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10 - Participation in Water Budget Grant Program
CITY OF aaEWP�_ R' @s NEWPORT BEACH, C'9<MpRN`P City Council Staff Report Agenda Item No. 10 April 10, 2012 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: Municipal Operations Department Mark Harmon, Municipal Operations Department Director 949 644 -3055, mharmon @newportbeachca.gov PREPARED BY: George Murdoch, Utilities General Manager APPROVED:„ TITLE: Agreement for Participation in Water Budget Based Tiered Rate Grant Program ABSTRACT: Staff is submitting a Water Budget Based Tiered Rate Grant Program agreement with Municipal Water District of Orange County ( MWDOC) to participate in the grant awarded to MWDOC by the California Department of Water Resources (DWR). RECOMMENDATION: Enter into an agreement with MWDOC to participate in Water Budget Based Tiered Rate Grant Program. FUNDING REQUIREMENTS: There is no fiscal impact related to this item. DISCUSSION: In October, 2009, MWDOC secured a Grant provided by the California DWR. The Grant was made available by DWR to assist in financing a water conservation project, pursuant to the California Proposition 50, the Water Security, Clean Drinking Water, Coastal and Beach Protection Act of 2002. The DWR Grant provides criteria for eligible project costs. MWDOC compiled these requirements and developed the following three phase approach (although not all agencies will participate in every phase or order): 1. Water Rate Development 2. Use of Parcel Data for Water Budget Development 3. Billing and Accounting System Needs (hardware and software) Agreement for Participation in Water Budget Based Tiered Rate Grant Program April 10, 2012 Page 2 In October 2009 the project started with agencies participating in digital mapping, which is part of phase two, however, the City of Newport Beach did not participate, since the City already has in place an extensive Geographic Information System (GIS) and completed parcel data for our City parks and medians. Due to economic issues, DWR froze the grant in 2010. When DWR resumed the grant, participants were allowed to go back to October 14, 2008, to capture matching costs expended after that date. Therefore, the MWDOC /DWR contract includes a one year extension that will expire in May 2012. The City contracted with RedOak Consulting in 2009, to conduct a rate study and prepare a five year financial plan, as well as a feasibility study of implementing a water budget. Part of that study was to investigate the City's billing system. The funds expended for work done by RedOak in 2009, qualify the City for phase three and are reimbursable from the grant. There is no further funding needed to comply with phase three. Entering into this agreement will enable MWDOC to reimburse the City $34,000. The City will be responsible for providing a short summary of the project, findings and outcomes. ENVIRONMENTAL REVIEW: Staff recommends the City Council find this action is not subject to the California Environmental Quality Act ( "CEQA ") pursuant to Sections 15060(c)(2) (the activity will not result in a direct or reasonably foreseeable indirect physical change in the environment) and 15060(c)(3) (the activity is not a project as defined in Section 15378) of the CEQA Guidelines, California Code of Regulations, Title 14, Chapter 3, because it has no potential for resulting in physical change to the environment, directly or indirectly. NOTICING: The agenda item has been noticed according to the Brown Act (72 hours in advance of the meeting at which the City Council considers the item). Submitted by: Mark Harmon i Municipal Operations Department Director Agreement for Participation in Water Budget Based Tiered Rate Attachment A Grant Program April 10, 2012 Page 3 Agreement for Participation in Water Budget Based Tiered Rate Grant Program Note: Attachments A through E are available at the City Clerk's office upon request City of Newport Beach Agreement for Participation in Water Budget Based Tiered Rate Grant Program 11 -03 -2011 Agreement for Participation in Water Budget Based Tiered Rate Grant Program THIS AGREEMENT ( "Agreement "), dated this day of 2012, is made between the Municipal Water District of Orange County ( MWDOC) and the City of Newport Beach, a California Municipal Corporation and Charter City ( "City" or "Party" herein) for the purpose of ensuring participation and local match funding under a grant program for developing and implementing water budget based tiered rate structures. The City will be participating in the program along with other cities and water agencies served by MWDOC ( "Participants" herein). Recitals WHEREAS, the State of California is experiencing a water supply crisis due to a variety of factors, including naturally occurring drought conditions and judicial orders for decreased water deliveries to Southern California from the State Water Project; and WHEREAS, water conservation in the form of budget based tiered rates is a proven method of water conservation and an important'additional conservation measure that should be considered by all water providers; and WHEREAS, the investment in technology and manpower required to develop and implement a water budget based tiered rate structure is significant, and pooling the resources of numerous cities and agencies will enhance efficiency and allow economies of scale; and WHEREAS, MWDOC and a number of its retail agency customers submitted a Grant Proposal to the California Department of Water Resources proposing to examine the costs, issues and water savings associated with implementation of Budget Based Tiered Rates for Water Management and Droughts (Grant Study); and WHEREAS, the California Department of Water Resources approved the Grant Study proposal and awarded $685,000 in grant funds (DWR Grant) to MWDOC to cover a substantial portion of an overall program with an estimated total cost of $2,390,695; and WHEREAS, the City is a MWDOC retail customer that has agreed to participate in the Grant Study; and City of Newport Beach Agreement for Participation in Water Budget Based Tiered Rate Grant Program 11 -03 -2011 WHEREAS, MWDOC has already entered into an agreement with DWR (attached hereto as Attachment A and incorporated herein by reference) that establishes the rights and obligations of MWDOC and any Participants under the DWR Grant, including reports and local match requirements; and WHEREAS, MWDOC and the City further require the Agreement set forth herein in order to ensure compliance with the DWR Grant, establish a scope of work for the Grant Study, set a schedule, outline their respective rights and obligations, and establish cost allocation principles for how the Grant funding will be shared among the Participants; and WHEREAS, certain elements of the Grant Study require the assistance of an outside consultant, Red Oak which shall be retained by MWDOC or the individual Participants, as provided herein. NOW THEREFORE, MWDOC and the City agree as follows: 1. PROJECT OVERVIEW The purpose of the Grant Study is to assist a number of MWDOC's retail water agencies in examining various aspects of water budget rate structures, including the feasibility, approach and implementation of water budget rate structures. The Grant Study will be conducted in three phases, although not every Participant will participate in every phase. The phases are: Phase 1: Water Rate Development Phase 2: Use of Parcel Data for Water Budget Development Phase 3: Billing and Accounting System Needs (hardware and software) As Grantee under the DWR Grant, MWDOC will work with the Participants in a group setting from time to time to discuss elements of all three phases. In addition, separate meetings between MWDOC and the individual Participants will focus in greater detail on the policy and technical issues associated with water budgets. Individual Participant meetings will be held with the appropriate policy - makers and senior staff to receive input on the type of water budget best suited for each Participant. In addition, a billing system compatibility analysis will be conducted and different implementation options will be provided for each Participant in that phase of the study. The Grant Study will also outline the financial and political aspects of water budgets and will position the retail agencies to implement water budgets for equitable allocation of water under a continuing rationing scenario. The main goal of the Grant Study is to help urban communities cope with water shortages and drought conditions, but the water management benefits of a water budget based rate structure will continue 2 City of Newport Beach Agreement for Participation in Water Budget Based Tiered Rate Grant Program 11 -03 -2011 to accrue each and every year. Equitable allocation of indoor and outdoor water needs by account will allow the Participants to determine quickly and accurately which accounts are over their allotment. Based on this information, a water purveyor can focus its resources on saving water from these accounts based on price and /or other complementary device -based conservation programs. In this manner, the flexibility of water budgets makes them the most equitable mechanism for water conservation. Agencies with sewer rates based on water consumption will also benefit by the reduction in treatment costs. All legal issues, including compliance with the California Environmental Quality Act (CEQA), will be handled by the individual Participants through their own legal counsel. Legal costs so incurred can be used as local matching funds. MWDOC has taken the position that for purposes of the Grant Study, no action by MWDOC is required for CEQA compliance. An independent CEQA determination should be made by each Participant pursuant to advice from its legal counsel. 2. CONSULTING CONTRACTS (PHASES 1 AND 3) To secure the required expertise and assistance in rate making, rate modeling and implementation of budget based tiered rates, the Participants and MWDOC conducted a selection and due diligence process to identify consultants to be hired by MWDOC. This process included (1) collecting information about qualifications of potential consultants from Participants, (2) working with Participants to identify and complete due diligence to establish qualifications for potential consultants, (3) MWDOC soliciting Statements of Qualifications from a number of consultants and selecting the consultants to be hired directly by MWDOC, and (4) Participants reviewing and hiring consultants based on their own administrative procedures. At all times MWDOC advised the Participants that they were free to utilize consultants selected by Participants or others with whom Participants have already worked on related activities. This multi - pronged process to establish and evaluate qualifications resulted in a consensus for MWDOC to hire Raftelis Financial Consultants for the Phase 1 Water Rate Development and Red Oak Consulting for Phase 3 Billing and Accounting System Needs. This process included input from Participants who were already working with Raftelis and Red Oak on related activities. Pursuant to these efforts, the Participants directed MWDOC to enter into agreements with both Raftelis Financial Consultants and Red Oak Consulting, a division of Malcolm Pirnie, to make consulting services available in support of the Grant Study. Shown below is a table indicating which agencies will be hiring their own consultants and which ones will be utilizing the MWDOC retained consultants. ,q City of Newport Beach Agreement for Participation in Water Budget Based Tiered Rate Grant Program 11 -03 -2011 Use of Consultants for DWR Budget Based Tiered Water Rates Phase 2 Phase 3 Digital Phase 1 Rate IT Hardware Participant Mapping Structure Software 1. Garden Grove Yes 2. Buena Park Own* Own* 3. Yorba Linda WD Raftelis Own* 4. South Coast WD Yes Raftelis Own* 5. El Toro WD Yes Raftelis Own* RedOakvia 6. Huntington Beach Raftelis MWDOC 7. Moulton Niguel Yes RedOak Own* 8. SMWD Yes Redoak via 9. Newport Beach MWDOC 10. San Juan Capistrano Yes 11. East Orange County WD Yes Raftelis Own* 12. Mesa Consolidated WD Yes 13. Fountain Valley Own* Raftelis for Management 14. MWDOC of Grant hired by MWDOC * "Own" indicates the Participant will retain its own consultant The Grant Study approved by DWR requires completion of ten (10) tasks, as described more fully in Section 4 below. Each task requires certain activities by MWDOC as the Grantee and certain activities by one or more of the Participants, depending on which of them are participating in a particular task. For completion of the Study Tasks., MWDOC's responsibilities include: a. Management and administration of consulting service proposal with Raftelis Financial Consultants (attached hereto as Attachment B and incorporated herein by reference). Fl City of Newport Beach Agreement for Participation in Water Budget Based Tiered Rate Grant Program 11 -03 -2011 b. Management, facilitation and administration of the Grant Study process with the Participants, including the tracking, monitoring and reporting of in -kind contributions. c. Invoicing the Participants, pursuant to this and other agreements, and paying the consultants hired by MWDOC. d. Administration of the DWR Grant agreement (attached hereto as Attachment A and incorporated herein by reference), including tracking local contributions toward the local match amount and working with the Participants to ensure to the fullest extent possible that all DWR funds are utilized. For completion of the Study Tasks, the City's responsibilities include: a. Participate and cooperate with MWDOC, other Grant Study Participants and all consultants hired for the Grant Study, including by responding to information requests on a timely basis. b. Attendance at workshop meetings. c. Assigning staff to attend individual meetings with Grant Study consultants. d. Keeping accurate and complete records of in -kind contributions to submit for credit toward the Participant's local match amount, which can include direct payments for services related to any aspect of the Grant Study, the value of staff time expended in furtherance of the Grant Study, legal fees and costs incurred in connection with participation in the Grant Study, and other fees and costs for consultants hired in connection with participation in the Grant Study, if any. e. Taking all reasonable steps available to maximize all local match opportunities so that the full amount of the grant from DWR can be utilized. The Participants are collectively responsible for providing an overall local .contribution of 71% of the full cost of the Grant Study. The Party hereby acknowledges that if the local contribution falls below 71% of the full cost of the Grant Study, DWR will reduce its contribution so as to maintain a 29% share and funds otherwise available under the DWR Grant will not be available for the Grant Study. MWDOC will work with the Participants, individually and collectively, to ensure that all DWR funds are utilized to the maximum extent possible. f. The City contracted with Red Oak Consulting (Attachment C) in December 2009, thereby satisfying Task 6 below -- assessing Billing and Accounting System Needs. This contract was in the amount of $88,177.00. MWDOC and the City anticipate that the MWDOC Grant will reimburse the City $34,000.00 for this portion of the work. In fulfillment of this requirement, the City will be responsible for providing a short summary of the project objectives, findings and outcomes. 5 City of Newport Beach Agreement for Participation in Water Budget Based Tiered Rate Grant Program 11 -03 -2011 3. DIGITAL MAP PRODUCTS (DMP) CONTRACT (PHASE 2) The City of Newport Beach elects to opt out of Phase 2. The City will provide its own digital mapping. 4. TEN TASKS OF THE GRANT STUDY The ten tasks required by the Grant Study are standard tasks based on the American Water Works Association Rates and Charges Manual, which is the industry standard for water rate setting. Task 1: General Administration and Report Preparation for All Agencies. Task 1 includes general administration and coordination among the Participants and consultants; quarterly progress report preparation and invoicing are included, as is a joint agency kickoff meeting to be held at the commencement of the Grant Study. MWDOC staff will be facilitating and managing the Grant Study on behalf of all of the Participants. Task 2: Identify Cost and Agency Revenue Requirements Task 2 involves identification of annual cash requirements to pay for the associated costs of maintaining water agency operations, while still meeting debt coverage ratio and reserve requirements. Each Participant in the Water Rate Development process will complete this task on their own. Task 3: Cost of Service Analysis MWDOC will conduct a workshop with the Participants in the Water Rate Development Process to provide information and background on how to conduct a cost of service analysis. Individual Participants will develop details on customer classes and fixed versus variable costs Task 4: Develop Rate Structure and Water Budgets Another workshop will be held with the Participants in the Water Rate Development Process to discuss Rate Structures and Water Budgets, including the following three topics or subtasks: a. Policy Factors for Indoor / Outdoor Allocation — Develop policy options associated with indoor and outdoor water allocations. These policy options Will serve as the foundation for developing water budgets. b. Development of Water Budget Database — Based on the policy option developed in the above task, each retail agency will develop the appropriate allocation factor for each account. MWDOC will utilize Newport Beach mapping estimates of irrigable area for each parcel. These estimates will be developed based on calculations and parcel data from the Assessor's Office and infrared map overlays that will identify estimated irrigation areas for each R City of Newport Beach Agreement for Participation in Water Budget Based Tiered Rate Grant Program 11 -03 -2011 parcel. This information will be incorporated into a water budget database that will allow formulation of a monthly water budget for each parcel. c. Model Development and Testing — Utilizing the water budget database as one of the model drivers, each agency will develop a water budget model to populate with data for their agency. The water budget models will provide Participants with an ability to conduct "what if' scenarios. The models will perform: 1) fixed /variable rate adjustment, 2) water budget allocation, 3) revenue analysis, and 4) typical monthly bills comparisons. Task 5: Legal Input — Proposition 218 Compliance The City shall have its own attorney provide input and advice on water budget based rates and compliance with provisions of Proposition 218. The indemnification of MWDOC and the State set forth below in this Agreement expressly includes, without limitation, any administrative or legal action related to Proposition 218. Task 6: Billing and Accounting System Needs and Options To support the implementation of the water budget based rate structure, the Phase 3 work will include an assessment of current customer service and billing practices and a review of the information systems used for Customer Information and Billing purposes. The ability of the current system will be compared with new requirements for handling budget based tiered rates and a gap analysis report will be prepared. This report will make recommendations for either a change in procedures or a change in systems and will provide suggested tasks, a schedule and an estimate of costs. Implementation of any billing or information system changes will be the responsibility of the City. Task 7: Outreach MWDOC and the Participants will develop generalized information templates for use by Participant's moving into implementation. Each individual Participant will then develop specific outreach materials and a tailored approach for its own use. The main goal of this task is to educate the public on the benefits associated with water budgets and how they function. Task 8: Implementation of Budget Based Tiered Rates MWDOC and its consultants hired as provided herein will be available to attend Board of Directors or City Council meetings and will develop presentation templates outlining options for generalized customer support. Individual Participants are responsible for all implementation phases and customer support within their service areas. Task 9: Final Report MWDOC, with the assistance of its consultants and each Participant, will develop individual reports that summarize the activities, findings and conclusions for each Participant. These reports will discuss the individual budget allocation used and the expected savings to be achieved. An overall report summarizing the results will be prepared for submittal to DWR and will be available to the Participants. 7 City of Newport Beach Agreement for Participation in Water Budget Based Tiered Rate Grant Program 11 -03 -2011 Task 10: Monitoring and Evaluation After the completion and submittal of the final report, MWDOC and each Participant will be responsible for conducting annual monitoring and evaluation reports to determine actual savings from this project. MWDOC will summarize the analysis for DWR. 5. SCHEDULE The general schedule for the Grant Study is outlined below. Based on the State freezing and restarting the grant, DWR will allow MWDOC and the Participants to go back to October 14, 2008 to capture matching costs expended after that date. The Digital Mapping effort began in October 2009. The DWR Contract, including the one - year extension, extends through May 15, 2012. Following is the estimated task schedule, assuming a start date of March 15, 2010: [INTENTIONALLY LEFT BLANK] 0 Budget Based Tiered Rate Grant Schedule Work Phase Code" Item Timing IT 1. Workshop on IT, Billing, Software March 15, 2010 DM 2. Delivery of 2009 Digital Mapping Data March 15, 2010 DM 3. Training on LandVision by Digital Maps March — April 2010 WR 4. Workshop on Water Rate Structures May 2010 (estimated) IT 5. Workshop with Potential Software Vendors (may be combined with other activities) May /June (estimated) 6. Finalize Agreements with Agencies & Consultants (Notice to Proceed) June, 2010 (estimated) PR 7. First Progress Report to DWR July 2010 IT 8. Complete Initial Assessment on IT, Billing, Software September 2010 PR 9. Second Progress Report to DWR October 2010 IT 10. Initiate Detailed IT, Billing, Software — where required November 2010 WR 11. Complete Primary Work on Water Rate Structures January 2011 PR 12. Third Progress Report to DWR January 2011 PR 13. Fourth Progress Report to DWR April 2011 IT 14. Complete detailed IT, Billing, Software — where required July 2011 WR 15. Agencies moving to implementation - complete and implement all work on Rate Structures January 2012 PR 16. Fifth Progress Report to DWR July 2011 17. Complete all work with Agencies on all Phases January 2012 PR 18. Sixth Progress Report to DWR October 2011 PR 19. Final Progress Report to DWR January 2012 20. Begin Five Year Monitoring Program January 2012 21. DWR Agreement End Date May 2012 Work Phase Code: IT = IT, Billing, Software activities DM = Digital Mapping activities WR = Water Rate Structure activities PR = Progress reporting activities 0 6. DELIVERABLES MWDOC will submit the quarterly reports to DWR documenting progress, task completion, and project success, the "Draft Final Report' due at Agreement end date, the "Final Report" due approximately one month following the Agreement end date, and "Annual Updates on Benefits & Costs" for 5 consecutive years following completion of the Grant Study. The projected benefits will be validated through data analysis. In addition to the deliverables required by DWR, MWDOC will also submit to DWR the "Rate Structure Recommendations Reports" and "Billing and Accounting System Needs and Options Reports" (one each per participating agency). 7. PHASES OF PROJECT PARTICIPATION The Participants will participate in their choice of a three Phase Grant Study and will receive a share of the grant funds based on their participation in the chosen Phase as outlined in Attachment D and incorporated herein by this reference. 8. GRANT SHARING Attachment A provides the basis for sharing in the grant funds from DWR. The conditions for receipt of Grant Funds by the Participants includes: o Must provide 71 % local funds or in -kind services to receive up to 29% grant funds, up to max in Attachment D. o Grant funds shown in Attachment D cannot be exceeded unless other Participants do not use all of the grant funds they were allocated. o Participants may utilize excess matching funds from other Participants toward their own local match, if the funds are available for that purpose. 9. OUTREACH, COMMUNITY INVOLVEMENT, AND ACCEPTANCE Outreach and community involvement activities (see Task 7) are an important component of the Grant Study, especially for any Participant proceeding into full implementation of budget based tiered rates. Outreach will begin when needed by an agency and extend through adoption and implementation of the rate structure. The Participants and their consultants shall include appropriate acknowledgement of credit to the State of California, Department of Water Resources and to all cost - sharing partners for their support when promoting the Grant Study or using any data and /or information developed under the Agreement. 10 10. BUDGET The total cost for the Grant Study is $2,390,695. The total DWR Grant amount awarded is $685,000, subject to Participants' local matching share of $1,705,695, or 71 % of the total amount. Refer to section 2f for the City of Newport Beach anticipated reimbursement amount. 11.COST SHARING Attachment D provides the basis for sharing in the grant funds from DWR. MWDOC will monitor and track the level of expenditures for each Participant. The goal is to complete the work with the highest quality and lowest cost possible and with a percentage local match of 71 % or greater. 12.INVOICING For other consultants hired by MWDOC, invoices shall be sent to the agencies on a quarterly basis concurrently with MWDOC's quarterly invoices to the State. Payments for consultants hired directly by the City are the responsibility of the City. Reports on payments made directly by the City for costs incurred for staffing and other internal costs shall be submitted to MWDOC on a quarterly basis. 13. INDEMNIFICATION AND HOLD HARMLESS a. General: Each Party agrees to indemnify, defend at its own expense, including attorneys' fees, and hold each other Party harmless from and against all claims, costs, penalties, causes of action, demands, losses and liability of any nature whatsoever, including but not limited to liability for bodily injury, sickness, disease or death, property damage (including loss of use) or violation of law, caused by or arising out of or related to any negligent act, error or omission, or willful misconduct of that indemnifying Party, its officers or employees, or any other agent acting pursuant to its control in the performance of this Agreement. b. As to MWDOC: Each Participant agrees to indemnify and defend at its own expense, including attorneys' fees, and hold MWDOC harmless from and against all claims, costs, penalties, causes of action, demands, losses and liability of any nature whatsoever related to an administrative or legal challenge to such Participant's action, or inaction, with respect to a water budget based rate structure. c. As to State: MWDOC and each Participant agrees to indemnify the State and its officers, agents, and employees against and to hold the same free and harmless from any and all claims, demands, damages, losses, costs, 11 expenses, or liability due or incident to, either in whole or in part, and whether directly or indirectly, arising out of the Grant Study. 14. INSPECTIONS BY STATE The State of California, acting by and through the Department of Water Resources, shall have the right to inspect the work being performed by the Participants at any and all reasonable times during the term of the Agreement. This right was established as to MWDOC in the DWR Grant agreement, and by express requirement it must be extended by MWDOC to this Agreement and all Participants. 15. WORKERS' COMPENSATION CLAUSE Each Participant affirms that it is aware of the provisions of Section 3700 of the California Labor Code, which require every employer to be insured against liability for workers' compensation or to undertake self- insurance in accordance with the provisions of that code, and each Participant affirms that it will comply with such provisions before commencing the performance of the work under this Agreement and will make its contractors and subcontractors aware of this provision. 16.AMERICANS WITH DISABILITIES ACT By signing this Agreement, each Participant affirms that it complies with the Americans with Disabilities Act (ADA) of 1990, (42 U.S.C. 12101 et seq.), which prohibits discrimination on the basis of disability, as well as all applicable regulations and guidelines issued pursuant to the ADA. 17. DRUG -FREE WORKPLACE CERTIFICATION OF COMPLIANCE By signing this Agreement, each Participant certifies that it has a drug -free workplace program that meets the requirements of Government Code 8350 et seq. with respect to employees who may work directly in the expenditure of grant funds. ) — MWDOC's Drug and Alcohol Free Workplace Program is attached as Attachment E and incorporated herein by reference, and MWDOC shall implement its program as required in connection with administration of the DWR Grant. 12 18. NON DISCRIMNATION CLAUSE During the performance of this Agreement, the Participants shall not deny the Agreement's benefits to any person on the basis of religion, color, ethnic group identification, sex, age, physical or mental disability, nor shall they discriminate unlawfully against any employee or applicant for employment because of race, religion, color, national origin, ancestry, physical handicap, mental disability, medical condition, marital status, age, or sex. The Participants shall insure that the evaluation and treatment of employees and applicants for employment are free of such discrimination. The Participants shall comply with the provisions of the Fair Employment and Housing Act (Government Code, Section 12900 et seq.), the regulations promulgated thereunder (California Code of Regulations, Title 2, Section 7285.0 et seq.), the provisions of Article 9.5, Chapter 1, Part 1, Division 3, Title 2 of the Government Code (Government Code, Sections 11135 - 11139.5) and the regulations or standards adopted by DWR to implement such article. The Participants shall give written notice of their obligations under this clause to labor organizations with which they have a collective bargaining or other agreement. The Participants shall include the nondiscrimination and compliance provisions of this clause in all contracts and subcontracts to perform work under the Agreement. The Participants' signatures on this Agreement shall constitute a certification that each signing Participant has, unless exempted, complied with the nondiscrimination program requirements of Government Code, Section 12990, and Title 2, California Code of Regulations, Section 8103. 19. TERM Unless terminated earlier as provided in this section, the term of this Agreement shall run concurrently with the term of the agreement between MWDOC and DWR, which extends through May 15, 2012. Alternatively, this Agreement runs until completion and payment of all costs of all Phases of the Project or until termination of the DWR Contract, whichever occurs earlier, unless the Agreement is terminated earlier by a majority of the Participants pursuant to Section 26 below. This Agreement may be modified by written agreement of MWDOC and the City, including modification to extend the term to be made consistent with any extensions provided by DWR for its contract. Pursuant to the DWR Grant agreement, the Project is considered to be completed or terminated for purposes of the DWR Grant only when so determined by DWR. 20. NOTICE Any notice, invoice, payment made pursuant to this Agreement shall be sent to MWDOC and the City at the address shown below. 13 City of Newport Beach City of Newport Beach P.O. Box 1768 Newport Beach, CA 92663 ATTN: Dave Kiff, City Manager MWDOC Municipal Water District of Orange County 18700 Ward St. P.O. Box 20895 Fountain Valley, CA 92728 ATTN: Kevin P. Hunt MWDOC and the City may change their addresses for this purpose by giving written notice to the other as provided herein. 21.TIMELINESS Time is of the essence in this Agreement. 22.AMENDMENTS The Agreement may be amended at any time by mutual agreement of all parties set forth in a written instrument and executed by all MWDOC and the City. 21ASSIGNMENT No party may assign or otherwise assign or transfer any rights, interests or obligations under this Agreement without the written consent of all parties. Once an assignment or transfer occurs with such consent, this Agreement and all of its provisions shall apply to and bind the successors and assigns of the parties. 24. SEVERABILITY The partial or total invalidity of one or more provisions of this Agreement will not invalidate the remaining provisions. 25. GOVERNING LAW This Agreement is governed by and shall be interpreted in accordance with the laws of the State of California. Venue for any action filed by any party or parties related to this Agreement shall be Orange County, California. 26.TERMINATION OF AGREEMENT This Agreement may be terminated by MWDOC or the City by action of their respective governing boards or councils. Upon termination, each shall remain 14 responsible for its share of costs up to the time of termination, as well as reasonable close -out costs, if any. 27. COUNTERPARTS This Agreement and any amendment hereto may be executed in two or more counterparts, and by each party on a separate counterpart, each of which, when executed and delivered, shall be an original and all of which together shall constitute one instrument, with the same force and effect as though all signatures appeared on a single document. 28. SIGNATURES The individuals executing this Agreement represent and warrant that they have the legal capacity and authority to do so on behalf of their respective agencies. IN WITNESS WHEREOF, the MWDOC and the City have executed this Agreement as of the date below. I ) Date I Date By �k4j �' I /I By Kevin P. Hunt City of Newport Beach General Manager Nancy Gardner MWDOC Mayor Approved as to Form: Approved as to Form: Date r -r z Date By: By: Aaron Harp Russell G. Behrens Daniel J. Payne City Attorney General Counsel Attest: Date By Leilani I. Brown City Clerk 15 Attachment A = DWR Grant Contract Attachment B = Raftelis Financial Consultants Proposal for MWDOC Attachment C = Red Oak Consulting Proposals for Newport Beach Attachment D = Grant Sharing Summary Attachment E = MWDOC Drug and Alcohol Free Workplace Program 16 Attachment A DVVR Grant Contract 17 STATE OF CALIFORNIA —THE RESOURCES AGENCY ARNOLD SCHWARZENEGGER,Govemor DEPARTMENT Of WATER RESOURCES 16 NINTH STREET, P.O. BOX 942836 .+CRAMENTO, CA 942360001 (916) 653-5791 00 do (IMY4 October 5, 2009 600Z6 0 i3o Mr. Kevin P. Hunt General Manager Municipal Water District of Orange County 18700 Ward Street Fountain Valley, California 92708 Dear Mr. Hunt: Enclosed is your fully executed copy of Proposition 50 Water Use Efficiency Drought Grant Agreement 4600008312 for the Budget Based Rates in Orange County for Water Management and Droughts Project. Please use your letterhead when you send invoices to the Department of Water Resources. Also, make reference to the agreement number, to whom the check should be made payable, and where it should be mailed. If you have any questions regarding the processing of your invoices, please contact me. Sincerely, Lisa tiste Grants Coordinator (916) 651 -7039 Enclosures 0 Agreement 4600008392 Municipal Water District of Orange County Budget Based Rates in Orange County for Water Management and Droughts Drought Grant STATE OF CALIFORNIA THE RESOURCES AGENCY DEPARTMENT OF WATER RESOURCES AGREEMENT BETWEEN THE STATE OF CALIFORNIA DEPARTMENT OF WATER. RESOURCES AND MUNICIPAL WATER DISTRICT OF ORANGE COUNTY FOR URBAN DROUGHT ASSISTANCE GRANT UNDER PROPOSITION 50; THE WATER SECURITY, CLEAN DRINKING WATER, COASTAL AND BEACH PROTECTION ACT OF 2002 Agreement 4600008312 Municipal Water District of Orange County Budget Based Rates, in Orange County for Water Management and Droughts' Drought Grant This agreement is entered into between the State of California, acting by and through the Department of Water Resources, (State) and the Municipal Water District of Orange County, (Grantee). The State and Grantee agree as follows: SECTION 1 PURPOSE OF GRANT This State Grant is made by the State to the Grantee to assist in financing a Water Conservation Project pursuant.to the California Proposition 50, the Water security, Clean Drinking Water, Coastal and Beach-Protection Act of.2002. This Grant program implements Water Code Chapter 7, Section 79550(g) of Proposition 50. Grant funds may be used only as. provided in this Agreement for such Eligible Project Costs as set forth in the Project description and Budget, copies of which are incorporated herein as reference. - Exhibit B, "Statement of Work° and Exhibit C, "Budget" which describe tasks to be accomplished and costs associated with those tasks under this Agreement. SECTION 2 TERM OF STATE GRANT The term of this Agreement shall be for two years from the date of execution. SECTION 3 PROJECT COSTS The Total Project Costs (identified in Exhibit C) are estimated to be $2,390,695.00. SECTION 4 STATE GRANT Subject to the availability of funds, the State will grant to the Grantee in accordance with the terms of this Agreement an amount not to exceed $685,000.00, as State Share, as identified in Exhibit C, for Eligible Project Costs. SECTION 5 GRANTEE'S COST SHARE AMOUNT The Grantee agrees to fund the difference, if any, between the estimated Project Cost (Section 3) and the State.Grant (Section 4). Grantee's Costs are estimated to be $1,705,695.00, as identified in Exhibit C. 2 Agreement 4600008312 Municipal Water District of Orange County t Budget Based Rates in Orange County for Water Management and Droughts Drought Grant SECTION 6 INCORPORATION OF STANDARD CONDITIONS AND GRANTEE 'COMMITMENTS In addition to Exhibits B and C, this agreement incorporates Exhibit A, "Standard Terms ". The Grantee accepts and agrees to comply with all terms, provisions, conditions, and commitments of this Agreement, including all incorporated documents, and to fulfill all assurances, declarations, representations and statements made by the Grantee in the Application, documents, amendments and communications filed in support of its request for financing. SECTION 7 CONDITIONS FOR DISBURSEMENT The Grantee shall meet all conditions for disbursement of money under this Agreement, .including the provisions of Exhibit A-6. Failure by Grantee to comply may, at the option of the State, result in termination of the Agreement.. SECTION 8 PROGRESS REPORTS AND STATEMENT OF-COSTS The Grantee shall submit quarterly progress reports, starting 3 months after date of execution, or as detailed in the Exhibit B; B7 "Schedule of Progress Reports and Payments° on the status of the Project and a Statement of Costs to the Department of Water' Resources. The submittal and approval by the. State of these reports is a requirement for continued disbursement of State Grant funds, Progress reports shall summarize the work completed during the reporting period', include a statement of IpTogiess— toward= completi a Project schedule, and provide' a comparison of costs to date compared to the approved scope of work and Project budget. Quarterly Reports will follow the format requirements set forth in Exhibit B; Attachment 1. SECTION 9 FINAL REPORTS. The Grantee shall submit a Draft .Final Report on Project completion or termination and expenditures for the State's review and comment. The Draft Final. Report shall be modified to incorporate the State's comments, if any, and resubmitted, as-Firial Report within sixty (60) days of the Grantee's receipt of�the State's comments. The Grantee shall also submit Post - Completion Annual Reports and updates. Reporting will follow the format requirements set in Exhibit B, Attachments '2 and 3. Agreement 4600008312 Municipal Water District of Orange County Budget Based Rates in Orange County for Water Management and Droughts Drought Grant SECTION 10 OPERATIONS AND MAINTENANCE OF "CONSTRUCTION" PROJECT In consideration of the State Grant, the Grantee agrees, for the useful life of the Project to expeditiously commence and to continue operation of the Project and shall cause the Project to be operated in an efficient and economical manner; shall provide for all repairs, renewals, and replacements necessary to the efficient operation, of the Project; and shall cause the Project to be maintained in as good and efficient condition as upon its construction, ordinary and reasonable wear and depreciation excepted. Refusal of the Grantee to operate and maintain the Project in accordance with this provision may, at the option of the State, be considered a material breach of Agreement and may be treated as default under default provisions Exhibit-A-25. SECTION 11 RELATIONSHIPS OF PARTIES The Grantee, its contractors, subcontractors, and their respective agents and employees required for performing any work under this Agreement shall act in an independent capacity and not as officers, employees, or agents of the State. The Grantee is solely responsible for planning and implementation of the Project Review or approval of plans, specifications, bid documents or other construction documents by the State is solely for the purpose of proper administration of State Grant' funds and shall not be deemed to relieve or restrict the Grantee's responsibility. SECTION 12 PERMITS, LICENSES, APPROVALS AND LEGAL OBLIGATIONS The Grantee shall be responsible Jor obtaining any and all permits, licenses and approvals required for performing any work under this Agreement, including .those necessary for planning and implementing the Project. The Grantee shall be responsible for complying with all applicable federal, State and local laws, rules or regulations affecting any such work; specifically including, but not limited to, environmental', labor, procurement and safety laws, rules, regulations and ordinances: SECTION 13 GRANTEE'S RESPONSIBILITIES FOR WORK The Grantee shall be responsible for work.and for persons or entities engaged in work, including, but not limited to, subcontractors, suppliers and providers of services,. The Grantee shall give personai supervision to any work required under this Agreement or employ a competent representative, satisfactory to the State, with the authority to act for the Grantee. The _Grantee or its authorized representative shall be present while work is in progress. The Grantee shall be responsible for any and "all disputes arising out of its contracts for work on the Project, including but not limited to bid disputes and payment disputes with the Grantee's contractors and subcontractors. The State will not Agreement 4600008312 Municipal Water District of Orange County Budget Based Rates in Orange County for Water Management and Droughts Drought Grant mediate disputes between the Grantee and any other entity concerning responsibility for performance of work. SECTION 14 PROJECT OFFICIALS AND NOTICES The Chief, Office of Water Use Efficiency and Transfers, Department of Water Resources shall be the State's representative and shall have the authority to sign Agreement and amendments to'the Agreement if needed, and to make determinations with respect to each controversy or discrepancy arising under or in connection with the interpretation, performance; or payment for work performed under this Agreement. The Grantee Project Director shall be Kevin P. Hunt. The Grantee Project Director shall be the Grantee's representative for the administration of the Agreement and shall have full authority to act on behalf of the Grantee, including authority to execute all payment requests. All communications given to the Project -Director shall be as binding as. if given to the Grantee. Either party maychange its representative upon written notice to the other party. Notices required to be given to the State in writing by the Grantee shall be sent to: under this Agreement Baryohay Davidoff,"Manager Water Use Efficiency Grant Program State of California Department of Water Resources Office of Water Use Efficiency and Transfers 901 P Street, Room 313A Post'Office Box 942836 Sacramento, CA 94236 -0001 Notices required to be given to the Grantee in writing by the State under this Agreement shall be sent to: Kevin P. Hunt, General Manager. Municipal Water District of Orange County P. O. Box 20895 Fountain Valley, CA 92728 A change of address for delivery or notice may be made by either party by written notice of such"change. of address to the other party_ All such notices shall be enclosed in a properly addressed, postage prepaid• envelope and deposited in a United States Post Office for delivery by registered or certified mail. Agreement 4600008312 Municipal Water District of Orange County Budget Based Rates in Orange County for Water Management and Droughts Drought Grant Approved as to Legal Form and Sufficiency: By nLQ DI 1 David A. Sandino, Chief Counsel Da e Department of Water Resources STATE OF CALIFORNIA DEPARTMENT OF WATER MUNICIPAL WATER DISTRICT OF ORANGE COUNTY Approved as to Legal Form and Sufficiency: By Grantee's Attorney (if applicable) Date By iz� P)l I� *atfe Signat ry Kevin P. Hunt;.General Manager Municipal Water District of Orange County 18700 Ward Street Fountain Valley, CA 92708 Use Efficiency and Transfers IN WITNESS WHEREOF, the parties hereto have executed this Agreement on Date A Agreement 4600008312 Municipal Water District of Orange County Budget Based Rates in Orange County for Water Management and Droughts Drought Grant STATE OF CALIFORNIA THE RESOURCES AGENCY DEPARTMENT OF WATER RESOURCES EXHIBIT A STANDARD TERMS A -1. GOVERNING LAW: This Agreement is governed by and shall be interpreted in accordance with the laws of the State of California. A -2. TIMELINESS: Time is of the essence in this Agreement. A 71 AMENDMENT: This Agreement may be amended at any time by mutual agreement -of the parties, except insofar as any proposed amendments are In any way contrary to applicable law. Requests by the Grantee for amendments must be in writing stating.the amendment request and the reason for the request. A -4. SUCCESSORS AND ASSIGNS: This Agreement and all of its provisions shall apply to and bind the successors and assigns . of the' parties hereto. No assignment or transfer of this`Agreement or any part thereof, rights hereunder, or interest herein by the Grantee shall be valid unless and until it is approved by the State and made subject to such reasonable terms and conditions as the State may imposer A -5. ELIGIBLE PROJECT COSTS: Grantee shall apply State Grant funds received only to Eligible Project Costs, as identified in Exhibit C. A-6. CONDITIONS FOR DISBURSEMENT: The State shall have no obligation to disburse money under this Agreement unless and until the Grantee has satisfied the State that the disbursement is in accordance with the requirements of the Water Code Chapter (7), Section 79550(8) of Proposition 50, and the following: (a) For Construction Projects, .the. Grantee submits to the State, final plans and specifications certified by a California Registered Civil- Engineer or equivalent documentation as to compliance with the approved Project. (b) The Grantee submits a written statement by an authorized representative that it has obtained all necessary permits, easements, rights -of -way and approvals as may be required by other State, federal, and /or local agencies, as specified in Section 12 of this Agreement. A -7 Agreement 4600008312 Municipal_ Water District of Orange County Budget Based Rates in Orange County for Water Management and Droughts Drought Grant (c) The Grantee demonstrates compliance with the California Environmental Quality Act and the National Environmental Policy Act by submitting copies of any environmental. documents, including environmental impact reports, environmental impact statements, negative declarations, mitigatioh agreements, legal notices and environmental permits as may be required prior to beginning the Project. (d) The Grantee submits timely quarterly progress reports, draft final and final reports, and post - completion annual reports on benefits and costs updates as required by Sections 8 and 9 of this Agreement. (e) The'Grantee'demonstrates continuing availability of sufficient funds to complete the Project. STATE GRANT DISBURSEMENTS: (a) Cost Statements: After the Conditions for Disbursement, Section A -6, are met, the State will disburse the whole or portions of the State Grant commitment to- the Grantee following' receipt from the Grantee of a statement or statements of incurred Eligible Project Costs, reviewed by the Grantee's designated representative, and timely progress reports as required by Section' 8 of this Agreement. Requests for State Grant funds shall-be filed quarterly or for such periods as the State and the Grantee may mutually agree. The Grantee shall provide the following information: 1. A statement of the incurred .Eligible Project Costs for work performed under the Agreement during the period identified in the particular statement and which matches the Budget in Exhibit C and tasks'in Exhibit B. 2. A statement of the cost of any interests in real property (land or easements) that have been necessarily acquired for the Project during the period identified in the. particular statement for the implementation of the Project. Agreement 4600008312 Municipal Water District of Orange County Budget Based Rates in Orange County for Water Management and Droughts Drought Grant The Grantee shall submit two (2) copies of quarterly progress reports and (2) copies of invoice.(along with supporting documents for expenditures) associated with work accomplished during that quarter to: Baryohay Davidoff, Water Use Efficiency Grant Program Manager Department of Water Resources Office of Water Use Efficiency and Transfers 901 P Street, Room 313A P.O. Box 942836 Sacramento, CA 94236 -0001 The invoice must be .detailed and provide supporting documentation for both State and Local Share of costs for each quarterly progress report. Invoice shall be submitted in :arrears, bearing the Agreement number. The Grantee must also submit one (1) original copy of each invoice simultaneously to: DWR Accounting Office Contracts Payable Unit P.O. Box 942836 Sacramento, CA 94236 All reports and invoices must be on the Grantee's letterhead, have name, project title, Agreement number, invoice number, and the quarter and tasks for which progress reports and invoices cover. (b) Disbursement: Following the review and approval of each invoice, the State will disburse to the Grantee the amount approved, subject to the availability of funds through the State's normal procedures. Funds will be disbursed by the State in response to each approved invoice on a pro rata basis in accordance with the relative payment obligations of the Grantee., Sections 3, 4, and 5'of this Agreement. Any and all money disbursed to the Grantee ' under this Agreement and any and all interest-eamed by the Grantee on such money shall be used solely to pay Eligible Project Costs. Agreement 4600008312 Municipal Water District of Orange County Budget Based Rates in Orange County for Water Management and Droughts Drought Grant Along with submittal of Draft and Final Report and satisfactory completion of the project, Grantee shall submit to the State a final invoice for incurred Eligible Project Costs .and request release of retention/withholding, as identified in Exhibit A 78(a) of this agreement. A -8. WITHHOLDING OF GRANT DISBURSEMENTS BY STATE: (a) Withholding. Clause: The State, at its discretion, may withhold ten percent (10 %) of the funds requested by the Grantee for reimbursement of eligible Project Costs until the Project is completed and Final Report is received. (b). Additional Conditions for Withholding: If the State determines that the Project is not being completed substantially in accordance with the provisions of this Agreement or that the Grantee has failed in any other respect to comply substantially with. the provisions of this Agreement, and if the Grantee does not remedy any such failure to the State's satisfaction, the State may withhold from the Grantee all or any portion of the State Grant commitment and take any other action that it deems necessary to protect its interests_ (c) Withholding Entire State Grant Commitment: If the State notifies the Grantee of its decision to withhold all of the State Grant commitment from the Grantee pursuant to Subdivision (b) of this Article, this Agreement shall terminate upon receipt of such notice by the Grantee and shall no longer be binding on either party. (d) Withholding Balance of State Grant Commitment: Where a portion of the State Grant commitment has been disbursed to the Grantee and the State notifies the Grantee of its decision to withhold the balance of the State Grant, the portion that has been disbursed shall thereafter be repaid immediately with interest, as directed by the State.. Refusal of the Grantee to so repay may, at the option of the State, be considered a material breach of Agreement and may be treated as default under Default Provisions, Exhibit 25. A -9. .DOCUMENTATION OF PROJECT BENEFITS AND COSTS: Actual Water Savings and Other Benefits and Costs: The Grantee shall submit Annual Reports of Benefits and Costs after the first operational year has elapsed and report any updates and other benefits such as water savings, water quality, flow and timing, energy_savings, and any other /additional benefits and costs resulting frorn..the Project, as detailed in the Exhibit B (B -2, Benefits). These reports must be submitted on schedule as identified in Exhibit B (B -7, Schedule for Progress 10 Agreement 4600008312 Municipal Water District of Orange County 1 Budget Based Rates in Orange County for Water Management and Droughts Drought Grant Reports and Payments) to the Project Manager. If appropriate, the Grantee shall revise the estimate of water savings based on records of each consecutive year for five years. Estimates shall include total annual water savings, net annual water savings, and costs-The report shall also include a description of how the water produced by the Project is being utilized. This recording and reporting process shall be subsequently repeated for a total of five (5) consecutive operational years. A -10. TIMING AND MANNER OF PROJECT UNDERTAKING. (a) Protect Undertaking Pursuant to Agreement: The Project shall be undertaken in strict accordance with this Agreement. (b) Determination of Project Completion: For the purposes . of this Agreement, the Project shall be considered to be.completed.or to be terminated when so determined by the State. (c) Acknowledgement of Credit: The - Grantee shall include appropriate acknowledgement of credit to the State and to all cost- sharing partners for their support when promoting the Project or using any data and /or information developed under the Agreement. (d) Audit Requirement: Pursuant to Government Code Section 8546.7, the contracting parties'shall be subject to the examination and audit of the State for a .period of three (3) years after final payment under this Agreement with respect to all matters'connected with the performance of this Agreement, including but not limited to, the cost of administering this Agreement All records of the Grantee or subcontractors shall be preserved for this purpose for at least three (3) years after completion of the Project. {e) Competitive Bidding of Contracts and Procurements: Grantee shall comply with all applicable laws and regulations regarding securing competitive bids and undertaking competitive negotiations in Grantee's contracts with other entities for acquisition of goods, and services and construction of public works with funds provided by the State under this Agreement. (f) iconstruction Proiectsl: Upon completion of the Project the Grantee shall provide for a final inspection and certification by a California Registered Civil Engineer that the Project has been completed in accordance with submitted final plans and specifications and any modifications thereto and 11 Agreement 4600008312 Municipal Water District of Orange County Budget Based Rates in Orange County for Water Management and Droughts Drought Grant in accordance with this Agreement. The Grantee shall notify the Office of Water Use Efficiency and Transfers of the Department of Water Resources of the inspection date at least 10 days prior to the inspection in order to provide the. State the opportunity to participate in the inspection. A -11. ACCOUNTING AND DEPOSIT OF GRANT DISBURSEMENT: (a) Separate Accountin of State Grant Disbursements and Interest Records: The Grantee shall account for -the money disbursed pursuant to this Agreement separately from all other Grantee's funds. The Grantee shall maintain audit and accounting procedures that are in accordance with generally accepted accounting principles and practices, 'consistently applied. The Grantee shall keep complete and accurate records of all receipts, disbursements, and interest earned on expenditures. of such funds. The' Grantee shall require its contractors or subcontractors to maintain books, records, and other documents pertinent to their work in accordance with generally accepted accounting principles and practices. Records are subject to inspection by the State. at -any and all reasonable times... (b) Disposition of Monev Dichumarp nn Al - - --- -- - - - -•° ..., uwucy UMDUISCU pursuant to this Agreement shall*. be -deposited, administered, and accounted for pursuant to the provisions -of applicable law. (c) Remittance of Unexpended Funds: The Grantee, within a period'of thirty, (30) days froth the final disbursement from the State to the Grantee of State Grant funds, shall remit to the State any unexpended funds that were disbursed to the Grantee under this Agreement and were not heeded to pay Eligible Project Costs. (d) Interim and Final Audits: The State reserves the right to conduct an audit at any time between the execution of this Agreement and the completion of the Project, with the costs of -such audit borne. by the State. After completion of the Project, the State may require the Grantee to conduct a final audit, qt the Grantee's expense, such audit to be conducted by and a report prepared by an independent. Certified Public Accountant. . Failure or refusal by the Grantee to comply with this provision. shall be considered a substantial failure to comply with this Agreement, and the. State may elect to pursue any remedies provided in Article A -25 or take any other action it deems necessary to protect its interests. 11K Agreement 4600008312 Municipal Water District of Orange County Budget Based Rates in Orange County for Water Management and Droughts Drought Grant A -12. CLAIMS DISPUTE CLAUSE: Any claim that the Grantee may have regarding the performance of this agreement including, but not limited to, claims for additional compensation or extension of time, shall be submitted to .the Project Manager, Department of Water Resources, within thirty (30) days of the Grantee's knowledge of the claim. Project Manager and Grantee shall then attempt to negotiate a resolution of such claim and process an amendment to this Agreement to implement the terms of any such resolution. AA 3. REMEDIES NOT EXCLUSIVE: The use by either party of any remedy specified herein for the enforcement of this agreement is not exclusive and shall not deprive the party using such remedy of, or limit the application of any other remedy.provided by law. A -14. STATE TO BE HELD HARMLESS: The Grantee agrees to indemnify the State and its officers, agents, and employees against and to hold the same free and harmless from any and all claims, demands, damages, losses, costs, expenses, or liability due or incident to, either in whole or in part, .and whether directly or indirectly, arising out of-the Project. A -15. INSPECTION OF BOOKS, RECORDS, AND REPORTS: During regular office hours, each of the parties hereto*and their duly authorized representatives shall have the tight to inspect and to make copies of ariy books, records, or reports of either party pertainirig to this Agreement or matters related' hereto. Each of the parties hereto shall maintain and shall make available at all times for such Inspection accurate records of all its costs, disbursements, and .receipts with respect to its activities under this Agreement. Failure or refusal by the Grantee to comply with this provision shall be considered a substantial failure to comply with this Agreement and the State may withhold disbursements to the Grantee .or take any other action it deems necessary to protect its interests. A -16. INSPECTIONS OF PROJECT BY STATEN The State shall have the right to inspect the work being performed at any and all reasonable times during the term of the Agreement. This right shall extend to any subcontracts, and the Grantee shall include provisions ensuring such access in all its contracts or subcontracts entered into pursuant to its Agreement with the State. A -17. PROHIBITION AGAINST DISPOSAL OF PROPERTY WITHOUT STATE PERMISSION: The Grantee shall not sell, abandon,. lease, transfer, exchange, mortgage, hypothecate, or encumber in any manner whatsoever all or any portion of any real or other property necessarily connected or used in conjunction with the Project, without prior permission of the State. The Grantee shall not take any action, including but not limited to actions relating to user fees, charges, and 13 Agreement 4600008312 Municipal Water District of Orange County Budget Based Rates in Orange County for Water Management and Droughts Drought Grant assessments that could adversely affect the ability of the Grantee to meet its obligations under this Agreement, without prior written permission.of the State. The State may require that the proceeds from the disposition of�any real or personal property be remitted to the State to be applied to the Grantee's indebtedness under this Agreement, A -18_ NO THIRD PARTY RIGHTS: The parties to this Agreement do not intend to create rights in, or grant remedies to, any third party as a beneficiary of this Agreement, or of any duty, covenant, obligation or undertaking established herein. A -19. NOTICES: All notices that are required either expressly or by implications to be given by' one party to 'the other under this Agreement shall be signed for the Program Manager and for the Grantee by such officers, as from time to time, it may authorize in writing to so adt. All such notices shall be deemed to have been given if delivered personally or if enclosed in a properly addressed postage- prepaid envelope and deposited in a United States Post Offce for delivery by registered or. certified mail. A -20. PERFORMANCE AND ASSURANCES: Grantee agrees to faithfully and expeditiously perform or cause to be performed all Project work as described in the final plans and specifications as.submitted or as later amended and approved by the State under this Agreement and to apply State funds received only to Eligible Project Costs and to operate and maintain the Project in accordance with applicable provisions of the law. In the event the State finds it necessary to enforce this provision or any right or power under this Agreement in the manner provided by -law, Grantee agrees to. pay all costs incurred by the State including, but not limited to, reasonable attorneys' fees, legal expenses, and costs. The State reserves the right to seek further written assurances from the grantee that the work of. the Project under this Agreement will be performed consistent with the terms of this Agreement- A-21. SEVERABILITY: In the event that any provision of this- Agreement is unenforceable or held to be unenforceable, then the parties agree that all other provisions of this Agreement have force and effect and shall not be affected thereby. A -22. WAIVER OF RIGHTS: None of the provisions of this. Agreement shall be deemed waived unless expressly waived in writing. It is the intention of the parties hereto that from time to time either party may waive any of its rights under this Agreement unless. contrary to law. Any waiver by either party hereto of rights arising in connection with this Agreement shall not be deemed to be a waiver with respect to any other rights or matters, and such provisions shall continue in 14 Agreement 4600008312 Municipal Water District of Orange County Budget Based Rates in Orange County for Water Management and Droughts Drought Grant full force and effect. A -23. TERMINATION WITHOUT CAUSE: The State may terminate this Agreement without cause on 30 days advance written notice. The Grantee shall be reimbursed for all reasonable.expenses incurred up to the date of termination. A -24. TERMINATION FOR CAUSE:, The State may terminate this Agreement and be relieved of any payments should the Grantee fail to - perform the requirements of this Agreement at the time and in the manner herein provided including but not limited to reasons of default under A -25. A -25. TERMINATION BY GRANTEE: Grantee may terminate this Agreement and be relieved of contractual obligations. In doing so, Grantee must provide a reason(s) for termination. Grantee must submit all progress reports summarizing accomplishments up until termination date. A -26. DEFAULT PROVISIONS: (a) The grantee will be in default under this agreement if any of the following occur: 1, Substantial 'breach of this Agreement, or -any supplement or amendmentto it; 2. Making any false warranty, representation, or statement with respect to this Agreement; •3. Failure to make any remittance required by this Agreement. (b) Should an event of default occur, the State may do any or all of the following: 1. Demand the State Grant be immediately repaid, with interest, which shall be equal to the State of California general obligation bond interest rate in effect at the time of the default; 2. Terminate any obligation to make future payments to the Grantee; 3. Terminate the Agreement; and 4. Take any other action that it deems necessary 'to protect its interests. 15 Agreement 4600oo8312 Municipal Water District of Orange County Budget Based Rates in Orange County for Water Management and Droughts Drought Grant (c) The Grantee agrees that any remedy. provided in this Agreement is in addition to and not in derogation of any other legal or equitable remedy available.to the State as a result of a breach of this Agreement by the Grantee, whether such breach occurs before or after completion of the Project. (d) No waiver by the State of. any breach or default will be a waiver of any breach or default occurring later. A waiver will be valid only if signed by the State or its authorized agent. A -27_ CONFLICT OF INTEREST: (a) Current State Emoloyees: 1. No State officer or employee shall engage in any employment, activity or enterprise from which the officer or employee receives compensation or has a financial interest and which is sponsored or funded by any State agency, unless the employment, activity or enterprise is required as a condition of regular State employment., 2. No State officer 'or employee shall contract on his or her own behalf as an independent contractor with any State agency to provide goods or services. (b) Former State Employees: For the two year period from the date he or she left State employment, no former State officer or employee may enter into a contract in which he or she engaged in any of the negotiations,. transactions, planning, arrangements or any part of the, decision - making process relevant to the Agreement while employed in any capacity by any State agency. 2. For the twelve -month period from the date he or she left State employment, no former State officer or employee may enter into,a contract with any State agency if he.or she was employed by that State agency in a policy - making position in the same general subject area as the proposed'Agreement within the twelve -month period prior to his or her leaving State service. A -28. WORKERS' COMPENSATION CLAUSE: The Grantee affirms that.it is aware of the provisions of Section 3700 of the California Labor Code, which require every employer to be insured against liability for workers' compensation or to undertake .16 Agreement 4600008312 Municipal Water District of Orange County Budget Based Rates in Orange County for Water Management and Droughts Drought.Grant self- insurance in accordance with the provisions of that code, and the Grantee affirms that it will comply with such provisions before commencing the performance of the work under this Agreement and will make its contractors and subcontractors aware of this provision. A -29. AMERICANS WITH DISABILITIES ACT: By signing this Agreement, Grantee assures the State that it complies with the Americans with Disabilities Act (ADA) of 1990, (42 U.S.C. 12101 et seq.), which prohibits discrimination on the basis of disability, as well as all applicable regulations and guidelines issued pursuant to the ADA. A -30. DRUG -FREE WORKPLACE CERTIFICATION: (a) Certification of.Comdiance By signing this Agreement, the Grantee, its contractors or subcontractors hereby cerfify under penalty of perjury under the laws of the State of California compliance with the requirements of the Drug -Free Workplace Act of 1990 (Government Code.8350 et seq.) and have or will provide a drug- free.workplace by taking the following actions: . Publish a statement notifying subcontractors that unlawful dispensation, possession, or use prohibited and specifying actions tc contractors or subcontractors for Government Code Section 8355(a), employees, contractors and manufacture, distribution; of a controlled substance is be taken against employees, violations, as required by 2. Establish a Drug -Free Awareness Program, as required by. Government Code Section 8355(b) to inform employees, contractors and subcontractors about all of the following: a. The dangers of drug abuse. in the workplace, b. The Grantee's policy of maintaining a drug -free workplace, c. Any available counseling, rehabilitation and employee assistance programs, and d. Penalties that may be imposed upon employees, contractors or subcontractors for drug abuse violations. 17 Agreement 4600008312 Municipal Water District of Orange County Budget Based Rates in Orange County for Water Management and Droughts Drought Grant 3. Provide, as required by Government Code Section 835.5(c), that every employee,, contractor and subcontractor who works under this Agreement: a. Will receive a copy of the .Grantee's drug -free policy statement, and b. Will agree to abide by terms of the Grantee's condition of employment, coritract or subcontract. (b) Suspension of Payments This Agreement or State Grant may be subject to suspension of payments or termination, or both, and the Grantee may. be subject to debarment if the Department.determinesthat:. 1. The Grantee, its contractors or subcontractors have made a false certification, or; 2. Grantee, its contractors or subcontractors violates the certification by failing to carry out the requirements noted above. A -31. NON DISCRIMINATION CLAUSE: During the performance of this Agreement, the Grantee, its- contractors and subcontractors shall not deny the Contract's benefits to any person on the basis of religion, color,_ ethnic group identification, sex, age, physical or mental disability, nor shall they discriminate unlawfully against any employee or applicant for employment because of race, religion, color,. national origin, ancestry, physical handicap, mental disability, medical condition, marital status, age, or sex. The Grantee shall insure that the evaluation and treatment of employees and applicants for employment are free of such discrimination. The Grantee, its contractors and subcontractors shall comply with the provisions of the Fair Employment and Housing Act (Government Code, Section 12900 et seq.), the regulations. promulgated thereunder (California Code of Regulations, Title 2, Section 7285.0 et seq.), the provisions of Article 9.5, Chapter 1, Part 1, Division 3, Title 2 'of the Government Code (Government Code, Sections 11135-111.30.5) and the regulations or standards adopted by the awarding State Agency to implement such article. The Grantee, its contractors and subcontractors shall give written notice of their obligations under this clause to labor organizations with which they have a collective bargaining or other agreement. m Agreement 4600008312 Municipal Water District of Orange County Budget Based Rates in Orange County for Water Management-and Droughts Drought Grant The Grantee shall include the nondiscrimination and compliance provisions of this clause in all contracts and subcontracts to perform work under the Agreement. The Grantee's signature on this Agreement shall constitute a certification under .the penalty of perjury under the laws of the State of California that the Grantee has, unless exempted, complied. with the nondiscrimination program requirements of Government Code, Section 12990, and Title 2, California Code. of Regulations, Section 8103.' A -32. UNION ORGANIZING: No State funds disbursed by this State Grant will be used to assist, promote, or deter union organizing. If Grantee makes expenditures to assist, promote, or deter union organizing, Grantee will maintain records sufficient to show that no State funds were used for those expenditures and that Grantee shall provide those records to the Attorney General upon request. 19 Agreement 460ooOS312 Municipal Water District of Orange County Budget Based Rates in Orange County for Water Management and Droughts Drought Grant EXHIBIT B STATEMENT MUNICIPAL WATER DISTRICT OF ORANGE COUNTY, 14542 13-1 Project Goals and Objectives The proposed project involves coordinated work among 11 retail water agencies with a combined population of over a million people and annual water -sales of 230'000.acre feet within Municipal Water District of Orange County (Grantee) to save water via implementation of budget based rates. It is expected that at least 4 of the retail agencies will proceed into the implementation phase. Agencies not going to full implementation still benefit by having the background information and tools necessary for implementation at a later date. Water budgets can assist during drought conditions by sending -price signals to customers who are the least efficient with their water use. An integral part of this effort is the evaluation assessment of each individual agency's billing system with a water budget rate structure. 13-2 Project Description Due to the deteriorating water supply situation in Califomia, the Orange County Grand Jury in May 2008 recommended that each retail water agency in.Orange County consider a water budget based rate structures to encourage conservation, address equity concems and increase revenue stability. Challenges agencies'face with vdater budget rate structures are determining staff and billing system requirements, designing defensible water budget allocations based on scientific'data, gathering. public support and setting realistic conservation goals. These challenges are often compounded by lack of technical expertise and policy inexperience. This project proposes to assist the agencies in overcoming these obstacles. The purpose of the project is to concurrently assist 11 retail water agencies in examining the approach and implementation Of water budget rate structures or various aspects of water budget rate structures. Grantee will conduct workshops with the full group and then conduct detailed work with each agency on the policy and technical issue associated with water budgets. Individual agency meetings will be held with the appropriate policy makers and senior staff to receive input on what type of water budget is best suited for each agency. In addition, a billing system compatibility analysis will be conducted and different implementation options will be provided. By channeling the energy of 11 local communities to examine water budgets, the political environment and the likelihood of success will be improved. 20 Agreement 4600008312 Municipal Water District of Orange County Budget Based Rates in Orange. County for Water Management and Droughts Drought Grant With the potential for Metropolitan Water District of Southern California (MWD) to declare mandatory water rationing in early 2009, this effort will position the retail. agencies to enable implementation of water budgets for equitable allocation of water during rationing. The main project goal is to help urban communities cope with water shortages and drought conditions, but the water management benefits continue to accrue each and every year. Equitable allocation of indoor and outdoor water needs by account allows agencies to scientifically determine which accounts are over their allotment. Water agencies can focus resources on saving water from non - efficient accounts. Utilization of water budgets makes them the most equitable mechanism for water. conservation. Agencies with sewer rates based on water consumption can accrue additional benefits. Due to the nature of this project, CEQA action is not required. All legal actions will be handled by the implementing agencies. - Grantee has designed the following 10 tasks to produce a proactive plan. The steps proposed for water budget based rates are'based on the American Water Works Association, Rates and Charge Manual, the industry standard for water rate setting. Task 1 Administration Task includes general administration and coordination -among the 11 retail agencies and consultants; quarterly progress'report preparation and invoicing; and a joint agency kickoff meeting to be held -at the beginning of the project. Grantee staff will be facilitating and managing the program on behalf of all of the participating retail agencies. Task 2 Identify Cost and Agency Revenue Requirements Task 2 involves the identification of the annual cash requirements to pay for the associated costs of maintaining water agency operations, while meeting its debt coverage ratio and reserve requirements. Red Oak will hold a workshop on how to conduct this analysis. Task 3 Cost of Service Analysis Grantee and Red Oak will hold a workshop which will educate the retail agencies on how to conduct a cost of service analysis. The individual agencies will develop details on customer classes and fixed versus variable costs. Task 4 Develop Rate Structure and Water Budgets The workshops discussed under Tasks 2 and 3 may be,part of a larger workshop on Rate Structures and Water Budgets. In addition, Grantee and Red Oak will conduct the following three subtasks: 21 Agreement 4600008312 Municipal Water District of Orange County Budget Based Rates in Orange County for Water Management and Droughts - Drought Grant Policy Factors for Indoor /Outdoor Allocation — Grantee and Red Oak will hold a series of workshops and meetings.to develop policy options associated with indoor and outdoor water allocation. These policy options will serve as the foundation for developing water budgets. Development of Water, Budget Database — Based on the policy option developed in the above task, each retail agency will develop the appropriate allocation factor for each account. Grantee will utilize Digital Map Products or another parcel map provider (GIS analysis and County Parcel information) to develop estimates of irrigable area for each parcel. This information will be incorporated into this database to allow each parcel to have a monthly water budget formulated. Model Development and Testing — Utilizing the water budget database as the model driver, Red Oak will develop a water budget model that each agency will own, which has the ability to conduct "what if` scenarios. The model will have the ability to perform: 1) fixed /variable rate adjustment, 2) water budget allocation, 3) revenue analysis, and 4) typical monthly bills comparison. Task 6 Legal Input — (Proposition 218. Compliance Each agency's attorney will provide input on how its water budget will comply with Proposition 218. Compliance may range from the requirement that block prices be based on escalating expenses'or that total revenue be based on total expenses. Task 6 (Billing and Accounting System Needs and Options To support the implementation of the water budget based rate structure Red Oak will conduct an assessment of current customer service and billing practices and the information systems used for GIS /Billing. Red Oak will compare the current system with new requirements, and prepare a Fit/Gap analysis, and then make recommendations for either a change in procedures or systems with suggested tasks, schedule, and. estimated. resource needs_ The.report will be provided in Microsoft Excel or Microsoft Access format to the retail agency for its use. Task 7 Outreach Grantee, the retail agencies, and Reis Oak will develop generalized information templates for use by each agency. The individual agencies will then develop specific outreach materials and a tailored approach for their use. The main goal of this task is to educate the public on the benefits associated with water budgets and how they function. 22 Agreement 4600008312 Municipal Water District of Orange County Budget Based Rates, in Orange County for Water Management and Droughts Drought Grant Task 8 Implementation It is anticipated that 4 out of the 11 retail agencies will implement water budget based rate structures. Red Oak will be available for attendance at Board of Directors or City Council presentations for support and will develop presentation templates outlining options for generalized customer support. Individual agencies are responsible for all implementation phases and customer support and response for implementation within their service areas. Task 9 Final Report Grantee; with the assistance of Red Oak, will develop individual reports that summarize the activities, findings and conclusions for each retail agency. The report will discuss the individual budget allocation used and the expected savings to be achieved. An overall report summarizing the results will be prepared for presentation10 Department of Water Resources. Task 10 Monitoring and Evaluation With the completion of the-final report, Grantee.will conduct annual monitoring and evaluation to determine actual savings from this project. Grantee will conduct this, analysis by using the - double difference, a standard statistical approach when conducting project evaluation. Schedule- Outlined below is the general schedule. However, based on the water supply situation, many of the agencies may want the schedule accelerated to allow implementation by January 2009. This accelerated schedule will be accommodated as best as possible, should the request arise. Task 1: General Administration Month 1 -24 Task 2: Identify Cost and Agency Revenue Requirements Month 1 -6 Task 3: Cost of Service Analysis Month 2 -7 Task 4: Develop Rate Structure and Water Budgets 'Month 3 -18 Task 5: Legal Input - Prop; 218 Compliance Month 4-20 Task 6: Billing and Accounting System Needs and Options Month 3 -18 Task 7: Outreach Month 12 -24 Task 8: Implementation Month 20 -24 Task 9: Final Report Month 23 -25 Task 10: Monitoring and Evaluation Month 26-64 23 Agreement 4600008312 Municipal Water District of Orange County Budget Based Rates in Orange County for Water Management and Droughts Drought Grant Water Quantity — One of the quickest drought response mechanisms that can be developed is additional water conservation via budget based rate structures. Documented water savings on the order of 20% have been achieved via implementation of these types-of rate structures. For this project, a conservative estimate in annual savings is 10,800 acre -feet per year, assuming an ave .rage agency has 18,000 acre -feet of annual water sales and 15% savings with 4 implementing agencies. The water saved includes both groundwater resources and imported water from MWD from the Colorado River and the State Water Project. The annual savings are anticipated in perpetuity_ In- stream Flow — The resulting annual savings will result in an avoided stream diversion from the Bay -Delta and the Colorado River basin_ Water Quality — By reducing the quantity of irrigation water being wasted, runoff from irrigated areas will be reduced and the transport of sediments and contaminants into waterways, streams and the ocean will be reduced. • . Water Shortages/Drought Mitigation — This'project will result in significant water savings by reducing the water demand by about 15 %. Not only will the,project benefit urban communities in times of shortages and drought, the anticipated savings are annual and will persist in perpetuity. The annual value of water saved at an existing melded water price in Orange County of $491 per acre -foot is $10 million (2008 dollars): En_ eEgy —Based on the California Energy Commission 2005 Integrated Energy Policy Report, energy savings associated with outdoor water conservation programs in Southern California is 3,300 kWh/AF. With project water savings of 10,800 AF annually, energy savings are estimated at more than 35 million kWh annually_ ' Other Benefits —Water budget based rate structures provide many types of benefits. When implemented,, they provide direct feedback to customers at each billing cycle to measure how residents are doing compared to a scientifically based. budget estimate. When high water users are identified, agency customer service representatives can easily target them for education and intervention measures. Equity among users is critical. These rate structures measure customer performance against.a scientific norm so all customers are evaluated on the same basis. Water conserving customers are rewarded by remaining within the budgets while non -water conscious customers are 'charged' for water they are wasting. Water budget based rates can be used to manage water resources both.during "drought" situations and on an on -going basis to, result in permanent water savings. Irrigation or water system components that may need repair or adjustments that might otherwise go unseen can be flagged. Environmental benefits also accrue by reducing water runoff and the trar1sport of 24 Agreement 4600008312 Municipal Water District of Orange County Budget Based Rates in Orange County for Water Management and Droughts Drought Grant sediments and contaminants into waterways, streams and the ocean. Certain.water budget rate structures are known to improve revenue instability, a financial concern when designing conservation rate structures. These types of rates also result in a reduction in peak demand,.which provides financial savings in capital improvement costs.- Savings in.treatment costs on the sewer side -also result. Deliverables The Grantee is responsible for the following` deliverables: Quarterly reports documenting progress, task completion, and project success as detailed in Exhibit B; Attachment 1. Draft final report and associated data at Agreement end date, detailed in Exhibit B, Attachment 2. Final report due approximately two months following the Agreement end date, as detailed in Exhibit B, Attachment 2. Annual Report of Benefits and Costs for 5 consecutive years, as detailed in Exhibit B, Attachment 3. Projected benefits will be validated through data analysis and reported according . to Monitoring and Verification Plan. B-3 Project Monitoring and Evaluation Plan Pre - Proiect Conditions Baseline Data Assumptions and Accuracv of Data The pre - project data exist in documents such as the Orange County Water Agencies 2007 Water Rates and Water System Operations and Financial Information Report. Proposed Task 9 provides baseline data which includes agency - specific costs and revenue requirements. Monitodrin Plan and Performance Measures The Monitoring Plan will include annual water use information and _performance measures such as total and unit water use (per person, per residential.unit, per employee, etc). Post Proiect Verification of Results and Benefits Comparison to customer and total - annual use will be made to evaluate temporal water savings towards the 15% goal. 25 Agreement 4600008312 Municipal Water District of Orange County Budget Based Rates in Orange County for Water Management and Droughts Drought Grant Estimated Monitoring and Evaluation Costs Up -front billing system software modifications to enable monitoring report generation costs are estimated at $10,000 per agency. The annual report generation and evaluation cost are estimated at $5,000 per agency. B=4 Qualification of Applicants and Cooperators Grantee is the third largest member agency of Metropolitan Water District and serves a population of about 2.3 million residents through 28 client agencies. Grantee has been instrumental in coordinating implementation of water conservation programs on a regional basis in Orange County since the early 1990's and was one of the first agencies to sign the California Urban Water Conservation Council (CUWCC) MOU for implementation of the BMPs. ' Grantee has a.nurriber of ongoing programs such as this where.programs are facilitated for a large number of agencies to gain economy of scale and where the management and administration of the program can be centered in one location for the benefit of many agencies. Currently, Grantee is administering a vartety- of programs including SmarTimer and Sprinkler Nozzle Rebates, Industrial Process Improvements, Toilet and Clothes Washer Rebates and plumbing fixture rebates for - businesses operating in Orange County. For.this project, 11 of our agencies will be participating representing over a.million residents and 230,000 AF of water sales on an annual basis. The numbers in the brackets indicate population served and total water sales acre -feet in FY 2006 -071, respectively. The 11 cooperating agencies include City of Tustin.(62,100; 13,21 1), City of Buena Park (82,450; 18,402), City of Huntington Beach (196,954; 31,649 ), Yorba Linda Water District (75,400; 24,021), Laguna Beach County Water District (22,000; 4,105), El Toro_ Water District (50;800; 11,81$), Moulton Niguel Water District (165,918; 41,682), Trabuco Canyon Water District (14,335; 5,114), Santa Margarita Water District (160,000; 39,310), the City of Garden Grove (171,000; 34,076) and South Coast Water District (41,600, 8,373). Malcolm Pirnie — Red Oak Division - Red Oak will be the consultant for Grantee and its client agencies. Red Oak consulting is one of the leading firms that specialize in analyzing and implementing water budget based rate structures. Red Oak has shaped and developed the industry's standards by.writing its leading manuals and speaking/teaching at national conferences. Red Oak's Information Management practice is uniquely qualified to assist in the Customer Information System and Utility Billing (CIS /UB) assessment task. Red Oak has awide range of experience in all facets of CIS /UB, ranging from assessment of business processes related to CI$ /UB, to assisting in solution evaluation, selection and procurement, to project implementation assistance, to actual modifications of custom billing systems. Red Oak's Information Management team also has a strong IT capability, having developed numerous custom 26 Agreement 4600008312 Municipal Water District of Orange County Budget Based Rates in Orange County for Water Management and Droughts Drought Grant Management team also has a strong IT capability, having developed numerous custom solutions for our clients, in areas related to billing and beyond. Digital Map Products - Grantee will utilize the services of Digital Map Products or another provider of similar information to develop estimates of irrigable area and monthly irrigation budgets for all parcels within the participating client agencies. This information is critical to the development of the irrigation water budget portion foreaeh customer and will provide the retail agencies with information that is not currently available. This information will then be entered into the modeling software to develop and test options for the rate structure tier width. Even if the irrigation budgets are not incorporated directly into the billing systems, they can be utilized to measure actual water use compared to budgeted water use and non - efficient water users for implementation of customer interventions. B -5 Outreach, Community Involvement, and Acceptance Outreach and community involvement activities are an important component of this project and-are covered in Task 7. Outreach will begin -in Month 12 and extends to the end of the second year_ Red Oak will develop generalized information templates available for use by each agency. The individual agencies will develop specific materials and approach to reach out to their customers. B-6 Budget (Exhibit C) The State's funding share will be for tasks identified in Exhibit C. Total State-share expenditure must not exceed $685,000.00. B -7 Schedule for Progress Reports and Payments: A Quarterly Project Progress Report and invoice is due every three months after execution of agreement. A Draft Final Report is due by the end of Agreement end date. A Final Report and Retention invoice is due two months following Agreement end date_ Annual Report of Benefits and Costs are due once a year for five consecutives years following the ariniversary of Agreement end date. The Agreement is executed on date that the Chief of Department of Water Resources, Office of Water Use Efficiency and Transfers signs, and terminated as specified in the SECTION 2 TERM OF STATE GRANT. 27 Agreement 4600008312 Municipal Water District of Orange County Budget Based Rates in Orange County for Water Management and Droughts Drought Grant Exhibit B - Attachment 1 DWR 2008 Urban Drought As Grant (Prop 50) Quarterly Progress Report. Date: Contract Number: Contractor: Contact Person: Phone: Email: Quarter End Date: Total State Funds Expended to Date: $ Signed, Reviewed by Designated Representative Progress Achieved: Funds Expended Deliverable '% Complete (DWR Grant) {Local Share) Task 1 (Description) Task 2 (Description) Task 3 Total (Description) Task 4 (Description) Activities Performed: Municipal Water District of Orange County Budget Based Rates in Orange County for Water Management and Droughts Drought Grant Describe the activities and deliverables completed during the reporting period; State the progress toward completion of the tasks, compared to the Project schedule. is the project on schedule or are there problems and delays? Description of Estimated Benefits to Date: Water — Quantity_— Local and.State (list units in acre feet) Annual water savings reported as: • Recoverable (applied water reduction); • Irrecoverable (real water or net water savings); Total water savings for the life of the project reported as: • Recoverable. (applied water reduction); • Irrecoverable (real water or net water savings); List targeted watershed, rivers and tributaries conveying water to the Bay- Delta. In- stream Flow — Local and State (list units in acre feet) Water Quality — Local and State Drought Mitigation(s) Water Shortage Management Energy - Local and State (list units in kilowatts) G Energy savings Next Quarter Projections: (Describe Planned -activities forthe next quarter Please submit one original and one copy of the progress report. 29 Agreement 4600008312 Municipal Water District of Orange County Budget Based Rates in Orange County for Water Management and Droughts Drought Grant Exhibit B= Attachment 2 DWR 2008 Urban Drought Assistance Grant (Prop 50) Draft /Final Reports Date: Contract Plumber: Grantee: Contact Person: Phone: Email: Description of the Project o Describe the project Description of Project Goals and Objectives List the original goals and objectives; o . Detail of changes and /or adjustments made during the project; . o Detail of causes to support changes andlor adjustments. Description of Benefits Water Quantity — Local and State (list units in acre feet) Annual water savings reported as: • Recoverable (applied water reduction); • Irrecoverable (real water or net water savings); Total water savings for the life of the project reported as: o _ Recoverable (applied water reductiori); Irrecoverable (real water or net water savings); C List targeted watershed,. rivers and tributaries conveying-water' to the Bay- Delta. In- stream Flow — Local and State (list units in acre feet) List targeted watershed, rivers and tributaries conveying water to the Bay - Delta. Water Quality — Local and State o List water savings in acre feet; List targeted watershed, rivers and tributaries conveying water to the Bay - Delta. 30 Drought Mitigation(s) — Water Shortage Mana ement- Municipal Water District of Orange County Budget Based Rates in Orange County for Water Management and Droughts Drought Grant EnEnroy— Local and State (list energy units in kilowatts) Energy savings Other — Include economic or environmental benefits if an Tasks and Statement of Work: As'identified in the Contract Detail of changes and /or adjustments throughout the project Detail of causes to support changes and /or adjustments' o As identified in the Contract Monitoring and Assessment: U Detail of changes and /or adjustments throughout the p role., Detail of causes to-suppo rt changes and /or adjustments Budget:. Detail of changes and /or adjustments throughout the project Detail of causes to support changes and /or adjustments Deliverables: Detail of changes and /or adjustments throughout the project Detail of causes to support changes and /or adjustments Schedule or Timeline for Progress /Payment/Final Report: .O Detail of changes and /or adjustments throughout the project Detail of causes to support changes and /or adjustments Cooperators: • Description of each cooperator /sub - contractor • Detail. of each cooperators performance • Detail of each cooperators impact on the project outcome Final Statement: Summary of expected and realized outcome 31 Agreement 4600008312 Municipal Water District of Orange County Budget Based Rates in Orange County for Water. Management and Droughts Drought Grant Exhibit B- Attachment 3 DWR 2008 Urban Drought Assistance Grant (Prop 5o) Post Project Annual Report of Benefits & Costs Annual reports of benefits and costs are required to be submitted for 5 consecutive years after the contract end date. Date: Description of Benefits and Costs • Was there any revision in benefits and costs since the completion of the project; • Describe the impacts of the implementation of the project on the Grantee's water management since the project was completed. Water Quantity — Local and State (list units in acre feet) Annual water savings reported as: Recoverable (applied water reduction); Irrecoverable (real Water or net water savings). Total water savings for the life of the project reported as: o Recoverable (applied water reduction); Irrecoverable. (real water or. net water savings); List targeted watershed, rivers and tributaries conveying water to the Bay- Delta. In- stream Flow— Local, and State (list units in acre feet) . P List targeted watershed, rivers and tributaries conveying wafer to the Bay - Delta. Water Quality — Local and State List targeted watershed, rivers and tributaries conveying water to the Bay- Delta. Drought Mitiaation(s)- Water Shortage Management - Energy — Local and State (list units in kilowatts) Energy savings Other - U Include economic or environmental benefits if.any. 32 Municipal Water District of Orange County ' Agreement 4600()0831� Budget Based Rates in Orange County for Water Management and Droughts Drought Grant Exhibit C Project Casts Attachment B Raftelis Financial Consultants Proposal for MWDOC iE:3 RFC RAFTELIS FINANCIAL CONSULTANTS, INC. July 15, 2010 201 S. Lake Ave, Suite 301 Phone 626.583.1894 www.raftelis.com Pasadena • CA • 91101 Fax 626.583.1411 Mr. Karl Seckel Assistant General Manager Municipal Water District of Orange County P.O. Box 20895 Fountain Valley, CA 92728 Subject: Scope of Service for Water Budget Meetings and Evaluation Dear Mr. Seckel• Raftelis Financial Consultants, Inc. (RFC) is pleased to present this scope of service to assist the Municipal Water District of Orange County (District) in coordinating, educating, and evaluating the Water Budget Rate Study for the Department of Water Resources (DWR) Grant. The scope for the various tasks is shown below. SCOPE OF WORK Task 1 — Attend and Participate in District Meeting(s) RFC staff will attend, participate, and present information at District sponsored or authorized meetings. The District will specify which meeting(s) RFC will attend and the level of participation required. This could, include the kick off meeting, educational meetings with the stakeholders and/or elected officials on the benefits and challenges associated with water budget rates or conference calls with the District to discuss the logistics of interfacing with staff for the DWR grant. In meeting(s) where RFC has a speaking role, RFC staff will prepare the appropriate PowerPoint presentation and provide this to the District. Meetings: Up to five (5) site meetings; 8 hours per meeting including preparation time. Deliverable: PowerPoint presentation, when applicable. Task 2 — Provide General Input and Assistance to District for Grant Management RFC staff will provide input and assistance to District staff as requested in the following areas: o Provide input to the Member Agencies on how to handle particular issues that may arise during the grant administration. DWR Grant Assistance Page I o Look for opportunities for furthering common efforts among the agencies related to implementation of budget based tiered rates. A budget of 40 hours has been allocated to accomplish these tasks. Task 3 — Evaluate Water Budget Savings Part of the requirement of the DWR grant is for the District to evaluate the savings that can be attributed to the implementation of a water budget rate structure. Water budget rate structures have empirically shown water savings of between 10 to 20 %. To conduct this analysis, RFC will use the double difference approach, a standard statistical approach, when conducting project evaluation. To calculate the potential water savings, RFC will use two sets of data, one from agencies that implemented a water budget rate structure and the other from agencies that have not participated, which is the control group. In the ideal world, the only difference between these two agencies is that one participated and the other did not. Based on the single family data that the District provides to RFC, RFC will calculate the average water use by account and, if available, by parcel size. RFC will then compare the difference between the water use prior to and after the implementation of a water budget rate structure. This time period difference will also be calculated for the control group. Then, RFC will calculate the difference between the two groups to estimate the actual savings that can be attributed to the water budget rate structure. Meetings: None. Deliverable: Technical memo (3 to 5 pages) that shows the steps taken to conduct the analysis and the estimated savings that can be attributed to the water budget rate structure. Estimated hours: 100 hours Task 4 — Annual Update on Evaluate Water Budget Savings Based on the work developed in Task 3, RFC will update this analysis on a yearly basis for five years for up to five participating agencies and five control groups. Meetings: None. Deliverable: Update the technical memo from Task 3 on an annual basis for five years. Estimated hours estimate for each subsequent years calculations: 40 hours DWR Grant Assistance Page 2 FEES RFC will perform the services described above on a time and material basis assuming the estimated hours shown in the table below. Tasks 1, 2 and 3 will be conducted for a not to exceed amount of $36,350. The table below shows the breakdown of cost by tasks. FEE Meetings Gaur Attend and Participate in District Meeting(s) 5 40 Provide General Input and Assistance 40 Evaluate Water Budget Savings -1st Year 20 Total estimated hours 100 Hourly rates $ 200 $ Professional Fees $ 20,000 $ Totalfees $ Estimated expenses $ Total Fees and Expenses $ Fin Cons Total $ 8,000 $ 8,000 80 $ 18,000 80 $ 34,000 $ 2,350 $ 36,350 The billing rates for Task 4 will be based on RFC standard rates in the respective year. It has been a pleasure working with you in the development of this scope of work and we look forward to assisting you with this important study. If you have any questions, please call Sanjay Gaur at (213) 327 -4405. Respectfully submitted, RAFTELIS FINANCIAL CONSULTANTS, INC. 0 ILa Sudhir Pardiwala Vice President Accepted by: MUNICIPAL WATER DISTRICT OF ORANGE COUNTY DWR Grant Assistance Page 3 RFC RAFTELIS FINANCIAL CONSULTANTS, INC. July 15, 2010 201 S. Lake Ave, Suite 301 Phone 626.583.1894 www.raftelis.com Pasadena • CA • 91101 Fax 626.583.1411 Mr. Karl Seckel Assistant General Manager Municipal Water District of Orange County P.O. Box 20895 Fountain Valley, CA 92728 Subject: Scope of Service for Water Budget Meetings and Evaluation Dear Mr. Seckel: Raftelis Financial Consultants, Inc. (RFC) is pleased to present this scope of service to assist the Municipal Water District of Orange County (District) in coordinating, educating, and evaluating the Water Budget Rate Study for the Department of Water Resources (DWR) Grant. The scope for the various tasks is shown below. SCOPE OF WORK Task 1 — Attend and Participate in District Meeting(s) RFC staff will attend, participate, and present information at District sponsored or authorized meetings. The District will specify which meeting(s) RFC will attend and the level of participation required. This could include the kick off meeting, educational meetings with the stakeholders and/or elected officials on the benefits and challenges associated with water budget rates or conference calls with the District to discuss the logistics of interfacing with staff for the DWR grant. In meeting(s) where RFC has a speaking role, RFC staff will prepare the appropriate PowerPoint presentation and provide this to the District. Meetings: Up to five (5) site meetings; 8 hours per meeting including preparation time. Deliverable: PowerPoint presentation, when applicable. Task 2 — Provide General Input and Assistance to District for Grant Management RFC staff will provide input and assistance to District staff as requested in the following areas: 0 Provide input to the Member Agencies on how to handle particular issues that may arise during the grant administration. DWR Grant Assistance Page 1 o Look for opportunities for furthering common efforts among the agencies related to implementation of budget based tiered rates. A budget of 40 hours has been allocated to accomplish these tasks. Task 3 — Evaluate Water Budget Savings Part of the requirement of the DWR grant is for the District to evaluate the savings that can be attributed to the implementation of a water budget rate structure. Water budget rate structures have empirically shown water savings of between 10 to 20 %. To conduct this analysis, RFC will use the double difference approach, a standard statistical approach, when conducting project evaluation. To calculate the potential water savings, RFC will use two sets of data, one from agencies that implemented a water budget rate structure and the other from agencies that have not participated, which is the control group. In the ideal world, the only difference between these two agencies is that one participated and the other did not. Based on the single family data that the District provides to RFC, RFC will calculate the average water use by account and, if available, by parcel size. RFC will then compare the difference between the water use prior to and after the implementation of a water budget rate structure. This time period difference will also be calculated for the control group. Then, RFC will calculate the difference between the two groups to estimate the actual savings that can be attributed to the water budget rate structure. Meetings: None. (Deliverable: Technical memo (3 to 5 pages) that shows the steps taken to conduct the analysis and the estimated savings that can be attributed to the water budget rate structure. Estimated hours: 100 hours Task 4 — Annual Update on Evaluate Water Budget Savings Based on the work developed in Task 3, RFC will update this analysis on a yearly basis for five years for up to five participating agencies and five control groups. Meetings: None. (Deliverable: Update the technical memo from Task 3 on an annual basis for five years. Estimated hours estimate for each subsequent years calculations: 40 hours DWR Grant Assistance Page 2 FEES RFC will perform the services described above on a time and material basis assuming the estimated hours shown in the table below. Tasks 1, 2 and 3 will be conducted for a not to exceed amount of $36,350. The table below shows the breakdown of cost by tasks. FEE Meetings Gaur Fin Cons Total 1. Attend and Participate in District Meeting (s) 5 40 - 2. Provide General Input and Assistance 40 3. Evaluate Water Budget Savings -1st Year 20 80 $ 18,000 Total estimated hours 100 80 Hourlyrates $ 200 $ 175 Professional Fees $ 20,000 $ 14,000 Total fees $ 34,000 $ 34,000 Estimated expenses $ 2,350 Total Fees and Expenses $ 36,350 $ 36,350 The billing rates for Task 4 will be based on RFC standard rates in the respective year. It has been a pleasure working with you in the development of this scope of work and we look forward to assisting you with this important study. If you have any questions, please call Sanjay Gaur at (213) 327 - 4405. Respectfully submitted, Accepted by: RAFTELIS FINANCIAL MUNICIPAL WATER DISTRICT OF CONSULTANTS, INC. ORANGE COUNTY IL� By:_ Sudhir Pardiwala Vice President Title: DWR Grant Assistance Page 3 Attachment C Red Oak Consulting Invoices /Proposal For Newport Beach P A T H W A Y S REIDAK • D CONSULTING • A DIVISION Or MALCOLM PIPNI[ Bill to: City of Newport Beach 3300 Newport Blvd, Newport Beach, CA 92658 -8915 Attention: Steve Myrtey P,B, Utilities Director Reference: Newport Beach Water Raze Study T O L A S T I N G S O L U T I O N S Nom r:l000a3ao3 �, ' June 04, 2008 WI& Project Number(s): 5317004 Statement Number 2 Invoice for Professional Services provided through Jane 04, 2008 Contract Summary $98,1 .00 22.60 % Complete To Date _... - - " "' 9,932.00 Less Previously Billed }"'�„- ,J•;,•, v,.x':- `. --'x`1 7 $7, lz= Amount Due This Invoice 11 , jU� 2 `t. S12,220.00 Remit Payments only to: I 1 t� ff.B1AtC0 y wire transfer please direct to: MALCOLM PJRNIE, INC. � �i }_ . LM PIRNIE, INC. 23444 Network Place or ABA# 021000021 Chicago, 11, 60673 -1234. Account # 128035990 I Swift # CIiASUS33 .Please reference invoice number on payment: 100083803 Federal Tax ID Number: 13- 2653703 GOOD /SERVICES RECEI ED DATE: DEPT. PO /R#: 4BUDGETRUTH, SCola, .o� - o. Project Nam be4s): 5317004 Statement N0[n0eZ,-r- Invoice for Professional Semices provided through April 22, 2008 Contract Summary $88,177-00 8.75 % Complete To Date $7,712.00 Less Previously Billed Amon 0 oval 2 00 .. ... ..... Remit Payments only to: 7f you wlsb to pay by wire transfer please direct to; &MAL1COLMP1RN1EJNC0, I MALCOLM PIRN11g, INC. 23444 Network Place or ABA #021DO0021 Chicago, IL 60673-1234 1 Account # 128035990 Swift # CHASUS33 !tn! �fhwdco number on payment. 10 WW@9 Federal Tax ED Number: 13.2653703 ov. To D/5EPNICES RECEIVED S'15 _ DEPT. --U�& BUDGET#: RUTH. SIG: P A T _V--W—\A Y a T 0 L A S T I N G S 0 L U T 1 0 N S REBDAK AV U VPIRN CONSULTI A DIVISION OF MALCOLM Nam 10079228:9) Bill to: City of Newport Beads April 22, 2008``- 3300 Newport Blvd. Newport Beach, CA 92658-8915 Attention: Steve Myrter, P.E. Utilities Director Reference: Newport Beach Water.Rate Study Project Nam be4s): 5317004 Statement N0[n0eZ,-r- Invoice for Professional Semices provided through April 22, 2008 Contract Summary $88,177-00 8.75 % Complete To Date $7,712.00 Less Previously Billed Amon 0 oval 2 00 .. ... ..... Remit Payments only to: 7f you wlsb to pay by wire transfer please direct to; &MAL1COLMP1RN1EJNC0, I MALCOLM PIRN11g, INC. 23444 Network Place or ABA #021DO0021 Chicago, IL 60673-1234 1 Account # 128035990 Swift # CHASUS33 !tn! �fhwdco number on payment. 10 WW@9 Federal Tax ED Number: 13.2653703 ov. To D/5EPNICES RECEIVED S'15 _ DEPT. --U�& BUDGET#: RUTH. SIG: P A T N W A V S T O L A S T I N G S O L U T I O N S REMAK e 0 e CpNSULTIN Ca • A DIVISION OF MALCOLM PINNI tV) EWGIC '. Number: 100089700 \:•';:; �`�� Bill to: City of Newport Beach November 14, 2008 3300Newport Blvd, GOOD %S Newport Beach, CA 92658 -8915 ryG�yQOD%S REDBTE: _ DEPT. Utilities Director P OM4 B� . BUDGET& 0° Reference: Newport Beach Water Rate study -- AUTli. SiG• ,jam ProjeA Numbet(s): 5317004 _ - _ StatementNumbA Invoice for Professional Services provided tbrough November 14, 2008 Contract Summary 38.40 %Complete To Date Less Previously Billed Amount Due This Invoke Remit Payments only for MALCOLM PIRNIC, INC. 23444 Network Place Chicago, IL 6D673-1234 A1.COL8 ABA #02168x021 Account III 128035990 Swift # CB"A,SUS33 Please reference invoice number on payment: 100089700 Federal Tax ID Number. 13 - 2653703 $S V77.00 77.00 . I ( $33.8 ,QO $1300 wine transfer plerrse direct to: INC, 0,`10; G� P H W A Y S 7 0 L A S T I N G 5 0 L U T 1 0 N 5 °n o REBDAK 0 ° ° CONSULTING • A DIVISION OF MALCOLM PINNIC Nnmb r: 100093975 Bill to: City of Newport Beach 3300 Newport Blvd. Newport Beach, CA 9265&8915 Attention: Mr George Murdoch Utilities Director Reference: Newport Beach Water Rate Study 5317004 Invoice for Professional Services provided January 01, 1900 through March 17,209 Contract Summary .5335 %Complete To Date Less Previously Billed Amount Due This Invoice Remit Payments only to: MALCOLM PIRNM INC. 23444 Network Place Chicago, IL 60673 -1234 Please reference Invoice number on payment: 100093975 Faeral Tax ID Nomben 13.2653703 t,lei Malcolm Pimle refers to Malcolm Pirnie, Im and He stobsldtarles and affiliates. $88,177.00 T--T— $47,044.00 �`• 3 0 ..�, k $13,131.00 If you wish to pay by wire transfev please dimet tot MALCOLM PIRNM INC. or ABA 6 021000021 w• Account N 128035990 1 swift ti cE[ASVS33 Please reference Invoice number on payment: 100093975 Faeral Tax ID Nomben 13.2653703 t,lei Malcolm Pimle refers to Malcolm Pirnie, Im and He stobsldtarles and affiliates. ° o REDDAK ° 00 G O ° CONSULTING A DIVISION Or WALeo LM PIRRI[ P A T N. W A Y S T O L A S T III I N G ,S O L U T 1 0 N 5 a ('= Bill to: City of Newport Beach - April 29. 2009 3300 Newport Blvd, Newport Beach, CA 97658 -8915 Attention: Mr. George Murdoch Utilities Director Reference: Newport Beach Water Rate Study Project Number(s): 5317004 .. Statement Number. 5 Invoice for Professional Services provided through April 28, 2009 Contract Summary 72.38 %Complete To Date Less Previously Billed Amount Due This Invoice Remit Payments only to: MALCOLM PIRPIIE, INC. 23444 Network Place Chicago, IL 60673.1234 If you wish to pay by wire transfer please direct to: MALCOLIYI PIRNM INC. OP 1 ABA 9 0210 0 01121 Account #128035990 Swift ff CHASUS33 Please reference invoice number on payment: 100093529 Federal Tax ID Number: 13-2653703 4m tt•i1- � A4 i ` �" •� GOODSjS�R�IlCE5 REC €IVED BUDGM Malcolm Pimie refers to Malcolm Plrnle, Inc. and Its subsidiaries and affiliates. ' P A T H W A Y S• TO. L A S T I N G 5 0 L U T 1 0 N 5 E s500) REEDAK ° CONSULTING v �� • A DIVISION OF MALCOLM PIRNIE INVOICE VOICE Number: 100109564 Bill to: City of Newport Beach June 07, 2010 3300 Newport Blvd. Newport Beady CA 92658 -8915 Attention: Mr. George Murdocb Utilities Director Reference: Newport Beach Water Rate Study Project Number(s): 5317004 Statement Number: 6 Invoice for Professional Services provided April 29, 2009 through May 25, 2010! Contract Snromary $97 677. 100.00 % Complete To Date 677.00 Less Previously Billed $63,824.00 Amount Due This Invoice $27,8 0�� Remit Payments only to: If you wish to pay by wire transfer please direct to: MALCOLM PIRNIE, INC. MALCOLM PIRNIE, INC. U 23444 Network Place or ABA # 021000021 Chicago, IL 6067 3-1234. I Account # 128035990 Swift #CHASUS33 Please reference Invoice number on payment: 100109564 Federal Tax ID Number: 13- 2653703 1-Y P4 !UN 15 2010 pp .I1,p�c '"tiVED �O:1 i•7y r'Fy °",•l /U?1} r �i.I SSDD ��.iy iliv J 0 Malcolm Pirnle refers to Malcolm Pirnle, Inc. and its subsidiaries an d affiliates. , P A T H W A Y 5 T O L A S T I N G 5 0 L U T I O N S ° o o° REIDAK CONSULTING • A °IV161°X OF NALC°LM PIRNIL I V ORICIE Number: 100109907 Bill to: City of Newport Beach June 16, 2010 3300 Newport Blvd. Newport Beach, CA 92658=8915 Attention: Mr, George Murdoch Utilities Director Reference: Newport Beach Water Rate Study Project Number(s): 5317004 Statement Number: 7 Invoice for Professional Services provided April 29, 2010 through May 25, 2010 Contract Surnmary 588,177.00 103.97 % Complete To Date $91,677.00 Less Previously Billed Amount Due This Invoice $88,177.00 $3„500.00 Remit Payments only to: if you wish to pay by wire transfer please direct to: MALCOLM PIRNIF„ INC. MALCOLM PIRNIE, INC. 23444 Network Plate or - ABA # 021000021 Chicago, IL 60673.1234 I Account # 128035990 Swift # CIIASUS33 Please reference invoice number on payment: 100109907 Federal Tax ID Number; 13- 2653703 Malcolm Pirnie refers to Malcolm Pirnle, Inc. and Its subsidiaries and affiliates. 10 © Exhibit A SCOPE of SERVICES Task 9 - Project Orientation Workshop Red Oak will conduct a Project Orientation workshop with City Staff. During this workshop, Red Oak will confirm the study objectives and gain a common understanding of project team's expectations. Prior to the Project Orientation workshop, Red Oak will provide the City with a preliminary data request list. During the workshop, Red Oak will discuss the data requirements to identify the appropriate source for that data within the City. Additionally, Red Oak will use this project orientation workshop to discuss the implications of Proposition 218 and review additional information that will be needed to complete the project. We will also review and discuss in detail the forecast assumptions and City policies to be used in the financial plan evaluation including: debt service coverage ratios, reserve requirements, etc. In addition, we will identify the cities to be included in the rate survey. Finally, we will clarify roles, communication procedures, the project schedule, and due dates for deliverables. Task 1 Delhrerables: 91 Data request o Minutes of the meeting at Project schedule o One project orientation meeting Task 2 - White Paper on Conservation Rate Structures and Props 218 Red Oak will produce a white paper that addresses the legal concerns associated with Prop 218 and conservation rate structures. The white paper goal will serve as an overview for Newport Beach City Attorneys on the rate equity issues associated with conservation rate structures and Prop 218. It will discuss the potential legal concerns and will request a legal response from City Attorneys. Task 2 Deliverables: o white paper that discusses the legal issues associated with conservation rate structures and Prop 218 cup Task 3 - 10 -Year Financial Plan Red Oak will use .f RECAST to develop financial planning models for the water for the ten-year study period. The financial plan analysis includes the following elements: Q Examination of the Metropolitan Water District of Southern California's (MWD) rate increases and evaluate demand projections for Newport Beach. We will develop different scenarios on both the demand for MWD imported water and operational practices to see how sensitive the ten -year financial plan will be to these factors. ® Revenue Analysis. Using the current demand for water, Red Oak will calculate revenue at current rates for the 10-year study period. o Revenue Requirements. A projection of operating expenses based on the utility's budget and a review of historical cost trends will be conducted in sufficient detail to: • Recognize types of expenses incurred by the system; • Project expenses for the study period; and • Recognize changes in certain costs consistent with changes in projected utility operations. o Bond Compliance Analysis. An analysis will be conducted to demonstrate that the covenants and financial requirements associated with any existing or proposed bond obligations and other debt instruments are complied with over the forecast period. o Reserve Requirements. An analysis will be conducted examine three reserve requirements that we typically recommend: • Operational and Maintenances. This is to satisfy yearly cash flow requirement. • CIP Reserves. This is annual contribution for future refurbishment programs. • Rate Stabilization Fund. This is hedge against volatility of revenue due to weather conditions, such as drought or periods of abnormal rain fall. Based on the above information, Red Oak will develop a ten-year revenue program that will maintain the water system and takes into account foreseeable risk, such as weather. We anticipate one meeting to confirm the revenue requirement with City staff members. This will ensure that all foreseeable costs are accounted for. Tash 3 Deliverables: o o Technical memorandum that highlights the assumptions used to develop the Ten -Year financial plan S Financial plan o One meeting to validate the assumptions associated with the financial plan Task 4 - Evaluating Customer Class For the City of Newport Beach, there are three steps required to evaluate customer class. The first is to examine prior justification of the current customer class. The second step is to examine individual accounts and group them by customer characteristics. The characteristics analyzed will include annual demands, seasonal demands, and monthly demands of water and peaking factors. The third step is to compare the customer class of Newport Beach with the preliminary customer class developed in the second step. Based on this analysis we will recommend changes to the customer classification if appropriate. We will also provide justification for our recommended changes. Task 44 ®elliverables: M Technical memorandum that evaluates the customer class and makes recommendation on potential changes Task 5 - Cost-of-Service analysis Once the financial plan has been developed, we will conduct the cost-of- service analysis to ensure each customer class pays its fair share of the cost. As mentioned, this will ensure that the proposed rate structure meets both the objectives of the City and the requirements of Proposition 218 and Government Code § 54999. In addition we will conduct a cost -of- service analysis following the standards of the American Water Works Association. There are two steps In this process, the functionalization of major and minor cost and the classification. The first step, functionalization of major and minor cost, is to assign cost drivers to each item in the ten-year financial plan. This will include all capital operations and maintenance costs. For water there are typically three types of cost drivers: is Normal delivery of water cost - This is the cost associated with the normal delivery of water, such as chemicals used for treatment. o Peaking cost - The cost is associated with meeting peak period water demands, such as pump stations. in Customer cost -The cost associated with non•consumptlon factors, such as customer support, meter reading and billing. o Other cost -The costs that are associated with social benefits, such as fire protection. Once we have assigned cost drivers to each line item in the financial plan, we will allocate these cost drivers to each customer class usage characteristics. This is the second step of the cost -of- service analysis, which is called classification. We will examine peaking factors, normal delivery of water and number of customers. The final result will be target revenue for each customer class that meets the requirement of Proposition 218 and bases for developing fair and equitable rates. Tash 9 Delhrerables: M Technical memorandum that summarizes the assumptions of the cost of service analysis Task 6 ° Rate Design Once the target revenues are estimated, we will develop rate structures that meet this revenue requirement. For water, there are three major steps. The first is to receive the billing database of the City's water accounts in a PC -based electronic format that can be used to develop a distribution pattern of water consumption. The second step Is to incorporate this information into our rate design model to conduct "what if" scenarios on different rate design structures. For instance the model will have the ability to determine the price of each block, given the block width. The last step is allocation of cost between fixed and volume components. This is an important issue due to the increase exposure of BMP 11, which is a conservation water rate sponsored by the California Urban Water Conservation Council. This BMP 11 states that at least 70% of total revenue should be generated from variable rates. In addition we will examine revenue volatility associated with each proposed rate structure and determine the reserve requirement associated with drought pricing. Task 7 - Workshop on Conservation fate Structure Once the @FORECAST model has been developed that incorporates the ten -year financial plan, the cost-of-service analysis and rate design, we will conduct a sensitivity analysis within the models. This step will examine different scenarios that may occur within the next ten years. In addition, we propose to conduct two workshops, where we will determine three water rate structures that are financially sustainable, legally justifiable and politically acceptable for the community of Newport Beach. The second workshop will be with the City Council where we will present the three defined water rate structures and the associated risk and benefit of each option. We will recommend a water rate structure for adoption to the City Council. Task 7 Deliverables: • Two rate workshop, one (1) with Senior Staff member, one (1) with City Council members • Memorandum that summarizes each Rate Workshop Task & - Prepare Draft Report We will prepare a draft report that encompasses theD1PRECAST model and integrates our findings from the previous tasks. We will provide a detailed, yet easy-to-read report for City staff and policymakers. In the case of the financial planning analysis, we will include the proposed revenue requirement and supporting documentation on how the proposed revenue requirement has taken into account highly probable risks, including fluctuation in revenue due to weather conditions. We will include a comparative matrix within the report that will identify three neighboring utility service providers' potable water rates in comparison to the City's current and proposed rates. We have found this comparative analysis to be a useful tool for elected officials and City staff in implementing new water rates. In addition, we will provide the City with twelve (12) copies of our draft report for review and comment. Task 8 C*Ilverables: m 12 copies of the Draft Report Task 9 - Review, Revise & Present Report We will review our draft report with City staff during a conference call. This conference call will allow us to identify and incorporate comments from the City's staff. Corrections and clarifications will be added to the final report to ensure full coverage and clear explanations. O � Following staff review and comment, we will present the final report, including the recommended rate structure, at one (1) Newport Beach City Council meeting. We are experienced in providing presentations to various stakeholders and legislative bodies. We are particularly skilled at presenting complex issues, such as rate studies, and presenting them to laypersons in an understandable and concise manner. We will provide the City with twelve (12) bound copies and one (1) unbound reproducible copy. We will also provide our report and model to the City on CD-ROM using MS Word, Adobe Acrobat, and MS Excel format. Task 9 Deliverables: is Present the final result of the Water Rate Study at one City Council Meeting 0 12 copies of the Final Report Task 10 - Mcdel Delivery and Training Over the course of this study, we will work with City staff to compile data and analyze results from our findings. During this process of information exchange and workshops, our Red Oak team will involve key City staff members in the details and the mechanics of the model. We find that "hands-on" training throughout the project is an effective way of keeping communication lines open and allowing for new ideas to be introduced. Following completion of the project, we will follow -up with a formal training session to review and demonstrate the key aspects of the models. The training will consist of reviewing methodologies used during the study and helping the City staff understand the financial planning and rate setting process, model design and layout, how to adjust key variables that support the "what -if' scenario development features of the model, and how to update the model with new budget, CIP, and revenue information for the ten year financial plan. At the completion of the training, we will provide the models in Microsoft Excel format to the City for its future use. Task 10 Deliverables: o Training for 0"1111C ST model 19 Completed RECAST model in Microsoft Excel format Meetings Summary We will participate in a total of six meetings consisting of: © One project orientation meeting in One revenue requirement meeting fl One rate workshop with Senior Staff members El Two presentation at a City Council Meeting o One training workshop on running and updating the model Data Requirements To complete our study, ideally, we request the following information from the City. This list is representative, rather than comprehensive. Additional information needs will be presented to City staff as the study proceeds. III The most recent Master Plan or other documentation that explains Capital Improvement Projects. This should include the projected number of customers, and costs broken down by growth and deficiency; o Financial statements or other documentation on the City of Newport Beach for the last five years. This would include all debt service payments and line item budgets; and IN Four years of the billing data in a PC format for the all water accounts. w 19 N N T a Y O u v C H L O Y B a 3 0 m m O� F Z t P i t - P N P � m uS O le to to e4i xi ix l410 R � a N a s � O � O s $ c a E Q Y $ f YVI F F F f Fes% F M t P i t 0 PATHWAYS Tif LASTING SOLUTIONS ° 0 c VuJliiJ/ ll \ ° O OO CONSULTING a A 0:11419N Of %ALCOtb P'HFIC EXHIBIT B Schedule of Billing Rates for 2008 Title Billing Rate Vice President $ 285 Associate II $ 250 Associate 1 $ 205 M3 $ 185 M2 $ 165 M1 $ 140 Admin $ 89 ° 725 South Figueme Sleet Suite 1540 ° Los Angeles CA 90017 e T (213) 6149002 e F (213) 6149003 ° w .redomkeomultiu&com _N m Y L C X E O Y Q N O a M C a !� C - @ M � w 00 N yj N o c O O _ Y -Q � y � C � D_ u .0 Y a o a@ � N O m u 6 N N v N � a C O O O C C U1 a O N w N U 00 a X C_ C 0! L w O) U Q Y f6 u O E O C y c C N N 0 ~ U X 0 N 0 w - N O C L - Y a C 3 o m E E Y N y M a M � m a w a Y 'u M i m l7 m e-I N M u r-I O n Y a/ L O C) O 0 O 0 O 0 O 0 O 0 O O O O O O O O O O O O O O O O O O O O p 0 0 0 0 O E O m O to a <t iri a O m° v O m 16 X Y n Lo N v0 ^ 00 w lD � N ci ti H N N^ a a � D_ O Q LL 0) Y r L m F- N Y E N O O 0 0 0 0 0 0 O O O O O 0 0 O O E O 0 O 0 O 0 O 0 O 0 O 0 0 O 0 0 O C o O C O 0 O x O 0 V V u] Ln t N n U1 I, m N N N -ZT N O N O zt N O N zr M Q C N C LL Y O (o N 0 0 0 0 0 0 O O O O O O U' C O O O O O O O O O O O O X O M LL M 00 w N 00 N O M d O M H O M d ^ N 1p to I� r tD n M n M 'y l0 Ury O O Y O K N ` M v O O v fl- '�^ -6 3 x x x x x x x x 00 Ni N m a a S p y �O 0 vii F U O U 0 O O i ry 0 O O w O O 4 on v u x x x x x x x x m m Q m � Y L t N v a o m o O m O C n O OD 12 > > > > > O) L O m Y > Y > d M Y Y j U m Q 01 � N U p p � u d v a O > 2r C OJ m L O Y O N L C Y c a v on In Y I- m N p p N L N O N a' i Attachment E MWDOC's DRUG AND ALCOHOL FREE WORKPLACE PROVISIONS Section 1. Introduction Using, possessing, purchasing, selling, negotiating sale or purchase or being under the influence of drugs, or being under the influence of alcohol, during working time, or on District premises, including parking lots, or while operating a personal vehicle on company business, is absolutely forbidden and will result in discharge or other discipline as the District deems appropriate. Section 2. Prescription Drugs: The use of prescription drugs which would not alter an employee's work performance is acceptable, if prescribed to the employee by a licensed healthcare provider. In the event there is a question regarding an employee's ability to perform assigned duties safely and effectively while using such drugs, clearance from a licensed health care provider may be required before the employee is allowed to resume the employee's regular duties. Section 3. Employees Duties and Responsibilities A. Notify their supervisor before beginning work when taking drugs (prescription or non - prescription), which the employee reasonably believes may interfere with the safe and effective performance of their duties; B. Not report to work, be at work, or work while under the influence of, or while his or her ability to perform job duties is impaired due to, on or off -duty alcohol or drug use; C. Not possess or use alcohol or impairing drugs or substances while on duty, at work, or working; D. Not directly, or through a third party, sell or provide drugs or alcohol to any person, including an employee, while either or both employees is on duty, at work, or working; E. Submit immediately to an alcohol or drug test when directed by a supervisor or manager; F. Provide, within 24 hours of request, bonafide verification of a current valid prescription for any potentially impairing drug or medication identified when a drug screen /test is positive. The prescription must be from a licensed health care provider and in the employee's name; and G. Report any conviction received pursuant to a criminal drug statute for violations for conduct occurring on or off District premises while conducting District business. A report of conviction must be made to the Administrative 21 Services Manager within five (5) days after conviction, as mandated by the Federal Drug -Free Workplace Act of 1988. H. The unlawful manufacture, distribution, dispensing, possession or consumption of any controlled substance is prohibited anytime an employee is on duty, at work or working. I. Any violation of this section and other provisions of this Policy may result in discipline, up to and including termination. Section 4. Alcohol at District Sponsored Events: With prior approval of Management and in Management's sole discretion, the District may allow employees to consume moderate amounts of alcohol at District sponsored social events outside of normal business hours where such use is appropriate in the circumstances. Employees who are found to be under the influence of alcohol, or who engage in misconduct at such events, are subject to discharge or discipline, in accordance with District processes and procedures. Section 5. Pre - Employment Vesting: A. As a condition of every offer of employment or any promotion or new assignment, the District reserves the right to require any new hire to undergo and successfully complete a blood, urine, or other chemical test for drugs or alcohol. B. The drug and /or alcohol test may test for any substance which could impair an employee's ability to perform the functions of their job effectively and safely, including, but not limited to, prescription drugs, alcohol, and other controlled substances. C. All testing (including sample collection, chain of custody and laboratory services) shall be conducted in accordance with the approved procedures of the substance Abuse and Mental Health Services Administration, formerly NJ DA. The results of testing shall be reviewed by a medical review officer, who shall be a licensed physician, possessing appropriate training, and knowledgeable about substance abuse disorders. D. Pre - employment drugs and /or alcohol test result. 1. A positive result form a drug and /or alcohol analysis may result in the applicant not being hired where the applicant's use of drugs and /or alcohol could affect requisite job standards, duties or responsibilities. 2. If a drug screen is positive at the pre - employment physical, the applicant must provide, within 24 hours of the request, bona fide verification of a valid current prescription for the drug identified in the drug screen. If the prescription is not in the applicant's name or the applicant does not provide acceptable verification, or if the drug is one that is likely ` *a to impair the applicant's ability to perform the job duties, the applicant may not be hired. Section 6. Reasonable Cause Testing: A. As a condition of continued employment, the District may require any employee to undergo and successfully complete a blood, urine, or other chemical test for drugs or alcohol whenever the District has reasonable suspicion to believe the employee is under the influence of or impaired by drugs or alcohol while on duty, at work, or working. B. A determination that an employee is under the influence of or impaired by drugs or alcohol will be based on specific personal observations of any of the following, which alone or in combination, may constitute reasonable suspicion depending upon the circumstances in which the behavior is observed and /or reported: 1. Bloodshot eyes; 2. Glassy eyes; 3. Dilated pupils; 4. Slurred Speech; 5. Odor on breath; 6. Drowsiness; 7. Euphoria; 8. Mood swings; 9. Inattentiveness; 10. Excitement and confusion 11. Irritability; 12. Aggressiveness; 13. Shaking or erratic movement; 14. Disorientation; 15. Unsteady walking and movement; 16. An accident involving District property, where it appears the employee's conduct is at fault; 17. Physical altercation; 18. Verbal altercation; 19. Unusual behavior; 20. Use or possession of alcohol, drugs or paraphernalia; and /or 21. Information obtained from a reliable person with personal knowledge. 23 C. Any Manager or supervisor requiring an employee to submit to a drug /and or alcohol test should document in writing the facts constituting reasonable suspicion that the employee in question is impaired or under the influence. A manager or supervisors failure to comply with this paragraph does not invalidate the directive to submit to testing. D. All testing will be conducted at a clinic or laboratory selected by the District, with appropriate safeguards for privacy, confidentiality, and accuracy. Test results will be kept confidential to the fullest extent required by law, and will be maintained separate from the individual's personnel file. All testing (including sample collection, chain of custody and laboratory services) shall be conducted in accordance with the approved procedures of the Substance Abuse and Mental Health Services Administration, formerly NIDA. The results of testing shall be reviewed by a medical review officer, who shall be a licensed physician, possessing appropriate training, and knowledgeable about substance abuse disorders. The manager of supervisor may arrange for the employee to be transported to a testing facility, and then home afterwards. The manager or supervisor may also notify appropriate law enforcement agencies. E. The reports or test results may be disclosed to District management on a strictly need -to -know basis and to the tested employee upon request. Disclosures, without patient consent, may also occur when: (1) the information is compelled by law or pursuant to a lawfully issued subpoena; (2) the information has been placed at issue in a formal dispute between the employee and the District; (3) the information is to be used in administering an employee benefit plan; or (4) the information is needed by medical personnel for the diagnosis or treatment of the patient who is unable to authorize disclosure. F. Managers and supervisors shall notify their department head or designee when they have reasonable suspicion to believe that an employee may have controlled substances in his or her possession or in an area not jointly or fully controlled by the District. If the department head or designee concurs that there is a reasonable suspicion of illegal drug possession, the department head shall notify the appropriate law enforcement agencies. Employees are required to cooperate with the District and its clinic or laboratory in conducting tests. Employees who refuse to undergo testing or who interfere with the testing process, including but not limited to interference by unreasonable delay or contamination or tampering of the sample, will be subject to immediate discharge or discipline. Employees who test positive, fail to cooperate with testing procedures, or otherwise violate this policy are subject to discharge or other discipline. In any case involving unusual or extenuating circumstances, the District in its sole discretion may allow an applicant or employee who tests positive to commence or continue employment, subject to the condition that the employee undergo some form of treatment for addictions or abuse of drugs and alcohol as 24 determined by the District, in its sole discretion and submit to periodic or random testing as required by the District. Section 7. Accommodation for Drug and Alcohol Rehabilitation Programs: The District will reasonably accommodate any employee who comes forward before violating this policy and requests to enter voluntarily into a drug or alcohol rehabilitation program. Such requests will be kept confidential as provided by law. Once an employee violates this policy, however, any request to enroll in a rehabilitation program in lieu of discharge or discipline will be left to the sole discretion of the District, and will require random testing and other necessary follow -up measures. Employees who wish to enroll in drug or alcohol rehabilitation are encouraged to come forward before they are found in violation of this policy. PAI