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HomeMy WebLinkAboutAgenda Report - October 19, 2022 C-13CITY OF A% .� o 6 z 4 CALIFORNIA AGENDA ITEM Coo,13 COUNCIL COMMUNICATION AGENDA TITLE: Adopt Resolution Authorizing City Manager to Execute Professional Services Agreement with Hildebrand Consulting of Oakland, for 2023 Water and Wastewater Cost of Service Rate Study ($90,620) MEETING DATE: October 19, 2022 PREPARED BY: Public Works Director RECOMMENDED ACTION: Adopt resolution authorizing City Manager to execute Professional Services Agreement with Hildebrand Consulting of Oakland for 2023 Water and Wastewater Cost of Service Rate Study ($90,620). BACKGROUND INFORMATION: The Reed Group, Inc. has been involved in the City's water and wastewater financial planning and rate setting since 2008 and prepared the City's current Proposition 218 five year rate plan that is scheduled to expire on December 31, 2023. The City's current agreement with The Reed Group, Inc. is set to expire on November 15, 2022, however, the firm has chosen to not extend the agreement and transition their existing clients to Hildebrand Consulting of Oakland, California. To ensure continuity between the current and proposed rate studies, Bob Reed will serve in an advisory capacity under Hildebrand Consulting's contract. The proposal from Hildebrand Consulting includes developing a ten year financial plan and rate model for both the Water and Wastewater utilities; a cost of service analysis and rate design, preparation of ten year financial rate plans, a rate study including an updated five year rate plan, and assistance with implementing the Proposition 218 process. Staff recommends Council authorize City Manager to execute a Professional Services Agreement with Hildebrand Consulting of Oakland, for water and wastewater financial plan and rate update study. This agreement will be for a term of three years with an option to extend for two additional one-year terms. FISCAL IMPACT: The tasks included in the agreement will enable a detailed analysis of current and future Water and Wastewater rates to ensure that revenues are sufficient to support operations and capital expenditures. This contract does not impact the General Fund. FUNDING AVAILABLE: Water & Wastewater Operations (56052001/53053001) $90,620 Qxv�6j Andrew Keys Deputy City Manager/Internal Services Director _(I UL2 _ Charles E. Swimley, Jr. Public Works Director CES/RAY/cd APPROVED: Stephen Schwabauer, City Manager \\cvcfilv02\pubwks$\WP\COUNCIL\2022\CCHildebrand PSA.docx 10/5/2022 AGREEMENT FOR PROFESSIONAL SERVICES ARTICLE 1 PARTIES AND PURPOSE Section 1.1 Parties THIS AGREEMENT is entered into on 20 by and between the CITY OF LODI, a municipal corporation (hereinafter "CITY"), and HILDEBRAND CONSULTING, LLC., a California limited liability company (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 On -Call Water and Wastewater Utility Financial Plan and Rate Setting Services (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 Scone 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 project 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 November 15, 2022 and terminates upon the completion of the Scope of Services or on November 14, 2025, whichever occurs first. Section 2.7 OpAion to Extend Term of Agreement At its option, City may extend the terms of this Agreement for an additional two (2) one (1) -year extensions; provided, City gives Contractor no less than thirty (30) days z written notice of its intent prior to expiration of the existing term. In the event City 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 five (5) 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 3 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 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. 4 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. 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 of 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 To CONTRACTOR: Hildebrand Consulting, LLC. 3378 Guido Street Oakland, CA 94602 Attn: Mark Hildebrand 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. 5 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 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 CONTRACTOR 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 Attorne '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 6 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. Section 4.16 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. 7 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. Section 4.22 Counterparts and Electronic Signatures This Agreement and other documents to be delivered pursuant to this Agreement may be executed in one or more counterparts, each of which will be deemed to be an original copy and all of which, when taken together, will be deemed to constitute one and the same agreement or document, and will be effective when counterparts have been signed by each of the parties and delivered to the other parties. Each party agrees that the electronic signatures, whether digital or encrypted, of the parties included in this Agreement are intended to authenticate this writing and to have the same force and effect as manual signatures. Delivery of a copy of this Agreement or any other document contemplated hereby, bearing an original manual or electronic signature by facsimile transmission (including a facsimile delivered via the Internet), by electronic mail in "portable document format" (".pdf') or similar format intended to preserve the original graphic and pictorial appearance of a document, or through the use of electronic signature software will have the same effect as physical delivery of the paper document bearing an original signature. 8 IN WITNESS WHEREOF, CITY and CONTRACTOR have executed this Agreement as of the date first above written. ATTEST: OLIVIA NASHED City Clerk APPROVED AS TO FORM: JANICE D. MAGDICH, City Attorney CITY OF LODI, a municipal corporation STEPHEN SCHWABAUER City Manager HILDEBRAND CONSULTING, LLC., a California Limited Liability Company By: By: Name: MARK HILDEBRAND Title: Owner Attachments: Exhibit A — Scope of Services Exhibit B — Fee Proposal Exhibit C — Insurance Requirements Exhibit D — Federal Transit Funding Conditions (if applicable) (Business Unit & Account No.) Funding Source: Doc ID:file:///\\cvcfilv02\pubwks$\WP\PROJECTS\PSA's\2022\Hildebrand%20Consulting\PSA.doc CkRev.02.2022.elecsign 9 HILDEBRAND CONSULTING Charles Swimley Public Works Director City of Lodi 221 W Pine St. Lodi, CA 95240 Subject: Proposal for 2023 Water & Wastewater Cost of Service Rate Study Dear Mr. Swimley, Exhibit AB HILDEBRAND CONSULTING July 15, 2022 In response to your request, Hildebrand Consulting, LLC. is pleased to submit this proposal to the City of Lodi to conduct a water and wastewater rate study for the City. We propose to team with The Reed Group, Inc. for this engagement. This proposal includes a scope of services and cost estimate for the study. The study described herein will develop equitable water and wastewater rates to achieve full cost recovery of annual system expenses associated with each respective system. The financial plans will identify annual water and sanitation rate revenue needs with consideration of operating and maintenance costs, debt service obligations, capital program needs, and financial reserve policies. The proposed rate structures will be based on clear and equitable cost allocation methodologies with cost bases that meet both the requirements of California state law (namely Proposition 218) and City policy objectives. Our review of the City's existing rates will consider California's evolving legal landscape, including recent relevant court decisions. We intend that the City's water and wastewater rates continue to be consistent with legal requirements for cost of service and proportionality (as required by the California Constitution). Mark Hildebrand brings over 20 years of broad experience in California as a utility rate and management consultant to municipal utilities. He has performed hundreds of studies covering a diverse range of rate setting, cost allocation, and financial planning to more than 60 clients, including Central Valley municipalities. As an independent consultant, Mr. Hildebrand offers a distinctive value proposition: we offer a seasoned and experienced consultant to be directly engaged in all facets of work while providing our services at significantly more affordable rates than peers at larger consultancies. Mark. Hildebrand's resume has been attached as Attachment A. Bob Reed is President of The Reed Group, Inc. and has over a decade of experience in working directly with the City of Lodi. He brings over 35 years of experience as an engineer for a major water/wastewater agency and a management consultant to local governments. Bob is moving into retirement, however, his involvement in this project will ensure continuity of service and bring his experience with and knowledge of the City to this engagement. Page 1 HILDEBRAND CONSULTING Proiect Background This study is intended to update the City's water and wastewater rates. The City's rates were last updated in 2019 based on a financial planning study conducted by The Reed Group. The 2019 Water and Wastewater Rate Study adopted a water rate schedule with the final increase scheduled for January 2023 and a wastewater rate schedule with the final increase schedule for July 2023. The 2019 study was limited to a financial plan (in other words the rate structure was neither studied nor modified) and the study recommended that the subsequent rate study should include a full cost of service and rate design analysis. The remainder of this proposal describes the scope of work, estimated cost, and schedule for the water and wastewater cost of service rate. It is important to note that, while this proposal includes the full scope of services that are needed for the rate studies, we also acknowledge that the initial effort of the studies will be completed using the remaining budget in a pre-existing contract between The Reed Group and the City. The budget section below indicates which tasks will be funded through that separate contract. Scope of Work: The water and wastewater rates and financial plans will include the following tasks: Task 1. Project Kickoff, Data Collection and Project Management To initiate the study, we will submit a data request to the City. Collecting and reviewing data prior to a Kickoff Meeting will allow us to be more produce from the outset of the project. Once a majority of data has been received, we will review it in detail. This will include (but is not limited to) a review of historical financial statements, capital spending forecast, historical statements of revenue and expense, current year budgets, customer counts and classes, and historical water usage data. Shortly thereafter, we will conduct a Project Kickoff Meeting with City staff to: ✓ Discuss key issues, roles and responsibilities ✓ Confirm study objectives and further explore project drivers such as revenue stability ✓ Confirm data requirements and discuss the data already received ✓ Finalize the project schedule, including key milestone dates and deliverables, in particular the sequencing of the workshops Follow-up calls with staff will be made to ensure full understanding of all data received. We will manage the project schedule and budget in close coordination with City staff. We will provide monthly invoices and progress reports and any additional updates as requested by staff. Page 2 HILDEBRAND CONSULTING Task 1 Meeting: Kickoff Meeting with staff Task 1 Deliverable: Data request list Task 2. 10 -Year Financial Plans In this task, we will use a revenue sufficiency and financial planning model to update the water and wastewater enterprises' 10 -Year Financial Plans and develop recommendations for 5 -year rate schedules. Financial planning models will be tailored to directly load each enterprises' budget (for seamless updates) and project annual revenue and fee adjustments requirements. The financial plans will consider projected changes to operating expenses, alternative spending levels, operating reserves targets, debt service coverage ratios and other financial policies/goals that affect the revenue requirements of the funds, as may be provided by staff. It will also consider historical operating expenses, growth projections and other trends that paint a complete financial picture and provide for informed decision-making. Our financial models clearly display key scenarios and assumptions in a format that is easy to understand. This function, coupled with our ability to make real-time changes to the model, is particularly useful when engaging in interactive planning meetings. Our team will work directly with City staff to understand the drivers for the Financial Plans and consider uncertainties, such as future regulatory mandate for water usage reductions and water supply/demand trends. The financial models will be developed for future use by City staff. To this end, we will work closely with staff to ensure that the models meet your needs and expectations. Our financial planning model provides a valuable capital planning tool which we will use to review the capital improvement program and evaluate the impacts of alternative projects, costs, timing, and funding sources. We will work collaboratively with City staff to understand capital and operational budgetary expenditures for financial model inputs. Closely related to this analysis is the examination of cash reserve policies, which are fundamental to achieving financial stability and avoiding sudden fee adjustments in the face of changes to operating or capital needs. Task 2 Meeting; Financial Planning Workshop with staff Task 2 Deliverable; Presentation materials. Study findings will be summarized in the final report (see Task 6). Task 3, Cost of Service and Rate Designs In Task 2, the financial plan models will be used to determine the annual rate revenue requirement for each enterprise during the 10 -year planning period, which establishes each utility's annual rate revenue requirement. This Task 3 will review and update the cost of service by customer class and the basis for the rate structure. Page 3 HILDEBRAND CONSULTING The cost -of -service analyses serve as the foundation for water and wastewater rates by allocating utility costs to cost categories and then to customer classes based on service and demand characteristics. Under California's Proposition 218 water and wastewater rates must reflect a proportionate distribution of costs to each customer and customer class. We will review the basis of the cost -of -service analysis from the previous study and the City's current rate structure to determine if they continue to serve the City's objectives relating to revenue stability, conservation, and affordability, while ensuring a fair and equitable distribution of costs, and conformance to accepted industry practice and legal requirements. Upon completion of the cost -of -service analysis, we will review the existing rate structures to determine if the cost of providing service to each customer class is being recovered appropriately through the water and wastewater rates. The rate structures should be a reflection of both the cost of service results as well as the City's financial objectives. At this time, significant changes to the metered water and wastewater rate structures are not anticipated. Changes will be limited to those necessitated by the cost of service analysis. The City continues to phase out its flat water and wastewater rates as water meters are installed. No changes to the structure of flat rates are planned. During this engagement, we will also provide assistance and guidance to the City regarding the transition of multi- family customers (currently billed to each living unit) to master -metered accounts (to be billed to the property owner). Data Requirements - Detailed data from the utility billing systems will be needed to analyze water usage characteristics and perform rate calculations. Data to be extracted from the two utility billing reports will include customer name and account number, customer class, meter size, number of dwelling units, and a 12 -month water use history. This data will be reviewed, sorted, organized, and analyzed to provide information on water usage characteristics by customer class. Analysis of metered water usage will be used in rate calculations and will also be useful for education and outreach purposes. Survey - The proposed water and wastewater rates will be compared with the rates of neighboring utilities by comparing the monthly utility bills for representative residential customers. In addition, we will relate the typical utility bill under proposed rates with average household income within the City's service area. This survey will be conducted early on in the project to help start stakeholder education. Task 3 Meeting; Rate Structure Workshop with staff Task 3 Deliverable; Presentation materials, including survey results, Study findings will be summarized in the final report (see Task 6). Task 4. Short -Sleeve and Council Presentations We propose to hold three meetings Short -Sleeve meetings with the City Council to present and discuss financial planning and rate issues in detail. Each presentation will involve development of a PowerPoint presentation, preparation with City staff, and debriefs after the meetings. It is assumed that all Short Sleeve meetings will group the water and wastewater studies into a single presentation. The Short Sleeve meetings will include an overview of the rate -setting process, identify our rate -setting objectives, provide background on the 10 -Year Financial Plans including a detailed discussion regarding capital spending Page 4 HILDEBRAND CONSULTING scenarios (as applicable), financial reserves, review rate design options, transition to master -metered multi -family accounts for billing, preview potential rate schedules, discuss bill impacts and compare the rates to other regional utilities (survey). We will also give presentations to City Council in up to three regular council meetings, including the public hearing to present our recommendations for the adoption of new water and wastewater rates. The presentations will re -iterate the rate -setting process, the rate -setting objectives, the findings of the rate studies. While the budget includes three (3) City Council presentations, we understand that only two meetings may be necessary. Task 4 Meetings: Three (3) Short Sleeve Meetings, up to three (3) City Council presentations (including the Public Hearing), all of which will be held via video conference. If in-person meetings are requested, travel time expenses will be apply. Task 4 Deliverables; Presentation materials Task 5. Reports, Models and Prop 218 Notification We will deliver an administrative draft report for staff to review. Following staff review, a draft report will be submitted to the Council for review and comment. Following acceptance of the draft report by the Council, a final report will be submitted. The report will include all elements of both rate studies. The report will include: a. A brief physical description of the water and wastewater systems b. Overview of financial operations for the last five years c. A forecast of capital improvement program needs for the next ten years d. The proposed 10 -year Financial Plans e. A transparent explanation of the basis for cost allocation to customer classes f. A clear explanation of the cost -basis for the respective rate structures g. 5 -year schedules of proposed water and wastewater rates h. A list of all assumptions and data supporting the stud's recommendations Proposition 218 Compliance and Notification We will provide guidance and advice to staff to help ensure compliance with the rate adoption process required by Proposition 218. We will work with City staff to draft the contents of the required Proposition 218 notice, which will need to be mailed to property owners at least 45 days prior to a public hearing. We assume that the City will work with a printing service to finalize the formatting and mail the Proposition 218 notification. Page 5 HILDEBRAND co�s.�T G Task 5 Deliverables; Administrative Draft, Draft, and Final Study Report - Draft Proposition 218 Notification Letter Cost Proposals The total estimated costs to perform the water and wastewater rate studies are summarized in the tables below. The hours incurred by The Reed Group will be invoiced through the existing contract with the City (which has about $17 thousand in remaining capacity). In addition, Hildebrand Consulting's hours associated with Task 1 will also be invoiced through The Reed Group's existing contract. It is our practice to bill clients monthly for actual time and expenses incurred during the prior month. No travel expenses or out-of-pocket expenses are anticipated at this time. Mark Hildebrand's hourly billing rate for this study will be $230. Hourly rates are subject to change every January 1. Page 6 HILDEBRAND Water Rate Study Task 1 Project Kickoff and Data Collection (na)* $0 Task 2 10 -Year Financial Plan 62 y $14,260 Task 3 Cost of Service and Rate Design 57 �0`e $13,110 Task 4 Short -Sleeve and Council Presentations 18 hPQ1 $4,140 Task 5 Reports, Models and Prop 218 Notification 60 $13,800 Total Hours: 197 Direct & Travel Expenses***: $0 Proposed Fee for Water Study: $45,310 Wastewater Rate Study Task 1 Project Kickoff and Data Collection (na)* $0 Task 2 10 -Year Financial Plan 62 $14,260 Task 3 Cost of Service and Rate Design 57 �a°tee $13,110 Task 4 Short -Sleeve and Council Presentations 18 ��� $4,140 Task 5 Reports, Models and Prop 218 Notification 60 $13,800 Total Hours: 197 Direct & Travel Expenses***: $0 Proposed Fee for Wastewater Study: $45,310 * Funded through existing contract between the City and The Reed Group ** Through November 15, Bob Reed will charge all of his time to his existing contract. After that he may charge some additional hours to this budget. *** This scope assumes that all meetings will be conducted via video conference. On-site meetings can be held at an additional charge of 4 hours per consultant. Schedule We understand that the City wishes to initiate the project in Spring of 2023 and hold the Public Hearing in the Fall 2023 (perhaps November). The first new water rates will be implemented in January of 2024 and the first new wastewater rates will be implemented in July of 2024. Page 7 HILDEBRAND COH5V LTi NG Hildebrand Consulting is grateful for the opportunity to be of service to the City. Please let me know if you would like to discuss this proposal in greater detail. Sincerely, Mark Hildebrand Hildebrand Consulting, Inc. Page 8 • HILDEBRAND Proposal for the City of Lodi CONSULTING 2023 Water & Wastewater Cost of Service Rate Studies Attachment A: Resume Attachment A HILDEBRAND CON SUITI NG MARK HILDEBRAND FOUNDER AND PRINCIPAL Proposal for the City of Lodi 2023 Water & Wastewater Cost of Service Rate Studies HILDEBRAND CONSULTING Owner and founder of Hildebrand Consulting, LLC., Mark Hildebrand is a finance and management consultant to local governments who bridges the disciplines of financial analysis and organizational effectiveness. He has performed scores of financial plans, fee studies, cost allocation plans, and water and sewer rate studies. Mr. Hildebrand is an expert in Proposition 218 and California's legal requirements regarding utility finances and cost allocation principles. He has been published by the AWWA Journal for articles addressing the challenges of utility service pricing in California. AREA OF EXPERTISE » Financial Planning Utility Rate/Fee Studies »Strategic Business Planning » Capital Facility Financing » Alternative Project Delivery PROFESSIONAL HISTORY » Hildebrand Consulting, LLC., Owner, 2018 - present MWH / STANTEC Consulting, Inc., Principal, 2014-2018 » ARCADIS / Malcom Pirnie, Senior Consultant, 2004 - 2014 » Clipper Windpower, 2003 - 2004, Researcher » IT Corp, Analyst, 2000 - 2002 » Peace Corps, 1998 - 2000, Madagascar EDUCATION » B.S., Ecology, University of California, Berkeley,1998 » M.S., Management, University of California, Santa Barbara, 2004 CERTIFICATION » Change Management (PROSCI) » Certified Document Technologist (DBIA) PUBLICATIONS & PRESENTATIONS "Ml Manual - Principal of Water Rates, Fees and Charges" Editor and contributing author "Conservation Rates Made Legal: Water Budgets and California Law," Journal of the American Water Works Association, Vol. 101, No. 4, April 2009 (lead author). "Water Rates, Fees, and the Legal Environment," American Water Works Association, 2nd Edition, 2010. ISBN 978-1-58321-796-2 (contributing editor). "Affording Conservation Revenue Challenges Facing Utilities,' Proceedings, International City Management Association, October 17-20, 2010. (Co - presenter). "California Finance Law: Water Budgets and California Law," Proceedings, Utility Management Conference, February 17-21, 2009 (Presenter). "Defining Latest Trends in Conservation Rate Design: Creating a Nexus Between Cost of Service Principles and Rate Structure," Utility Management Conference, February 17-20, 2009 (Co -presenter). ATTACHEMENT A HILDEBRAND CONSULTING SAMPLE PROJECT EXPERIENCE Mark Hildebrand has conducted over 75 rate studies for water and sewer utilities. The following is a sample of some of those projects. Coachella Valley Water District, Comprehensive Rate Study Project Manager for a multifaceted rate study to a wholesale State Water Contractor that provides domestic water, sewer, recycled water, canal (irrigation) water, and replenishment program services. City of Santa Ana, Comprehensive Water, Sewer and Recycled Water Rate Study Project Manager in delivering a comprehensive cost -of - service analysis and rate design project to address significant reductions in water sales. Examined a variety of scenarios to provide a cost -basis for tiered rates, consistent with the requirements of Prop 218. Moulton Niguel WD Water/Sewer Rate Study Project Manager in delivering a water, sewer and recycled water financial plan, cost -of -service analysis, and water budget -based rate design project. Work included conforming large volumes of billing data for water budget -based rates, developing financial models, debt and bond issuance evaluation (financial strategy), long term financial forecasting, drought rate policies. City of Fullerton, Water Rate Study Current Project Manager in delivering a comprehensive water cost -of -service analysis and rate design project to address the City's epidemic of water main ruptures. Spent extensive time with a citizen advisory committee in order to determine the proper level of capital reinvestment in the City's underground infrastructure. Soquel Creek Water District, Santa Cruz County Project Manager in delivering a comprehensive water cost -of -service analysis and rate design project to address significant reductions in water sales. Examined a variety of scenarios to provide a cost -basis for tiered rates, consistent with the requirements of Prop 218. Proposal for the City of Lodi 2023 Water & Wastewater Cost of Service Rate Studies Ross Valley Sanitation District, Sewer Rate Study Delivering a comprehensive wastewater financial plan, cost -of -service analysis and rate design project for this relatively small special district in Marin California. The scope of work may include a consolidation assessment of two local systems. City of Santa Rosa, Water and Sewer Rate Studies Performing rate studies for Santa Rosa Water, which include detailed cost of service analyses, refinement of current rate structures, development of a five- and ten- year financial plans, and review of financial policies and practices. The study is complicated by the effects of the recent Tubbs Fire. Casitas Municipal Water District, Water Rate Study Project Manager in delivering a comprehensive water financial plan, cost -of -service analysis and rate design project for this mixed agricultural community. One of the project challenges was the California drought that ended in 2017 for most of the state but persisted hydraulically isolation community. The scope included numerous Board workshops. Indian Wells Valley WD, Water Rate Study Current Project Manager for a comprehensive water rate study financial plan update that will ensure that rates are sufficient and consistent with the requirements of Proposition 218. The study includes fire service charges, pumping elevation charges, and bulk rates. The study is examining SGMA costs and funding mechanisms for the lead agency of their GSA. Indio Water Authority, Cost Allocation Plan & Fee Study Lead consultant for a cost allocation plan project in association with a Comprehensive Service Fee Study. The project developed a comprehensive list of Service Fees that were set at levels to reflect the true cost of providing the services and in compliance with OMB Circular A87. The scope included identification of new Service Fees and calculation of the maximum -justifiable rates. This study also examined anticipated GSP costs and rate structure. ATTACHEMENT A W to. qt rFQR� 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) to submit the required insurance documentation electronically Insurance Requirements for Professional Services Contractor shall procure and maintain for the duration of the contract insurance against claims for injuries to persons or damages to property which may arise from or in connection with the performance of the work hereunder and the results of that work by the Contractor, his agents, representatives, employees or subcontractors. MINIMUM SCOPE AND LIMIT OF INSURANCE Coverage shall be at least as broad as: 1. Commercial General Liability (CGL): Insurance Services Office Form CG 00 01 covering CGL on an "occurrence" basis, including products and completed operations, property damage, bodily injury and personal & advertising injury with limits no less than $1,000,000 per occurrence. If a general aggregate limit applies, either the general aggregate limit shall apply separately to this project/location (ISO CG 25 03 or 25 04) or the general aggregate limit shall be twice the required occurrence limit. 2. Automobile Liability: ISO Form Number CA 00 01 covering any auto or if Contractor has no owned autos, then hired, and non - owned autos with limit no less than $1,000,000 per accident for bodily injury and property damage. 3. Workers' Compensation: as required by the State of California, with Statutory Limits, and Employer's Liability Insurance with limit of no less than $1,000,000 per accident for bodily injury or disease. 4. Professional Liability (Errors and Omissions) Insurance appropriate to the Consultant's profession, with limits not less than $1,000,000 per occurrence or claim, $2,000,000 aggregate. May be waived by Risk Manager depending on the scope of services. Other Insurance Provisions: (a) Additional Named Insured Status The City of Lodi, its elected and appointed boards, commissions, officers, agents, employees, and volunteers are to be covered as additional insureds on the CGL and auto policy with respect to liability arising out of work or operations performed by or on behalf of the Contractor including materials, parts, or equipment furnished in connection with such work or operations. General liability coverage can be provided in the form of an endorsement to the Contractor's insurance (at least as broad as ISO Form CG 20 10 11 85 or if not available, through the addition of both CG 20 10, CG 20 26, CG 20 33, or CG 20 38; and CG 20 37 if a later edition is used (b) Pdmary and Non -Contributory Insurance Endorsement The limits of insurance coverage required may be satisfied by a combination of primary and umbrella or excess insurance. For any claims related to this contract, the Contractor's insurance coverage shall be primary coverage at least as broad as ISO CG 20 01 04 13 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 Contractor's insurance and shall not contribute with it. (c) Waiver of Subrogation Contractor hereby grants to City of Lodi a waiver of any right to subrogation which any insurer of said Contractor may acquire against the City of Lodi by virtue of the payment of any loss under such insurance. Contractor agrees to obtain any endorsement that may be necessary to affect this waiver of subrogation, but this provision applies regardless of whether or not the City of Lodi has received a waiver of subrogation endorsement from the insurer NOTE: (1) The street address of the CITY OF LODI must be shown along with (a) and (b) and (c) above: 221 West Pine Street, Lodi, California, 95240; (2) The insurance certificate must state, on its face or as an endorsement, a description of therp oiect that it is insuring. (d) 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. (e) Notice of Cancellation or Chan - e 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. Page 1 1 of 2 pages Risk: rev. 3/1/2018 (f) Continuity of Coverage All policies shall be in effect on or before the first day of the Term 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 Contractors insurance lapses or is discontinued for any reason, Contractor shall immediately notify the City and immediately obtain replacement insurance. 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.). (g) 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 California. 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. (h) Verification of Coverage Consultant shall furnish the City with a copy of the policy declaration and endorsement page(s), original certificates and amendatory endorsements or copies of the applicable policy language effecting coverage required by this clause. All certificates and endorsements are to be received and approved by the City before work commences. However, failure to obtain the required documents prior to the work beginning shall not waive the Consultant's obligation to provide them. The City reserves the right to require complete, certified copies of all required insurance policies, including endorsements required by these specifications, at any time. Failure to exercise this right shall not constitute a waiver of the City's right to exercise after the effective date. (i) Self -Insured Retentions Self-insured retentions must be declared to and approved by the City. The City may require the Consultant to provide proof of ability to pay losses and related investigations, claim administration, and defense expenses within the retention. The policy language shall provide, or be endorsed to provide, that the self-insured retention may be satisfied by either the named insured or City. (j) Insurance Limits The limits of insurance described herein shall not limit the liability of the Contractor and Contractor's officers, employees, agents, representatives or subcontractors. Contractor's obligation to defend, indemnify and hold the City and its officers, officials, employees, agents and volunteers harmless under the provisions of this paragraph is not limited to or restricted by any requirement in the Agreement for Contractor to procure and maintain a policy of insurance. (k) Subcontractors Consultant shall require and verify that all subcontractors maintain insurance meeting all the requirements stated herein, and Consultant shall ensure that City is an additional insured on insurance required from subcontractors (1) Claims Made Policies If any of the required policies provide coverage on a claims -made basis: 1. The Retroactive Date must be shown and must be before the date of the contract or the beginning of contract work. 2. Insurance must be maintained and evidence of insurance must be provided for at least five (5) years after completion of the contract of work. 3. If coverage is canceled or non -renewed, and not replaced with another claims -made policy form with a Retroactive Date prior to the contract effective date, the Consultant must purchase "extended reporting" coverage for a minimum of five (5) years after completion of contract work. (m) 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. Page 2 1 of 2 pages Risk: rev. 3/1/2018 RESOLUTION NO. 2022-250 A RESOLUTION OF THE LODI CITY COUNCIL AUTHORIZING THE CITY MANAGER TO EXECUTE A PROFESSIONAL SERVICES AGREEMENT WITH HILDEBRAND CONSULTING, OF OAKLAND, FOR THE 2023 WATER AND WASTEWATER COST OF SERVICE RATE STUDY ------------------------------------------------------------------------ ------------------------------------------------------------------------ WHEREAS, The Reed Group, Inc., has been involved in the City's water and wastewater financial planning and rate setting since 2008 and prepared the City's current Proposition 218 five-year rate plan that is scheduled to expire on December 31, 2023; and WHEREAS, the City's current agreement with The Reed Group, Inc., is set to expire on November 15, 2022, however, the firm has chosen to not extend the agreement and is transitioning existing clients to Hildebrand Consulting, of Oakland; and WHEREAS, the proposal from Hildebrand Consulting includes developing a ten-year financial plan and rate model for both the water and wastewater utilities; a cost of service analysis and rate design; preparation of ten-year financial rate plans; a rate study, including an updated five-year rate plan; and assistance with implementing the Proposition 218 process; and WHEREAS, staff recommends authorizing the City Manager to execute a Professional Services Agreement with Hildebrand Consulting, of Oakland, for the 2023 Water and Wastewater Cost of Service Rate Study, in the amount of $90,620. NOW, THEREFORE, BE IT RESOLVED that the Lodi City Council does hereby authorize the City Manager to execute a Professional Services Agreement with Hildebrand Consulting, of Oakland, California, for the 2023 Water and Wastewater Cost of Service Rate Study, in the amount of $90,620, for the term of three years with two optional one-year extensions; and BE IT FURTHER RESOLVED, pursuant to Section 6.3q of the City Council Protocol Manual (adopted 11/6/19, Resolution No. 2019-223), the City Attorney is hereby authorized to make minor revisions to the above -referenced document(s) that do not alter the compensation or term, and to make clerical corrections as necessary. Dated: October 19, 2022 ----------------------------------------------------------------------- ----------------------------------------------------------------------- I hereby certify that Resolution No. 2022-250 was passed and adopted by the City Council of the City of Lodi in a regular meeting held October 19, 2022 by the following votes: AYES: COUNCIL MEMBERS — Hothi, Khan, Kuehne, Nakanishi, and Mayor Chandler NOES: COUNCIL MEMBERS — None ABSENT: COUNCIL MEMBERS — None ABSTAIN: COUNCIL MEMBERS — None Gw.�U� OLIVIA NASHED City Clerk 2022-250