2025 through May 21, 2026
Year 3: May 22, 2026 through May 21, 2027
Year 4: May 22, 2027 through May 21, 2028
Year 5: May 22, 2028 through May 21, 2029
Pricing as set forth in Section 1.e. above shall remain firm for the first two years of the AGREEMENT.

Price increases for any subsequent AGREEMENT years following the second year, shall not exceed the percentage change in the Consumer Price Index (CPI) for West Urban Area in any one AGREEMENT year, and shall be negotiated through the Purchasing Division. Requests for price increases #10..
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44 shall be submitted by CONTRACTOR in writing, 90 days prior to the annual anniversary date of the AGREEMENT to be effective for the subsequent year.

5. LIABILITY INSURANCE:

The CONTRACTOR shall provide, at its own expense, and maintain at all times the following insurance with insurance companies licensed in the State of California and shall provide evidence of such insurance to the CITY as may be required by the City Clerk of the CITY. The policies or certificates thereof shall provide that, at least 30 days prior to cancellation or material change in the policy, notices of same shall be given to the Risk Manager of the CITY by registered mail, return receipt requested, for all of the following stated insurance policies.
a. General Liability - insurance with a minimum limit of liability per occurrence of $1,000,000 for bodily injury and property damage. The insurance shall indicate on the certificate of insurance the following coverage and indicate the policy aggregate limit applying to: premises and operations; broad form contractual; independent contractors and subcontractors; products and completed operations; and/or professional liability. b. Automobile Liability – insurance with a minimum limit of liability per occurrence of $1,000,000 for bodily injury and property damage and transportation related pollution liability. This insurance shall cover any automobile for bodily injury and property damage.
c. Workers' Compensation - in compliance with the statutes of the State of California, plus employer's liability with a minimum limit of liability of $1,000,000 per accident for bodily injury or disease.

If at any time any of said policies shall be unsatisfactory to the CITY, as to form or substance or if a company issuing such policy shall be unsatisfactory to the CITY, the CONTRACTOR shall promptly obtain a new policy, submit the same to the CITY’s Risk Manager for approval and submit a certificate thereof as hereinabove provided. Upon failure of the CONTRACTOR to furnish, deliver or maintain such insurance and certificates as above provided, this AGREEMENT, at the election of the CITY, may be forthwith declared #10..
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45 suspended, or terminated. Failure of the CONTRACTOR to obtain and/or maintain any required insurance shall not relieve the CONTRACTOR from any liability under this Agreement, nor shall the insurance requirements be construed to conflict with or otherwise limit the obligations of the CONTRACTOR concerning indemnification.

The CITY, its agents, officers, employees, and volunteers shall be named as an additional insured on all insurance policies required herein, except Workers' Compensation.

The Workers' Compensation insurer shall agree to waive all rights of subrogation against the CITY, its agents, officers, employees, and volunteers for losses arising from work performed by CONTRACTOR for the CITY.

The CONTRACTOR’s insurance policy(ices) shall include a provision that the coverage is primary as respects the CITY; shall include no special limitations to coverage provided to additional insured; and, shall be placed with insurer(s) with acceptable Best's rating of A:VII or with approval of the CITY’s Risk Manager.

For any claims related to this AGREEMENT, the CONTRACTOR’s insurance coverage shall be primary insurance as respects CITY, its officers, officials, employees, and volunteers. Any insurance or self-insurance maintained by CITY, its officers, officials, employees, or volunteers shall be excess of the CONTRACTOR’s insurance and shall not contribute with it.

6. PAYMENT:

CONTRACTOR shall invoice CITY not less than once per month based on the cost for services performed and reimbursable costs incurred prior to the invoice date. All invoices shall be paid in full the following payment terms within thirty days after completion and acceptance of the Services by the CITY, and receipt of a properly prepared invoice, CITY will pay CONTRACTOR [TO BE DETERMINED BY IFB RESPONSE IN FINAL AGREEMENT, EITHER “Net 30 terms via CITY’s ePay Program” or “Net 45 Days #10..
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46 via manual check”.]. The CITY is exempt from payment of Federal Excise Tax, and all invoices shall be exclusive of such excise tax.

Invoice to: City of Modesto
Attn: Accounts Payable
P.O. Box 642
Modesto, CA 95353
Email to: [email protected]
At a minimum, invoices shall state the following:
• This AGREEMENT number
• CITY department/division name and address
• Billing period
• Service hours worked day and week
• Unit price, extended price, sales tax and total

7. INDEMNITY: The CONTRACTOR shall hold the CITY, its officers, officials, employees, agents and volunteers, harmless from and save, defend and indemnify them against any and all claims, losses, liabilities, judgments or damages from every cause, including but not limited to injury to person or property or wrongful death, including reasonable costs and expenses of defense of any judicial or administrative action, arising directly or indirectly out of any negligent or intentional act or omission of CONTRACTOR, or its officers, officials, employees, agents and volunteers relating to or during the performance of its obligations under this AGREEMENT. CONTRACTOR’s obligation to defend, indemnify, and hold the CITY, its officers, officials, employees, agents and volunteers harmless under the provisions of this paragraph is not limited to or restricted by any requirement in this AGREEMENT for CONTRACTOR to procure and maintain a policy of insurance.

8. VENUE & GOVERNING LAW:
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47 Venue for any dispute or claim arising or related to this AGREEMENT its performance, breach, or interpretation (including issues about its validity or enforceability), shall be exclusively in the Superior Court of Stanislaus County or the United States District Court for the Eastern District of California This AGREEMENT shall be deemed made in, governed by, performed in, and construed and enforced in accordance with the laws of the State of California, without giving effect to its conflicts of laws provisions or principles.

9. ATTORNEYS’ FEES: If a party to this AGREEMENT brings any action, including an action for declaratory relief, to enforce or interpret the provision of this AGREEMENT, the prevailing party shall be entitled to reasonable attorneys’ fees in addition to any other relief to which that party may be entitled. The court may set such fees in the same action or in a separate action brought for that purpose.

10. COMMENCEMENT AND COMPLETION OF THE WORK:

The work contemplated herein shall be commenced after the agreement administrator receives and has on file:

Proofs of insurance (approved by CITY Risk Manager); and Executed Agreement;
a. Resolution No.2023-_______;
b. CONTRACTOR Bid submittal;
c. IFB No. 2324-16
d. Contractor’s City of Modesto business license

11. TERMINATION OF SERVICES:

Termination for Default: In the event either party fails to perform under this AGREEMENT or breaches any condition contained herein, the other party shall notify in writing the breaching party of the nonperformance. Within 10 days after receipt of notification, the breaching party shall correct any non- #10..
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48 performance to the reasonable satisfaction of the non-breaching party, or such other time as may be identified in the notice. Failure to correct any non-performance shall allow the non-breaching party to terminate this AGREEMENT for cause.

Termination by City for Convenience: The City may also terminate this AGREEMENT the Contractor's performance underthe Agreement, eitherin whole orin part, at its own discretion and without cause.

Post-Termination Procedure
Upon receipt of a written notice of termination pursuant to either of the foregoing paragraphs, the CONTRACTOR shall:
a. Cease its work as directed in the notice of termination as of the termination date and see to it that its employees, subcontractors and agents are notified of such termination and act as specified in the notice of termination; b. Terminate all orders and subcontracts except as necessary to complete any portion of the SERVICES that are not terminated;
c. If directed in writing by the CITY to do so, assign all right, title and interest in subcontracts and materials in progress to CITY, in which case the CITY will have the right at its discretion to settle, or pay any or all claims arising out of the termination of such, but in no event shall recovery by any CONTRACTOR or subcontractor include lost profits for portions of the SERVICES not completed or undertaken, including materials not delivered; d. Deliver or otherwise make available to the CITY all data, drawings, specifications, reports, estimates, summaries and such other information and material as may have been accumulated by the CONTRACTOR in performing the SERVICES whether completed or in process;
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49 e. Settle outstanding liabilities and claims, subject to the approval of CITY; f. Complete performance of such part of the SERVICES as has not been terminated; g. Take such other actions as may be necessary, or as may be directed by the CITY for the protection and preservation of the SERVICES and/or property related to the SERVICES;
h. If CITY so requests, and at CITY's cost, CONTRACTOR shall provide sufficient oral or written status reports to make CITY reasonably aware of the status of CONTRACTOR’s work on the SERVICES.
i. CONTRACTOR understands and agrees that CITY may, in CITY’s sole discretion, refuse to pay CONTRACTOR for that portion of CONTRACTOR's SERVICES which were performed by CONTRACTOR on the project prior to the termination date and which remain unacceptable and/or not useful to CONTRACTOR as of the termination date.

CITY will pay CONTRACTOR for SERVICES actually completed prior to the receipt of the termination notice or otherwise completed in accordance with the notice of termination. The final payment to the CONTRACTOR after termination for convenience shall be limited to amounts due and owing under the AGREEMENT at time of termination, including the following:
a. The cost of settling and paying valid claims arising out of the termination of the SERVICES such as subcontractor agreements or contracts for materials; b. The AGREEMENT price allocable to the portion of the SERVICES properly performed or goods supplied to the work site by the CONTRACTOR as of the date of termination, as determined in accordance with the notice of termination, reduced by any sums previously paid to the CONTRACTOR for such #10..
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50 SERVICES.

12. COMPLIANCE WITH ALL LAWS:

CONTRACTOR hereby agrees that CONTRACTOR and its subcontractors, if any, in the performance of the SERVICES described herein, will comply with all federal, state, county and municipal laws, rules and regulations which may be applicable to the work herein contracted for, whether now in existence or hereafter adopted.

13. FAILURE TO PERFORM SATISFACTORY WORK: It is agreed and understood that if the CONTRACTOR fails to perform the SERVICES as specified herein, CITY's representative may:
a. Consent to accept such unsatisfactory service with an appropriate adjustment in contract price, based on established cost factors,
b. Have such required work done by CITY forces or otherwise, and charge the cost thereof to the CONTRACTOR, or
c. Recommend termination of AGREEMENT between said the CONTRACTOR and the City of Modesto.

Those discrepancies and deficiencies in the SERVICES that remains uncorrected after the date set for correction may be the necessary justification for a billing adjustment in the month following the occurrence.

Unless otherwise negotiated, billing adjustments for this incomplete or uncorrected work shall be permanent retention of 100% of the estimated monthly cost for the SERVICES not corrected or completed.

14. ASSIGNMENT OF RIGHTS: The CONTRACTOR offers and agrees, and will require all subcontractors and suppliers to agree, to assign to the CITY all rights, title, and interest in and to all causes of action it and they may have under Section 4 of the Clayton Act (15 United States code, Section 15) or under the Cartwright Act (Business and Professions Code, Section 16700 et seq.), arising from #10..
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51 the acquisition of goods, services, or materials pursuant to this AGREEMENT or any allowed subcontract. The assignment made by CONTRACTOR and all assignments made by subcontractors and suppliers shall be made and become effective at the time the CITY makes final payment to The CONTRACTOR, without further acknowledgment by the parties (Government Code, Sections 4550- 4554).

15. CITY PROCESS/PROCEDURE APPROVALS: CITY approval of any process or procedure shall not relieve CONTRACTOR of its responsibility to furnish the required SERVICES meeting all specifications contained herein.

16. DIR REGISTRATION: Pursuant to Labor Code section 1771.1, CONTRACTOR may not engage in the performance of the Services set forth in Exhibit “C”, unless currently registered and qualified to perform public work pursuant to Section 1725.5 thereof. As required in Section 7029.1 of the Business and Professions Code or by Section 10164 or 20103.5 of the Public Contract Code, that during term of this AGREEMENT, CONTRACTOR shall be registered to perform public work pursuant to Section 1725.5 thereof.

17. CONTRACTOR'S RESPONSIBILITY FOR DAMAGES: If CONTRACTOR damages any property belonging to the CITY or a third party, the CONTRACTOR will be required to make repairs immediately, at CONTRACTOR’s sole cost and expense, to the satisfaction of the CITY. In the event that CONTRACTOR fails to perform the necessary repairs, the CITY may either retain from the money due to CONTRACTOR an amount sufficient to repair the damage or perform the repairs and send an invoice to the CONTRACTOR for such costs, which shall be paid within thirty (30) days.

18. NOTICES:

Any notice, payment or instrument required or permitted by this AGREEMENT to be given or delivered to either party shall be deemed to have been received when personally delivered, or one calendar #10..
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52 week following deposit of the same in any United States Post Office, registered or certified mail, postage prepaid, addressed as follows:

CONTRACTOR: __________________
__________________
__________________
__________________
CITY: City of Modesto
Purchasing Division
P.O. Box 642
Modesto, CA 95353
Each party may change its address for delivery of notice by delivering written notice of such change of address to the other party.

19. SIGNATORY(IES) FOR CONTRACTOR:

Each signatory for CONTRACTOR below warrants and represents that it is legally competent to, and have full authority to, execute the AGREEMENT.

20. QUANTITIES: No minimum or maximum is guaranteed or implied.

21. FUNDING: All annual extensions are based upon continuous funding for that purpose by the City Council. Failure to fund any annual extension shall result in an immediate termination of the AGREEMENT without redress.

22. OTHER GOVERNMENT/PUBLICLY FUNDED AGENCIES: If mutually agreeable to all parties, the issuance of any resultant contract/purchase order referencing these specifications and modified by mutual agreement between all parties may be extended to other government or publicly funded agencies. It shall be understood that all terms and conditions as specified herein shall apply.

23. NON-DISCRIMINATION:
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53 a. During the performance of this AGREEMENT, CONTRACTOR and any allowed subcontractors shall not unlawfully discriminate against any employee or applicant for employment because of race, color, ancestry, religion, sex, national origin, marital status, age, medical condition (cancer related), physical handicap (including AIDS), sexual orientation, or any other basis prohibited by Federal or California law. Equal employment opportunity extends, but is not limited to recruitment, compensation, benefits, layoff, termination, and all other conditions of employment. The CONTRACTOR and any allowed subcontractors shall ensure that the evaluation and treatment of their employees and applicants for employment are free of such discrimination.

The CONTRACTOR and any allowed subcontractors shall comply with the provisions of the Fair Employment and Housing Act (Government Code, Section 12900 et seq.) and the applicable regulations promulgated thereunder (California Administrative Code, Title 2, and Section 7285.0 et seq.). The applicable regulations of the Fair Employment and Housing Commission implementing Government Code, Section 12900, set forth in Chapter 5 of Division 4 of Title 2 of the California Administrative Code are incorporated into this contract by reference and made a part hereof as if set forth in full. b. The CONTRACTOR and any allowed subcontractors shall give written notice of their obligations under this clause to labor organizations with which they have a collective bargaining or other agreement.
c. The CONTRACTOR shall include the nondiscrimination and compliance provisions of this clause in any allowed subcontracts to perform SERVICES. d. The Contractor shall permit access by representatives of the Department of Fair Employment and Housing and the CITY upon reasonable notice at any time during the normal business hours, but in no case less than 24 hours notice, to such of its books, records, accounts, other sources of information and its facilities as said Department or CITY shall require to ascertain compliance with this AGREEMENT. #10..
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54 e. By executing this AGREEMENT, CONTRACTOR certifies that it shall follow and be in compliance with the Americans with Disabilities Act of 1990, the applicable administrative requirements promulgated in response thereto, and any other applicable Federal laws and regulations relating to handicap discrimination and participation, and will continue to do so for at least the duration of the AGREEMENT and any extensions thereof.

24. CONTRACTOR LICENSES & PERMITS: CONTRACTOR warrants and represents that it possesses and shall maintain all licenses, and shall secure and maintain all necessary permits, necessary to perform the SERVICES.

25. RECORDS: All final versions of reports, data, maps, models, charts, studies, surveys, photographs, memoranda, plans, studies, specifications, records, files, or any other documents or materials, in electronic or any other form, that CONTRACTOR prepares or obtains pursuant to this Agreement and that relate to the matters covered hereunder shall be the property of the CITY.

CONTRACTOR hereby agrees to deliver those documents to the CITY upon termination of the AGREEMENT, and the CITY may use, reuse or otherwise dispose of the documents without CONTRACTOR’s permission. It is understood and agreed that the documents and other materials, including but not limited to those described above, prepared pursuant to this AGREEMENT are prepared specifically for the City and are not necessarily suitable for any future or other use.

26. FACILITIES AND EQUIPMENT: Except as set forth herein, CONTRACTOR shall, at its sole cost and expense, provide all facilities and equipment that may be necessary to perform the services required by this AGREEMENT. CITY shall make available to CONTRACTOR only the facilities and equipment listed in EXHIBIT “B” and “C”, and only under the terms and conditions set forth herein.

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55 AGREEMENT, CONTRACTOR shall be an independent contractor and shall not be an employee of CITY. CITY shall have the right to control CONTRACTOR only insofar as the results of CONTRACTOR’s services rendered pursuant to this AGREEMENT. Except as City may specify in writing, CONTRACTOR shall have no authority, express or implied, to act on behalf of CITY in any capacity whatsoever as an agent. CONTRACTOR shall have no authority, express or implied, pursuant to this AGREEMENT to bind City to any obligation whatsoever.

28. DRUG FREE WORKPLACE: CONTRACTOR certifies that it is following and in compliance with Sections 8350 - 8355 of Chapter 5.5 of the Government Code, Drug Free Workplace Act whereby each person or organization awarded a contract/purchase order or grant for the procurement of any property or service from any state agency (city) shall certify to the contracting or granting agency that it will provide a drug free workplace.

29. ASSIGNMENT:

Neither this AGREEMENT nor any SERVICES hereunder shall be subcontracted or assigned by CONTRACTOR without the prior written consent of the CITY in each and every instance.

30. WAIVER:

The waiver by any party to this AGREEMENT of a breach of any provision hereof shall be in writing and shall not operate or be construed as a waiver of any other or subsequent breach hereof unless specifically stated in writing.

31. HEADINGS NOT CONTROLLING:
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56 Headings used in the Agreement are for reference purposes only and shall not be considered in construing this AGREEMENT.

32. MISCELLANEOUS:

Time is of the essence in CONTRACTOR’s performance under each provision of this AGREEMENT.

33. ENTIRE AGREEMENT:

This Agreement and its exhibits contain the entire understanding between CONTRACTOR and CITY. Additional or new terms contained in this AGREEMENT which vary from CONTRACTOR’S bid are controlling and are deemed accepted by CONTRACTOR by performance of any SERVICES or other commencement of performance hereunder. The terms and conditions of the IFB, attached hereto as Exhibit C, are incorporated herein. In the event of a conflict between the IFB and this AGREEMENT, this AGREEMENT shall control. All previous bids, offers and communications relative to this Agreement, whether oral or written, are hereby superseded except to the extent that they have been incorporated into this Agreement. No future waiver or exception to any of the terms, conditions, and provisions of this AGREEMENT shall be considered valid unless specifically agreed to in writing by the parties.

34. PARTIAL INVALIDITY:

If any provision in this AGREEMENT is held by a court of competent jurisdiction to be invalid, void, or unenforceable, the remaining provisions shall nevertheless continue in full force without being impaired or invalidated in any way.
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57 IN WITNESS WHEREOF, the CITY OF MODESTO, a municipal corporation, has authorized the execution of this Agreement in duplicate by its City Manager and attested by its City Clerk under authority of Resolution No. 2023- _________ adopted by the Council of the City of Modesto on the _____________ day of _____________________, 2023 and _____________________has caused this Agreement to be duly executed.

CITY OF MODESTO, CONTRACTOR
A municipal corporation
By: __________________________ By: _________________________________ JOSEPH P. LOPEZ, (Signature)
City Manager
By: _________________________________
(Name & Title)
ATTEST: Date: _______________________________
By: __________________________

DIANE NAYARES-PEREZ, CMC,
City Clerk

(SEAL)

APPROVED AS TO FORM:

By: ____________________________
JOSE M. SANCHEZ,
City Attorney
By: ____________________________
JOE F. RODRIQUEZ,
Risk Manager
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DESCRIPTION
Hot Mix Asphalt (4-in Lift)
Linear
Hot Mix Asphalt (4-in Lift)
Spot
Raw material price vesus unit
cost
Lowest Bid
Payment of Prevailing Wages
Adams
Underground
III
Arrow
Construction
B & M Builders,
Inc.

United
Pavement
Maintenance
Laboror
Direct Labor Rate $36.20 /HR $35.35 /HR $38.10 /HR $40.99 /HR Fringe Benefit Rate $25.56 /HR $28.56 /HR $25.81 /HR $28.56 /HR Labor Markup (percent) 20% 170% 65% 35%
Price Per Service $77.71 /HR $108.65 /HR $105.45 /HR $93.89 /HR Operator
Direct Labor Rate $60.72 /HR $56.33 /HR $56.33 /HR $64.36 /HR Fringe Benefit Rate $32.93 /HR $32.93 /HR $32.93 /HR $32.93 /HR Labor Markup (percent) 20% 170% 65% 35%
Price Per Service $112.38 /HR $151.74 /HR $147.28 /HR $131.34 /HR Teamster
Direct Labor Rate - $40.23 /HR - -
Fringe Benefit Rate - $33.29 /HR - -
Labor Markup (percent) - 170% - -
Price Per Service - $124.98 /HR - -
Foreman
Direct Labor Rate - - $94.00 /HR -
Fringe Benefit Rate - - $0 -
Labor Markup (percent) - - 65% -
Price Per Service - - $155.10 /HR -
Truck Driver
Direct Labor Rate - - $40.23 /HR -
Fringe Benefit Rate - - $33.39 /HR -
Labor Markup (percent) - - 65% -
Price Per Service - $121.4 /HR -
Mason
Direct Labor Rate - - - $51.47 /HR
Fringe Benefit Rate - - - $28.71 /HR
Labor Markup (percent) - - - 35%
Price Per Service - - - $108.24 /HR

ADAMS UNDERGROUND III

UNIT PRICE
$11.25
$11.75
25%

ARROW CONSTRUCTION

UNIT PRICE
$10.00
$13.96
$15.00
$30.00
B & M BUILDERS, INC.

UNITED PAVEMENT

MAINTENANCE
$16.00
$17.00
25% 15% 20%
X

UNIT PRICE UNIT PRICE

CITY OF MODESTO
PO BOX 642 MODESTO CA 95353
IFB NO. 2324-16 HOT PATCH SERVICES

WATERFORD, CA SACRAMENTO, CA RANCHO CORDOVA, CA HUGHSON, CA #10..
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