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HomeMy WebLinkAbout08 - Water Rate StudyCITY OF NEWPORT BEACH CITY COUNCIL STAFF REPORT Agenda Item No. 8 February 26, 2008 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: Utilities Department Steve Myrter, Utilities Director 644 -3411 or smyrter (dlcity.newoort- beach.ca.us SUBJECT: APPROVAL OF PROFESSIONAL SERVCIES AGREEMENT WITH RED OAK CONSULTING FOR WATER RATE STUDY, BUDGET AMENDMENT - ISSUE: Should the City enter into a contract with Red Oak Consulting to perform a water rate study, including evaluating the feasibility of implementing a more conservation- oriented water rate structure? RECOMMENDATION: 1. Approve a professional services agreement with Red Oak Consulting at a not -to- exceed price of $88,177 and authorize the Mayor and City Clerk to execute the agreement. 2. Approve a budget amendment #BA -- in the amount of $88,177 (move from water enterprise system reserve to the Utilities' professional and technical services account). DISCUSSION: Background: In July 2007, the Council determined that a water rate study would be conducted in fiscal year 2008. The Natural Resources Element, Chapter 10 of the City General Plan, further established policy NR 1.3 to explore the appropriateness of implementing a more conservation- oriented water rate structure. This policy was set as part of Water Supply Goal NR 1 to minimize water consumption though conservation methods and other techniques. Red Oak Consulting Approval Professional Services Agreement February 26, 2008 Page 2 Staff developed a Request for Proposal (RFP) with a defined scope of services to perform a comprehensive water rate study including evaluating the feasibility implementing a conservation - oriented tiered and/or budget -based tiered water rate structure. Key deliverables of this study would include: 1. 10 -Year Financial Plan: Perform financial analysis to include an examination of projected imported water supply pass - through rate increases, possible future reductions of imported water supply allocations, capital improvement budgets, revenue analysis, revenue requirements, bond compliance analysis, and reserve requirements. 2. Cost -of- Service Analysis: Conduct cost of service analysis to ensure an equitable and fair rate structure design. Two primary steps would be performed in conducting such an analysis. Fictionalization is the first step in the process, where each budget Rem is associated with a cost driver such as normal delivery of water, peaking, or number of customers. The second step, classification, allocates each cost based on each customer class characteristic of water usage. Additionally, this analysis must be :completed to meet the requirements of Proposition 218 and recently revised Governmental Code 5999. 3. Evaluation and Design of Proposed Rate Structures: Develop conservation rate structure designs based on targeted revenue required to operate the Water Department. The rate design model will have the ability to calculate the revenue generated from hypothetical rate structures, including a tiered and/or budget -based tiered rate; based on customer class evaluations to be performed as part of this study. The model will have the ability to perform "what if' scenarios on different rate structures as well as compare monthly bills for customer classes under the existing rate structure and hypothetical new rate structure designs. Staff issued an RFP soliciting consulting services for the City of Newport Beach Water Rate Study to four consulting firms. Three consulting firms submitted proposals in response to this RFP. The selection panel that was formed to evaluate these proposals rated Red Oak Consulting the highest in terms of their overall qualifications to perform this study. The Red Oak team was determined to be uniquely qualified based on their .extensive experience with similar projects. Additionally, their references were very strong. Red Oak Consulting will perform the scope of services for the Water Rate Study for an amount not to exceed $88,177. Committee Review On December 13, 2007, Staff presented to the Coastal -Bay Committee a recommendation of awarding the rate study to Red Oak Consulting. The rate study's objectives were summarized. During this discussion the Committee Chair, Council Red Oak Consulting Approval Professional Services Agreement February 26, 2008 Page 3 Member Gardener, requested clarification on the types of water rate structures to be investigated as part of the study. It was explained that the study will investigate the feasibility of implementing a block-tiered rate structure and/or water budget tiered rate structure that would allocate water budgets based on customer classifications. A question was: also raised regarding the feasibility of implementing another water budget rate structure based on individual customers, and an explanation was given that feasibility could be evaluated as part of the study, however, this type of rate structure requires a large capital investment as part of the implementation cost. Staff recommended that a council workshop be conducted to further define the anticipated capital and administrative cost required to implement the various water rate structures to be evaluated as part of the study. The Coastal -Bay Committee concurred with Staffs recommendations awarding the water rate study to Red Oak Consulting and placing the recommendation on the City Council Meeting Agenda. A general overview of the rate study's objective was given to the Finance Committee as part of their February 1, 2008 committee meeting. Committee Chair, Council Member Curry, raised concerns regarding how,a tiered rate structure would differentiate between .lot sizes in variousi areas within the City. Staff explained that a tiered water rate structure can be designed based on many types of customer characteristics other than just lot size and, that water allocation to each customer class can be adjusted accordingly: A question was also asked regarding whether reduction of the City s annual water demand can be anticipated after a conservation- oriented rate structure is implemented, as compared to demand under the City's current rate structure. It was explained by staff .that annual water demand may be reduced up to 10 %, although demand reduction would ultimately be dependent on the final design of the rate structure implemented. It was noted that a more accurate and detailed estimate of demand can be given after the rate model is completed during the study. The Finance Committee concurred with Staffs recommendations to award the water rate study to Red Oak Consulting and to place the recommendation on the City Council Meeting Agenda. Environmental Review: This action requires no environmental review, as it is not a project pursuant to CEQA. Fundino Availabilitv: Funding for this rate study is available in the Utilities Department's reserves assuming the Council approves a Budget Amendment transferring these funds to the Department's professional and technical services account. The City would be eligible for reimbursement for the cost of this study under the terms of the Enhanced Conservation Grant the City secured in December 2006 from the Metropolitan Water District through their member agency, Municipal Water Districts of Orange County. Staff secured this grant in December 2006 in Red Oak Consulting Approval Professional Services Agreement February 26, 2008 Page 4 the amount of $125,000 to evaluate the feasibility to implement a more conservation - oriented water budget type rate structure. This grant stipulates that the monies can be used to offset the cost of this rate study with the balance of the grant to be used to help offset billing software upgrades, provided that a more conservation - oriented rate structure is implemented at the conclusion of the study. Submitted by: Steve Myrter, Utilities irec or Attachments: Agreement with Red Oak Consulting Budget Amendment - BA #_ PROFESSIONAL SERVICES AGREEMENT WITH RED OAK CONSULTING FOR CONSULTING SERVICES FOR WATER RATE STUDY THIS AGREEMENT is made and entered into as of this 26th day of February, 2008, by and between the CITY OF NEWPORT BEACH, a Municipal Corporation ( "City"), and RED OAK CONSULTING a division of MALCOLM PIRNIE, a New York Corporation whose address is 725 South 'Figueroa Street, Suite 1540, Los Angeles, California, 90017 ( "Consultant "), and is made with reference to the following: RECITALS A. City is a municipal corporation duly organized and validly existing under the laws of the State of California with the power to carry on its business as it is now being conducted under the statutes of the State of California and the Charter of City. B. City is planning to do a Water Rate Study C. City desires to engage Consultant to provide consulting services for a Water Rate Study ( "Project'). D. Consultant possesses the skill, experience, ability, background, certification and knowledge to provide the services described in this Agreement. E. The principal member of Consultant for purposes of this Project shall be Sanjay Gaur. F. City has solicited and received a proposal from Consultant, has reviewed the previous experience and evaluated the expertise of Consultant, and desires to retain Consultant to render professional services under the terms and conditions set forth in this Agreement. NOW, THEREFORE, it is mutually agreed by and between the undersigned parties as follows: 1. TERM The term of this Agreement shall commence on the above written date, and shall terminate on the 3151 day of January, 2009, unless terminated earlier as set forth herein. 2. SERVICES TO BE PERFORMED Consultant shall diligently perform all the services described in the Scope of Services attached hereto as Exhibit A and incorporated herein by reference. The City may elect to delete certain tasks of the Scope of Services at its sole discretion. 3. TIME OF PERFORMANCE Time is of the essence in the performance of services under this Agreement and the services shall be performed to completion in a diligent and timely manner. The failure by Consultant to perform the services in a diligent and timely manner may result in termination of this Agreement by City. Notwithstanding the foregoing, Consultant shall not be responsible for delays due to causes beyond Consultant's reasonable control. However, in the case of any such delay in the services to be provided for the Project, each party hereby agrees to provide notice to the other party so that all delays can be addressed. 3.1 Consultant shall submit all requests for extensions of time for performance in writing to the Project Administrator not later than ten (10) calendar days after the start of the condition that purportedly causes a delay. The Project Administrator shall review all such requests and may grant reasonable time extensions for unforeseeable delays that are beyond Consultant's control. 3.2 For all time periods not specifically set forth herein, Consultant shall respond in the most expedient and appropriate manner under the circumstances,. by either telephone, fax, hand - delivery or mail. 4. COMPENSATION TO CONSULTANT City shalt pay Consultant for the services on a time and expense not -to- exceed basis in accordance with the provisions of this Section and the Schedule of Billing Rates attached: ;hereto as Exhibit 6 and incorporated herein by reference. Consultant's compensation for all work performed in accordance with this Agreement, including all reimbursable items and subconsultant fees, shall not exceed Eighty-Eight Thousand One Hundred Seventy -Seven Dollars and no /100 ($88,177) without prior written authorization from City. No billing rate changes shall be made during the term of this Agreement without the prior written approval of City. 4.1 Consultant shall submit invoices to City describing the work performed the preceding billing period. Consultant's bills shall include the name of the person who performed the work, a brief description of the services performed and /or the specific task in the Scope of Services to which it relates, the date the services were performed, the number of hours spent on all work billed on an. hourly basis, and a description of any reimbursable expenditures. City shall pay Consultant no later than thirty (30) days after approval of the monthly invoice by City staff. 4.2 City shall reimburse Consultant only for those costs or expenses specifically approved in this Agreement, or specifically approved in writing in advance by City. Unless otherwise approved, such costs shall be limited and include nothing more than the following costs incurred by Consultant: 2 A. The actual costs of subconsultants for performance of any of the services that Consultant agrees to render pursuant to this Agreement, which have been approved in advance by City and awarded in accordance with this Agreement. B. Approved reproduction charges. C. Actual costs and /or other costs and /or payments specifically authorized in advance in writing and incurred by Consultant in the performance of this Agreement. 4.3 Consultant shall not receive any compensation for Extra Work performed without the prior written authorization of City. As used herein, "Extra Work" means any work that is determined by City to be necessary for the proper completion of the Project, but which is not included within the Scope of Services and which the parties did not reasonably anticipate would be necessary at the execution of this Agreement. Compensation for any authorized Extra Work shall be paid in accordance with the Schedule of Billing Rates as set forth in Exhibit B. S. PROJECT MANAGER Consultant shall designate a Project Manager, who shall coordinate all phases of the Project. This Project Manager shall be available to City at all reasonable times during the Agreement term. Consultant has designated Sanjay Gaur to be its Project Manager. Consultant shall not remove or reassign the Project Manager or any personnel listed in Exhibit A or assign any new or replacement personnel to the Project without the prior written consent of City. City's approval shall not be unreasonably withheld with respect to the removal or assignment of non -key personnel. Consultant, at the sole discretion of City, shall remove from the Project any of its personnel assigned to the performance of services upon written request of City. Consultant warrants that it will continuously furnish the necessary personnel to complete the Project on a timely basis as contemplated by this Agreement. 6. ADMINISTRATION This Agreement will be administered by the Utilities Department. Steve Myrter shall be the Project Administrator and shall have the authority to act for City under this Agreement. The Project Administrator or his/her authorized representative shall represent City in all matters pertaining to the services to be rendered pursuant to this Agreement. 7. CITY'S RESPONSIBILITIES In order to assist Consultant in the execution of its responsibilities under this Agreement, City agrees to, where applicable: 3 A. Provide access to, and upon request of Consultant, one copy of all existing relevant information on file at City. City will provide all such materials in a timely manner so as not to cause delays in Consultant's work schedule. B. Provide blueprinting and other services through City's reproduction company for bid documents. Consultant will be required to coordinate the required bid documents with City's reproduction company. All other reproduction will be the responsibility of Consultant and as defined above. C. Provide usable life of facilities criteria and information with regards to new facilities or facilities to be rehabilitated. S. STANDARD OF CARE 8.1 All of the services shall be performed by Consultant or under Consultant's supervision. Consultant represents that it possesses the professional and technical personnel required to perform the services required by this Agreement, and that it will perform all services in. a manner commensurate with community. professional standards. All services shall be performed by qualified and experienced personnel who are not employed .by City, nor have any contractual relationship with City. By delivery, of completed work, Consultant certifies that the work conforms to the, requirements of this Agreement and all applicable federal, state and local - laws _and the professional standard of care. 8.2 Consultant represents and warrants to City that it has, shall obtain, and shall keep in full force in effect during the term hereof, at its sole cost and expense, all licenses, permits-, qualifications, insurance and approvals of whatsoever nature that is legally required of Consultant to practice its profession. Consultant shall maintain a City of Newport Beach business license during the term of this Agreement. 8.3 Consultant shall not be responsible for delay, nor shall Consultant be responsible for damages or be in default or deemed to be in default by reason of strikes, lockouts, accidents, or acts of God, or the failure of City to furnish timely information or to approve or disapprove Consultant's work promptly, or delay or faulty performance by City, contractors, or governmental agencies. 9. HOLD HARMLESS To the fullest extent permitted by law, Consultant shall indemnify, defend and hold harmless City, its City Council, boards and commissions, officers, agents, volunteers and employees (collectively, the "Indemnified Parties) from and against any and all claims (including, without limitation, claims for bodily injury, death or damage to property), demands, obligations, damages, actions, causes of action, suits, losses, judgments, fines, penalties, liabilities, costs and I expenses (including, without limitation, attorney's fees, disbursements and court costs) of every kind and nature whatsoever (individually, a Claim; collectively, "Claims'), which may arise from or in any manner relate (directly or indirectly) to the negligence, recklessness, or willful misconduct of the Consultant or its principals, officers, agents, employees, vendors, suppliers, consultants, subcontractors, anyone employed directly or indirectly by any of them or for whose acts they may be liable or any or all of them. Notwithstanding the foregoing, nothing herein shall be construed to require Consultant to indemnify the Indemnified Parties from any Claim arising from the sole negligence, active negligence or willful misconduct of the Indemnified Parties. Nothing in this indemnity shall be construed as authorizing any award of attorney's fees in any action on or to enforce the terms of this Agreement. This indemnity shall apply to all claims and liability regardless of whether any insurance policies are applicable. The policy limits do not act as a limitation upon the amount of indemnification to be provided by the Consultant. 10. INDEPENDENT CONTRACTOR It is understood that City retains Consultant on an independent contractor basis and Consultant is not an agent or employee of City. The manner and means of conducting the work are under the control of Consultant, except to the extent they: are limited., by statute, rule or regulation and the expressed terms of this Agreement. Nothing in this Agreement shall be deemed to constitute approval for Consultant or any of Consultant's employees or agents, to be the agents or employees of City. Consultant shall have the responsibility for and control over the means of performing the work, provided that Consultant is in compliance with the terms of this Agreement. Anything in this Agreement that may appear to give City the right to direct Consultant as to the details of the performance or to exercise a measure of control over Consultant shall mean only that Consultant shall follow the desires of City with respect to the results of the services. 11. COOPERATION Consultant agrees to work closely and cooperate fully with City's designated Project Administrator and any other agencies that may have jurisdiction or interest in the work to be performed. City agrees to cooperate with the Consultant on the Project. 12. CITY POLICY Consultant shall discuss and review all matters relating to policy and Project direction with City's Project Administrator in advance of all critical decision points in order to ensure the Project proceeds in a manner consistent with City goals and policies. 5 13. PROGRESS Consultant is responsible for keeping the Project Administrator and /or his/her duly authorized designee informed on a regular basis regarding the status and progress of the Project, activities performed and planned, and any meetings that have been scheduled or are desired. 14. INSURANCE Without limiting Consultant's indemnification of City, and prior to commencement of work. Consultant shall obtain, provide and maintain at its own expense during the term of this Agreement, a policy or policies of liability insurance of the type and amounts described below and in a form satisfactory to City. A. Certificates of Insurance. Consultant shall provide certificates of insurance with original endorsements to City as evidence of the insurance coverage required herein. Insurance certificates must be approved by City's Risk Manager prior to commencement of performance or issuance of any permit. Current certification of insurance shall be kept on file with City-at all -times during the term of this Agreement. B. Signature. A person authorized by the insurer to bind coverage on its behalfshall sign certification of all required policies. C. Acceptable Insurers. All insurance policies shall be issued by an insurance company currently authorized by the Insurance Commissioner to transact business of insurance in the State of California, with an assigned policyholders' Rating of A (or higher) and Financial Size Category Class VII (or larger) in accordance with the latest edition of Best's Key Rating Guide, unless otherwise approved by the City's Risk Manager. D. Coverage Requirements. Workers' Compensation Coverage. Consultant shall maintain Workers' Compensation Insurance and Employers Liability Insurance for his or her employees in accordance with the laws of the State of California. In addition, Consultant shall require each subcontractor to similarly maintain Workers' Compensation Insurance and Employer's Liability Insurance in accordance with the laws of the State of California for all of the subcontractors employees. Any notice of cancellation or non - renewal of all Workers' Compensation policies must be received by City at least thirty (30) calendar days (10 calendar days written notice of non- payment of premium) prior to such change. The insurer shall agree to waive all rights of subrogation against City, its officers, agents, employees and volunteers for losses arising from work performed by Consultant for City. ii. General Liability Coverage. Consultant shall maintain commercial general liability insurance in an amount not less than two million dollars ($2,000,000) per occurrence for bodily injury, personal injury, and property damage, including without limitation, contractual liability. If commercial general liability insurance or other form with a general aggregate limit is used, either the general aggregate limit shall apply separately to the work to be performed under this Agreement, or the general aggregate limit shall be at least twice the required occurrence limit. iii. Automobile Liability Coverage. Consultant shall maintain automobile insurance covering bodily injury and property damage for all activities of the Consultant arising out of or in connection with work to be performed under this Agreement, including coverage for any owned, hired, non -owned or rented vehicles, in an amount not less than two million dollars ($2,000,000) combined single limit for each occurrence. iv. Professional Errors and Omissions Insurance. Consultant shall maintain professional errors and omissions insurance, which covers the services to be performed in connection with this Agreement in the minimum amount of two million dollars (V1,006,000). E. Endorsements. Each general liability and automobile liability insurance policy Shall: be endorsed with the following specific language: The City, its elected or appointed officers, officials, employees, agents and volunteers are to be covered as additional insureds with respect to liability arising out of work performed by or on behalf of the Consultant. This policy shall be considered primary insurance as respects to City, its elected or appointed officers, officials, employees, agents and volunteers as respects to all claims, losses, or liability arising directly or indirectly from the Consultant's operations or services provided to City. Any insurance maintained by City, including any self- insured retention City may have, shall be considered excess insurance only and not contributory with the insurance provided hereunder. iii. This insurance shall act for each insured and additional insured as though a separate policy had been written for each, except with respect to the limits of liability of the insuring company. iv. The insurer waives all rights of subrogation against City, its elected or appointed officers, officials, employees, agents and volunteers. 7 V. Any failure to comply with reporting provisions of the policies shall not affect coverage provided to City, its elected or appointed officers, officials, employees, agents or volunteers. vi. The insurance provided by this policy shall not be suspended, voided, canceled, or reduced in coverage Or in limits, by either party except after thirty (30) calendar days (10 calendar days written notice of non - payment of premium) written notice has been received by City. F. Timely Notice of Claims. Consultant shall give City prompt and timely notice of claim made or suit instituted arising out of or resulting from Consultant's performance under this Agreement. G. Additional Insurance. Consultant shall also procure and maintain, at its own cost and expense, any additional kinds of insurance, which in its own judgment may be necessary for its proper protection and prosecution of the work. 15. PROHIBITION AGAINST ASSIGNMENTS AND TRANSFERS Except as specifically authorized under this Agreement, the services to be provided under. this .Agreement shall. not be assigned, transferred contracted or subcontracted out without the prior written approval of City. Any of the following shall',be construed; as an assignment: The .sale, assignment, transfer or other disposition of;any of the issued and outstanding capital stock of Consultant, or of the interest of any general partner or joint venturer or syndicate member or na ns cotent if Coultant. is a partnership or joint-venture or syndicate or cotenancy, which shall result in changing the control of Consultant. Control means fifty percent (50 %) or more of the voting power, or twenty-five percent (25 %) or more of the assets of the corporation, partnership or joint- venture. 16. SUBCONTRACTING The parties recognize that a substantial inducement to City for entering into this Agreement is the professional reputation, experience and competence of Consultant. Assignments of any or all rights, duties or obligations of the Consultant under this Agreement will be permitted only with the express written consent of City. Consultant shall not subcontract any portion of the work to be performed under this Agreement without the prior written authorization of City. 17. OWNERSHIP OF DOCUMENTS Each and every report, draft, map, record, plan, document and other writing produced (hereinafter "Documents "), prepared or caused to be prepared by Consultant, its officers, employees, agents and subcontractors, in the course of implementing this Agreement, shall become the exclusive property of City, and City shall have the sole right to use such materials in its discretion without further compensation to Consultant or any other party. The City acknowledges and 0 agrees that the interactive financial model utilized by Consultant, and demonstrated to, and delivered to City pursuant to this Agreement, is a proprietary and confidential Consultant service instrument, and is to be used soley for the financial analysis proposed by Consultant and is not to be resold or otherwise used for secondary commercial gain. The Consultant shall retain sole ownership of pre - existing proprietary property including the financial model. Consultant shall, at Consultant's expense, provide such Documents to City upon prior written request. Documents, including drawings and specifications, prepared by Consultant pursuant to this Agreement are not intended or represented to be suitable for reuse by City or others on any other project. Any use of completed Documents for other projects and any use of incomplete Documents without specific written authorization from Consultant will be at City's sole risk and without liability to Consultant. Further, any and all liability arising out of changes made to Consultant's deliverables under this Agreement by City or persons other than Consultant is waived against Consultant and City assumes full responsibility for such changes unless City has given Consultant prior notice and has received from Consultant written consent for such changes. 18. CONFIDENTIALITY All Documents, including drafts, preliminary drawings or plans, notes and communications that result from the services in this Agreement, shall be kept confidential unless City authorizes in writing the release of information or unless required:to be disclosed by law or court order with notice to the City. 19. INTELLECTUAL PROPERTY INDEMNITY The Consultant shall defend and indemnify City, its agents, officers, representatives and employees against any and all liability, including costs, for infringement of any United States' letters patent, trademark, or copyright infringement, including costs, contained in Consultant's drawings and specifications provided under this Agreement. 20. RECORDS Consultant shall keep records and invoices in connection with the work to be performed under this Agreement. Consultant shall maintain complete and accurate records with respect to the costs incurred under this Agreement and any services, expenditures and disbursements charged to City, for a minimum period of three (3) years, or for any longer period required by law, from the date of final payment to Consultant under this Agreement. All such records and invoices shall be clearly identifiable. Consultant shall allow a representative of City to examine, audit and make transcripts or copies of such records and invoices during regular business hours. Consultant shall allow inspection of all work, data, Documents, proceedings and activities related to the Agreement for a period of three (3) years from the date of final payment to Consultant under this Agreement. i 21. WITHHOLDINGS City may withhold payment to Consultant of any disputed sums until satisfaction of the dispute with respect to such payment. Such withholding shall not be deemed to constitute a failure to pay according to the terms of this Agreement. Consultant shall not discontinue work as a result of such withholding. Consultant shall have an immediate right to appeal to the City Manager or his /her designee with respect to such disputed sums. Consultant shall be entitled to receive interest on any withheld sums at the rate of return that City earned on its investments during the time period, from the date of withholding of any amounts found to have been improperly withheld. 22. ERRORS AND In the event of errors or omissions that are due to the negligence or professional inexperience of Consultant which result in expense to City greater than what would have resulted if there were not errors or omissions in the work accomplished by Consultant, the additional design, construction and /or restoration expense shall be borne by Consultant. Nothing in this paragraph is intended to limit City's rights under the law or any other sections of this Agreement. 23. CITY'S RIGHT TO EMPLOY OTHER CONSULTANTS City reserves the right to employ other Consultants in connection with the Project.. 24. CONFLICTS OF INTEREST The Consultant or its employees may be subject to the provisions of the California Political Reform Act of 1974 (the "Act "), which (1) requires such persons to disclose any .financial interest that may foreseeably be materially affected by the work performed under this Agreement, and (2) prohibits such persons from making, or participating in making, decisions that will foreseeably financially affect such interest. If subject to the Act, Consultant shall conform to all requirements of the Act. Failure to do so constitutes a material breach and is grounds for immediate termination of this Agreement by City. Consultant shall indemnify and hold harmless City for any and all claims for damages resulting from Consultant's violation of this Section. 25. NOTICES All notices, demands, requests or approvals to be given under the terms of this Agreement shall be given in writing, and conclusively shall be deemed served when delivered personally, or on the third business day after the deposit thereof in the United States mail, postage prepaid, first -class mail, addressed as 10 hereinafter provided. All notices, demands, requests or approvals from Consultant to City shall be addressed to City at: Attn: Steve Myrter Utilities Department City of Newport Beach 3300 Newport Boulevard Newport Beach, CA, 92663 Phone:949 -644 -3011 Fax: 949 - 646 -5204 All notices, demands, requests or approvals from CITY to Consultant shall be addressed to Consultant at: Attention: Sanjay Gaur Red Oak Consulting 725 South Figueroa Street, Suite 1540 Los Angeles, CA 90017 Phone: (213) 614 -9002 Fax: (213) 614 -9003 26. TERMINATION In. the event that either party .fails or refuses to perform any of the provisions of this Agreement at the time and in the manner required, that party shall be deemed imdefault in the performance of this Agreement. If such default is not cured within, .a period of two (2) calendar days, or if more than two (2) calendar days are reasonably required to cure the default and the defaulting party fails to give adequate assurance of due performance within two (2) calendar days after receipt of written notice of default, specifying the nature of such default and the steps necessary to cure such default, and thereafter diligently take steps to cure the default, the non - defaulting party may terminate the Agreement forthwith by giving to the defaulting party written notice thereof. Notwithstanding the above provisions, City shall have the right, at its sole discretion and without cause, of terminating this Agreement at any time by giving seven (7) calendar days prior written notice to Consultant. In the event of termination under this Section, City shall pay Consultant for services satisfactorily performed and costs incurred up to the effective date of termination for which Consultant has not been previously paid. On the effective date of termination, Consultant shall deliver to City all reports, Documents and other information developed or accumulated in the performance of this Agreement, whether in draft or final form. 27. COMPLIANCE WITH ALL LAWS Consultant shall at its own cost and expense comply with all statutes, ordinances, regulations and requirements of all governmental entities, including federal, state, county or municipal, whether now in force or hereinafter enacted. 11 In addition,. all work prepared by Consultant shall conform to applicable City, county, state and federal laws, rules, regulations and permit requirements and be subject to approval of the Project Administrator and City. 28. WAIVER A waiver by either party of any breach, of any term, covenant or condition contained herein shall not be deemed to be a waiver of any subsequent breach of the same or any other term, covenant or condition contained herein, whether of the same or a different character. 29. INTEGRATED CONTRACT This Agreement represents the full and complete understanding of every kind or nature whatsoever between the parties hereto, and all preliminary negotiations and agreements of whatsoever kind or nature are merged herein. No verbal agreement or implied covenant shall be held to vary the provisions herein. 30. CONFLICTS OR INCONSISTENCIES In the event there are any conflicts or inconsistencies between this Agreement and .the Scope of Services or any other attachments attached hereto, the terms of this Agreement shall govern. 31. INTERPRETATION The terms of this Agreement shall be construed in accordance with the meaning of. the language -used and shall not be construed for or against either party by reason of the authorship of the Agreement or any other rule of construction which might otherwise apply. 32. AMENDMENTS This Agreement may be modified or amended only by a written document executed by both Consultant and City and approved as to form by the City Attorney. 33. SEVERABILITY If any term or portion of this Agreement is held to be invalid, illegal, or otherwise unenforceable by a court of competent jurisdiction, the remaining provisions of this Agreement shall continue in full force and effect. 34. CONTROLLING LAW AND VENUE The laws of the State of California shall govern this Agreement and all matters relating to it and any action brought relating to this Agreement shall be adjudicated in a court of competent jurisdiction in the County of Orange. 12 35. EQUAL OPPORTUNITY EMPLOYMENT Consultant represents that it is an equal opportunity employer and it shall not discriminate against any subcontractor, employee or applicant for employment because of race, religion, color, national origin, handicap, ancestry, sex or age. IN WITNESS WHEREOF, the parties have caused this Agreement to be executed on the day and year first written above. APPROVED AS TO FORM: A, C City Attorney ` for the City of Newport Beach ATTEST: 0 LaVonne Harkless, City Clerk CITY OF NEWPORT BEACH, A Municipal Corporation By: Edward Selich, Mayor for the City of Newport Beach CONSULTANT: M (Corporate Officer) Title: Print Name: By: (Financial Officer) Print Name: Attachments: Exhibit A — Scope of Services /Schedule of Billing Rates Exhibit B — Schedule of Billing Rates for 2008 13 City of Newport Beach BUDGET AMENDMENT 2007 -08 EFFECT ON BUDGETARY FUND BALANCE: Increase Revenue Estimates X Increase Expenditure Appropriations AND Transfer Budget Appropriations SOURCE: from existing budget appropriations from additional estimated revenues X from unappropriated fund balance EXPLANATION: This budget amendment is requested to provide for the following: NO. BA- 08BA -049 AMOUNT: Sss,177.00 Increase in Budgetary Fund Balance X Decrease in Budgetary Fund Balance No effect on Budgetary Fund Balance To increase expenditure appropriations from the Water Fund system reserves for a water rate study. ACCOUNTING ENTRY: BUDGETARY FUND BALANCE Amount Fund Account Description Debit Credit 500 3784 Water Fund - System Reserve $88,177.00 REVENUE ES77MA7ES (3601) Fund/Division Account Description EXPENDITURE APPROPRIA77ONS (3603) Description Division Number 5500 Utilities - Water Account Number 8080 Services - Professional & Technical $88,177.00 Division Number Account Number Division Number Account Number Division Number Account Number Division Number Account Number Automatic System Entry. Signed:', %�� �? (/. �! /JZ 'L / J J ✓, Financial Approval: s Administrativ eices Director Date Signed: i P t Administrative Approv City Manager a Signed: City Council Approval: City Clerk Date Dollars per Year $5001 IF 11 $300 $2001 $100! IN mparlis+'ori cif (Rates for Fiscal Year 2007 -08) ates Comparison ,Agencies INS n '� O U N in D 0 �i U) °� U U) U �'. O U- U .2 U Q cA — U U) w D U iu ca Comparison ,Agencies .0. d i / _ / I. <a"_M � January 31, 2008 TO: Board of Directors FROM: Jin , General Manager SUBJECT: Proposed fee increase information Some of you have let us know that you are receiving questions from fellow council members and residents about the five -year plan and proposed rate increases. As we get closer to the Board meeting in February when you will vote, I am sure you will continue to receive more questions. To assist with your efforts, our staff has developed a question and answer sheet as well as a wallet -sized card with some fast facts about the proposal. I am certain you will find this information useful. Please let me know if you need additional materials or have any questions. Our staff has also posted information about the proposed fee increase on OCSD's Web site, at www.ocsd.com. Thanks much and I will see you soon. `.F Piss ) ann�u u� � �f I' /z ?� �� ��� oEx� /! A ` Elms, 6 9331,W4 Enclosures JDR:mg lfi✓ � w � Rlox Cc i/ l L� ,y � l� a saseaJOUI 004 JGMag pasOdoad aL4 inoge sjoej tsej towsla uoimpeS ktuno0 afluej0 Why are my rates going up this year? • over $1.5 billion in Improvements are needed in the near future to protect the environment and meet customer demands. The rate increase helps fund these needed improvements. OOSD cannot rely on the State or Federal Government for assistance. Ten percent seams like a big hit, why so much ?. • In actual dollars, your rates are Increasing by an average of less than $2 per month. OCSD's rates would still be lower, on average, than others around the State. How Is the new fee collected? • As is happening currently, your sewer fees appear on your annual property tax bill. Where is the money going? • More than half of the increase wig fund the completion of GWRS to meet our future water supply needs and upgrade aging infrastructure. • The Board takes its role very seriously in keeping staff costs and expenses low and we've worked hard to trim the budget and maintain an efficient operation. Is It too late to ask questions or express an opinion? • No. The Board will meet on February 27, 2008 at &.90 pm to vote on the Increase. This is a public hearing. You can also contact the District directly. For more information contact a LOrange County Sanitation District �. 10844 Ellis Avenue o Fountain Valley, CA 92708 X www.ocsd.com N M (714) 593 7281 rates @ocsd.com Why are my rates going up this year? • over $1.5 billion in Improvements are needed in the near future to protect the environment and meet customer demands. The rate increase helps fund these needed improvements. OOSD cannot rely on the State or Federal Government for assistance. Ten percent seams like a big hit, why so much ?. • In actual dollars, your rates are Increasing by an average of less than $2 per month. OCSD's rates would still be lower, on average, than others around the State. How Is the new fee collected? • As is happening currently, your sewer fees appear on your annual property tax bill. Where is the money going? • More than half of the increase wig fund the completion of GWRS to meet our future water supply needs and upgrade aging infrastructure. • The Board takes its role very seriously in keeping staff costs and expenses low and we've worked hard to trim the budget and maintain an efficient operation. Is It too late to ask questions or express an opinion? • No. The Board will meet on February 27, 2008 at &.90 pm to vote on the Increase. This is a public hearing. You can also contact the District directly. P., SEWER SERVICE FEE QUESTIONS AND ANSWERS What is the Sewer Service Fee for and how is it calculated The fee is for the collection, treatment, and disposal of wastewater (sewage). The fee is based upon the type of property. Residential properties, including condominiums and town homes, are charged a flat rate. Multi- family (apartment buildings including duplexes and triplexes) and mobile home parks are charged on a per unit basis. Non - residential properties are charged a rate per thousand square feet of improvements. The rate varies based upon the use of the property. 2. Who approved the fee? The fee was passed by ordinance by the OCSD Board of Directors. The Board consists of elected officials - from each city, representatives from the local sanitary or water district and a member from the Orange County Board of Supervisors. 3. How is the fee collected? Fees appear on the property tax bill annually. Using the property tax bill is the most cost effective method of collection as it avoids adding additional staff. 4. Why was the rate increase needed? As the sixth largest wastewater treatment agency in the United States, several factors influence future costs and rates to cover them. Increased costs of chemicals, managing biosolids, maintaining clean beaches, moving to additional secondary treatment, funding half of the water reclamation Ground Water Replenishment System (GWR System), and the ongoing need to replace our aging infrastructure to name a few. To continue operating 24 hours a day, 365 days a year and maintain the reliable service you've come to expect, it is essential we continue investing in our facilities. 5. What will be the new fee? The uniform single -family residential (SFR) user rate will increase over the next five year period from the 2007 -2008 rate of $182 to: 2008 =$201 2009 =$221 2010 =$244 2011 =$267 2012 =$294 S. Why are we proposing a 5 -year increase schedule? The majority of the costs for the capital improvements required to implement full secondary treatment are expected to be incurred over the next 5 years. Adopting a multi -year schedule will allow us to borrow funds at lower rates because it shows a viable cash flow. This reduces costs over the long run. SEWER SERVICE FEE QUESTIONS AND ANSWERS 7. How do you satisfy the requirements of Propositions 13 and 218? Proposition 13 deals with taxes and property values. This user fee is based upon the average use of the sewer system. Therefore, the user fee is not governed by Proposition 13. Proposition 218 has a specific exemption for sewer user fees. OCSD mails a notice to each property owner and conducts a public hearing. A public notice is published in the local newspaper and notifications are mailed to property owners. The fees are enacted after a public hearing by a vote of the Board of Directors. 8. Am I paying for the same thing on my.utility bill? No. Most of the cities and local sewering agencies charge a maintenance fee for. their local sewer lines. Often times, this fee is on the water bill. The sewage from those local lines flows into OCSD's large regional trunk sewers and comes to one of our two plants for treatment. Those local fees are only used for local sewers and are not forwarded to OCSD. 9. Can I get the fees reduced? Non - residential users with a low water use may be eligible for a reduction based on actual water use. They must send OCSD a written request (from the property owner) along with a copy of their water bills for the prior fiscal year (12 complete months) and a copy of the current tax bill. The single family residential rate is the lowest fee that any user can pay for our services. 10. What if I am not connected to the sewer? Only parcels not connected to the sewer are exempt from sewer service fees. The owner may write and sign a letter including their parcel number to OCSD indicating they use a septic tank or that the property is not developed 11. What if I have further questions or comments? The OCSD Board will hold a public hearing on Wednesday, February 27, 2003 to consider input on the proposed rate change. The hearing will be held at 6:30 p.m. in the OCSD Board Room, 10844 Ellis Avenue, Fountain Valley. Written comments may also be submitted to OCSD at P.O. Box 8127, Fountain Valley, CA 92728 -8127. An email account (rates(ftcsd.com) has been established should you prefer to leave an email. If you have additional questions orwant more information, please call (714) 593 -7281. Office hours are 8:00 a.m. to 4:30 p.m., Monday through Friday. If these times are not convenient, you may leave a recorded message after hours or on weekends or email. A member of the Sanitation District's staff will return your call. Big Court Win for Taxpayers: Proposition 218 Means What It Says By Jon Coupal and Tim Bittle Week of August 14, 2006 Although it received very little press attention, taxpayers recently won a huge victory in the California Supreme Court. The ruling in Bighom -Desert View Water Agency v. Beringson has created shockwaves throughout the state among those concerned with local taxation. To fully appreciate the importance of this ruling, we must travel back to 1978, when Proposition 13 was overwhelmingly approved by voters. Californians understand that Proposition 13 effectively limited our property taxes. It still does. But Proposition 13 also imposed a two- thirds voter approval requirement for other local taxes. It was this provision that was immediately attacked by the tax- and -spend lobby. Like termites on wood, they ate away at Prop 13's voter requirements, greatly weakening them. Twice taxpayers counter- attacked against this assault on Prop 13 with successful statewide ballot measures in 1986 and 1996. In the latter year, taxpayers passed the powerful Right to Vote on Taxes Act (Proposition 218) to close several court- created loopholes in Proposition 13. These loopholes had been conjured up by local governments to impose a myriad of "fees," "charges" and "assessments" on property owners without their approval. But even with strong language requiring voter or property owner approval of new "levies," local governments continued to fight back. That brings us to the court case. In June 2003, the Bighorn-Desert View Water Agency placed Measure L before its voters, to reinstate certain fees they had previously eliminated due to a suit brought by HJTA. Bighorn promised rate relief if the voters passed Measure L. The voters dutifully passed Measure L. Instead, however, the Agency substantially jacked up its water rates. One frustrated ratepayer, E.W. Kelley, collected enough signatures to qualify yet another initiative that would roll back consumption rates to a reasonable level. The Agency then filed suit against the County Registrar to keep Kelley's initiative off the ballot. In a two- pronged decision against taxpayers, the Court of Appeal held that despite the expanded initiative power under Proposition 218, metered water rates are not subject to Proposition 218 and thus cannot be adjusted by the people using their initiative power. As authority for its holding that metered water rates are not subject to Proposition 218, the Court cited Howard Jarvis Taxpayers Assn. v. City of Los Angeles, a case we lost in 2000. The Los Angeles decision was horrible and directly contrary to the clear language we had placed in Proposition 218. In essence, the Court of Appeal had concluded that water rates are not "property related" and thus not subject to 218's limitations. Although we won subsequent cases against the cities of Roseville and Fresno that held water rates are subject to Proposition 218, the Los Angeles case has nonetheless been a thorn in our side for six years as cities, counties, and special districts throughout California have taken cover behind that case to justify not following Proposition 218's rules for rate - setting. In our brief to the Supreme Court in the Bighorn case, we explained the conflict between Los Angeles, Roseville, and Fresno: 'The conflict is causing confusion as illustrated by the present case. To eliminate this confusion, Jarvis v. Los Angeles should be overruled." Understand that it is a big deal to ask the Supreme Court to overrule a precedent that has been on the books for several years, especially if it is a case where the Supreme Court previously denied review. On July 24th, the Supreme Court answered our request with a big Yes. The Court held that the lower court had erred both in limiting the scope of the people's initiative power and in holding that metered water rates are not subject to Proposition 218. In the Court's words, Proposition 218 applies to "charges for a property - related service, whether the charge is calculated on the basis of consumption or is imposed as a fixed monthly fee." In a footnote, the Court ruled, "Howard Jarvis Taxpayers Assn. v. City of Los Angeles ... is disapproved insofar as it is inconsistent with this conclusion." The importance of this ruling cannot be overstated. Water rates, sewer rates and other property related fees are now subject to Proposition 218's "cost of service" requirements. What that means is that the hundreds of millions of dollars transferred to cities' general funds from enterprise funds is now illegal. Let the games begin. Jon Coupa/ is president of the Howard Jarvis Taxpayers Association — California's largest taxpayer organization -- which is dedicated to the protection of Proposition 13 and promoting taxpayers'rights. Tim Bittle is HJTA's director of legal affairs.