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ATTACHMENT 2 HEH CONSULTANTS LLC Managing Tomorrow's Resources Today 201 N.Civic Drive,Suite 230 Robert D.Hilton,Emeritus Walnut Creek,California 94596 John W.Farnkopf,PE Telephone:925/977-6950 Laith B.Ezzet,CMC www.hfh-consultants.com Richard J.Simonson,CMC Marva M.Sheehan,CPA Robert C.Hilton,CMC May 3, 2019 Ms. Becky Hopkins Assistant to the City Manager City of Pleasanton P. 0. Box 520 Pleasanton, CA 94566-0802 Re: Review of Pleasanton Garbage Service, Inc. (PGS)Calculation of the Rate Reserve Dear Ms. Hopkins: Following are our findings from our review of the PGS's Calculation of the Rate Reserve. Summary Findings • PGS submitted its Calculation of the Rate Reserve on March 22, 2019 along with its audited financial statement for the three months ended June 30,2018 in accordance with the Rate Reserve Agreement between Pleasanton Garbage Service, Inc. and the City of Pleasanton made as of March 20, 2018 (Agreement). • PGS' calculated balance due the City is $5,342,285. When the Agreement was entered, PGS and the City agreed that the amount of the reserve at March 31, 2019 was unknowable because it would be affected by a number of factors. At the time the Agreement was entered, PGS believed it was "reasonable to believe that the reserve would be sufficient to provide for the Deficit,the Unamortized Balance,and the audit fees with a remaining balance of at least$2,000,000 to be shared between PGS and the City in accordance with the Agreement". • PGS' calculation is supported by an audit performed by BHLF LLP for the year ended March 31, 2018 and the following three month period ended June 30, 2018. Scope of Work HF&H reviewed PGS'proposed Calculation of the Rate Reserve dated March 22,2019 for compliance with the Agreement. A. PGS' Calculation of the balance due the City was performed in accordance with the Agreement without exception. B. PGS's value used for the Rate Reserve Balance and Deficit due the Company was supported by the audit report for the three month period ended June 30, 2018 prepared by BHLF LLP and dated January 15, 2019.