(a) The consultant selected by the city shall propose a fee for his services in preparing the local law. The basis for the fee shall be stated. The proposed fee for consulting services shall be based on:

1. (1) Lump sum, taking into account reasonable consulting costs for similar work, or
2. (2) An audited consulting payroll cost required to perform the work, plus a reasonable amount to cover overhead and profit, and as agreed to between the consultant, the commissioner and the city.
3. (3) A combination of (1) and (2).