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HomeMy WebLinkAboutAgenda Report - December 19, 2018 C-07TM CITY OF LODI COUNCIL COMMUNICATION AGENDA ITEM C- 7 AGENDA TITLE: Adopt Resolution Authorizing City Manager to Execute Amendment No. 1 to Professional Services Agreement with The Reed Group, Inc., of Sacramento, for Water and Wastewater Financial Plan and Rate Update and Study ($15,000) MEETING DATE: December 19, 2018 PREPARED BY: Public Works Director RECOMMENDED ACTION: Adopt resolution authorizing City Manager to execute Amendment No. 1 to Professional Services Agreement with The Reed Group, Inc., of Sacramento, for Water and Wastewater Financial Plan and Rate Update and Study, in the amount of $15,000. BACKGROUND INFORMATION: On February 7, 2018, Council approved Professional Services Agreement with The Reed Group, Inc., of Sacramento, for Water and Wastewater Financial Plan and Rate Update and Study, in the amount of $69,950. The proposal from The Reed Group, Inc. included tasks such as developing an updated 10 -year financial plan and revenue model for both Water and Wastewater utilities, a cost -of -service analysis and rate design, preparation of a financial plan and rate study report, and assistance with the upcoming Proposition 218 process. Amendment No. 1, if approved, will extend the term of the agreement through June 30, 2019 and add funds to address additional work anticipated to complete the rate models and updated study. Staff recommends authorizing the City Manager to execute Amendment No. 1 to Professional Services Agreement with The Reed Group, Inc., of Sacramento, for Water and Wastewater Financial Plan and Rate Update and Study, in the amount of $15,000. This amendment will increase the total not -to -exceed amount to $84,950 over the entire term of the agreement. FISCAL IMPACT: The tasks included in the agreement will enable a detailed analysis of current and future rates to ensure that operations and capital expenditures are balanced to its revenues. This project does not impact the General Fund. FUNDING AVAILABLE: Water & Wastewater Operations (56052001/53053001) - $15,000 CES/RAY/tdb Attachment Andrew Keys Deputy City Manager/Internal Services Director APPROVED: Charles E. Swimley, Jr. Public Works Director Stephen Schwa er, City Manager K:\WP\COUNCIL\2018\CC Reed Group Amend No. 1.doc 12/3/2018 AMENDMENT NO. 1 THE REED GROUP, INC. PROFESSIONAL SERVICES AGREEMENT THIS AMENDMENT NO. 1 TO PROFESSIONAL SERVICES AGREEMENT, is made and entered this day of , 2018, by and between the CITY OF LODI, a municipal corporation (hereinafter "CITY"), and THE REED GROUP, INC., a California corporation (hereinafter "CONTRACTOR"). WITNESSETH: 1. WHEREAS, CONTRACTOR and CITY entered into a Professional Services Agreement on February 26, 2018 (the "Agreement"), as set forth in Exhibit 1, attached hereto and made part of; and 2. WHEREAS, CITY requested to increase the fees by an amount not -to -exceed $15,000, for a total not -to -exceed amount of $84,950, within the existing Scope of Services; and 3. WHEREAS, CITY requested to extend the term of the Agreement through June 30, 2019; and 4. WHEREAS, CONTRACTOR agrees to said amendments NOW, THEREFORE, the parties agree to amend the Agreement as set forth above. All other terms and conditions of the Agreement remain unchanged. IN WITNESS WHEREOF, CITY and CONTRACTOR have executed this Amendment No. 1 on the date and year first above written. CITY OF LODI, a municipal corporation hereinabove called "CITY" THE REED GROUP, INC., a California corporation hereinabove called "CONTRACTOR" STEPHEN SCHWABAUER ROBERT REED City Manager President Attest: JENNIFER M. FERRAIOLO, City Clerk Approved as to Form: JANICE D. MAGDICH, City Attorney Exhibit 1 AGREEMENT FOR PROFESSIONAL SERVICES ARTICLE 1 PARTIES AND PURPOSE Section 1.1 Parties THIS AGREEMENT is entered into on fedknnA .9.&o , 20 t Sf , by and between the CITY OF LODI, a municipal corporation (hereinafter "CITY"), and THE REED GROUP, INC., a California corporation (hereinafter "CONTRACTOR"). Section 1.2 Purpose CITY selected the CONTRACTOR to provide the services required in accordance with attached Scope of Services, Exhibit A, attached and incorporated by this reference. CITY wishes to enter into an agreement with CONTRACTOR for Water and Wastewater Financial Plan and Rate Update Study (hereinafter "Project") as set forth in the Scope of Services attached here as Exhibit A. CONTRACTOR acknowledges that it is qualified to provide such services to CITY. ARTICLE 2 SCOPE OF SERVICES Section 2.1 Scope of Services CONTRACTOR, for the benefit and at the direction of CITY, shall perform the Scope of Services as set forth in Exhibit A. Section 2.2 Time For Commencement and Completion of Work CONTRACTOR shall commence work pursuant to this Agreement, upon receipt of a written notice to proceed from CITY or on the date set forth in Section 2,6, whichever occurs first, and shall perform all services diligently and complete work under this Agreement based on a mutually agreed upon timeline or as otherwise designated in the Scope of Services. CONTRACTOR shall submit to CITY such reports, diagrams, drawings and other work products as may be designated in the Scope of Services. CONTRACTOR shall not be responsible for delays caused by the failure of CITY staff to provide required data or review documents within the appropriate time frames. The review time by CITY and any other agencies involved in the project shall not be counted against CONTRACTOR's contract performance period. Also, any delays due to weather, vandalism, acts of God, etc., shall not be counted. CONTRACTOR shall 1 remain in contact with reviewing agencies and make all efforts to review and return all comments. Section 2.3 Meetings CONTRACTOR shall attend meetings as may be set forth in the--Scope of Services. Section 2.4 Staffing CONTRACTOR acknowledges that CITY has relied on CONTRACTOR's capabilities and on the qualifications of CONTRACTOR's principals and staff as identified in its proposal to CITY. The Scope of Services shall be performed by CONTRACTOR, unless agreed to otherwise by CITY in writing. CITY shall be notified by CONTRACTOR of any change of Project Manager and CITY is granted the right of approval of all original, additional and replacement personnel at CITY's sole discretion and shall be notified by CONTRACTOR of any changes of CONTRACTOR's j ct staff prior to any change. CONTRACTOR represents it is prepared to and can perform all services within the Scope of Services (Exhibit A) and is prepared to and can perform all services specified therein. CONTRACTOR represents that it has, or will have at the time this Agreement is executed, all licenses, permits, qualifications, insurance and approvals of whatsoever nature are legally required for CONTRACTOR to practice its profession, and that CONTRACTOR shall, at its own cost and expense, keep in effect during the life of this Agreement all such licenses, permits, qualifications, insurance and approvals, and shall indemnify, defend and hold harmless CITY against any costs associated with such licenses, permits, qualifications, insurance and approvals which may be imposed against CITY under this Agreement. Section 2.5 Subcontracts Unless prior written approval of CITY is obtained, CONTRACTOR shall not enter into any subcontract with any other party for purposes of providing any work or services covered by this Agreement. Section 2.6 Term The term of this Agreement commences on February 1, 2018 and terminates upon the completion of the Scope of Services or on January 31, 2019, whichever occurs first. Section 2.7 Option to Extend Term of Agreement At its option, City may extend the terms of this Agreement for an additional one (1) one (1)-year extension; provided, City gives Contractor no less than thirty (30) days written notice of its intent prior to expiration of the existing term. In the event City 2 exercises any option under this paragraph, all other terms and conditions of this Agreement continue and remain in full force and effect. The total duration of this Agreement, including the exercise of any option under this paragraph, shall not exceed two (2) years. - - ARTICLE 3 COMPENSATION Section 3.1 Compensation CONTRACTOR's compensation for all work under this Agreement shall conform to the provisions of the Fee Proposal, attached hereto as Exhibit B and incorporated by this reference. CONTRACTOR shall not undertake any work beyond the scope of this Agreement unless such additional work is approved in advance and in writing by CITY. Section 3.2 Method of Payment CONTRACTOR shall submit invoices for completed work on a monthly basis, or as otherwise agreed, providing, without limitation, details as to amount of hours, individual performing said work, hourly rate, and indicating to what aspect of the Scope of Services said work is attributable. CONTRACTOR's compensation for all work under this Agreement shall not exceed the amount of the Fee Proposal. Section 3.3 Costs The Fee Proposal shall include all reimbursable costs required for the performance of the Scope of Services. Payment of additional reimbursable costs considered to be over and above those inherent in the original Scope of Services shall be approved in advanced and in writing, by CITY. Section 3.4 Auditing CITY reserves the right to periodically audit all charges made by CONTRACTOR to CITY for services under this Agreement. Upon request, CONTRACTOR agrees to furnish CITY, or a designated representative, with necessary information and assistance needed to conduct such an audit. CONTRACTOR agrees that CITY or its delegate will have the right to review, obtain and copy all records pertaining to performance of this Agreement. CONTRACTOR agrees to provide CITY or its delegate with any relevant information requested and shall permit CITY or its delegate access to its premises, upon reasonable notice, during normal business hours for the purpose of interviewing employees and inspecting and copying such books, records, accounts, and other material that may be relevant to a matter under investigation for the purpose of determining compliance with 3 this requirement. CONTRACTOR further agrees to maintain such records for a period of three (3) years after final payment under this Agreement. ARTICLE 4 MISCELLANEOUS PROVISIONS Section 4.1 Nondiscrimination In performing services under this Agreement, CONTRACTOR shall not discriminate in the employment of its employees or in the engagement of any sub CONTRACTOR on the basis of race, color, religion, sex, sexual orientation, marital status, national origin, ancestry, age, or any other criteria prohibited by law. Section 4.2 ADA Compliance In performing services under this Agreement, CONTRACTOR shall comply with the Americans with Disabilities Act (ADA) of 1990, and all amendments thereto, as well as all applicable regulations and guidelines issued pursuant to the ADA. Section 4.3 Indemnification and Responsibility for Damage CONTRACTOR to the fullest extent permitted by law, shall indemnify and hold harmless CITY, its elected and appointed officials, directors, officers, employees and volunteers from and against any claims, damages, losses, and expenses (including reasonable attorney's fees and costs), arising out of performance of the services to be performed under this Agreement, provided that any such claim, damage, loss, or expense is caused by the negligent acts, errors or omissions of CONTRACTOR, any subcontractor employed directly by CONTRACTOR, anyone directly or indirectly employed by any of them, or anyone for whose acts they may be liable, except those injuries or damages arising out of the active negligence, sole negligence, or sole willful misconduct of the City of Lodi, its elected and appointed officials, directors, officers, employees and volunteers. CITY may, at its election, conduct the defense or participate in the defense of any claim related in any way to this indemnification. If CITY chooses at its own election to conduct its own defense, participate in its own defense, or obtain independent legal counsel in defense of any claim related to this indemnification, CONTRACTOR shall pay all of the costs related thereto, including without limitation reasonable attorney fees and costs. The defense and indemnification obligations required by this Agreement are undertaken in addition to, and shall not in any way be limited by the insurance obligations set forth herein. Section 4.4 No Personal Liability Neither the City Council, nor any other officer or authorized assistant or agent or City employee shall be personally responsible for any liability arising under this Agreement. 4 Section 4.5 Responsibility of CITY CITY shall not be held responsible for the care or protection of any material or parts of the work described in the Scope of Services prior to final acceptance by CITY, except as expressly provided herein. Section 4.6 Insurance Requirements for CONTRACTOR CONTRACTOR shall take out and maintain during the life of this Agreement, insurance coverage as set forth in Exhibit C attached hereto and incorporated by this reference. Section 4.7 Successors and Assigns CITY and CONTRACTOR each bind themselves, their partners, successors, assigns, and legal representatives to this Agreement without the written consent of the others. CONTRACTOR shall not assign or transfer any interest in this Agreement without_ the prior written consent _o CITY. Consent to any such transfer shall be at the sole discretion of CITY. Section 4.8 Notices Any notice required to be given by the terms of this Agreement shall be in writing signed by an authorized representative of the sender and shall be deemed to have been given when the same is personally served or upon receipt by express or overnight delivery, postage prepaid, or three (3) days from the time of mailing if sent by first class or certified mail, postage prepaid, addressed to the respective parties as follows: To CITY: City of Lodi 221 West Pine Street P.O. Box 3006 Lodi, CA 95241-1910 Attn: Rebecca Areida-Yadav ;To CONTRACTOR: The Reed Group, Inc. 3053 Freeport Boulevard #158 Sacramento, CA 95818-4346 Attn: Robert Reed Section 4.9 Cooperation of CITY CITY shall cooperate fully and in a timely manner in providing relevant information it has at its disposal relevant to the Scope of Services. Section 4.10 CONTRACTOR is Not an Employee of CITY CONTRACTOR agrees that in undertaking the duties to be performed under this Agreement, it shall act as an independent contractor for and on behalf of CITY and not an employee of CITY. CITY shall not direct the work and means for accomplishment of the services and work to be performed hereunder. CITY, however, retains the right to 5 require that work performed by CONTRACTOR meet specific standards without regard to the manner and means of accomplishment thereof. Section 4.11 Termination - CITY may terminate this Agreement, with or without cause, by giving CONTRACTOR at least ten (10) days written notice. Where phases are anticipated within the Scope of Services, at which an intermediate decision is required concerning whether to proceed further, CITY may terminate at the conclusion of any such phase. Upon termination, CONTRACTOR shall be entitled to payment as set forth in the attached Exhibit B to the extent that the work has been performed. Upon termination, CONTRACTOR shall immediately suspend all work on the Project and deliver any documents or work in progress to CITY. However, CITY shall assume no liability for costs, expenses or lost profits resulting from services not completed or for contracts entered into by__CONTRACT__OR with_third_parties in reliance_upon_this Agreement. Section 4.12 Confidentiality CONTRACTOR agrees to maintain confidentiality of all work and work products produced under this Agreement, except to the extent otherwise required by law or permitted in writing by CITY. CITY agrees to maintain confidentiality of any documents owned by CONTRACTOR and clearly marked by CONTRACTOR as "Confidential" or "Proprietary", except to the extent otherwise required by law or permitted in writing by CONTRACTOR. CONTRACTOR acknowledges that CITY is subject to the California Public Records Act. Section 4.13 Applicable Law, Jurisdiction, Severability, and Attorney's Fees This Agreement shall be governed by the laws of the State of California. Jurisdiction of litigation arising from this Agreement shall be venued with the San Joaquin County Superior Court. If any part of this Agreement is found to conflict with applicable laws, such part shall be inoperative, null, and void insofar as it is in conflict with said laws, but the remainder of this Agreement shall be in force and effect. In the event any dispute between the parties arises under or regarding this Agreement, the prevailing party in any litigation of the dispute shall be entitled to reasonable attorney's fees from the party who does not prevail as determined by the San Joaquin County Superior Court. Section 4.14 City Business License Requirement CONTRACTOR acknowledges that Lodi Municipal Code Section 3.01.020 requires CONTRACTOR to have a city business license and CONTRACTOR agrees to secure such license and pay the appropriate fees prior to performing any work hereunder. 6 Section 4.15 Captions The captions of the sections and subsections of this Agreement are for convenience only and shall not be deemed to be relevant in resolving any question or interpretation or intent hereunder. Section 4.16 Integration and Modification This Agreement represents the entire understanding of CITY and CONTRACTOR as to those matters contained herein. No prior oral or written understanding shall be of any force or effect with respect to those matters covered hereunder. This Agreement may not be modified or altered except in writing, signed by both parties. Section 4.17 Contract Terms Prevail All exhibits and this Agreement are intended to be construed as a single document. Should any inconsistency occur between the specific terms of this Agreement and the attached exhibits, the terms of this Agreement shall prevail. Section 4.18 Severability The invalidity in whole or in part of any provision of this Agreement shall not void or affect the validity of any other provision of this Agreement. Section 4.19 Ownership of Documents All documents, photographs, reports, analyses, audits, computer media, or other material documents or data, and working papers, whether or not in final form, which have been obtained or prepared under this Agreement, shall be deemed the property of CITY. Upon CITY's request, CONTRACTOR shall allow CITY to inspect all such documents during CONTRACTOR's regular business hours. Upon termination or completion of services under this Agreement, all information collected, work product and documents shall be delivered by CONTRACTOR to CITY within ten (10) calendar days. CITY agrees to indemnify, defend and hold CONTRACTOR harmless from any liability resulting from CITY's use of such documents for any purpose other than the purpose for which they were intended. Section 4.20 Authority The undersigned hereby represent and warrant that they are authorized by the parties to execute this Agreement. Section 4.21 Federal Transit Funding Conditions ❑ If the box at left is checked, the Federal Transit Funding conditions attached as Exhibit D apply to this Agreement. In the event of a conflict between the terms of this Agreement or any of its other exhibits, and the Federal Transit Funding Conditions, the Federal Transit Funding Conditions will control. 7 IN WITNESS WHEREOF, CITY and CONTRACTOR have executed this Agreement as of the date first above written. ATTEST: 1FER M. RRAIOLO Clerk APPROVED AS TO FORM: JANICE D. MAGDICH, City Attorney CITY OF LOD1, a municipal corporation ST ' " SCT*WII:A City Manager THE REED GROUP, INC., a California corporation By: Name: ROBERT REED ll1 Title: President Attachments: Exhibit A — Scope of Services Exhibit B — Fee Proposal Exhibit C — Insurance Requirements Exhibit D — Federal Transit Funding Conditions (if applicable) Funding Source: 53053001156052001 (Business Unit & Account No.) Doc ID:K:\WP\PROJECTS\PSA's\2018\Reed Group PSA.doc CA:Rev.01.2015 8 THE REED GROUP, INC. January 23, 2018 Charles Swimley City of Lodi 221 West Pine Street Lodi, CA 95241-1910 Exhibit AIB Subject: Proposal for Water and Wastewater Financial Plan and Rate Update Study Dear Charlie, In response to your request, The Reed Group, Inc. is pleased to submit this proposal to update the City's water and wastewater financial plans and user rates. As you know, The Reed Group, Inc. has assisted the City with similar financial planning and rate studies over a number of years, as well as as -needed assistance on related issues. This proposal includes a scope of services, schedule, and cost estimate for the study. The study described herein includes the technical and financial analysis for preparing ten-year financial plans for the water and wastewater utilities. The financial plans will primarily focus on evaluating the revenue needs of the utilities based on the requirements for ongoing operation and maintenance, debt service obligations, and capital program needs. Among the considerations to be made will be to assess the potential for early repayment of water system debt, once the meter retrofit program is completed. The financial plans will also be available to help develop strategies for minimizing future water and wastewater rate increases and smoothing those increases over time. In 2015, the Fourth District Court of Appeal published a decision in Capistrano Taxpayer Association v. City of San Juan Capistrano (SJC decision). This decision had a direct bearing on tiered water rates, as well as other cost of service requirements contained in Proposition 218. The City currently has a 3 -tier water rate structure. The Reed Group reviewed the City's tiered water rate structure in the wake of the SJC decision, and found it to meet the court's requirements. This water and wastewater rate study will need to examine the rates in the context of this recent and other more recent court decisions. We will develop water and wastewater rates consistent with legal requirements for cost of service and proportionality (as required by the California Constitution), and will work with the City's legal counsel to achieve this objective. The remainder of this letter describes the scope of work, estimated cost, and schedule for the water and wastewater financial plan and rate update study. Scope of Work The water and wastewater financial plans and user rates will be developed in a manner similar to previous studies performed for the City, and will include the following tasks: 3053 Freeport Boulevard, #158 • Sacramento, CA 95818-4346 • Tel. (916) 444-9622 • www.TheReedGroup.org CT 'ARLES SWIM -LEY JANTJARY 23, 2018 PACE 2 • Project Initiation and Management - Our project management approach stresses communication, objectivity, and teamwork. This task includes a kick-off and interim meetings and/ or conference calls with staff and contract management. Prior to the kick- off meeting, we will submit a data and information request. We will use the kick-off meeting to be proactive and diligent in identifying and understanding key study issues and stakeholder concerns, as we accumulate the necessary data and information to perform the study. Interim meetings will be scheduled as needed to discuss key issues, preliminary results, and the strategy for taking recommendations forward to decision makers. • Data Collection and Analysis - This task includes the efforts required to collect, compile, review, and analyze financial, budget, CIP, customer account, water use, and wastewater -flow data -and -information, including -policy -goals and objectives. -It-is-also-the-first step in building the administrative record necessary to support new water and wastewater rates. • Develop Ten -Year Financial Plan Models - The City is approaching the end of the previously developed ten-year financial plans. This task will entail developing new water and wastewater financial plans reflecting operations, capital programs, debt obligations, reserves and reserve policies, and non -rate revenues. The planning horizon will match the time period covered by the City's capital improvement plans. If appropriate, attention will be given to potential early repayment of existing debt and/or estimating the potential timing and sizing for debt issuance in order to finance planned capital improvement projects. The multi-year financial plans will be used to identify annual revenue requirements for the recommended financial strategy. The financial plans will be presented in an easy -to -understand format on an interactive dashboard. The dashboard will allow users to vary certain assumptions (CIP funding, debt, water use, revenue adjustments) so that the model user can appreciate the effects of revenue adjustments, capital financing through rates or debt, and reserve targets. A snapshot of a sample dashboard is shown below. Several features of the model's dashboard include the ability to show or indicate: 1. Projected revenue streams and adjustments for the next five years in order to meet debt coverage, fund capital projects, and fund reserves 2. Reserve balances and reserve targets as well as debt service coverage ratios (days cash on hand, reserve funding levels) 3. Operating plan break down (O&M, debt service, reserve funding) 4. Different capital funding sources such as rate funded (also known as pay-as-you- go or PAYGO), debt financing (including the City's debt capacity), or grant funding. CHARLES SWIMLEY JANUARY 23, 2018 PAGE3 111/1 ..Yvnass0ui n 21111 407<slti 400gh 4Yi]il 1 RevAdin .11'1' O'ooCh1 (WI R.c0...Y r.es (effect. fY) sl.co,10 i • 0'...F Drought Coit R... Fees tett.. FY) 5.1.250 000 111610.6116 . f I t 1 New Fund 711 Debt 3111 ion rrf. .:. • 5 006 16. n "t' 'V461'335 .hec oaM Clwges• 701 w Sten.. Wale Demand is u.. ,...� w PeofMed Wafer 5.9105 3.96111G L5061. 2.906610 JAN Ora E R. AdJrn1/ Revenue Adjustments and Debt Coverage Co -am . 120?G low. :9 r0F io o� 100% i0 C1' { 100% 306% 8.0% 6 0% 200% 6,0% ]017K 2.0% a u% �I I11 i . 10.14 ............ FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 01PIAOYAd5 . as 0rooght Feas --Debi Coverage -Taget Debt Coverage sok) 540 $20 50 420 50 3.0"04 MG 1136,1•21./16,1.1/.61.1..114 .. •1% 'l{ 1! w Fuw+ 1Y$119 • IYtn2[l lYn11. 4351 4100.1 50 50 so so so 3.0070100 1,097 010 1.110 MG 1.131114G 1,136006 CIP and Funding Source. for Water Funds 6WsnclnIOo,In • • . Mt lil i.LA .� FY204 FY 1015 fY2016 FY 201/ fY2018 F72019 a By PayGo • By New Debt • Total CIP Waren ooer;.ting Financial Pian Projected Ending Fund Balances Sia 1 5., Std FY 2014 FY 2015 FY 2016 FY 20I7 FY 20114 FY 2019 imeonmi,ems4MEI 4401 rrkf orei.{apto lNt+lr•R 1:uweGrr< s3 9121 1 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 .v tndOg Balances Tager Bala... . Nen Balances so As adjustments are made to different variables, the model can save adjustments as separate scenarios. A scenario manager alIows multiple distinct scenarios to be saved and revisited for a comparative analysis between different financial plans and rate options. City staff can review and determine the most appropriate financial plan and rate design, The models are designed to be easy to understand and show the impacts of various assumptions allowing both staff and the City Council to make informed decisions. • Cost of Service Analysis and Rate Design - This task will include cost of service analyses and preparation of water and wastewater rate schedules. We will follow the requirements of Proposition 218, including new guidance provided by the 2015 San Juan Capistrano appellate court decision, in determining water and wastewater rates and in allocating costs to each customer. Rate schedules will be developed for up to a 5 -year period based on annual revenue requirements. If the City would like to maintain a residential tiered water rate structure, then we will perform the analyses required to justify the structure. Alternatively, the City may choose, or we may ultimately recommend (if facts support the recommendation), a different rate structure that better meets legal requirements as well as the City's policy objectives. Similarly, new wastewater rates will be developed based on cost of service analyses. In particular, we will examine strength -based wastewater rates for non-residential accounts. Rate structures will be developed with consideration of administrative requirements and constraints imposed by the City's billing practices. CHARLES SWIMLEY JANUARY 23, 2018 PAGE 4 Finally, we will provide time for the City's legal counsel to review the rate recommendations prior to moving forward with the rate adoption process. We will also consider whether automatic rate adjustment formulas, as authorized by California statutes, would be of potential benefit to the City. • Prepare Water and Wastewater Financial Plan and Rate Study Report - Study recommendations on the financial plans and water/wastewater rates will be documented in a report including all underlying assumptions, proposed financial strategy, cost of service analysis, rate structures, and policy recommendations. This task will include preparing Administrative Draft, Final Draft, and Final reports. An administrative draft report will be prepared for staff and legal review, prior to public distribution. Comments on this draft will be incorporated into a Final Draft, which will be presented to the City Council -The-Final-report-will-be-prepared- consistent with -rates -contained- in theAlotice of Public Hearing. The study report will be a key document in the City's administrative record to support, justify, and explain water and wastewater rate recommendations. • Present Study Recommendations to the City Council - In this task, we will present study recommendations contained in the Final Draft report to the City Council in advance of mailing public notices of proposed rate increases, and incorporate any changes resulting from their comments into the preparation of the Final report. • Assist City Staff with Proposition 218 Compliance - Assist staff by reviewing a draft public notice and working with the City Attorney on the process and procedures to be followed in adopting the water and wastewater rates. The notice of public hearing regarding changes in water and wastewater rates must be mailed to affected property owners and customers at least 45 days prior to holding the public hearing. • Participate in Public Hearing - Prepare for and make a brief presentation and respond to questions/comments from the City Council during a public hearing to adopt the water and wastewater rate recommendations. Cost Estimate The total estimated cost to perform the water and wastewater financial plans and rate update study is $69,950, including expenses, as indicated in the table below. Our cost estimate is based on our current understanding of the project. For this project, we have allowed for up to three on- site meetings with staff (plus conference calls as needed), one Council meeting to present draft recommendations, and one public hearing. In addition, we will prepare materials for meetings with the City Council and PDF versions of the draft and final reports. It is our practice to bill clients monthly for actual time and expenses incurred during the prior month. Out of pocket expenses re billed at cost. Hourly billing rates are subject to change in January of each year. Consultant Hours Prof. B Reed H Isaac A Boehling Fees Hourly billing rates --> $ 285 $ 260 $ 180 Project Initiation and Management 20 16 4 $ 10,580 Data Collection and Analysis 8 12 16 $ 8,280 Develop 10 -Year Financial Plan Models 8 16 24 $ 10,760 Cost of Service Analysis and Rate Design 12 16 28 $ 12,620 Prepare Financial Plan and Rate Study Reports 12 16 40 $ 14,780 P-resentStudy-Recommendations-to-the-City-Council— 8 -- 4 8 $ -4,760- Assist City Staff with Proposition 218 Compliance 4 4 4 $ 2,900 Participation in Public Hearing 8 2 4 $ 3,520 Total Hours and Professional Fees 80 86 128 $ 68,200 Estimate Expenses $ 250 $ 1,000 $ 500 $ 1,750 Total Project Cost $ 69,950 CHARLES SWIMLEY JANUARY 23, 2018 PAGE5 City of Lodi Water and Wastewater Financial Plans and Rate Update Study Estimated I'rojcct Cost Schedule An initial time line for the project is listed below, assuming that the study begins in February. The timeline will be reviewed and, if necessary, adjusted during the kick-off meeting for the project. The proposed timeline would enable the City to adopt new water and wastewater rates for implementation in January 2019. Data request and kick-off meeting February Financial plan analyses March -April Cost of service analysis and rate design April -May Submit administrative draft report June Review Admin. Draft Report with Staff/Legal June Submit final draft report & present to City Council July Finalize report & mail notice of public hearing August Public hearing on water and wastewater rates October Project Team This project for the City of Lodi will be led and managed by Bob Reed, from The Reed Group, Inc. and include additional consultants from Raftelis Financial Consultants, Inc. (RFC). Earlier in 2017, The Reed Group, Inc. entered into a collaborative arrangement with RFC to provide mutual support, depth of experience, and staffing flexibility in client engagements. Bob Reed will be assisted by two staff from Raftelis' California practice. Habib Isaac is a Senior Manager and an experienced project manager with strong financial, cost of service, and rate design analytical skills as well as communication skills. Habib has performed similar engagements for the City of Galt, aTinT. CHARLES SWIMLEY JANUARY 23, 2018 PAGED City of Livermore, and City of Madera. Andrea Boehling is a Senior Consultant and an experienced rate analyst with expertise in developing financial plan and rate models. Her clients have included the cities of Galt, Livermore, and Santa Cruz. The Reed Group, Inc. has been working with northern California water and wastewater utilities for 20 years and has worked with the City of Lodi on various water/wastewater projects since 2008. Our mission is to provide clients with an exceptional level of service and responsiveness, to develop creative yet practical solutions to client needs, and to broaden understanding and facilitate consensus on complex issues. As such, The Reed Group is well qualified to offer services for water and wastewater utilities in the following areas: • Water, wastewater, and recycled water rate studies • Cost of service and rate design analyses • Capacity charge nexus studies • Long-range financial and strategic planning • Public participation and facilitation • Litigation support and avoidance Founded in 1993, Raftelis Financial Consultants, Inc. provides services that help utilities function as sustainable organizations while providing the public with clean water at an affordable price. With this goal in mind, RFC has grown to have the largest and most experienced water, wastewater, and stormwater utility financial and management consulting practice in the nation. RFC has experience providing these services to hundreds of utilities across the country. The firm provides clients with innovative and insightful recommendations that are founded on industry best practices. Throughout its history, RFC has maintained a strict focus on the financial and management aspects of utilities, building a staff with knowledge and skills that are extremely specialized to the services provides, and thus providing clients with independent and objective advice. Resumes for the three members of our project team at included at the end of this letter proposal. The Reed Group, Inc. is grateful for the opportunity to be of further service to the City. Please let me know if you would like to discuss this proposal in greater detail. Sincerely, Or?„.C._ Robert Reed The Reed Group, Inc. EXHIBIT C NOTE: The City of Lodi Is now using the online insurance program PINS Advantage. Once you have been awarded a contract you will receive an email from the City's online insurance program requesting you to forward the email to your insurance provider(s). Please see attached flyer regarding PINS Advantage. Jnsurance Reouirements far Contractor The Contractor shall take out and maintain during the life of this Agreement, insurance coverage as listed below. These insurance policies shall protect Contractor and any subcontractor performing work covered by this Agreement from claims for damages for personal injury, including accidental death, as well as from claims for property damages, which may arise from Contractor's operations under this Agreement, whether such operations be by Contractor, or by any subcontractor, or by anyone directly or indirectly employed by either of them. In the event Contractor's insurance cannot fully cover any hired subconsultants, the terms of insurance herein shall be requirements for the subconsultant. The amount of such insurance shall be as follows: 1. COMPREHENSIVE GENERAL LIABILITY $2,000,000 Each Occurrence $4,000,000 General Aggregate 2. COMPREHENSIVE AUTOMOBILE LIABILITY $1,000,000 Combined Single Limit Such insurance shall cover liability arising out of any vehicle (including, owned, hired and non -hired vehicles) operated in performing any and all services pursuant to this Agreement. Coverage shall be written on ISO form CA 00 01 12 90, or a later version, that provides liability coverage at least as broad as this form. 3. PROFESSIONAL LIABILITY / ERRORS AND OMISSIONS $1,000,000 Each Claim/Aggregate When project specific insurance is required, all limits are to be designated strictly for the City of Lodi, its elected and appointed boards, commissions, officers, agents, employees, and volunteers. All deductibles or self-insured retentions (SIR) must be disclosed to City's Risk Manager for approval and shall not reduce the limits of liability set forth hereinabove. Insurance policies containing any deductible or SIR provision shall provide, or be endorsed to provide, that the deductible or SIR may be satisfied by either the Named Insured(s) or the City of Lodi. It is required that any available insurance proceeds broader than or in excess of the specified minimum insurance coverage requirements and/or limits set forth above, shall be available to City as an additional insured. Furthermore, the requirements for coverage and limits shall be (i) the minimum coverage and limits specified in these insurance requirements; or (ii) the broader coverage and maximum limits of coverage of any insurance policy or proceeds available to the Contractor; whichever is greater. Contractor agrees and stipulates that any insurance coverage provided to the City of Lodi shall provide for a claims period following termination of coverage which is at least consistent with the claims period or statutes of limitations found in the California Tort Claims Act (California Government Code Section 810 et seq.). A copy of the certificate(s) of insurance with the following endorsements shall be furnished to the City: Insurance Raaulrements for Contractor (continued) (a) Additional Named Insured Endorsement Pursuant to a separate endorsement (ISO form CG 2010 (11/85) or a later version, that provides commercial general liability coverage at least as broad as this form) such insurance as is afforded by this policy shall also apply to the City of Lodi, its elected and appointed boards, commissions, officers, agents, employees, and volunteers as additional named insureds. An additional named insured endorsement is also required for Auto Liability (b) Primary and Non -Contributory Insurance Endorsement Additional insurance coverage under the Contractor's commercial general liability and automobile liability policy shall be "primary and non-contributory" and will not seek contribution from City's insurance or self-insurance and shall be at least as broad as ISO form CG 20 01 04 13. NOTE: (1) The street address of the CITY OF LODI must be shown along with (a) and (b) above: 221 West Pine Street, Lodi, California, 95240; (2) The insurance certificate must state, on its face or as an endorsement, a Page 1 I of 2 pages Risk: rev.08.28.2017 description of the proiect that it is insuring. (c) Waiver of Subrocatiort Include a waiver of subrogation against the City of Lodi, its elected and appointed boards, commissions, officers, agents, employees, and volunteers. A waiver is required for General Liability and Auto Liability. (d) Limits of Coverage The limits of insurance coverage required may be satisfied by a combination of primary and umbrella or excess insurance. Any umbrella or excess insurance of Contractor shall contain, or be endorsed to contain, a provision that such coverage shall also apply on a primary and non-contributory basis for the benefit of the City before the City's own insurance or self-insurance shall be called upon to protect the City as a named insured. (e) Severability of Interest Clause The term "insured" is used severally and not collectively, but the inclusion herein of more than one insured shall not operate to increase the limit of the company's liability under the Contractors commercial general liability and automobile liability policies. (f) Notice of Cancellation or Change in Coverage Endorsement This policy may not be canceled nor the coverage reduced by the company without 30 days' prior written notice of such cancellation or reduction in coverage to the Risk Manager, City of Lodi, 221 West Pine St,, Lodi, CA 95240. (9) Continuity of Coverage All policies shall be in effect on or before the first day of the Temi of this Agreement. At least thirty (30) days prior to the expiration of each insurance policy, Contractor shall furnish a certificate(s) showing that a new or extended policy has been obtained which meets the minimum requirements of this Agreement. Contractor shall provide proof of continuing insurance on at least an annual basis during the Term. If Contractor's insurance lapses or is discontinued for any reason, Contractor shall immediately notify the City and immediately obtain replacement insurance. (h) Failure to Comply If Contractor fails or refuses to obtain and maintain the required insurance, or fails to provide proof of coverage, the City may obtain the insurance. Contractor shall reimburse the City for premiums paid, with interest on the premium paid by the City at the maximum allowable legal rate then in effect in Califomia. The City shall notify Contractor of such payment of premiums within thirty (30) days of payment stating the amount paid, the name(s) of the insurer(s), and rate of interest. Contractor shall pay such reimbursement and interest on the first (1st) day of the month following the City's notice. Notwithstanding any other provision of this Agreement, if Contractor fails or refuses to obtain or maintain insurance as required by this agreement, or fails to provide proof of insurance, the City may terminate this Agreement upon such breach. Upon such termination, Contractor shall immediately cease use of the Site or facilities and commence and diligently pursue the removal of any and all of its personal property from the site or facilities. (i) Qualified Insurer(s) All insurance required by the terms of this Agreement must be provided by insurers licensed to do business in the State of California which are rated at least "A-, VI" by the AM Best Ratings Guide, and which are acceptable to the City. Non -admitted surplus lines carriers may be accepted provided they are included on the most recent list of California eligible surplus lines insurers (LESLI list) and otherwise meet City requirements. Workers Compensation insuranc@ The Contractor shall take out and maintain during the life of this Agreement, Worker's Compensation Insurance for all of Contractor's employees employed at the site of the project and, if any work is sublet, Contractor shall require the subcontractor similarly to provide Workers Compensation Insurance for all of the latters employees unless such employees are covered by the protection afforded by the Contractor. In case any class of employees engaged in hazardous work under this Agreement at the site of the project is not protected under the Worker's Compensation Statute, the Contractor shall provide and shall cause each subcontractor to provide insurance for the protection of said employees. A waiver of subrogation is required for workers compensation insurance. This policy may not be canceled nor the coverage reduced without 30 days' prior written notice of such cancellation or reduction in coverage to the Risk Manager, City of Lodi, 221 West Pine St., Lodi, CA 95240. NOTE: The City reserves the right to obtain a full certified copy of any Insurance policy or endorsements required. Failure to exercise this right shall not constitute a waiver of the City's right to exercise after the effective date. Page 2 I of 2 pages Risk: 'rev ,08.28.2017 RESOLUTION NO. 2018-243 A RESOLUTION OF THE LODI CITY COUNCIL AUTHORIZING THE CITY MANAGER TO EXECUTE AMENDMENT NO. 1 TO THE PROFESSIONAL SERVICES AGREEMENT WITH THE REED GROUP, INC., OF SACRAMENTO, FOR WATER AND WASTEWATER FINANCIAL PLAN AND RATE UPDATE AND STUDY WHEREAS, on February 7, 2018, Council approved a Professional Services Agreement with The Reed Group, Inc., of Sacramento, for Water and Wastewater Financial Pian and Rate Update and Study, in the amount of $69,950; and WHEREAS, the proposal from The Reed Group, Inc., included tasks such as developing an updated 10 -year financial plan and revenue model for both Water and Wastewater utilities, a cost of service analysis and rate design, preparation of a financial plan and rate study report, and assistance with the upcoming Proposition 218 process; and WHEREAS, staff recommends authorizing the City Manager to execute Amendment No. 1 to the Professional Services Agreement with The Reed Group, Inc., of Sacramento, for Water and Wastewater Financial Plan and Rate Update and Study, in the amount of $15,000. NOW, THEREFORE, BE IT RESOLVED that the Lodi City Council does hereby authorize the City Manager to execute Amendment No. 1 to the Professional Services Agreement with The Reed Group, Inc., of Sacramento, California, for Water and Wastewater Financial Plan and Rate Update and Study, extending the term of the agreement to June 30, 2019, in the amount of $15,000, for a not -to -exceed total of $84,950 over the entire term of the agreement. Dated: December 19, 2018 I hereby certify that Resolution No. 2018-243 was passed and adopted by the City Council of the City of Lodi in a regular meeting held December 19, 2018, by the following vote: AYES: COUNCIL MEMBERS — Johnson, Kuehne, Mounce, Nakanishi, and Mayor Chandler NOES: COUNCIL MEMBERS — None ABSENT: COUNCIL MEMBERS — None ABSTAIN: COUNCIL MEMBERS — None ti .tA/t/LaiQl . ENNIFER M_ FERRA1OLO City Clerk 2018-243