Rancho Palos Verdes City Council Agenda July 16,2002



DATE: JULY 16, 2002


Staff Coordinator: Kathryn Downs, Accounting Manager


Authorize the Mayor and City Clerk to execute the attached Professional Services Agreement with Cost Recovery Systems, Inc. for the preparation of the Cityís eligible state mandated cost reimbursement claims with the State of California for an amount not to exceed $7,250.


Cost Recovery Systems, Inc. ("CRS") provides financial services to cities throughout the State of California. The firm specializes in securing reimbursement of state-mandated costs for California cities. Staff has utilized the services of CRS to prepare claims to the State for costs from FY1997-1998 forward. To date, the City has received a total of $155,588 from this program over three years. In the coming months staff expects to receive an additional $19,000 in reimbursements associated with FY 2000-2001 and FY 2001-2002.

Staff estimates the City will be eligible to receive reimbursements totaling approximately $40,000 from the State of California for certain FY 2002-2003 state-mandated costs. Although the state is required to reimburse local agencies for mandated costs, receipt of these reimbursements will likely be spread over three fiscal years due to the current state budget crisis. Postponed payments from the state will include interest. Sources for reimbursements from state-mandated program costs include:

  • The cost of assessing regional housing needs;
  • The cost of absentee ballots;
  • The cost of providing investment reports to the City Council and the public; and
  • The cost of agenda preparation in accordance with the Open Meetings Act.

The selection of Cost Recovery Systems, Inc. is exempt from the Cityís "open market (bid) procedure" in accordance with section 2.44.060 of the Cityís Municipal Code. Municipal Code Section 2.44.060, Exception to Bid Procedures, enables the City Manager to select a financial advisor without following the established bid procedures. We have provided a copy of the Agreement to be executed by CRS and the City in the event the City Council authorizes the Mayor to sign it.


It is estimated the City will receive approximately $40,000 as reimbursement to the General fund of the City from the State of California for claims related to FY 2002-2003. The consulting fee charged by CRS will not exceed $7,250 and will be entirely reimbursed to the City by the State of California.

Respectfully submitted,

Dennis McLean, Finance Director


Les Evans, City Manager





THIS AGREEMENT is made and entered into this ___ day of _____________, 2002, by and between CITY OF RANCHO PALOS VERDES hereinafter referred to as "CITY" and Cost Recovery Systems, Inc., 705-2 East Bidwell Street, Suite 294, Folsom, CA, 95630, hereafter referred to as "CONSULTANT".

IN CONSIDERATION of the covenants hereinafter set forth, the parties hereto mutually agree as follows:




The Project is described as follows:

The preparation of eligible State Mandate Reimbursement claims ("Eligible Claims") as defined in Attachment A-2 of this Agreement.

1.2Description of Services

CONSULTANT shall conduct necessary services and timely prepare the Eligible Claims for State Mandate Reimbursement included in Attachment A-2 to this Agreement. Necessary services include, but are not limited to, conducting interviews with staff of CITY, collecting necessary data and information and the correct preparation of the Eligible Claims. Eligible Claims shall be prepared based upon proof of CITYís costs. Claims shall not be prepared in the event they do not exceed $200.00. CONSULTANT reserves the right not to prepare any Eligible Claims listed on Attachment A-2.

1.3Schedule of Work

Upon receipt of written notice to proceed from the CITY, CONSULTANT shall perform with due diligence the services requested by the CITY and agreed to by CONSULTANT. CONSULTANT shall not be responsible for delay, nor shall be responsible for damages, or be in default or deemed to be in default, by reason of strikes, lockouts, accidents, acts of God, or the failure of CITY to furnish timely information or to approve or disapprove CONSULTANTíS work promptly, or delay or faulty performance by CITY, or any other delays beyond CONSULTANTíS control or without CONSULTANTíS fault. CITY and CONSULTANT shall mutually establish deadlines for CITYís submission to the CONSULTANT of the information necessary to prepare the Eligible Claims. Regardless, CITY shall provide necessary information no less than three weeks prior to the filing deadline for the Eligible Claims.





(a)CITY agrees to compensate CONSULTANT an amount not to exceed amount of $7,250 for the services described herein. CONSULTANT shall be responsible for all of their own costs, including, but limited to travel, meals, lodging, supplies and reproduction.

(b)CITY may request additional specified work under this agreement. All such work must be authorized, in writing by the Finance Director, prior to commencement.

2.2 Payment Address

All payments due CONSULTANT shall be paid to the address included above.

2.3 Terms of Compensation

CITY agrees to pay all undisputed amounts within thirty (30) days of receipt of any payment from the State of California resulting from the filing of Eligible Claims prepared by CONSULTANT in accordance with this Agreement. Such payment to the CONSULTANT shall be for the entire amount of each payment received from the State of California until the total amount received by CITY equals the FEE in accordance with Section 2.1(a). In no event shall the Fee exceed the total amount claimed and filed or received for Eligible Claims from the State of California.

CITY agrees to notify CONSULTANT of any disputed amounts within ten (10) days of the receipt of each payment from the State of California. However, CITY's failure to timely notify CONSULTANT of a disputed amount shall not be deemed a waiver of CITY's right to challenge such amount or percentage thereof.

Additionally, in the event CITY fails to pay any undisputed amounts due CONSULTANT within forty-five (45) days after invoices are received, CITY agrees that CONSULTANT shall have the right to consider said default a total breach of this Agreement and be terminated by CONSULTANT without liability to CONSULTANT upon ten (10) working days advance written notice.



3.1Consultantís Liability

CONSULTANT has represented to CITY that it is an expert in preparing the Eligible Claims described in Attachment A-2 and shall exercise due professional care accordingly. CONSULTANT will prepare the Eligible Claims based upon information provided by the CITY and shall assume that all information and materials provided by the CITY are correct and complete. CONSULTANT shall not be liable for reductions, late penalties, loss of claim opportunities and disallowanceís determined by the State of California, except for those resulting from CONSULTANTíS willful misconduct or negligence.

3.2 Indemnification

(a)CONSULTANT will defend, indemnify and hold harmless CITY, its Boards and its officers, employees and agents (collectively "CITY"), against any claim, loss or liability that arises because of the sole or primary negligence or willful misconduct of CONSULTANT, its agents, officers, directors or employees, in performing any of the services under this Agreement.

(b) CITY will defend, indemnify and hold harmless CONSULTANT, its Boards and its officers, employees and agents (collectively "CONSULTANT"), against any claim, loss or liability that arises because of the sole or primary negligence or willful misconduct of CITY, its agents, officers, directors or employees, in performing any of the services under this Agreement.

3.3 General Liability

CONSULTANT shall at all times during the term of the Agreement carry, maintain, and keep in full force and effect, a policy or policies of Comprehensive General Liability Insurance, with minimum limits of One Million ($1,000,000.00) Dollars for each occurrence and in the aggregate, combined single limit, against any personal injury, death, loss or damage resulting from the wrongful or negligent acts by CONSULTANT. Said policy or policies shall be issued by an insurer admitted to do business in the State of California and rated in Best's Insurance Guide with a rating of A VII or better.

3.4 Worker's Compensation

CONSULTANT agrees to maintain in force at all times during the performance of work under this Agreement worker's compensation insurance as required by the law. CONSULTANT shall require any subcontractor similarly to provide such compensation insurance for their respective employees.

3.5 Notice of Cancellation

(a)All insurance policies shall provide that the insurance coverage shall not be canceled by the insurance carrier without thirty (30) days prior written notice to CITY. CONSULTANT agrees that it will not cancel or reduce said insurance coverage.

(b)CONSULTANT agrees that if it does not keep the aforesaid insurance in full force and effect, CITY may either immediately terminate this Agreement or, if insurance is available at a reasonable cost, CITY may take out the necessary insurance and pay, at CONSULTANTíS expense, the premium thereon.

3.6Certificate of Insurance

At all times during the term of this Agreement, CONSULTANT shall maintain on file with the CITY Clerk a certificate of insurance showing that the aforesaid policies are in effect in the required amounts. The comprehensive general liability policy shall contain endorsements naming the CITY, its officers, agents and employees as additional insured.

3.7Primary Coverage

The insurance provided by CONSULTANT shall be primary to any coverage available to city. The insurance policies (other than workers' compensation and professional liability) shall include provisions for waiver of subrogation.




(a)The term of this Agreement shall commence on July 1, 2002 and continue until June 30, 2003. Notwithstanding the foregoing, either party shall have the right to terminate this Agreement upon no less than 30 days' prior written notice to the other party before the effective date of such termination.

(b)CONSULTANT may provide the CITY with written notice of a proposed increase of the fee, provided such notice is given at least 90 days prior to the end of the term of the Agreement. In the event the CONSULTANT provides such notice of a proposed fee increase, the CITY shall provide written notice on or before 15 days after the date of CONSULTANTíS notice of the proposed fee increase of: (1) the CITYíS acceptance or rejection of the proposed fee; or (2) notice of termination of the Agreement at the end of the term. In the event the CITY provides notice of rejection of the proposed fee and if CONSULTANT and the CITY are unable to reach an agreement of the increase of the fee for the succeeding term, on or before 15 days after the date of the CITYíS rejection of the proposed increase of the fee, the Agreement will terminate at the end of the term. In the event the CITY does not provide timely notice of rejection of the proposed fee or notice of termination of the Agreement, the proposed increase of the fee shall become effective on the first day of the succeeding term.

(c)Upon expiration or termination of this Agreement, the CITY shall remit any and all undisputed amounts due and owing to CONSULTANT hereunder within 30 days of receipt of an itemized invoice from CONSULTANT for such amounts.

4.2 Termination of Agreement

(a)This Agreement may be terminated at any time, with or without cause, by either party upon thirty (30) dayís prior written notice. Notice shall be deemed served upon deposit in the United States Mail of a certified or registered letter, postage prepaid, return receipt requested, addressed to the other party, or upon personal service of such notice to the other party, at the address set forth in Article 6.9.

(b)In the event of termination or cancellation of this Agreement by CONSULTANT or CITY, due to no fault or failure of performance by CONSULTANT, CONSULTANT shall be paid compensation for all services performed by CONSULTANT, in an amount to be determined as follows: for work done in accordance with all of the terms and provisions of this Agreement, CONSULTANT shall be paid an amount equal to the percentage of services performed prior to the effective date of termination or cancellation in accordance with the work items; provided, in no event shall the amount of money paid under the foregoing provisions of this paragraph exceed the amount which would have been paid to CONSULTANT for the full performance of the services described in Article 2.1.



5.1 Ownership of Documents and Work Product

All documents prepared by CONSULTANT pursuant to this Agreement are work product and shall be deemed the property of the CONSULTANT. Such work product shall be available for inspection at any time, upon reasonable request by the CITY. Computerized claim forms and other proprietary software and materials that are the sole ownership of the CONSULTANT shall not be used by or distributed in any way by the CITY. The CONSULTANT shall provide the CITY with copies of all claims prepared or filed on behalf of the CITY.



6.1 Representation

A CITY representative shall be designated by the City Manager and a CONSULTANT representative shall be designated by CONSULTANT as the primary contact person for each party regarding performance of this Agreement. Upon request, CONSULTANT shall represent the CITY in the event of any inquiries, examinations or audits of the Eligible Claims prepared by the CONSULTANT and filed by the CITY.

6.2 Fair Employment Practices/Equal Opportunity Acts

In the performance of this Agreement, CONSULTANT shall comply with all applicable provisions of the California Fair Employment Practices Act (California Government Code Sections 12940-48) and the applicable equal employment provisions of the Civil Rights Act of 1964 (42 U.S.C. 200e-217), and the Americans with Disabilities Act of 1992 (42 U.S.C. ß 11200, et seq.).


CONSULTANT represents that it has, or shall secure at its own expense, all personnel required to perform CONSULTANTíS services under this Agreement. CONSULTANT may associate with or employ associates or subconsultants in the performance of its services under this Agreement, but at all times shall be responsible for their services.

6.4Legal Action

Should either party to this Agreement bring legal action against the other, the case shall be brought in a court of competent jurisdiction in Los Angeles County, California. Subject to the limitation provided in Section 3.1 of this Agreement, the party prevailing in such action shall be entitled to recover its costs of litigation, including reasonable attorneys' fee which shall be fixed by the judge hearing the case and such fee shall be included in the judgment.

6.5 Assignment

(a)This Agreement shall not be assignable by either party without the prior written consent of the other party.

(b)Notwithstanding the above, CONSULTANT may use the services of persons and entities not in CONSULTANTíS direct employ, when it is appropriate and customary to do so.

6.6Independent Contractor

CONSULTANT is and shall at all times remain, as to the CITY, a wholly independent contractor. Neither the CITY nor any of its agents shall have control over the conduct of CONSULTANT or any of the CONSULTANTíS employees, except as herein set forth. CONSULTANT expressly warrants not to, at any time or in any manner, represent that it, or any of its agents, servants or employees, are in any manner agents, servants or employees of CITY, it being distinctly understood that CONSULTANT is, and shall at all times remain to CITY, a wholly independent contractor and CONSULTANTíS obligations to CITY are solely such as are prescribed by this Agreement.

6.7 Titles

The titles used in this Agreement are for general reference only and are not part of the Agreement.

6.8 Extent of Agreement

This Agreement represents the entire and integrated Agreement between CITY and CONSULTANT and supersedes all prior negotiations, representations or agreements, either written or oral. This Agreement may be modified or amended only by a subsequent written agreement signed by both parties.


All notices pertaining to this Agreement shall be in writing and addressed as follows:


Annette S. Chinn, President

Cost Recovery Systems, Inc.

705-2 East Bidwell Street, Suite 294

Folsom, CA 95630

If to CITY:

Dennis McLean, Finance Director

City of Rancho Palos Verdes

30940 Hawthorne Blvd.

Rancho Palos Verdes, CA 90275

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date and year first above written.




By: Annette S. Chinn, PresidentCost Recovery Systems, Inc.



Dated: "CITY"


A Municipal Corporation