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HomeMy WebLinkAboutC-4023 - PSA for Consulting Services for Water Rate StudyPROFESSIONAL SERVICES AGREEMENT WITH RED OAK CONSULTING FOR CONSULTING SERVICES FOR WATER RATE STUDY THIS AGREEMENT is made and entered into as of this 26th day of February, 2008, by and between the CITY OF NEWPORT BEACH, a Municipal Corporation ( "City "), and RED OAK CONSULTING a division of MALCOLM PIRNIE, a New York Corporation whose address is 725 South Figueroa Street, Suite 1540, Los Angeles, California, 90017 ( "Consultant'), and is made with reference to the following: RECITALS A. City is a municipal corporation duly organized and validly existing under the laws of the State of California with the power to carry on its business as it is now being conducted under the statutes of the State of California and the Charter of City. B. City is planning to do a Water Rate Study. C. City desires to engage Consultant to provide consulting services for a Water Rate Study ( "Project'). D. Consultant possesses the skill, experience, ability, background, certification and knowledge to provide the services described in this Agreement. E. The principal member of Consultant for purposes of this Project shall be Sanjay Gaur. F. City has solicited and received a proposal from Consultant, has reviewed the previous experience and evaluated the expertise of Consultant, and desires to retain Consultant to render professional services under the terms and conditions set forth in this Agreement. NOW, THEREFORE, it is mutually agreed by and between the undersigned parties as follows: 1. TERM The term of this Agreement shall commence on the above written date, and shall terminate on the 315t day of January, 2009, unless terminated earlier as set forth herein. 2. SERVICES TO BE PERFORMED Consultant shall diligently perform all the services described in the Scope of Services attached hereto as Exhibit A and incorporated herein by reference. The City may elect to delete certain tasks of the Scope of Services at its sole discretion. • • 3. TIME OF PERFORMANCE Time is of the essence in the performance of services under this Agreement and the services shall be performed to completion in a diligent and timely manner. The failure by Consultant to perform the services in a diligent and timely manner may result in termination of this Agreement by City. Notwithstanding the foregoing, Consultant shall not be responsible for delays due to causes beyond Consultant's reasonable control. However, in the case of any such delay in the services to be provided for the Project, each party hereby agrees to provide notice to the other party so that all delays can be addressed. 3.1 Consultant shall submit all requests for extensions of time for performance in writing to the Project Administrator not later than ten (10) calendar days after the start of the condition that purportedly causes a delay. The Project Administrator shall review all such requests and may grant reasonable time extensions for unforeseeable delays that are beyond Consultant's control. 3.2 For all time periods not specifically set forth herein, Consultant shall respond in the most expedient and appropriate manner under the circumstances, by either telephone, fax, hand - delivery or mail. 4. COMPENSATION TO CONSULTANT City shall pay Consultant for the services on a time and expense not- to-exceed basis in accordance with the provisions of this Section and the Schedule of Billing Rates attached hereto as Exhibit B and incorporated herein by reference. Consultant's compensation for all work performed in accordance with this Agreement, including all reimbursable items and subconsultant fees, shall not exceed Eighty -Eight Thousand One Hundred Seventy -Seven Dollars and no /100 ($88,177) without prior written authorization from City. No billing rate changes shall be made during the term of this Agreement without the prior written approval of City. 4.1 Consultant shall submit invoices to City describing the work performed the preceding billing period. Consultant's bills shall include the name of the person who performed the work, a brief description of the services performed and/or the specific task in the Scope of Services to which it relates, the date the services were performed, the number of hours spent on all work billed on an hourly basis, and a description of any reimbursable expenditures. City shall pay Consultant no later than thirty (30) days after approval of the monthly invoice by City staff. 4.2 City shall reimburse Consultant only for those costs or expenses specifically approved in this Agreement, or specifically approved in writing in advance by City. Unless otherwise approved, such costs shall be limited and include nothing more than the following costs incurred by Consultant: 7 • A. The actual costs of subconsultants for performance of any of the services that Consultant agrees to render pursuant to this Agreement, which have been approved in advance by City and awarded in accordance with this Agreement. B. Approved reproduction charges. C. Actual costs and/or other costs and/or payments specifically authorized in advance in writing and incurred by Consultant in the performance of this Agreement. 4.3 Consultant shalt not receive any compensation for Extra Work performed without the prior written authorization of City. As used herein, "Extra Work" means any work that is determined by City to be necessary for the proper completion of the Project, but which is not included within the Scope of Services and which the parties did not reasonably anticipate would be necessary at the execution of this Agreement. Compensation for any authorized Extra Work shall be paid in accordance with the Schedule of Billing Rates as set forth in Exhibit B. 5. PROJECT MANAGER Consultant shall designate a Project Manager, who shall coordinate all phases of the Project. This Project Manager shall be available to City at all reasonable times during the Agreement term. Consultant has designated Sanjay Gaur to be its Project Manager. Consultant shall not remove or reassign the Project Manager or any personnel listed in Exhibit A or assign any new or replacement personnel to the Project without the prior written consent of City. City's approval shall not be unreasonably withheld with respect to the removal or assignment of non -key personnel. Consultant, at the sole discretion of City, shall remove from the Project any of its personnel assigned to the performance of services upon written request of City. Consultant warrants that it will continuously furnish the necessary personnel to complete the Project on a timely basis as contemplated by this Agreement. 6. ADMINISTRATION This Agreement will be administered by the Utilities Department. Steve Myrter shall be the Project Administrator and shall have the authority to act for City under this Agreement. The Project Administrator or his /her authorized representative shall represent City in all matters pertaining to the services to be rendered pursuant to this Agreement. 7. CITY'S RESPONSIBILITIES In order to assist Consultant in the execution of its responsibilities under this Agreement, City agrees to, where applicable: 3 i 41 A. Provide access to, and upon request of Consultant, one copy of all existing relevant information on file at City. City will provide all such materials in a timely manner so as not to cause delays in Consultant's work schedule. B. Provide blueprinting and other services through City's reproduction company for bid documents. Consultant will be required to coordinate the required bid documents with City's reproduction company. All other reproduction will be the responsibility of Consultant and as defined above. C. Provide usable life of facilities criteria and information with regards to new facilities or facilities to be rehabilitated. 8. STANDARD OF CARE 8.1 All of the services shall be performed by Consultant or under Consultant's supervision. Consultant represents that it possesses the professional and technical personnel required to perform the services required by this Agreement, and that it will perform all services in a manner commensurate with community professional standards. All services shall be performed by qualified and experienced personnel who are not employed by City, nor have any contractual relationship with City. By delivery of completed work, Consultant certifies that the work conforms to the requirements of this Agreement and all applicable federal, state and local laws and the professional standard of care. 8.2 Consultant represents and warrants to City that it has, shall obtain, and shall keep in full force in effect during the term hereof, at its sole cost and expense, all licenses, permits, qualifications, insurance and approvals of whatsoever nature that is legally required of Consultant to practice its profession. Consultant shall maintain a City of Newport Beach business license during the term of this Agreement. 8.3 Consultant shall not be responsible for delay, nor shall Consultant be responsible for damages or be in default or deemed to be in default by reason of strikes, lockouts, accidents, or acts of God, or the failure of City to furnish timely information or to approve or disapprove Consultant's work promptly, or delay or faulty performance by City, contractors, or governmental agencies. 9. HOLD HARMLESS To the fullest extent permitted by law, Consultant shall indemnify, defend and hold harmless City, its City Council, boards and commissions, officers, agents, volunteers and employees (collectively, the "Indemnified Parties) from and against any and all claims (including, without limitation, claims for bodily injury, death or damage to property), demands, obligations, damages, actions, causes of action, suits, losses, judgments, fines, penalties, liabilities, costs and Ell expenses (including, without limitation, attorney's fees, disbursements and court costs) of every kind and nature whatsoever (individually, a Claim; collectively, "Claims"), which may arise from or in any manner relate (directly or indirectly) to the negligence, recklessness, or willful misconduct of the Consultant or its principals, officers, agents, employees, vendors, suppliers, consultants, subcontractors, anyone employed directly or indirectly by any of them or for whose acts they may be liable or any or all of them. Notwithstanding the foregoing, nothing herein shall be construed to require Consultant to indemnify the Indemnified Parties from any Claim arising from the sole negligence, active negligence or willful misconduct of the Indemnified Parties. Nothing in this indemnity shall be construed as authorizing any award of attorney's fees in any action on or to enforce the terms of this Agreement. This indemnity shall apply to all claims and liability regardless of whether any insurance policies are applicable. The policy limits do not act as a limitation upon the amount of indemnification to be provided by the Consultant. 10. INDEPENDENT CONTRACTOR It is understood that City retains Consultant on an independent contractor basis and Consultant is not an agent or employee of City. The manner and means of conducting the work are under the control of Consultant, except to the extent they are limited by statute, rule or regulation and the expressed terms of this Agreement. Nothing in this Agreement shall be deemed to constitute approval for Consultant or any of Consultant's employees or agents, to be the agents or employees of City. Consultant shall have the responsibility for and control over the means of performing the work, provided that Consultant is in compliance with the terms of this Agreement. Anything in this Agreement that may appear to give City the right to direct Consultant as to the details of the performance or to exercise a measure of control over Consultant shall mean only that Consultant shall follow the desires of City with respect to the results of the services. 11. COOPERATION Consultant agrees to work closely and cooperate fully with City's designated Project Administrator and any other agencies that may have jurisdiction or interest in the work to be performed. City agrees to cooperate with the Consultant on the Project. 12. CITY POLICY Consultant shall discuss and review all matters relating to policy and Project direction with City's Project Administrator in advance of all critical decision points in order to ensure the Project proceeds in a manner consistent with City goals and policies. A 0 0 13. PROGRESS Consultant is responsible for keeping the Project Administrator and /or his /her duly authorized designee informed on a regular basis regarding the status and progress of the Project, activities performed and planned, and any meetings that have been scheduled or are desired. 14. INSURANCE Without limiting Consultant's indemnification of City, and prior to commencement of work. Consultant shall obtain, provide and maintain at its own expense during the term of this Agreement, a policy or policies of liability insurance of the type and amounts described below and in a form satisfactory to City. A. Certificates of Insurance. Consultant shall provide certificates of insurance with original endorsements to City as evidence of the insurance coverage required herein. Insurance certificates must be approved by City's Risk Manager prior to commencement of performance or issuance of any permit. Current certification of insurance shall be kept on file with City at all times during the term of this Agreement. B. Signature. A person authorized by the insurer to bind coverage on its behalf shall sign certification of all required policies. C. Acceptable Insurers. All insurance policies shall be issued by an insurance company currently authorized by the Insurance Commissioner to transact business of insurance in the State of California, with an assigned policyholders' Rating of A (or higher) and Financial Size Category Class VII (or larger) in accordance with the latest edition of Best's Key Rating Guide, unless otherwise approved by the City's Risk Manager. D. Coverage Requirements. i. Workers' Compensation Coverage. Consultant shall maintain Workers' Compensation Insurance and Employer's Liability Insurance for his or her employees in accordance with the laws of the State of California. In addition, Consultant shall require each subcontractor to similarly maintain Workers' Compensation Insurance and Employer's Liability Insurance in accordance with the laws of the State of California for all of the subcontractor's employees. Any notice of cancellation or non - renewal of all Workers' Compensation policies must be received by City at least thirty (30) calendar days (10 calendar days written notice of non- payment of premium) prior to such change. The insurer shall agree to waive all rights of subrogation against City, its officers, agents, employees and volunteers for losses arising from work performed by Consultant for City. 0 0 ii. General Liability Coverage. Consultant shall maintain commercial general liability insurance in an amount not less than two million dollars ($2,000,000) per occurrence for bodily injury, personal injury, and property damage, including without limitation, contractual liability. If commercial general liability insurance or other form with a general aggregate limit is used, either the general aggregate limit shall apply separately to the work to be performed under this Agreement, or the general aggregate limit shall be at least twice the required occurrence limit. iii. Automobile Liability Coverage. Consultant shall maintain automobile insurance covering bodily injury and property damage for all activities of the Consultant arising out of or in connection with work to be performed under this Agreement, including coverage for any owned, hired, non -owned or rented vehicles, in an amount not less than two million dollars ($2,000,000) combined single limit for each occurrence. iv. Professional Errors and Omissions Insurance. Consultant shall maintain professional errors and omissions insurance, which covers the services to be performed in connection with this Agreement in the minimum amount of two million dollars ($2,000,000). E. Endorsements. Each general liability and automobile liability insurance policy shall be endorsed with the following specific language: The City, its elected or appointed officers, officials, employees, agents and volunteers are to be covered as additional insureds with respect to liability arising out of work performed by or on behalf of the Consultant. ii. This policy shall be considered primary insurance as respects to City, its elected or appointed officers, officials, employees, agents and volunteers as respects to all claims, losses, or liability arising directly or indirectly from the Consultant's operations or services provided to City. Any insurance maintained by City, including any self- insured retention City may have, shall be considered excess insurance only and not contributory with the insurance provided hereunder. iii. This insurance shall act for each insured and additional insured as though a separate policy had been written for each, except with respect to the limits of liability of the insuring company. iv. The insurer waives all rights of subrogation against City, its elected or appointed officers, officials, employees, agents and volunteers. 7 0 0 V. Any failure to comply with reporting provisions of the policies shall not affect coverage provided to City, its elected or appointed officers, officials, employees, agents or volunteers. vi. The insurance provided by this policy shall not be suspended, voided, canceled, or reduced in coverage or in limits, by either party except after thirty (30) calendar days (10 calendar days written notice of non - payment of premium) written notice has been received by City. F. Timely Notice of Claims. Consultant shall give City prompt and timely notice of claim made or suit instituted arising out of or resulting from Consultant's performance under this Agreement. G. Additional Insurance. Consultant shall also procure and maintain, at its own cost and expense, any additional kinds of insurance, which in its own judgment may be necessary for its proper protection and prosecution of the work. 15. PROHIBITION AGAINST ASSIGNMENTS AND TRANSFERS Except as specifically authorized under this Agreement, the services to be provided under this Agreement shall not be assigned, transferred contracted or subcontracted out without the prior written approval of City. Any of the following shall be construed as an assignment: The sale, assignment, transfer or other disposition of any of the issued and outstanding capital stock of Consultant, or of the interest of any general partner or joint venturer or syndicate member or cotenant if Consultant is a partnership or joint- venture or syndicate or cotenancy, which shall result in changing the control of Consultant. Control means fifty percent (50 %) or more of the voting power, or twenty-five percent (25 %) or more of the assets of the corporation, partnership or joint- venture. 16. SUBCONTRACTING The parties recognize that a substantial inducement to City for entering into this Agreement is the professional reputation, experience and competence of Consultant. Assignments of any or all rights, duties or obligations of the Consultant under this Agreement will be permitted only with the express written consent of City. Consultant shall not subcontract any portion of the work to be performed under this Agreement without the prior written authorization of City. 17. OWNERSHIP OF DOCUMENTS Each and every report, draft, map, record, plan, document and other writing produced (hereinafter "Documents'), prepared or caused to be prepared by Consultant, its officers, employees, agents and subcontractors, in the course of implementing this Agreement, shall become the exclusive property of City, and City shall have the sole right to use such materials in its discretion without further compensation to Consultant or any other party. The City acknowledges and agrees that the interactive financial model utilized by Consultant, and demonstrated to, and delivered to City pursuant to this Agreement, is a proprietary and confidential Consultant service instrument, and is to be used soley for the financial analysis proposed by Consultant and is not to be resold or otherwise used for secondary commercial gain. The Consultant shall retain sole ownership of pre- existing proprietary property including the financial model. Consultant shall, at Consultant's expense, provide such Documents to City upon prior written request. Documents, including drawings and specifications, prepared by Consultant pursuant to this Agreement are not intended or represented to be suitable for reuse by City or others on any other project. Any use of completed Documents for other projects and any use of incomplete Documents without specific written authorization from Consultant will be at City's sole risk and without liability to Consultant. Further, any and all liability arising out of changes made to Consultant's deliverables under this Agreement by City or persons other than Consultant is waived against Consultant and City assumes full responsibility for such changes unless City has given Consultant prior notice and has received from Consultant written consent for such changes. 18. CONFIDENTIALITY All Documents, including drafts, preliminary drawings or plans, notes and communications that result from the services in this Agreement, shall be kept confidential unless City authorizes in writing the release of information or unless required to be disclosed by law or court order with notice to the City. 19. INTELLECTUAL PROPERTY INDEMNITY The Consultant shall defend and indemnify City, its agents, officers, representatives and employees against any and all liability, including costs, for infringement of any United States' letters patent, trademark, or copyright infringement, including costs, contained in Consultant's drawings and specifications provided under this Agreement. 20. RECORDS Consultant shall keep records and invoices in connection with the work to be performed under this Agreement. Consultant shall maintain complete and accurate records with respect to the costs incurred under this Agreement and any services, expenditures and disbursements charged to City, for a minimum period of three (3) years, or for any longer period required by law, from the date of final payment to Consultant under this Agreement. All such records and invoices shall be clearly identifiable. Consultant shall allow a representative of City to examine, audit and make transcripts or copies of such records and invoices during regular business hours. Consultant shall allow inspection of all work, data, Documents, proceedings and activities related to the Agreement for a period of three (3) years from the date of final payment to Consultant under this Agreement. M E 21. WITHHOLDINGS • City may withhold payment to Consultant of any disputed sums until satisfaction of the dispute with respect to such payment. Such withholding shall not be deemed to constitute a failure to pay according to the terms of this Agreement. Consultant shall not discontinue work as a result of such withholding. Consultant shall have an immediate right to appeal to the City Manager or his /her designee with respect to such disputed sums. Consultant shall be entitled to receive interest on any withheld sums at the rate of return that City earned on its investments during the time period, from the date of withholding of any amounts found to have been improperly withheld. 22. ERRORS AND OMISSIONS In the event of errors or omissions that are due to the negligence or professional inexperience of Consultant which result in expense to City greater than what would have resulted if there were not errors or omissions in the work accomplished by Consultant, the additional design, construction and /or restoration expense shall be borne by Consultant. Nothing in this paragraph is intended to limit City's rights under the law or any other sections of this Agreement. 23. CITY'S RIGHT TO EMPLOY OTHER CONSULTANTS City reserves the right to employ other Consultants in connection with the Project. 24. CONFLICTS OF INTEREST The Consultant or its employees may be subject to the provisions of the California Political Reform Act of 1974 (the "Act "), which (1) requires such persons to disclose any financial interest that may foreseeably be materially affected by the work performed under this Agreement, and (2) prohibits such persons from making, or participating in making, decisions that will foreseeably financially affect such interest. If subject to the Act, Consultant shall conform to all requirements of the Act. Failure to do so constitutes a material breach and is grounds for immediate termination of this Agreement by City. Consultant shall indemnify and hold harmless City for any and all claims for damages resulting from Consultant's violation of this Section. 25. NOTICES All notices, demands, requests or approvals to be given under the terms of this Agreement shall be given in writing, and conclusively shall be deemed served when delivered personally, or on the third business day after the deposit thereof in the United States mail, postage prepaid, first -class mail, addressed as 10 0 0 hereinafter provided. All notices, demands, requests or approvals from Consultant to City shall be addressed to City at: Attn: Steve Myrter Utilities Department City of Newport Beach 3300 Newport Boulevard Newport Beach, CA, 92663 Phone: 949-644-3011 Fax: 949 - 646 -5204 All notices, demands, requests or approvals from CITY to Consultant shall be addressed to Consultant at: Attention: Sanjay Gaur Red Oak Consulting 725 South Figueroa Street, Suite 1540 Los Angeles, CA 90017 Phone: (213) 614 -9002 Fax: (213) 614 -9003 26. TERMINATION In the event that either party fails or refuses to perform any of the provisions of this Agreement at the time and in the manner required, that party shall be deemed in default in the performance of this Agreement. If such default is not cured within a period of two (2) calendar days, or if more than two (2) calendar days are reasonably required to cure the default and the defaulting party fails to give adequate assurance of due performance within two (2) calendar days after receipt of written notice of default, specifying the nature of such default and the steps necessary to cure such default, and thereafter diligently take steps to cure the default, the non - defaulting party may terminate the Agreement forthwith by giving to the defaulting party written notice thereof. Notwithstanding the above provisions, City shall have the right, at its sole discretion and without cause, of terminating this Agreement at any time by giving seven (7) calendar days prior written notice to Consultant. In the event of termination under this Section, City shall pay Consultant for services satisfactorily performed and costs incurred up to the effective date of termination for which Consultant has not been previously paid. On the effective date of termination, Consultant shall deliver to City all reports, Documents and other information developed or accumulated in the performance of this Agreement, whether in draft or final form. 27. COMPLIANCE WITH ALL LAWS Consultant shall at its own cost and expense comply with all statutes, ordinances, regulations and requirements of all governmental entities, including federal, state, county or municipal, whether now in force or hereinafter enacted. 11 0 0 In addition, all work prepared by Consultant shall conform to applicable City, county, state and federal laws, rules, regulations and permit requirements and be subject to approval of the Project Administrator and City. 28. WAIVER A waiver by either party of any breach, of any term, covenant or condition contained herein shall not be deemed to be a waiver of any subsequent breach of the same or any other term, covenant or condition contained herein, whether of the same or a different character. 29. INTEGRATED CONTRACT This Agreement represents the full and complete understanding of every kind or nature whatsoever between the parties hereto, and all preliminary negotiations and agreements of whatsoever kind or nature are merged herein. No verbal agreement or implied covenant shall be held to vary the provisions herein. 30. CONFLICTS OR INCONSISTENCIES In the event there are any conflicts or inconsistencies between this Agreement and the Scope of Services or any other attachments attached hereto, the terms of this Agreement shall govern. 31. INTERPRETATION The terms of this Agreement shall be construed in accordance with the meaning of the language used and shall not be construed for or against either party by reason of the authorship of the Agreement or any other rule of construction which might otherwise apply. 32. AMENDMENTS This Agreement may be modified or amended only by a written document executed by both Consultant and City and approved as to form by the City Attorney. 33. SEVERABILITY If any term or portion of this Agreement is held to be invalid, illegal, or otherwise unenforceable by a court of competent jurisdiction, the remaining provisions of this Agreement shall continue in full force and effect. 34. CONTROLLING LAW AND VENUE The laws of the State of California shall govern this Agreement and all matters relating to it and any action brought relating to this Agreement shall be adjudicated in a court of competent jurisdiction in the County of Orange. 12 35. EQUAL OPPORTUNITY EMPLOYMENT Consultant represents that it is an equal opportunity employer and it shall not discriminate against any subcontractor, employee or applicant for employment because of race, religion, color, national origin, handicap, ancestry, sex or age. IN WITNESS WHEREOF, the parties have caused this Agreement to be executed on the day and year first written above. APPROVED AS TO FORM: C c �— City Attorney for the City of Newport Beach ATTEST: By LaVonne Harkless, City Clerk CITY'NEWPO— RT BEACH, A M isipalnC�r�or6tir lldwdrd Selich'Ma'y& for the City of Newport Beach CONSULTANT: By:� (Corporate Of(icer) Title QC�6.;'t a-cl-t}- I Print NameXt�cu, Byl�%l�CrGt" GCLZ't L (Financial Officer) Title: C fir) Print Name: .T*JlkELG V�/k Attachments: Exhibit A - Scope of Services/Schedule of Billing Rates Exhibit B - Schedule of Billing Rates for 2008 13 Exhibit A SCOPE OF SERVICES Task 1 - 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 Deliverables: ■ Data request ■ Minutes of the meeting ■ Project schedule ■ One project orientation meeting Task 2 - White Paper on Conservation Rate Structures and Prop 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: W White paper that discusses the legal issues associated with conservation rate structures and Prop 218 A5317O2 / ORA Pathways to Lasting Solutions -00 Task 3 - 10 -Year Financial Plan Red Oak will use eFORECAS'; to develop financial planning models for the water for the ten-year study period. The financial plan analysis includes the following elements: rA 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. &� 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. in 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. 19 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. Task 3 Deliverables: A531702/ORA Pathways to Lasting Solutions ■ Technical memorandum that highlights the assumptions used to develop the Ten -Year financial plan ■ Financial plan ■ 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 4 Deliverables: ■ 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: Normal delivery of water cost - This is the cost associated with the normal delivery of water, such as chemicals used for treatment. Peaking cost - The cost is associated with meeting peak period water demands, such as pump stations. A531702 / ORA Pathways to Lasting Solutions r� Customer cost - The cost associated with non -consumption factors, such as customer support, meter reading and billing. al 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. Task 5 Deliverables: ■ 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 Rate Structure Once the eFORECAS'i 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 A531702/ORA Pathways to Lasting Solutions -00 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 8 - Prepare Draft Report We will prepare a draft report that encompasses the eFORE_ 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 Deliverables: 0 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. A531702 / ORA Pathways to Lasting Solutions 0(\�__� 0 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: to Present the final result of the Water Rate Study at one City Council Meeting ■ 12 copies of the Final Report Task 10 - Model 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: ea Training for eFORECAST model iA Completed �IDFORECAST model in Microsoft Excel format A531702/ORA Pathways to Lasting Solutions t■ Meetings Summary We will participate in a total of six meetings consisting of: ■ One project orientation meeting ■ One revenue requirement meeting ■ One rate workshop with Senior Staff members ■ Two presentation at a City Council Meeting ■ 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. N 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; a 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 ® Four years of the billing data in a PC format for the all water accounts. A531702/ORA Pathways to Lasting Solutions W W LL �M MW 00W 0 AHC C N CQ C D ro O v - C Z N a) u N Ln V 41 L_ a Q C Ln C 0 U ru a� Y N .fl V) LnO Q Z) O L O C� L V) U1 �O N 0 z CD � n n m O m O Cli m c+� I di m N N m m n N n N n N m m m m (p V o arnp V m N N N N rn LqO ro C7 n n n v N V d y N N N N N N N d •' o � d d a O c m e C y A A N O d 1 A G d ` {l N H 3 _T A > r a a o U a E ry n o A A -o(2 C ? y O U -0 N > Cd N A U > C C A > > d 10 0 P d P O O. d d O a s d d W N a+ L Yd O L A > O a 3 d w u ¢ 3 d a` N V PI O Ifl N P m O• A N • PATHWAYS # L A S T I N G SOLUTIONS • 725 South Figueroa Street Suite 1540 • Los Angeles, CA 90017 • T (213) 6149002 • F (213) 6149003 • w .redoakcomulting.com 11 DD AK CONSULTING • A O+Yt OION Of XALCOLY P'RNIL 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 Figueroa Street Suite 1540 • Los Angeles, CA 90017 • T (213) 6149002 • F (213) 6149003 • w .redoakcomulting.com • CITY OF NEWPORT BEACH CITY COUNCIL STAFF REPORT ZOa3 Agenda Item No. 8 February 26, 2008 TO: HONORABLE MAYOR AND MEM13ERS OF THE CITY COUNCIL FROM: Utilities Department Steve Myrter, Utilities Director 644 -3411 or smvrter0citv.newport- beach.ca.us SUBJECT: APPROVAL OF PROFESSIONAL SERVCIES AGREEMENT WITH RED OAK CONSULTING FOR WATER RATE STUDY, BUDGET AMENDMENT Should the City enter into a contract with Red Oak Consulting to perform 'a water rate . studle ii-icluong evaloating the feasibility of implementing a more conservation- oriented water rat# structure? RECOMMENDATION: 1. Approve a professional services agreement with Red Oak Consulting at a not -to- exceed price of $88,177 and authorize the Mayor and City Clerk to execute the agreement. 2. Approve a budget amendment #BA- in the amount of $88,177 (move from water enterprise system reserve to the Utilities' professional and technical services account). DISCUSSION: Background: In July 2007, the Council determined that a water rate study would be conducted in fiscal year 2008. The Natural Resources Element, Chapter 10 of the City General Plan, further established policy NR 1.3 to explore the appropriateness of implementing a more conservation- oriented water rate structure. This policy was set as part of Water Supply Goal NR 1 to minimize water consumption though conservation methods and other • techniques. • Red Oak Consulting Approval Professional Services Agreement February 26, 2008 Page 2 • Staff developed a Request for Proposal (RFP) with a defined scope of services to perform a comprehensive water rate study including evaluating the feasibility implementing a conservation- oriented tiered and /or budget -based tiered water rate structure. Key deliverables of this study would include: 1. 10 -Year Financial Plan: Perform financial analysis to include an examination of projected imported water supply pass- through rate increases, possible future reductions of imported water supply allocations, capital improvement budgets, revenue analysis, revenue requirements, bond compliance analysis, and reserve requirements. 2. Cost-of-Service Analysis: Conduct cost of service analysis to ensure an equitable and fair rate structure design. Two primary steps would be performed in conducting such an analysis. Fictionalization is the first step in the process, where each budget item is associated with a cost driver such as normal delivery of water, peaking, or number of customers. The second step, classification, allocates each cost based on each customer class characteristic of water usage. Additionally, this analysis must be completed to meet the requirements of Proposition 218 and recently revised Governmental Code 5999. 3. 9VAktati©n, and resign of Proposed Rate Structures: Develop conservation rate structure designs based on targeted revenue required to operate the Water Department. The rate design model will have the ability to calculate the revenue generated from hypothetical rate structures, including a tiered and /or budget -based tiered rate, based on customer class evaluations to be performed as part of this study. The model will have the ability to perform "what if" scenarios on different rate structures as well as compare monthly bills for customer classes under the existing rate structure and hypothetical new rate structure designs. Staff issued an RFP soliciting consulting services for the City of Newport Beach Water Rate Study to four consulting firms. Three consulting firms submitted proposals in response to this RFP. The selection panel that was formed to evaluate these proposals rated Red Oak Consulting the highest in terms of their overall qualifications to perform this study. The Red Oak team was determined to be uniquely qualified based on their ,extensive experience with similar projects. Additionally, their references were very strong. Red Oak Consulting will perform the scope of services for the Water Rate Study for an amount not to exceed $88,177. Committee Review On December 13, 2007, Staff presented to the Coastal -Bay Committee a recommendation of awarding the rate study to Red Oak Consulting. The rate study's objectives were summarized. During this discussion the Committee Chair, Council • • Red Oak Consulting Approval Professional Services Agreement February 26, 2008 Page 3 • Member Gardener, requested clarification on the types of water rate structures to be investigated as part of the study. It was explained that the study will investigate the feasibility of implementing a block - tiered rate structure and /or water budget tiered rate structure that would allocate water budgets based on customer classifications. A question was also raised regarding the feasibility of implementing another water budget rate structure based on individual customers, and an explanation was given that feasibility could be evaluated as part of the study, however, this type of rate structure requires a large capital investment as part of the implementation cost. Staff recommended that a council workshop be conducted to further define the anticipated capital and administrative cost required to implement the various water rate structures to be evaluated as part of the study. The Coastal -Bay Committee concurred with Staffs recommendations awarding the water rate study to Red Oak Consulting and placing the recommendation on the City Council Meeting Agenda. A general overview of the rate study's objective was given to the Finance Committee as part of their February 1, 2008 committee meeting. Committee Chair, Council Member Curry, raised concerns regarding how tiered rate structure would differentiate between lot sizes in various areas .within the City. Staff explained that a tiered water rate strul#m_ can.be.de"ned based on many types of customer characteristics other than just 10 siae and ftt water allocation to each customer class can be adjusted • aaoartltttigly.,A question .was also asked regarding whether reduction of the City's annual water demand can be anticipated after a conservation- oriented rate structure is implemented; as compared to demand under the City's current rate structure. It was explained by staff that annual water demand may be reduced up to 10 %, although demand reduction would ultimately be dependent on the final design of the rate structure implemented. It was noted that a more accurate and detailed estimate of demand can be given after the rate model is completed during the study. The Finance Committee concurred with Staffs recommendations to award the water rate study to Red Oak Consulting and to place the recommendation on the City Council Meeting Agenda. Environmental Review: This action requires no environmental review, as it is not a project pursuant to CEQA. Funding Availability: Funding for this rate study is available in the Utilities Department's reserves assuming the Council approves a Budget Amendment transferring these funds to the Department's professional and technical services account. The City would be eligible for reimbursement for the cost of this study under the terms of the Enhanced Conservation Grant the City secured in December 2006 •from the Metropolitan Water District through their member agency, Municipal Water Districts of Orange County. Staff secured this grant in December 2006 in • • Red Oak Consulting Approval Professional Services Agreement February 26, 2008 Page 4 • the amount of $725,000 to evaluate the feasibility to implement a more conservation - oriented water budget type rate structure. This grant stipulates that the monies can be used to offset the cost of this rate study with the balance of the grant to be used to help offset billing software upgrades, provided that a more conservation- oriented rate structure is implemented at the conclusion of the study. Submitted by: Steve Myrter, Utilities Directhr Attachments: Agreement with Red Oak Consulting • Budget Amendment - BA #_ • 0 PROFESSIONAL SERVICES AGREEMENT WITH • RED OAK CONSULTING FOR CONSULTING SERVICES FOR WATER RATE STUDY THIS AGREEMENT is made and entered into as of this 261' day of February, 2008, by and between the CITY OF NEWPORT BEACH, a Municipal Corporation ( "City "), and RED OAK CONSULTING a division of MALCOLM PIRNIE, a New Fork Corporation whose address is 725 South Figueroa Street, Suite 1640, Los Angeles, California, 90017 ( "Consultant'), and is made with reference to the following: RECITALS A. City is a municipal corporation duly organized and validly existing under the laws of the State of California with the power to carry on its business as it is now being conducted under the statutes of the State of California and the Charter of City. B. City is planning to do a Water Rate Study. C. City desires to engage Consultant to provide consulting services for a Water Rate Study ( "Project"). D. Consultant possesses the skill, experience, ability, background, certification and • knowledge to provide the services described in this Agreement. E. The principal member of Consultant for purposes of this Project shall be Sanjay Gaur. F. City has solicited and received a proposal from Consultant, has reviewed the previous experience and evaluated the expertise of Consultant, and desires to retain Consultant to render professional services under the terms and conditions set forth in this Agreement. NOW, THEREFORE, it is mutually agreed by and between the undersigned parties as follows: 1. TERM The tern of this Agreement shall commence on the above written date, and shall terminate on the 31'� day of January, 2009, unless terminated earlier as set forth herein. 2. SERVICES TO BE PERFORMED Consultant shall diligently perform all the services described in the Scope of • Services attached hereto as Exhibit A and incorporated herein by reference. The City may elect to delete certain tasks of the Scope of Services at its sole discretion. 0 3. TIME OF PERFORMANCE E Time is of the essence in the performance of services under this Agreement and • the services shall be performed to completion in a diligent and timely manner. The failure by Consultant to perform the services in a diligent and timely manner may result in termination of this Agreement by City. Notwithstanding the foregoing, Consultant shall not be responsible for delays due to causes beyond Consultant's reasonable control. However, in the case of any such delay in the services to be provided for the Project, each party hereby agrees to provide notice to the other party so that all delays can be addressed. 3.1 Consultant shall submit all requests for extensions of time for performance in writing to the Project Administrator not later than ten (10) calendar days after the start of the condition that purportedly causes a delay. The Project Administrator shall review all such requests and may grant reasonable time extensions for unforeseeable delays that are beyond Consultant's control. 3.2 For all time periods not specifically set forth herein, Consultant shall respond in the most expedient and appropriate manner under the circumstances, by either telephone, fax, hand - delivery or mail. 4. COMPO ATION TO CONSULTANT City shall pay Consultant for the services on a time and expense not -to- exceed • basis, in .accordance with, the provisions of this Section and the Schedule of Im#ing Rates attached hereto as .Exhibit B and incorporated herein by reference. Consultant's compensation for all work performed in accordance with this Agreement, including all reimbursable items and subconsultant fees, shall not exceed Eighty -Eight Thousand One Hundred Seventy -Seven Dollars and no /100 ($$8,177) without prior written authorization from City. No billing rate changes shall be made during the term of this Agreement without the prior written approval of City. 4.1 Consultant shall submit invoices to City describing the work performed the preceding billing period. Consultant's bills shall include the name of the person who performed the work, a brief description of the services performed and /or the specific task in the Scope of Services to which it relates, the date the services were performed, the number of hours spent on all work billed on an hourly basis, and a description of any reimbursable expenditures. City shall pay Consultant no later than thirty (30) days after approval of the monthly invoice by City staff. 4.2 City shall reimburse Consultant only for those costs or expenses specifically approved in this Agreement, or specifically approved in writing in advance by City. Unless otherwise approved, such costs shall be • limited and include nothing more than the following costs incurred by Consultant: 4 A. The actual costs of subconsultants for performance of any of the services that Consultant agrees to render pursuant to this • Agreement, which have been approved in advance by City and awarded in accordance with this Agreement. B. Approved reproduction charges. C. Actual costs and /or other costs and /or payments specifically authorized in advance in writing and incurred by Consultant in the performance of this Agreement. 4.3 Consultant shall not receive any compensation for Extra Work performed without the prior written authorization of City. As used herein, "Extra Work" means any work that is determined by City to be necessary for the proper completion of the Project, but which is not included within the Scope of Services and which the parties did not reasonably anticipate would be necessary at the execution of this Agreement. Compensation for any authorized Extra Work shall be paid in accordance with the Schedule of Billing Rates as set forth in Exhibit B. 5. PROJECT tAANAGER Consultant zhall- Aesite a Project Manager, who shall coordinate all phases of the Ptnject. Uis= Project Manager shall be available to City at all reasonable . times. during:the Agreement term.. Consultant has designated Sanjay Gaur to be its Project Manager. Consultant shall not remove or reassign the Project Manag6r,or arly.pemnnel listed in Exhibit A or assign any new or replacement personnel to the Project without the prior written consent of City. City's approval shall not be unreasonably withheld with respect to the removal or assignment of non -key personnel. Consultant, at the sole discretion of City, shall remove from the Project any of its personnel assigned to the performance of services upon written request of City. Consultant warrants that it will continuously fumish the necessary personnel to complete the Project on a timely basis as contemplated by this Agreement. 6. ADMINISTRATION This Agreement will be administered by the Utilities Department. Steve Myrter shall be the Project Administrator and shall have the authority to act for City under this Agreement. The Project Administrator or his /her authorized representative shall represent City in all matters pertaining to the services to be rendered pursuant to this Agreement. 7. CITY'S RESPONSIBILITIES • In order to assist Consultant in the execution of its responsibilities under this Agreement, City agrees to, where applicable: 3 A. Provide access to, and upon request of Consultant, one copy of all existing relevant information on file at City. City will provide all such materials in a timely manner so as not to cause delays in Consultant's • work schedule. B. Provide blueprinting and other services through City's reproduction company for bid documents. Consultant will be required to coordinate the required bid documents with City s reproduction company. All other reproduction will be -the responsibility of Consultant and as defined above. C. Provide usable life of facilities criteria and information with regards to new facilities or facilities to be rehabilitated. 8. STANDARD OF CARE 8.1 All of the services shall be performed by Consultant or under Consultant's supervision. Consultant represents that it possesses the professional and technical personnel required to perform the services required by this Agreement, and that it will perform all services in a manner commensurate with community professional standards. All services shall be performed by qualified and experienced personnel who are not employed by City, nor have any contractual relationship with City. By delivery, of completed work, Consultant certifies that the work conforms to th-6 requirements of this Agreement and all applicable federal, state and local.laws and the professional standard of care. • 8.2 Consultant represents and warrants to City that it has, shall obtain, and shall keep in full force in effect during the term hereof, at its sole cost and expense, all licenses, permits, qualifications, insurance and approvals of whatsoever nature that is legally required of Consultant to practice its profession. Consultant shall maintain a City of Newport Beach business license during the term of this Agreement. 8.3 Consultant shall not be responsible for delay, nor shall Consultant be responsible for damages or be in default or deemed to be in default by reason of strikes, lockouts, accidents, or acts of God, or the failure of City to furnish timely information or to approve or disapprove Consultant's work promptly, or delay or faulty performance by City, contractors, or governmental agencies. 9. HOLD HARMLESS To the fullest extent permitted by law, Consultant shall indemnify, defend and hold harmless City, its City Council, boards and commissions, officers, agents, volunteers and employees (collectively, the "Indemnified Parties) from and against any and all claims (including, without limitation, claims for bodily injury, • death or damage to property), demands, obligations, damages, actions, causes of action, suits, losses, judgments, fines, penalties, liabilities, costs and El 41 0 expenses (including, without limitation, attorney's fees, disbursements and court costs) of every kind and nature whatsoever (individually, a Claim; collectively, • "Claims "), which may arise from or in any manner relate (directly or indirectly) to the negligence, recklessness, or willful misconduct of the Consultant or its principals, officers, agents, employees, vendors, suppliers, consultants, subcontractors, anyone employed directly or indirectly by any of them or for whose acts they may be liable or any or all of them. Notwithstanding the foregoing, nothing herein shall be construed to require Consultant to indemnify the Indemnified Parties from any Claim arising from the sole negligence, active negligence or willful misconduct of the Indemnified Parties. Nothing in this indemnity shall be construed as authorizing any award of attorney's fees in any action on or to enforce the terms of this Agreement. This indemnity shall apply to all claims and liability regardless of whether any insurance policies are applicable. The policy limits do not act as a limitation upon the amount of indemnification to be provided by the Consultant. 10. INDEPENDENT CONTRACTOR It is understood that City retains Consultant on an independent contractor basis and Consultant is not an agent or employee of City. The manner and means of conducting the work are under the control of Consultant, except to the extent they are limited by..statute, rule or regulation and the expressed terms of this Agreement. Nothing. in this Agreement shall be deemed to constitute approval • for Coesultant.or any of Consoltaffs employees or agents, to be the agents or employees of City. Consultant shall have the responsibility for and control over the paeans of performing the work,,provided that Consultant is in compliance with the terms of this Agreement. Anything in this Agreement that may appear to give City the right to direct Consultant as to the details of the performance or to exercise a measure of control over Consultant shall mean only that Consultant shall follow the desires of City with respect to the results of the services. • 11. COOPERATION Consultant agrees to work closely and cooperate fully with City's designated Project Administrator and any other agencies that may have jurisdiction or interest in the work to be performed. City agrees to cooperate with the Consultant on the Project. 12. CITY POLICY Consultant shall discuss and review all matters relating to policy and Project direction with City's Project Administrator in advance of all critical decision points in order to ensure the Project proceeds in a manner consistent with City goals and policies. 5 n L-A 13. PROGRESS C Consultant is responsible for keeping the Project Administrator and /or his/her • duly authorized designee informed on a regular basis regarding the status and progress of the Project, activities performed and planned, and any meetings that have been scheduled or are desired. 14. INSURANCE Without limiting Consultant's indemnification of City, and prior to commencement of work. Consultant shall obtain, provide and maintain at its own expense during the term of this Agreement, a policy or policies of liability insurance of the type and amounts described below and in a form satisfactory to City. A. Certificates of Insurance. Consultant shall provide certificates of insurance with original endorsements to City as evidence of the insurance coverage required herein. Insurance certificates must be approved by City's Risk Manager prior to commencement of performance or issuance of any permit. Current certification of insurance shall be kept on file with City at all times during the term of this Agreement. B. a re. A person authorized by the insurer to bind coverage on its bgRioiff slirall sign certification of all required policies. C. Ao&rsfab/,e. insurers. All insurance policies shall be issued by an • insur6nc*:: ebrhpsiiny currently authorized by the Insurance Commissioner to transact business of insurance in the State of California, with an assigned policyholders' Rating of A (or higher) and Financial Size Category Class VII (or larger) in accordance with the latest edition of Best's Key Rating Guide, unless otherwise approved by the City's Risk Manager. D. Coverage Requirements. i. Workers' Compensation Coverage. Consultant shall maintain Workers' Compensation Insurance and Employer's Liability Insurance for his or her employees in accordance with the laws of the State of California. In addition, Consultant shall require each subcontractor to similarly maintain Workers' Compensation Insurance and Employer's Liability Insurance in accordance with the laws of the State of California for all of the subcontractor's employees. Any notice of cancellation or non - renewal of all Workers' Compensation policies must be received by City at least thirty (30) calendar days (10 calendar days written notice of non- payment of premium) prior to such change. The insurer shall agree to waive all rights of subrogation against City, its officers, agents, employees and volunteers for losses arising from work performed • by Consultant for City. R 0 0 ii. General Liability Coverage. Consultant shall maintain commercial • general liability insurance in an amount not less than two million dollars ($2,000,000) per occurrence for bodily injury, personal injury, and property damage, including without limitation, contractual liability. If commercial general liability insurance or other form with a general aggregate limit is used, either the general aggregate limit shall apply separately to the work to be performed under this Agreement, or the general aggregate limit shall be at least twice the required occurrence limit. iii. Automobile Liability Coverage. Consultant shall maintain automobile insurance covering bodily injury and property damage for all activities of the Consultant arising out of or in connection with work to be performed under this Agreement, including coverage for any owned, hired, non -owned or rented vehicles, in an amount not less than two million dollars ($2,000,000) combined single limit for each occurrence. iv. Professional Errors and Omissions Insurance. Consultant shall mairitain professional errors and omissions insurance, which covers the services to be performed in connection with this Agreement in the minimum amount of two million dollars ($22-;04 0;000). • E. ftnft: Each general liability and automobile liability insurance policy shale be endorsed with the following specific language: i. The City, its elected or appointed officers, officials, employees, agents and volunteers are to be covered as additional insureds with respect to liability arising out of work performed by or on behalf of the Consultant. ii. This policy shall be considered primary insurance as respects to City, its elected or appointed officers, officials, employees, agents and volunteers as respects to all claims, losses, or liability arising directly or indirectly from the Consultant's operations or services provided to City. Any insurance maintained by City, including any self- insured retention City may have, shall be considered excess insurance only and not contributory with the insurance provided hereunder. iii. This insurance shall act for each insured and additional insured as though a separate policy had been written for each, except with respect to the limits of liability of the insuring company. iv. The insurer waives all rights of subrogation against City, its elected • or appointed officers, officials, employees, agents and volunteers. 7 0 0 V. Any failure to comply with reporting provisions of the policies shall not affect coverage provided to City, its elected or appointed • officers, officials, employees, agents or volunteers. vi. The insurance provided by this policy shall not be suspended, voided, canceled, or reduced in coverage or in limits, by either party except after thirty (30) calendar days (10 calendar days written notice of non - payment of premium) written notice has been received by City. F. Timely Notice of Claims. Consultant shall give City prompt and timely notice of claim made or suit instituted arising out of or resulting from Consultant's performance under this Agreement. G. Additional Insurance. Consultant shall also procure and maintain, at its own cost and expense, any additional kinds of insurance, which in its own judgment may be necessary for its proper protection and prosecution of the work. 15. PROHWfTJON AGAINST ASSIGNMENTS AND TRANSFERS E ejt as. specifically authorized under this Agreement, the services to be prt�4ed, �r dee *vs Agreement shall not be assigned, transferred contracted or si�ti out Without the prior written approval of City. Any of the following st>a# r d,.as, an assignment: The sale, assignment, transfer or other • div0At , f ar �r of the issued and outstanding capital stock of Consultant, or of ir the ite.Mt.of any general partner or joint venturer or syndicate member or cotenant if`Gonsultant is a partnership or joint- venture or syndicate or cotenancy, which shatl result in changing the control of Consultant. Control means fifty percent (50%) or more of the voting power, or twenty -five percent (25 %) or more of the assets of the corporation, partnership or joint- venture. 16. SUBCONTRACTING The parties recognize that a substantial inducement to City for entering into this Agreement is the professional reputation, experience and competence of Consultant. Assignments of any or all rights, duties or obligations of the Consultant under this Agreement will be permitted only with the express written consent of City. Consultant shall not subcontract any portion of the work to be performed under this Agreement without the prior written authorization of City. 17. OWNERSHIP OF DOCUMENTS Each and every report, draft, map, record, plan, document and other writing produced (hereinafter "Documents'), prepared or caused to be prepared by Consultant, its officers, employees, agents and subcontractors, in the course of implementing this Agreement, shall become the exclusive property of City, and • City shall have the sole right to use such materials in its discretion without further compensation to Consultant or any other party. The City acknowledges and I agrees that the interactive financial model utilized by Consultant, and demonstrated to, and delivered to City pursuant to this Agreement, is a • proprietary and confidential Consultant service instrument, and is to be used soley for the financial analysis proposed by Consultant and is not to be resold or otherwise used for secondary commercial gain. The Consultant shall retain sole ownership of pre - existing proprietary property including the financial model. Consultant shall, at Consultant's expense, provide such Documents to City upon prior written request. Documents, including drawings and specifications, prepared by Consultant pursuant to this Agreement are not intended or represented to be suitable for reuse by City or others on any other project. Any use of completed Documents for other projects and any use of incomplete Documents without specific written authorization from Consultant will be at City's sole risk and without liability to Consultant. Further, any and all liability arising out of changes made to Consultant's deliverables under this Agreement by City or persons other than Consultant is waived against Consultant and City assumes full responsibility for such changes unless City has given Consultant prior notice and has received from Consultant written consent for such changes. 18. CONFIDENTIALITY All Documents, including drafts, preliminary drawings or plans, notes and communications that result from the services in this Agreement, shall be kept is confidential unless City authorizes in writing the release of information or unless required to be disclosed by law or court order with notice to the City. 19. INTELLECTUAL PROPERTY INDEMNITY The Consultant shall defend and indemnify City, its agents, officers, representatives and employees against any and all liability, including costs, for infringement of any United States' letters patent, trademark, or copyright infringement, including costs, contained in Consultant's drawings and specifications provided under this Agreement. 20. RECORDS Consultant shall keep records and invoices in connection with the work to be performed under this Agreement. Consultant shall maintain complete and accurate records with respect to the costs incurred under this Agreement and any services, expenditures and disbursements charged to City, for a minimum period of three (3) years, or for any longer period required by law, from the date of final payment to Consultant under this Agreement. All such records and invoices shall be clearly identifiable. Consultant shall allow a representative of City to examine, audit and make transcripts or copies of such records and invoices during regular business hours. Consultant shall allow inspection of all • work, data, Documents, proceedings and activities related to the Agreement for a period of three (3) years from the date of final payment to Consultant under this Agreement. E 0 21. WITHHOLDINGS 0 City may withhold payment to Consultant of any disputed sums until satisfaction • of the dispute with respect to such payment. Such withholding shall not be deemed to constitute a failure to pay according to the terms of this Agreement. Consultant shall not discontinue work as a result of such withholding. Consultant shall have an immediate right to appeal to the City Manager or his/her designee with respect to such disputed sums. Consultant shall be entitled to receive interest on any withheld sums at the rate of return that City earned on its investments during the time period, from the date of withholding of any amounts found to have been improperly withheld. 22. ERRORS AND OMISSIONS In the event of errors or omissions that are due to the negligence or professional inexperience of Consultant which result in expense to City greater than what would have resulted if there were not errors or omissions in the work accomplished by Consultant, the additional design, construction and /or restoration expense shall be bome by Consultant. Nothing in this paragraph is intended to limit City's rights under the law or any other sections of this Agreement. 23. CtTY'F FIGHT TO EMPLOY OTHER CONSULTANTS City .reserves the right to employ other Consultants in connection with the • Project. 24. CONFLICTS OF INTEREST The Consultant or its employees may be subject to the provisions of the California Political Reform Act of 1974 (the "Act "), which (1) requires such persons to disclose any financial interest that may foreseeably be materially affected by the work performed under this Agreement, and (2) prohibits such persons from making, or participating in making, decisions that will foreseeably financially affect such interest. If subject to the Act, Consultant shall conform to all requirements of the Act. Failure to do so constitutes a material breach and is grounds for immediate termination of this Agreement by City. Consultant shall indemnify and hold harmless City for any and all claims for damages resulting from Consultant's violation of this Section. 25. NOTICES All notices, demands, requests or approvals to be given under the terms of this Agreement shall be given in writing, and conclusively shall be deemed served when delivered personally, or on the third business day after the deposit thereof • in the United States mail, postage prepaid, first -class mail, addressed as 10 0 0 hereinafter provided. All notices, demands, requests or approvals from Consultant to City shall be addressed to City at: • Attn: Steve Myrter Utilities Department City of Newport Beach 3300 Newport Boulevard Newport Beach, CA, 92663 Phone:949- 644 -3011 Fax: 946-646-5204 All notices, demands, requests or approvals from CITY to Consultant shall be addressed to Consultant at: Attention: Sanjay Gaur Red Oak Consulting 725 South Figueroa Street, Suite 1540 Los Angeles, CA 90017 Phone: (213) 614 -9002 Fax: (213) 694 -9003 26. TERMINATION In:Oe exegfthat: either party fails or refuses to perform any of the provisions of . this fAgteement at the time and in the manner required, that party shall be deered-rn•:deillt ; in the performance of this Agreement. If such default is not ce d, vi iif fri: a Pedod of. two (2) calendar days, or if more than .two (2) calendar day�;'at6 reasonably required to cure the default and the defaulting party fails to give adequate assurance of due performance within two (2) calendar days after receipt of written "notice of default, specifying the nature of such default and the steps necessary to cure such default, and thereafter diligently take steps to cure the default, the non - defaulting party may terminate the Agreement forthwith by giving to the defaulting party written notice thereof. Notwithstanding the above provisions, City shall have the right, at its sole discretion and without cause, of terminating this Agreement at any time by giving seven (7) calendar days prior written notice to Consultant. In the event of termination under this Section, City shall pay Consultant for services satisfactorily performed and costs incurred up to the effective date of termination for which Consultant has not been previously paid. On the effective date of termination, Consultant shall deliver to City all reports, Documents and other information developed or accumulated in the performance of this Agreement, whether in draft or final form. 27. COMPLIANCE WITH ALL LAWS • Consultant shall at its own cost and expense comply with all statutes, ordinances, regulations and requirements of all governmental entities, including federal, state, county or municipal, whether now in force or hereinafter enacted. 11 0 0 In addition, all work prepared by Consultant shall conform to applicable City, county, state and federal laws, rules, regulations and permit requirements and be subject to approval of the Project Administrator and City. • 28. WAIVER A waiver by either party of any breach, of any term, covenant or condition contained herein shall not be deemed to be a waiver of any subsequent breach of the same or any other term, covenant or condition contained herein, whether of the same or a different character. 29. INTEGRATED CONTRACT This Agreement represents the full and complete understanding of every kind or nature whatsoever between the parties hereto, and all preliminary negotiations and agreements of whatsoever kind or nature are merged herein. No verbal agreement or implied covenant shall be held to vary the provisions herein. 30. CONFLICTS OR INCONSISTENCIES In the event there are any conflicts or inconsistencies between this Agreement and the Scope of Services or any other attachments attached hereto, the terms of this Agreement shall govem. 31. INTERPRETATION • The terms of this Agreement shall be construed in accordance with the meaning of the language• used and shall not be construed for or against either party by reason of the authorship of the Agreement or any other rule of construction which might otherwise apply. 32. AMENDMENTS This Agreement may be modified or amended only by a written document executed by both Consultant and City and approved as to form by the City Attorney. 33. SEVERABILITY If any term or portion of this Agreement is held to be invalid, illegal, or otherwise unenforceable by a court of competent jurisdiction, the remaining provisions of this Agreement shall continue in full force and effect. 34. CONTROLLING LAW AND VENUE The laws of the State of California shall govern this Agreement and all matters relating to it and any action brought relating to this Agreement shall be • adjudicated in a court of competent jurisdiction in the County of Orange. 12 35. EQUAL OPPORTUNITY EMPLOYMENT • Consultant represents that it is an equal opportunity employer and it shall not discriminate against any subcontractor, employee or applicant for employment because of race, religion, color, national origin, handicap, ancestry, sex or age. IN WITNESS WHEREOF, the parties have caused this Agreement to be executed on the day and year first written above. APPROVED AS TO FORM: CITY OF NEWPORT BEACH, C A Municipal Corporation By: City Attorney Edward Selich, Mayor for the City of Newport Beach for the City of Newport Beach ATTEST: CONSULTANT: By: By. LaVonne Harkless, (Corporate Officer) City. Clerk Title: • Print Name: • OR (Financial Officer) Title: Print Name: Attachments: Exhibit A — Scope of Services /Schedule of Billing Rates Exhibit B — Schedule of Billing Rates for 2008 13 C" of Newport Beach• NO. BA- 08BA -049 BUDGET AMENDMENT 2007 -08 AMOUNT: $8a,�77.00 EFFECT ON BUDGETARY FUND BALANCE: Increase Revenue Estimates Increase in Budgetary Fund Balance �X Increase Expenditure Appropriations AND �X Decrease in Budgetary Fund Balance Transfer Budget Appropriations No effect on Budgetary Fund Balance SOURCE: from existing budget appropriations from additional estimated revenues NX from unappropriated fund balance EXPLANATION: This budget amendment is requested to provide for the following: To increase expenditure appropriations from the Water Fund system reserves for a water rate study. ACCOUNTING ENTRY: BUDGETARY FUND BALANCE Amount Fund Account Description Debit Credit 500 3784 Water Fund - System Reserve $88,177.00 ` REVENUE ESTIMATES (3601) • Fund /Division Account Description EXPENDITURE APPROPRIATIONS (3603) Description Division Number 5500 Utilities - Water Account Number 8080 Services - Professional & Technical $88,177.00 Division Number Account Number Division Number Account Number Division Number Account Number Division Number Account Number " Aularrw c System Entry. i Signed: F— inancial Approval: Administrativ ervices Director Date �f Signed: z , � di D • Administrative Approv City Manager ! "a Signed: City Council Approval: City Clerk Date