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HomeMy WebLinkAbout5.875 Original Contract 5.975 AGREEMENT FOR PROFESSIONAL SERVICES BETWEEN THE CITY OF PORT ANGELES AND FCS GROUP RELATING TO: ECONOMIC ANALYSIS - RATE STUDY SERVICES THIS AGREEMENT is made and entered into this ~~ay of ~ c!. lL..... , 2008, by and between THE CITY OF PORT ANGELES, a non-charter co Ity of the State of Washington, (hereinafter called the "CITY") and FCS Group, a Washington Corporation authorized to do business in the state of Washington (hereinafter called the "CONSULTANT"). WHEREAS, the CITY desires professional services related to comprehensive rate studies for utilities; and WHEREAS, the CITY desires to engage the professional services and assistance of a qualified consulting firm to perform the scope of work as detailed in Exhibit A, and WHEREAS, the CONSULTANT represents that it is in full compliance with the statutes of the State of Washington for professional registration and/or other applicable requirements, and WHEREAS, the CONSULTANT represents that it has the background, experience, and ability to perform the required work in accordance with the standards of the profession, and WHEREAS, the CONSULTANT represents that it will provide qualified personnel and appropriate facilities necessary to accomplish the work; NOW, THEREFORE, in consideration of the above representations and the terms, conditions, covenants, and agreements set forth below, the parties hereto agree as follows: SCOPE OF WORK The scope of professional services to be performed and the results to be achieved by the CONSULTANT shall be as detailed in the attached Exhibit A and shall include all services and material necessary to accomplish the work. The CITY may review the CONSULTANT'S work product, and if it is not satisfactory, the CONSULTANT shall make such changes as may be required by the CITY. Such changes shall not constitute "Extra Work" as related in Section XII of this Agreement. The CONSULTANT agrees that all services performed under this Agreement shall be in accordance with the standards of the profession and in compliance with applicable federal, state and local laws. The Scope of Work may be amended upon written approval of both parties. PW 0410_01 Professional Services Agreement [Revised [05/12/06] Page 1 of 7 II OWNERSHIP OF DOCUMENTS Upon completion of the work, all documents, exhibits, photographic negatives, or other presentations of the work shall become the property of the CITY for use without restriction and without representation as to suitability for reuse by any other party unless specifically verified or adapted by the CONSULTANT. However, any alteration of the documents, by the City or by others acting through or on behalf of the City, will be at the City's sole risk. III DESIGNATION OF REPRESENTATIVES Each party shall designate its representatives in writing. The CONSULTANT'S representative shall be subject to the approval of the CITY. IV TIME OF PERFORMANCE The CONSULTANT may begin work upon execution of this Agreement by both parties and the duration of the Agreement shall extend through January 31, 2010. The work shall be completed in accordance with the schedule set forth in the attached Exhibit D. V PAYMENT The CITY shall pay the CONSULTANT as set forth in this section of the Agreement. Such payment shall be full compensation for work performed, services rendered, and all labor, materials, supplies, equipment and incidentals necessary to complete the work. A. Payment shall be on the basis of the CONSULTANT'S standard billing rates as set forth in Exhibit C multiplied by the actual hours worked, cost for actual labor, overhead and profit plus CONSULTANT'S direct non-salary reimbursable costs as set forth in the attached Exhibit C. B. The CONSULTANT shall submit invoices to the CITY on a monthly basis. Invoices shall detail the work, hours, employee name, and hourly rate; shall itemize with receipts and invoices the non-salary direct costs; shall indicate the specific task or activity in the Scope of Work to which the costs are related; and shall indicate the cumulative total for each task. C. The CITY shall review the invoices and make payment for the percentage of the project that has been completed less the amounts previously paid. D. The CONSULTANT invoices are due and payable within 30 days of receipt. In the event of a disputed billing, only the disputed portion will be withheld from payment. E. Final payment for the balance due to the CONSULTANT will be made after the completion of the work and acceptance by the CITY. F. Payment for "Extra Work" performed under Section XII of this Agreement shall be as agreed to by the parties in writing. PW 0410_01 ProfeSSional Services Agreement [ReVised [05/12/06] Page 2 of 7 VI MAXIMUM COMPENSATION Unless otherwise agreed to in writing by both parties, the CONSULTANT'S total compensation and reimbursement under this Agreement, including labor, direct non-salary reimbursable costs and outside services, shall not exceed the maximum sum of $71 ,932.00. The budget for each task is as set forth in the attached Exhibit B. Budgets for task(s) may be modified upon mutual agreement between the two parties, but in any event, the total payment to CONSULTANT shall not exceed $71,932.00. VII INDEPENDENT CONTRACTOR STATUS The relation created by this Contract is that of owner-independent contractor. The Contractor is not an employee of the City and is not entitled to the benefits provided by the City to its employees. The Contractor, as an independent contractor, has the authority to control and direct the performance of the details of the services to be provided. The Contractor shall assume full responsibility for payment of all Federal, State, and local taxes or contributions imposed or required, including, but not limited to, unemployment insurance, Social Security, and income tax. VIII EMPLOYMENT Employees of the CONSULTANT, while engaged in the performance of any work or services under this Agreement, shall be considered employees of the CONSULTANT only and not of the CITY, and claims that may arise under the Workman's Compensation Act on behalf of said employees while so engaged, and any and all claims made by a third party as a consequence of any negligent act or omission on the part of the CONSULTANT'S employees while so engaged, on any of the work or services provided to be rendered herein, shall be the sole obligation and responsibility of the CONSULTANT. In performing this Agreement, the CONSULTANT shall not employ or contract with any CITY employee without the City's written consent. IX NONDISCRIMINATION The CONSULTANT shall conduct its business in a manner, which assures fair, equal and non-discriminatory treatment of all persons, without respect to race, creed or national origin, or other legally protected classification and, in particular: A. The CONSULTANT shall maintain open hiring and employment practices and will welcome applications for employment in all positions, from qualified individuals who are members of minorities protected by federal equal opportunity/affirmative action requirements; and, B. The CONSULTANT shall comply with all requirements of applicable federal, state or local laws or regulations issued pursuant thereto, relating to the establishment of non discriminatory requirements in hiring and employment practices and assuring the service of all persons without discrimination as to any person's race, color, religion, sex, Vietnam era veteran status, disabled veteran condition, physical or mental handicap, or national origin. PW 0410_01 ProfeSSional Services Agreement [ReVised [05/12/06] Page 3 of 7 X SUBCONTRACTS A. The CONSULTANT shall not sublet or assign any of the work covered by this Agreement without the written consent of the CITY. B. In all solicitation either by competitive bidding or negotiation made by the CONSULTANT for work to be performed pursuant to a subcontract, including procurement of materials and equipment, each potential subconsultant or supplier shall be notified by the CONSULTANT of Consultant's obligations under this Agreement, including the nondiscrimination requirements. XI CHANGES IN WORK Other than changes directed by the CITY as set forth in Section I above, either party may request changes in the scope of work. Such changes shall not become part of this Agreement unless and until mutually agreed upon and incorporated herein by written amendments to this Agreement executed by both parties. XII EXTRA WORK The CITY may desire to have the CONSULTANT perform work or render services in connection with this project, in addition to the Scope of Work set forth in Exhibit A and minor revisions to satisfactorily completed work. Such work shall be considered as "Extra Work" and shall be addressed in a written supplement to this Agreement. The CITY shall not be responsible for paying for such extra work unless and until the written supplement is executed by both parties. XIII TERMINATION OF AGREEMENT A. The CITY may terminate this Agreement at any time upon not less than ten (10) days written notice to the CONSULTANT. Written notice will be by certified mail sent to the consultant's designated representative at the address provided by the CONSULTANT. B. In the event this Agreement is terminated prior to the completion of the work, a final payment shall be made to the CONSULTANT, which, when added to any payments previously made, shall compensate the CONSULTANT for the percentage of work completed. C. In the event this Agreement is terminated prior to completion of the work, documents that are the property of the CITY pursuant to Section II above, shall be delivered to and received by the CITY prior to transmittal of final payment to the CONSULTANT. XIV INDEMNIFICATION/HOLD HARMLESS CONSULTANT shall defend, indemnify and hold the CITY, its officers, officials, employees and volunteers harmless from any and all claims, injuries, damages, losses or suits including attorney fees, arising out of or resulting from the negligent acts, errors or omissions of the CONSULTANT in performance of this Agreement, except for injuries and damages caused by the sole negligence of the CITY. PW 0410_01 ProfeSSional Services Agreement [ReVised [05/12/06] Page 4 of 7 The CITY agrees to indemnify the CONSULTANT from any claims, damages, losses, and costs, including, but not limited to, attorney's fees and litigation costs, arising out of claims by third parties for property damage and bodily injury, including death, caused solely by the negligence or willful misconduct of the CITY, CITY's employees, or agents in connection with the work performed under this Agreement. If the negligence or willful misconduct of both CONSULTANT and CITY (or a person identified above for whom each is liable) is a cause of such damage or injury, the loss, cost, or expense shall be shared between the CONSULTANT and the CITY in proportion to their relative degrees of negligence or willful misconduct and the right of indemnity shall apply for such proportion. Should a court of competent jurisdiction determine that this Agreement is subject to RCW 4.24.115, then, in the event of liability for damages arising out of bodily injury to persons or damages to property caused by or resulting from the concurrent negligence of the CONSULTANT, the CITY, and the officers, officials, employees, and volunteers of either, the CONSULTANT'S liability hereunder shall be only to the extent of the CONSULTANT'S negligence. It is further specifically and expressly understood that the indemnification provided herein constitutes the CONSULTANT'S waiver of immunity under Industrial Insurance, Title 51 RCW, solely for the purposes of this indemnification. This waiver has been mutually negotiated by the parties. The provisions of this section shall survive the expiration or termination of this Agreement. However, the CONSULTANT expressly reserves its rights as a third person set forth in RCW 51.24.035. XV INSURANCE The CONSULTANT shall procure and maintain for the duration of the Agreement, insurance against claims for injuries to persons or damage to property which may arise from or in connection with the performance of the work hereunder by the CONSULTANT, its agents, representatives, employees or subcontractors. No Limitation. CONSULTANT'S maintenance of insurance as required by the agreement shall not be construed to limit the liability of the CONSULTANT to the coverage provided by such insurance, or otherwise limit the CITY'S recourse to any remedy available at law or in equity. A. Minimum Scope of Insurance Consultant shall obtain insurance of the types described below: 1. Automobile Liability insurance covering all owned, non-owned, hired and leased vehicles. Coverage shall be written on Insurance Services Office (ISO) form CA 0001 or a substitute form providing equivalent liability coverage. If necessary, the policy shall be endorsed to provide contractual liability coverage; and, 2. Commercial General Liability insurance shall be written on ISO occurrence form CG 00 01 and shall cover liability arising from premises, operations, independent contractors, and personal injury and advertising injury. The City shall be named as an insured under the Consultant's Commercial General liability insurance policy with respect to the work performed for the City; and, PW 0410_01 Professional Services Agreement [Revised [05/12/06] Page 5 of 7 3. Workers' Compensation coverage as required by the Industrial Insurances laws of the State of Washington; and 4. Professional Liability insurance appropriate to the Consultant's profession. B. Minimum Amounts of Insurance Consultant shall maintain the following insurance limits: 1. Automobile Liability insurance with a minimum combined single limit for bodily injury and property damage of $1 ,000,000 per accident. 2. Commercial General Liability insurance shall be written with limits no less than $1,000,000 each occurrence, $2,000,000 general aggregate. 3. Professional Liability insurance shall be written with limits no less than $1,000,000 per claim and $1,000,000 policy aggregate limit. C. Other Insurance Provisions The insurance policies are to contain, or be endorsed to contain, the following provisions for Automobile Liability, Professional Liability and Commercial General Liability insurance: 1. The Consultant's insurance coverage shall be primary insurance as respect the City. Any insurance, self-insurance, or insurance pool coverage maintained by the City shall be excess of the Consultant's insurance and shall not contribute with it. 2. The Consultant's insurance shall be endorsed to state that coverage shall not be cancelled, suspended or materially changed by either party, except after thirty (30) days prior written notice by certified mail, return receipt requested, has been given to the City. 3. Any payment of deductible or self-insured retention shall be the sole responsibility of the CONSULTANT. 4. The CONSULTANT'S insurance shall contain a clause stating that coverage shall apply separately to each insured against whom claim is made or suit is brought, except with respects to the limits of the insurer's liability. D. Acceptability of Insurers Insurance is to be placed with insurers with a current A.M. Best rating of not less than AVII. E. Verification of Coverage Consultant shall furnish the City with original certificates and a copy of the amendatory endorsements, including but not necessarily limited to the additional insured endorsement, evidencing the insurance requirements of the Consultant before commencement of the work. PW 0410_01 Professional Services Agreement [ReVised [05/12/06] Page 6 of 7 XVI APPLICABLE LAW This Agreement shall be construed and interpreted in accordance with the laws of the State of Washington, and in the event of dispute the venue of any litigation brought hereunder shall be Clallam County. XVII EXHIBITS AND SIGNATURES This Agreement, including its exhibits, constitutes the entire Agreement, supersedes all prior written or oral understandings, and may only be changed by a written amendment executed by both parties. The following exhibits are hereby made a part of this Agreement: Exhibit A - Scope of Work Exhibit B - Budget for Each Task Exhibit C - Consultant Labor Costs and Non-salary Reimbursable Costs Exhibit D - Schedule for the Work IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first written above. CITY OF PORT ANGELES M~~~ L-. f a~.~/_/'- ~ APPR VED A~O ~M: ,2 ~?------- WILLIAM E. BLOOR, CITY ATTORNEY CONSULTANT ATTEST: 1-~~ TITLE: f r2-\NL \ f k-L- -' - PW 0410_01 Professional Services Agreement [ReVised [05/12/06] Page 7 of 7 City of Pon Angeles Proposal for Utility Rate Study EXHIBIT A SCOPE OF SERVICES The following scope of services has been developed to meet the needs expressed in the City's request for proposal. Task One -Data Collection FCS GROUP will establish a foundation for the rate study by conducting a structured data collection and analysis process. We will strive to uncover any data limitations, issues or concerns that will need to be addressed early on in the process to ensure successful study completion. a. Detailed customer statistics will be provided for exploring alternative rate designs for each utility. This will be provided by the City in electronic format and include individual customer account information. b. The City will also provide detailed customer data related to customers receiving the low-income utility discount for senior citizens and disabled citizens. c. Existing data supplied on the City's Transfer Protocol website will be reviewed thoroughly before a supplemental data request is provided. Task Two -Fiscal Policy Evaluation: FCS GROUP will review policies regarding reserve management. The review will ensure maintenance of the minimum threshold for each fund and the financial and rate impacts for establishing any new or revised reserves or target levels. a. The following reserves will be reviewed; cash (operating) reserves, capital-related reserves, debt reserves, and rate stabilization reserves, if applicable. b. The solid waste utility landfill post-closure. fund balances will be reviewed in detail. A review of the collection equipment reserve will also be performed. Task Three -Capital Funding Plan: This task will define strategies for funding the Capital Improvement Programs over the 2009 - 2011 time horizon. The overall objective of the capital financial planning analysis is to determine the optimal mix of available resources from rate revenues, development/connection fees, debt financing and use of accumulated capital reserves, to ensure financial health of the utilities and to smooth rate impacts of capital funding needs. a. The water utility approach shall include a financial program to be included in the City's December 2008 Water Comprehensive Plan. b. The wastewater utility shall include rwo separate yet related capital requirements. The first requirement relates to regular renewallreplacement and growth related capital needs. The second set of capital requirements are listed in the amended 2006 CSO Reduction Facilities Plan. Each set of capital needs should identifY the capital funding approach and the resulting impacts to rates. The CSO review may require sensitivity analyses that will calculate the impact to the CSO charge of funding varying degrees of CSO specific capital needs. c. The solid waste collection and transfer station anticipate no capital needs for this review period. Task Four -Multi-Year Operating Forecast (Revenue Requirement): This task forms a complete portrayal of utility financial obligations and links directly with the operational/capital drivers of the system - yielding a basis for setting rates. The analysis will be conducted for each utility separately, ensuring that each system's rates and charges can independently meet the needs for which they are established. a. Integrate cash, coverage and fund balance requirements from recommended fiscal policies (Task Two) and capital financing strategies (Task Three). ~~~) FCS GROUP 1 City of Pon Angdes Proposal for Utility Rare Study b. Forecast annual operating expenditures and revenues for the planning horizon. Budget estimates will be used as a baseline for projecting future costs and revenues. Model impacts resulting from any operational cost additions or savings (Water Comprehensive Plan, CSO program, solid waste operational changes (every other week pickup), etc.), known or anticipated changes to meet regulatory requirements, as well as impacts of any new or enhanced program initiatives. c. Incorporate the City's existing debt issues and any anticipated new issues in the revenue requirement. Debt service coverage requirements will be monitored. d. IdentifY the full operating and capital costs for each utility and conduct a test of sufficiency that compares those needs against available rate and miscellaneous operating revenues, identifYing any projected shortfalls over the forecast period. e. Develop rate strategies that meet financial obligations for the 2009-2011 planning horizons and provide smooth impacts to utility customers, to the extent practical. f. Evaluate alternative scenarios that may alter the results of the operating forecast. The sensitivity of alternative funding sources, growth rates, project timing, etc. may be considered to provide the city staff, senior management team and council with appropriate information to make the most informed decision. A baseline scenario will be developed for existing operations as well as up to two (2) additional scenarios for various changes and/or increases in service levels/costs. Task Five - Cost of Service: This evaluation will provide a defensible basis for assigning "cost shares" and establishing "equity" for system customers with the development of a series of allocations, based on customer data, engineering/planning criteria, and judgment, to assign utility cost recovery to customers in proportion to their actual demands. a. Existing customer classes will be evaluated in the cost of service. b. Functionalize, classifY and allocate costs to customer classes. A peer review will be provided to evaluate the existing cost classification approach used by the City for each of the utilities. Lisa Skumatz from SERA Inc. will provide this review for the solid waste utility and John Ghilarducci, Principal of the project will provide this review for the water and wastewater utility. c. A summary memorandum will document any recommended changes as a result of the peer review. Incorporating any significant changes to the existing cost of service methodology have not been budgeted in this phase of the rate study. d. The cost of service analysis will provide a summary of the allocated costs by customer class. In addition, the unit cost for each major utility service function will be calculated. Task Six -Rate Design: This task includes the generation of alternative rate design structures for each service, and a comparison of sample typical bills showing potential customer impacts under each structure. The rate design options will be developed to be consistent with the City's fiscal policies, generate sufficient revenue to meet the revenue requirement forecast and begin to address any inequities identified in the cost-of-service findings. The rate design task will include a review of the following: a. Review transfer station rates and/or charge basis for recycling, yard waste, moderate risk waste, municipal solid waste, compost and other rate/charges specified by the City. Recommended changes will be summarized in a memorandum for future consideration by the City. There are no alternative programs or rates to be considered for the solid waste collection utility. b. Water utility rates for fixed and variable charges will be reviewed. A conservation based rate structure for the water utility shall be evaluated to comply with House Bill 1338 Water Use Efficiency Rule. Generally, conservation blocks work well to target single-family usage and a seasonal rate structure is more effective for o~~) FCS GROUP 2 City of Port Angeles Proposal for Utility Rate Study commercial type use. Review fixed monthly meter charges for compliance with industry capacity weightings. Review the option of an irrigation rate and set volume rate appropriately to meet City objectives. c. Wastewater utility rates should be calculated to meet all utility obligations with the CSO charge calculated and identified separately based on the cost recovery targets of the CSO program. The rate evaluation will review the option of single-family fixed and variable charges to help the City determine if the current rate structure is still appropriate. d. Each proposed rate option evaluated will discuss the pros and cons of moving to the rate structure. Each rate option shall also address the percentage of revenue that comes from the fixed versus the variable rate components. e. Bill comparisons will be generated describing the number of and degree to which different customers are impacted by changes in the current rate structures. We will prepare a comparison of the impact of each rate structure (including the existing rate structure) on typical bills of representative customers from each customer class. The City shall provide rate structures for neighboring and regional utilities to be included in comparisons. Task Seven -Meetings/Presentations: Prepare for and facilitate on-site meetings with staff, senior management, Joint Solid Waste Advisory Committee, Utility Advisory Committee and/or City Council to review findings, conclusions, and recommendations. Following this review, FCS GROUP will revise the analyses, as appropriate, and finalize recommendations. a. Two (2) staff review meetings (via conference calls or video teleconferencing) will be scheduled to discuss the preliminary results and incorporate changes/edits. Two review meetings are anticipated. One meeting to discuss the results of the revenue requirements and cost of service. The second meeting is to review the proposed rate designs. b. Two (2) meetings to discuss and present findings, conclusions and recommendations (via conference calls or video teleconferencing) with senior management and the Joint Solid Waste Advisory Committee. c. Two (2) meetings (in person) with the Utility Advisory Committee and City Council have been budgeted to present the utility rate study findings and obtain feedback. Travel costs are included, however, lodging expenses were not anticipated or included. Task Eight -Documentation: An executive level report for each comprehensive rate study will be provided at the conclusion of the technical analysis documenting the rate study process, assumptions, findings, and recommendations. a. All presentations will be provided to the City electronically. b. All excel spreadsheet models will be provided electronically. c. Three (3) bound copies of the draft executive level report will be submitted to the City for review and comment. We will incorporate all appropriate changes identified during the City's review of the draft. d. Three (3) bound copies of the final executive level report will be provided to the City along with an electronic reproducible version of the report. Task Nine-Other Reviews The City has identified in the RFP optional scope of work items that may be requested. approach to meeting the city's requests in each of the areas is as follow; The FCS GROUP ~~:) FCS GROUP 3 City of Pon Angdes Proposal for Utility Rate Study a. Connection ~es - Connection charges relate to the cost incurred to physically connect a customer to the water or sewer system. Key cost drivers will be reviewed such as fully loaded labor costs and materials to calculate the cost to provide this service. We expect that we will need City staff to provide some time estimates and weighted labor cost estimates to facilitate the analysis. b. State Tax Review- Evaluate the City's state tax return and verify the City is not overpaying on the various taxes. FCS GROUP has proposed the use of Chris Gonzales. Chris has spent a substantial amount of time working with the Washington State Department of Revenue on excise tax audits on behalf of FCS GROUP clients around Washington State. c. Review Tide 13 - Public Utilities Code - Evaluate the utilities code and provide feedback as to ways to simplify utility rates and discounts. Exhibit B - Budget by Task City of Port Angdes Utility Rate Studies for Water, Wastewater And Solid Waste Utilities Task Hourly BJllmg Rates Rate Study Task 1 - Data Collectlon 16 $1,680 8 $720 24 $2,400 Task 2 - FIscal Policy Evaluatlon 8 1,360 8 1,176 16 2,536 Task 3 - Capital Fundmg Plan -Water 4 12 1,940 0 16 1,940 - Wastewater (CSO fundmg evaluatlon) 4 20 2,780 0 24 2,780 - Solid Waste 0 0 0 Task 4 - Multl-Year Operatlng Forecast - Water 8 30 4,510 0 38 4,510 - Wastewater 8 32 4,720 0 40 4,720 - Solid Waste 0 24 3,528 24 3,528 Task 5 - COSt of ServIce - Water (SF conservatlon rate only) - no COSA changes 8 8 16 4,480 0 32 4,480 - Wastewater - No COSA changes 8 8 16 4,480 0 32 4,480 - Solid Waste (cursory review, 10 Improvements) 0 24 8 4,248 32 4,248 Task 6 - Rate Design - Water (conservation rates only) 8 30 4,510 0 38 4,510 - Wastewater (SF volume based rate) 4 24 3,200 0 28 3,200 - Solid Waste (cursory reVlev.l, 10 Improvements) 0 24 3,528 24 3,528 Task 7 - Meettngs/Presenranons - Project Meetlngs (conference calls - 2) 4 4 1,100 4 588 12 1,688 - Presemanon Semor Management 3 510 0 3 510 - PresentatIon JOInt SolId Waste AdVISOry Committee 3 510 0 3 510 - Presentation Utility AdVISOry Commutee 8 1,360 0 8 1,360 - Presemauon Council 8 1,360 0 8 1,360 Task 8 - Documentatlon (executlve level) 4 32 4,040 12 1,764 48 5,804 Subtotal Rate Study 16 90 232 $42,540 96 16 $15.552 450 $58,092 Additional Tasks Task 9 - Other RevIews - Connecuon Charges 30 $4,200 $0 30 $4,200 - State Tax Reviews 2 32 4,820 0 34 4,820 - Rate Ordmance Review 2 32 4,820 0 34 4,820 Subtotal Add1l10nal Tasks 4 94 $13,840 $0 98 $13,840 Total All 16 94 94 232 $56,380 96 16 $15,552 548 $71.932 37% 216% 216% 532% Total Hours 436 857% 143% Total Hours 112 Total Budget $56,380 Total Budget $15,552 % Total Budget 78% % Total Budget 22% 100% Exhibit C - Labor Costs and Non-Salary Reimburseable Costs City of Port Angeles Utility Rate Studies for Water, Wastewater And Solid Waste Utilities FCS GROUP LABOR COSTS Title Principal Project Managet Project Consultant Senior Analyst Analyst Admin Support DIRECT EXPENSES Billing Rate $180 $170 $140 $120 $105 $60 Major direct expenses, such as air travel and lodging, will be charged at cost plus 5%. Other expenses will NOT be directly charged. For any client-requested extraordinary expenses, specific terms will be established prior to expenditure and billing. SERA INC. LABOR COSTS Title Principal Analyst Billing Rate** $147 $90 **Includes 5% subconsulting fee DIRECT EXPENSES No direct expenses anticipated. All meetings will be held via conference call or video teleconference. EXHIBIT D - SCHEDULE OF WORK Utility Rate Studies for the Water, Wastewater and Solid Waste Utilities ESTIMATED PROJECT TIMELINE - 2008 Notice to Proceed Task 1. Data Collection - all studies Task 2 Fiscal Policy Evaluation Solid Waste/Transfer Station Water/Wastewater Task 3. Capital Funding Plan SolId Waste/Transfer Station Water/Wastewater Task 4. Operating Forecast - Revenue Requirement Solid Waste/Transfer Station Water/Wastewater Task 5. Cost of Service Analysis SolId Waste/Transfer Station Water/Wastewater Task 6. Rate Design Solid Waste/Transfer Station Water/Wastewater Task 7. Meetings/Presentations Internal Review Meeting/Conference Call - (2) . . Presentations Committees/Council - (4) . . . . Task 8. Documentation (executive levd report/memo) Task 9. Other Reviews Note: FInal results are dependant on timely schedulIng of meetings The above chart represents estimated timing only that Will lIkely evolve as the project proceeds. * Indicates Notice to Proceed . Indicates Internal staff review of prelIminary results . Indicates presentation to semor management, Joint Solid Waste Advisory Board, Utiliry Advisory Committee and Clry Council 5. ca75 AMENDMENT NO.1 TO AGREEMENT FOR PROFESSIONAL SERVICES BETWEEN THE CITY OF PORT ANGELES AND FCS GROUP RELATING TO: ECONOMIC ANALYSIS - RATE STUDY SERVICES THIS AGREEMENT is made and entered into this 15ti.. day of ~ IO~ A/ , 2008, by and between THE CITY OF PORT ANGELES, a non-charter ~State of Washington, (hereinafter,called the "CITY") and FCS Group, a Washington Corporation authorized to do business in the state of Washington (hereinafter called the "CONSULTANT"). WHEREAS, the CITY desires professional services related to comprehensive rate studies for utilities; and WHEREAS, the CITY desires to engage the professional services and assistance of a qualified consulting firm to perform the scope of work as detailed in Exhibit A, and WHEREAS, the CONSULTANT represents that it is in full compliance with the statutes of the State of Washington for professional registration and/or other applicable requirements, and WHEREAS, the CONSULTANT represents that it has the background, experience, and ability to perform the required work in accordance with the standards of the profession, and WHEREAS, the CONSULTANT represents that it will provide qualified personnel and appropriate facilities necessary to accomplish the work; NOW, THEREFORE, in consideration of the above representations and the terms, conditions, covenants, and agreements set forth below, the parties hereto agree as follows: SCOPE OF WORK The scope of professional servi,ces to be performed and the results to be achieved by the CONSULTANT shall be as detailed in the attached Exhibit A and shall include all services and material necessary to accomplish the work. The CITY may review the CONSULTANT'S work product, and if it is not satisfactory, the CONSULTANT shall make such changes as may be required by the CITY. Such changes shall not constitute "Extra Work" as related in Section XII of this Agreement. The CONSULTANT agrees that all services performed under this Agreement shall be in accordance with the standards of the profession and in compliance with applicable federal, state and local laws. The Scope of Work may be amended upon written approval of both parties. PW 0410_01 ProfeSSional Services Agreement [ReVised [05/12/06] Page 1 of 7 II OWNERSHIP OF DOCUMENTS Upon completion of the work, all documents, exhibits, photographic negatives, or other presentations of the work shall become the property of the CITY for use without restriction and without representation as to suitability for reuse by any other party unless specifically verified or adapted by the CONSULTANT. However, any alteration of the documents, by the City or by others acting through or on behalf of the City, will be at the City's sole risk. III DESIGNATION OF REPRESENTATIVES Each party shall designate its representatives in writing. The CONSULTANT'S representative shall be subject to the approval of the CITY. IV TIME OF PERFORMANCE The CONSULTANT may begin work upon execution of this Agreement by both parties and the ' duration of the Agreement shall extend through January 31,2010. The work shall be completed in accordance with the schedule set forth in the attached Exhibit D. V PAYMENT The CITY shall pay the CONSULTANT as set forth in this section of the Agreement. Such payment shall be full compensation for work performed, services rendered, and all labor, materials, supplies, equipment and incidentals necessary to complete the work. A. Payment shall be on the basis of the CONSULTANT'S standard billing rates as set forth in Exhibit C multiplied by the actual hours worked, cost for actual labor, overhead and profit plus CONSULTANT'S direct non-salary reimbursable costs as set forth in the attached Exhibit C. B. The CONSULTANT shall submit invoices to the CITY on a monthly basis. Invoices shall detail the work, hours, employee name, and hourly rate; shall itemize with receipts and invoices the non-salary direct costs; shall indicate the specific task or activity in the Scope of Work to which the costs are related; and shall indicate the cumulative total for each task. C. The CITY shall review the invoices and make payment for the percentage of the project that has been completed less the amounts previously paid. D. The CONSULTANT invoices are due and payable within 30 days of receipt. In the event of a disputed billing, only the disputed portion will be withheld from payment. E. Final payment for the balance due to the CONSULTANT will be made after the completion of the work and acceptance by the CITY. F. Payment for "Extra Work" performed under Section XII of this Agreement shall be as agreed to by the parties in writing. PW 0410_01 ProfeSSional Services Agreement [Revised [05/12/06] Page 2 of 7 VI MAXIMUM COMPENSATION Unless otherwise agreed to in writing by both parties, the CONSULTANT'S total compensation and reimbursement under this Agreement, including labor, direct non-salary reimbursable costs and outside services, shall not exceed the maximum sum of $82,197.00. The budget for each task is as set forth in the attached Exhibit B. Budgets for task(s) may be modified upon mutual agreement between the two parties, but in any event, the total payment to CONSULTANT shall not exceed $82,197.00. VII INDEPENDENT CONTRACTOR STATUS The relation created by this Contract is that of owner-independent contractor. The Contractor is not an employee of the City and is not entitled to the benefits provided by the City to its employees. The Contractor, as an independent contractor, has the authority to control and direct the performance of the details of the services to be provided. The Contractor shall assume full responsibility for payment of all Federal, State, and local taxes or contributions imposed or required, including, but not limited to, unemployment insurance, Social Security, and income tax. VIII EMPLOYMENT Employees of the CONSULTANT, while engaged in the performance of any work or services under this Agreement, shall be considered employees of the CONSULTANT only and not of the CITY, and claims that may arise under the Workman's Compensation Act on behalf of said employees while so engaged, and any and all claims made by a third party as a consequence of any negligent act or omission on the part of the CONSULTANT'S employees while so engaged, on any of the work or services provided to be rendered herein, shall be the sole obligation and responsibilify of the CONSULTANT. In performing this Agreement, the CONSULTANT shall not employ or contract with any CITY employee without the City's written consent. IX NONDISCRIMINATION The CONSULTANT shall conduct its business in a manner, which assures fair, equal and non-discriminatory treatment of all persons, without respect to race, creed or national origin, or other legally protected classification and, in particular: A. The CONSULTANT shall maintain open hiring and employment practices and will welcome applications for employment in all positions, from qualified individuals who are members of minorities protected by federal equal opportunity/affirmative action requirements; and, B. The CONSULTANT shall comply with all requirements of applicable federal, state or local laws or regulations issued pursuant thereto, relating to the establishment of non discriminatory requirements in hiring and employment practices and assuring the service of all persons without discrimination as to any person's race, color, religion, sex, Vietnam era veteran status, disabled veteran condition, physical or mental handicap, or national origin. PW 0410_01 ProfeSSional Services Agreement [ReVised [05/12/06] Page 3 of 7 X SUBCONTRACTS A. The CONSULTANT shall not sublet or assign any of the work covered by this Agreement without the written consent of the CITY. B. In all solicitation either by competitive bidding or negotiation made by the CONSULTANT for work to be performed pursuant to a subcontract, including procurement of materials and equipment, each potential subconsultant or supplier shall be notified by the CONSULTANT of Consultant's obligations under this Agreement, including the nondiscrimination requirements. XI CHANGES IN WORK Other than changes directed by the CITY as set forth in Section I above, either party may request changes in the scope of work. Such changes shall not become part of this Agreement unless and until mutually agreed upon and incorporated herein by written amendments to this Agreement executed by both parties. XII EXTRA WORK The CITY may desire to have the CONSULTANT perform work or render services in connection with this project, in addition to the Scope of Work set forth in Exhibit A and minor revisions to satisfactorily completed work. Such work shall be considered as "Extra Work" and shall be addressed in a written supplement to this Agreement. The CITY shall not be responsible for paying for such extra work unless and until the written supplement is executed by both parties. XIII TERMINATION OF AGREEMENT A. The CITY may terminate this Agreement at any time upon not less than ten (10) days written notice to the CONSULTANT. Written notice will be by certified mail sent to the consultant's designated representative at the address provided by the CONSULTANT. B. In the event this Agreement is terminated prior to the completion of the work, a final payment shall be made to the CONSULTANT, which, when added to any payments previously made, shall compensate the CONSULTANT for the percentage of work completed. C. In the event this Agreement is terminated prior to completion of the work, documents that are the property of the CITY pursuant to Section II above, shall be delivered to and received by the CITY prior to transmittal of final payment to the CONSULTANT. XIV INDEMNIFICATION/HOLD HARMLESS CONSULTANT shall defend, indemnify and hold the CITY, its officers, officials, employees and volunteers harmless from any and all claims, injuries, damages, losses or suits including attorney fees, arising out of or resulting from the negligent acts, errors or omissions of the CONSULTANT in performance of this Agreement, except for injuries and damages caused by the sole negligence of the CITY. PW 0410_01 Professional Services Agreement [Revised [05/12/06] Page 4 of 7 The CITY agrees to indemnify the CONSULTANT from any claims, damages, losses, and costs, including, but not limited to, attorney's fees and litigation costs, arising out of claims by third parties for property damage and bodily injury, including death, caused solely by the negligence or willful misconduct of the CITY, CITY's employees, or agents in connection with the work performed under this Agreement. If the negligence or willful misconduct of both CONSULTANT and CITY (or a person identified above for whom each is liable) is a cause of such damage or injury, the loss, cost, or expense shall be shared between the CONSULTANT and the CITY in proportion to their relative degrees of negligence or willful misconduct and the right of indemnity shall apply for such proportion. Should a court of competent jurisdiction determine that this Agreement is subject to RCW 4.24.115, then, in the event of liability for damages arising out of bodily injury to persons or damages to property caused by or resulting from the concurrent negligence of the CONSULTANT, the CITY, and the officers, officials, employees, and volunteers of either, the CONSULTANT'S liability hereunder shall be only to the extent of the CONSULTANT'S negligence. It is further specifically and expressly understood that the indemnification provided herein constitutes the CONSULTANT'S waiver of immunity under Industrial Insurance, Title 51 RCW, solely for the purposes of this indemnification. This waiver has been mutually negotiated by the parties. The provisions of this section shall survive the expiration or termination of this Agreement. However, the CONSULTANT expressly reserves its rights as a third person set forth in RCW 51.24.035. XV INSURANCE The CONSULTANT shall procure and maintain for the duration of the Agreement, insurance against claims for injuries to persons or damage to property which may arise from or in connection with the performance of the work hereunder by the CONSULTANT, its agents, representatives, employees or subcontractors. No Limitation. CONSULTANT'S maintenance of insurance as required by the agreement shall not be construed to limit the liability of the CONSULTANT to the coverage provided by such insurance, or otherwise limit the CITY'S recourse to any remedy available at law or in equity. A. Minimum Scope of Insurance Consultant shall obtain insurance of the types described below: 1. Automobile Liability insurance covering all owned, non-owned, hired and leased vehicles. Coverage shall be written on Insurance Services Office (ISO) form CA 0001 or a substitute form providing equivalent liability coverage. If necessary, the policy shall be endorsed to provide contractual liability coverage; and, 2. Commercial General Liability insurance shall be written on ISO occurrence form CG 00 01 and shall cover liability arising from premises, operations, independent contractors, and personal injury and advertising injury. The City shall be named as an insured under the Consultant's Commercial General Liability insurance policy with respect to the work performed for the City; and, PW 0410_01 ProfeSSional Services Agreement [Revised [05/12/06] Page 5 of 7 3. Workers' Compensation coverage as required by the Industrial Insurances laws of the State of Washington; and 4. Professional Liability insurance appropriate to the Consultant's profession. B. Minimum Amounts of Insurance Consultant shall maintain the following insurance limits: 1. Automobile Liability insurance with a minimum combined single limit for bodily injury and property damage of $1 ,000,000 per accident. 2. Commercial General Liability insurance shall be written with limits no less than $1,000,000 each occurrence, $2,000,000 general aggregate. 3. Professional Liability insurance shall be written with limits no less than $1,000,000 per claim and $1,000,000 policy aggregate limit. C. Other Insurance Provisions The insurance policies are to contain, or be endorsed to contain, the following provisions for Automobile Liability, Professional Liability and Commercial General Liability insurance: . 1. The Consultant's insurance coverage shall be primary insurance as respect the City. Any insurance, self-insurance, or insurance pool coverage maintained by the City shall be excess of the Consultant's insurance and shall not contribute with it. 2. The Consultant's insurance shall be endorsed to state that coverage shall not be cancelled, suspended or materially changed by either party, except after thirty (30) days prior written notice by certified mail, return receipt requested, has been given to the City. 3. Any payment of deductible or self-insured retention shall be the sole responsibility of the CONSULTANT. 4. The CONSULTANT'S insurance shall contain a clause stating that coverage shall apply separately to each insured against whom claim is made or suit is brought, except with respects to the limits of the insurer's liability. D. Acceptability of Insurers Insurance is to be placed with insurers with a current A.M. Best rating of not less than A:VII. E. Verification of Coverage Consultant shall furnish the City with original certificates and a copy of the amendatory endorsements, including but not necessarily limited to the additional insured endorsement, evidencing the insurance requirements of the Consultant before commencement of the work. PW 0410_01 ProfeSSional Services Agreement [ReVised [05/12/06] Page 6 of 7 XVI APPLICABLE LAW This Agreement shall be construed and interpreted in accordance with the laws of the State of Washington, and in the event of dispute the venue of any litigation brought hereunder shall be Clallam County. XVII EXHIBITS AND SIGNATURES This Agreement, including its exhibits, constitutes the entire Agreement, supersedes all prior written or oral understandings, and may only be changed by a written amendment executed by both parties. The following exhibits are hereby made a part of this Agreement: Exhibit A - Scope of Work Exhibit B - Budget for Each Task Exhibit C - Consultant Labor Costs and Non-salary Reimbursable Costs Exhibit D - Schedule for the Work IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first written above. CITY OF PORT ANGELES ;;;APPROVED AS TO FORM: /\. . A~ <-~ WILLIAM E. BLOOR, CITY ATTORNEY Lj .J.. /~ IJ/~. MAYOR CONSULTANT ATTEST: TI~~l ~ ") PW 0410_01 ProfeSSional Services Agreement [Revised [05/12/06] Page 7 of 7 City ,)( l'on ;\nf;cll'<; Pro!"''>,lJ for Utility RalC Study EXHIBIT A - AMENDMENT NO.1 SCOPE OF SERVICES The following scope of services has been developed to meet the needs expressed in the City's request for proposal. ra"k One --DJta Collection FCS GROUP will establish a foundation for the rate study by conducting a structured data collection and analysis process. We will strive to uncover any data limitations, issues or concerns that will need to be addressed early on in the process to ensure successful study completion. a. Detailed customer statistics will be provided for exploring alternative rate designs for each utilrty. ThIS will be provided by the City in electronic format and include individual customer account information. b. The City will also provide detailed customer data related to customers receiving the low-income utility discount for senior citizens and disabled citizens. c. Existing data supplied on the City's Transfer Protocol website will be reviewed thoroughly before a supplemental data request is provided. T ask Two -riscal Policy [valuation: FCS GROUP will review policies regarding reserve management. The review will ensure maintenance of the minimum threshold for each fund and the financial and rate impacts for establishing any new or revised reserves or target levels. a. The following reserves will be reviewed; cash (operating) reserves, capital-related reserves, debt reserves, and rate stabilIzation reserves, if applicable. b. The solid waste utility landfill post-closure fund balances will be reviewed in detail. A review of the collection equipment reserve will also be performed. Task -Three -Capital Funding Plan: This task will define strategies for funding the Capital Improvement Programs over the 2009 - 2011 time horizon. The overall objective of the capital financial planning analysis is to determine the optimal mix of available resources from rate revenues, development/connection fees, debt financing and use of accumulated capital reserves, to ensure financial health of the utilrties and to smooth rate impacts of capital funding needs. a. The water utility approach shall include a financial program to be included in the City's December 2008 Water Comprehensive Plan. b. The wastewater utility shall include two separate yet related capital requirements. The first requirement relates to regular renewallreplacement and growth related capital needs. The second set of capital requirements are listed in the amended 2006 CSO Reduction Facilities Plan. Each set of capital needs should identifY the capital funding approach and the resulting impacts to rates. The CSO review may require sensitivity analyses that will calculate the impact to the CSO charge of funding varying degrees of CSO specific capital needs. c. The solid waste collection and transfer station anticipate no capital needs for this review period. -r ask four -Multi-Year Operating Forecast (Revenue Requirement): This task forms a complete portrayal of utility financial obligations and links directly with the operational/capital drivers of the system - yielding a basisJor setting rates. The analysis will be conducted for each utility separately, ensuring that each systqn's rates and charges can independently meet the needs for which they are established. a. Integrate cash, coverage and fund balance requirements from recommended fiscal policies (Task Two) and capital financing strategies (Task Three). ~ 4;:$) FeS % [TD , ,. '"-' 1 (-ifY of POri /\nf;( 1,,<; l'ropo\.ll for Utility IbH'Study b. Forecast annual operating expenditures and revenues for the planning-horizon. Budget estimates will be used as a baseline for projecting future costs and revenues. Model impacts resulting from any operational cost additions or savings (Water Comprehensive Plan, CSO program, solid waste operational changes (every other week pickup), etc.), known or anticipated changes to meet regulatory requirements, as well as impacts of any new or enhanced program initiatives. c. Incorporate the City's existing debt issues and any anticipated new issues in the revenue requirement. Debt service coverage requirements will be monitored. d. Identify the full operating and capital costs for each utility and conduct a test of sufficiency that compares those needs agaInst available rate and miscellaneous operating revenues, identifying any projected shortfalls over the forecast period. e. Develop rate strategies that meet financial obligations for the 2009-2011 planning horizons and provide smooth impacts to utility customers, to the extent practical. f. Evaluate alternative scenarios that may alter the results of the operating forecast. The sensitivity of alternative funding sources, growth rates, project timing, etc. may be considered to provide the city staff, senior management team and council with appropriate information to make the most informed decision. A baseline scenario will be developed for existing operations as well as up to two (2) additional scenarios for various changes and/or increases in service levels/costs. ! ask HvC' - Co~l of Service: This evaluation will provide a defensible basis for assigning "cost shares" and establishing "equity" for system customers with the development of a series of allocations, based on customer data, engineering/planning criteria, and judgment, to assign utility cost recovery to customers in proportion to their actual demands. a. Existing customer classes will be evaluated in the cost of service. b. FunctJonalize, classify and allocate costs to customer classes. A peer review will be provided to evaluate the existing cost classification approach used by the City for each of the utilities. Lisa Skumatz from SERA Inc. will provide this review for the solid waste utility and John Ghilarducci, Principal of the project will provide this review for the water and wastewater utility. c. A summary memorandum will document any recommended changes as a result of the peer review. Incorporating any significant changes to the existing cost of service methodology have not been budgeted in this phase of the rate study. d. The cost of service analysis will provide a summary of the allocated costs by customer class. In addition, the unit cost for each major utility service function will be calculated. rask Six -Rate Design: This task includes the generation of alternative rate design structures for each service, and a comparison of sample typical bills showing potential customer impacts under each structure. The rate design options will be developed to be consistent with the City's fiscal policies, generate sufficient revenue to meet the revenue requirement forecast and begin to address any inequities identified in the cost-of-service findings. The rate design task will include a review of the following: a. Review transfer station rates and/or charge basis for recycling, yard waste, moderate risk waste, municipal solid waste, compost and other rate/charges specified by the City. Recommended changes will be summarized in a memorandum for future consideration by the City. There are no alternative programs or rates to be considered for the solid waste collection utility. b. Water utility rates for fixed and variable charges will be reviewed. A conservation based rate structure for the water utility shall be evaluated to comply with House Bill 1338 Water Use Efficiency Rule. Generally, conservation blocks work well to target single-family usage and a seasonal rate structure is more effective for +::> FCS (~R()CP 2 (;ity of POI! An~clcs "wpm.!! (or Utility R:lle Study commercial type use. Review fixed monthly meter charges for compliance with industry capacity weightings. Review the option of an irrigation rate and set volume rate appropriately to meet City objectives. c. Wastewater utility rates should be calculated to meet all utility obligations with the CSO charge calculated and identified separately based on the cost recovery targets of the CSO program. The rate evaluation will review the option of single-family fixed and variable charges to help the City determine if the current rate structure is still appropriate. d. Each proposed rate option evaluated will discuss the pros and cons of moving to the rate structure. Each rate option shall also address the percentage of revenue that comes from the fixed versus the variable rate components. e. Bill comparisons will be generated describing the number of and degree to which different customers are impacted by changes in the current rate structures. We will prepare a comparison of the impact of each rate structure (including the existing rate structure) on typical bills of representative customers from each customer class. The City shall provide rate structures for neIghboring and regional utilities to be included in comparIsons. Task Seven -Meetings/Presentations: Prepare for and facilitate on-site meetings with staff, senior management, Joint Solid Waste Advisory Committee, Utility Advisory Committee and/or City Council to review findings, conclusions, and recommendations. Following this review, FCS GROUP will revise the analyses, as appropriate, and finalize recommendations. a. Two (2) staff review meetings (via conference calls or video teleconferencing) will be scheduled to discuss the preliminary results and incorporate changes/edits. Two review meetings are anticipated. One meeting to discuss the results of the revenue requirements and cost of service. The second meeting is to review the proposed rate designs. b. Two (2) meetings to discuss and present findings, conclusions and recommendations (via conference calls or video teleconferencing) with senior management and the Joint Solid Waste Advisory Committee. c. Two (2) meetings (in person) with the Utility Advisory Committee and City Council have been budgeted to present the utility rate study findings and obtain feedback. Travel costs are included, however, lodging expenses were not anticipated or included. Task Eight -Documentation: An executive level report for each comprehensive rate study will be provided at the conclusion of the technical analysis documenting the rate study process, assumptions, findings, and recommendations. a. All presentations will be provided to the City electronically. b. All excel spreadsheet models will be provided electronically. c. Three (3) bound copies of the draft executive level report will be submitted to the City for review and comment. We will incorporate all appropriate changes identified during the City's review of the draft. d. Three (3) bound copies of the final executive level report will be provided to the City along with an electronic reproducible version of the report. i ask Nine-Other Reviews The City has identified in the RFP optional scope of work items that may be requested. The FCS GROUP approach to meeting the city's requests in each of the areas is as follow; ~ ..::> FCS l ' I' J ;t j (-it)' of Pon .'\ll~t'k~ I'mI'm.l! tor Utility Hal<' ';tudy a. Connection charges - Connection charges relate to the cost incurred to physically connect a customer to the water or sewer system. Key cost drivers will be reviewed such as fully loaded labor costs and materials to calculate the cost to provide this service. We expect that we will need City staff to provide some time estimates and weighted labor cost estimates to facilitate the analysis. b. State Tax Review - Evaluate the City's state tax return and verifY the City is not overpaying on the various taxes. FCS GROUP has proposed the use of Chris Gonzales. Chris has spent a substantial amount of time working with the Washington State Department of Revenue on excise tax audits on behalf of FCS GROUP clients around Washington State. c. Review Title 13 - Public Utilities Code - Evaluate the utilIties code and provide feedback as to ways to simplifY utility rates and discounts. d. Water and Wastewater System Development Charge Update - Evaluate fees imposed on new development which are intended to mitigate the impact of such development on the capital facilities of the water and wastewater system and recommend revisions as warranted. Fes C;H() Ip 1j 5.S75 AMENDMENT NO.2 TO AGREEMENT FOR PROFESSIONAL SERVICES BETWEEN THE CITY OF PORT ANGELES AND FCS GROUP RELATING TO: ECONOMIC ANALYSIS - RATE STUDY SERVICES THIS AGREEMENT is made and entered into this I ptA.. day of ~ ^J 4 tI.....~ ' 2009, by and between THE CITY OF PORT ANGELES, a non-charter e city of the ate of Washington, (hereinafter called the "CITY") and FCS Group, a Washington Corporation authorized to do business in the state of Washington (hereinafter called the "CONSUL T ANr'). WHEREAS, the CITY desires professional services related to comprehensive rate studies for utilities; and WHEREAS, the CITY desires to engage the professional services and assistance of a qualified consulting firm to perform the scope of work as detailed in Exhibit A, and WHEREAS, the CONSUL T ANT represents that it is in full compliance with the statutes of the State of Washington for professional registration and/or other applicable requirements, and WHEREAS, the CONSULTANT represents that it has the background, experience, and ability to perform the required work in accordance with the standards of the profession, and WHEREAS, the CONSULTANT represents that it will provide qualified personnel and appropriate facilities necessary to accomplish the work; NOW, THEREFORE, in consideration of the above representations and the terms, conditions, covenants, and agreements set forth below, the parties hereto agree as follows: SCOPE OF WORK The scope of professional services to be performed and the results to be achieved by the CONSULTANT shall be as detailed in the attached Exhibit A and shall include all services and material necessary to accomplish the work. The CITY may review the CONSULTANT'S work product, and if it is not satisfactory, the CONSUL TANT shall make such changes as may be required by the CITY. Such changes shall not constitute -Extra Work" as related in Section XII of this Agreement. The CONSULTANT agrees that all services performed under this Agreement shall be in accordance with the standards of the profession and in compliance with applicable federal, state and local laws. The Scope of Work may be amended upon written approval of both parties. PW 0410_01 P.rofesslonal Services Agreement Revised [05/12106J Page 1 of 7 II OWNERSHIP OF DOCUMENTS Upon completion of the work, all documents, exhibits, photographic negatives, or other presentations of the work shall become the property of the CITY for use without restriction and without representation as to suitability for reuse by any other party unless specifically verified or adapted by the CONSULTANT. However, any alteration of the documents, by the City or by others acting through or on behalf of the City, will be at the City's sole risk. III DESIGNATION OF REPRESENTATIVES Each party shall designate its representatives in writing. The CONSULTANT'S representative shall be subject to the approval of the CITY. IV TIME OF PERFORMANCE The CONSULTANT may begin work upon execution of this Agreement by both parties and the duration of the Agreement shall extend through January 31, 2010. The work shall be completed in accordance with the schedule set forth in the attached Exhibit C. V PAYMENT The CITY shall pay the CONSULTANT as set forth in this section of the Agreement. Such payment shall be full compensation for work performed, services rendered, and all labor, materials, supplies, equipment and incidentals necessary to complete the work. A. Payment shall be on the basis of the CONSULTANT'S standard billing rates as set forth in Exhibit B multiplied by the actual hours worked, cost for actual labor, overhead and profit plus CONSULTANT'S direct non-salary reimbursable costs as set forth in the attached Exhibit B. B. The CONSULTANT shall submit invoices to the CITY on a monthly basis. Invoices shall detail the work, hours, employee name, and hourly rate; shall itemize with receipts and invoices the non-salary direct costs; shall indicate the specific task or activity in the Scope of Work to which the costs are related; and shall indicate the cumulative total for each task. C. The CITY shall review the invoices and make payment for the percentage of the project that has been completed less the amounts previously paid. D. The CONSULTANT invoices are due and payable within 30 days of receipt. In the event of a disputed billing, only the disputed portion will be withheld from payment. E. Final payment for the balance due to the CONSULTANT will be made after the completion of the work and acceptance by the CITY. F. Payment for "Extra Work" performed under Section XII of this Agreement shall be as agreed to by the parties in writing. PW 0410_01 ProfeSSional Services Agreement Revised [05/12/06] Page 2 of 7 VI MAXIMUM COMPENSATION Unless othelWise agreed to in writing by both parties, the CONSULTANT'S total compensation and reimbursement under this Agreement, including labor, direct non-salary reimbursable costs and outside services, shall not exceed the maximum sum of $39,955.00. The budget for each task Is as set forth in the attached Exhibit B. Budgets for task(s) may be modified upon mutual agreement between the two parties, but in any event, the total payment to' CONSULTANT shall not exceed $39,955.00. VII INDEPENDENT CONTRACTOR STATUS The relation created by this Contract is that of owner-independent contractor. The Contractor is not an employee of the City and is not entitled to the benefits provided by the City to its employees. The Contractor, as an independent contractor, has the authority to control and direct the performance of the details of the services to be provided. The Contractor shall assume full responsibility for payment of all Federal, State, and local taxes or contributions imposed or required, including, but not limited to, unemployment insurance, Social Security, and income tax. VIII EMPLOYMENT Employees of the CONSULTANT, while engaged in the performance of any work or services under this Agreement, shall be considered employees of the CONSULTANT only and not of the CITY, and claims that may arise under the Workman's Compensation Act on behalf of said employees while so engaged, and any and all claims made by a third party as a consequence of any negligent act or omission on the part of the CONSULTANT'S employees while so engaged, on any of the work or services provided to be rendered herein, shall be the sole obligation and responsibility of the CONSULTANT. In performing this Agreement, the CONSULTANT shall not employ or contract with any CITY employee without the City's written consent. IX NONDISCRIMINATION The CONSULTANT shall conduct its business in a manner, which assures fair, equal and non-discriminatory treatment of all persons, without respect to race, creed or national origin, or other legally protected classification and, in particular: A. The CONSULTANT shall maintain open hiring and employment practices and will welcome applications for employment in all positions, from qualified individuals who are members of minorities protected by federal equal opportunity/affirmative action requirements; and. B. The CONSULTANT shall comply with all requirements of applicable federal, state or local laws or regulations issued pursuant thereto, relating to the establishment of non discriminatory requirements in hiring and employment practices and assuring the service of all persons without discrimination as to any person's race, color, religion, sex, Vietnam era veteran status, disabled veteran condition, physical or mental handicap, or national origin. PW 0410_01 Professional ServIces Agreement Revised [05/12/06] . Page 3 of 7 X SUBCONTRACTS A. The CONSULTANT shall not sublet or assign any of the work covered by this Agreement without the written consent of the CITY. B. In all solicitation either by competitive bidding or negotiation made by the CONSULTANT for work to be performed pursuant to a subcontract, including procurement of materials and equipment, each potential subconsultant or supplier shall be notified by the CONSULTANT of Consultant's obligations under this Agreement, including the nondiscrimination requirements. XI CHANGES IN WORK Other than changes directed by the CITY as set forth in Section I above, either party may request changes in the scope of work. Such changes shall not become part of this Agreement unless and until mutually agreed upon and incorporated herein by written amendments to this Agreement executed by both parties. XII EXTRA WORK The CITY may desire to have the CONSULTANT perform work or render services in connection with this project, in addition to the Scope of Work set forth in Exhibit A and minor revisions to satisfactorily completed work. Such work shall be considered as "Extra Work" and shall be addressed in a written supplement to this Agreement. The CITY shall not be responsible for paying for such extra work unless and until the written supplement is executed by both parties. XIII TERMINATION OF AGREEMENT A. The CITY may terminate this Agreement at any time upon not less than ten (10) days written notice to the CONSULTANT. Written notice will be by certified mail sent to the consultant's designated representative at the address provided by the CONSULTANT. B. In the event this Agreement is terminated prior to the completion of the work, a final payment shall be made to the CONSULTANT, which, when added to any payments previously made, shall compensate the CONSULTANT for the percentage of work completed. C. In the event this Agreement is terminated prior to completion of the work, documents that are the property of the CITY pursuant to Section II above, shall be delivered to and received by the CITY prior to transmittal of final payment to the CONSULTANT. XIV INDEMNIFICATION/HOLD HARMLESS CONSULTANT shall defend, indemnify and hold the CITY, its officers, officials, employees and volunteers harmless from any and all claims, injuries, damages, losses or suits including attorney fees. arising out of or resulting from the negligent acts. errors or omissions of the CONSULTANT in performance of this Agreement, except for injuries and damages caused by the sole negligence of the CITY. PW 0410_01 Professional SeMces Agreement Revised [05I12106J Page 4 of 7 The CITY agrees to indemnify the CONSULTANT from any claims, damages, losses, and costs, including, but not limited to. attorney's fees and litigation costs, arising out of claims by third parties for property damage and bodily injury, including death, caused solely by the negligence or willful misconduct of the CITY, CITY's employees, or agents in connection with the work performed under this Agreement. If the negligence or willful misconduct of both CONSULTANT and CITY (or a person identified above for whom each is liable) is a cause of such damage or injury, the loss, cost, or expense shall be shared between the CONSULTANT and the CITY in pro'portion to their relative degrees of negligence or willful misconduct and the right of indemnity shall apply for such proportion. Should a court of competent jurisdiction determine that this Agreement is subject to RCW 4.24.115, then, in the event of liability for damages arising out of bodily injury to persons or damages to property caused by or resulting from the concurrent negligence of the CONSULTANT, the CITY, and the officers, officials, employees. and volunteers of either, the CONSULTANT'S liability hereunder shall be only to the extent of the CONSULTANT'S negligence. It is further specifically and expressly understood that the indemnification provided herein constitutes the CONSULTANT'S waiver of immunity under Industrial Insurance. Title 51 RCW. solely for the purposes of this indemnification. This waiver has been mutually negotiated by the parties. The provisions of this section shall survive the expiration or termination of this Agreement. However, the CONSULTANT expressly reserves its rights as a third person set forth in RCW 51.24.035. XV INSURANCE The CONSULTANT shall procure and maintain for the duration of the Agreement, insurance against claims for injuries to persons or damage to property which may arise from or in connection with the performance of the work hereunder by the CONSULTANT, its agents, representatives, employees or subcontractors. No Limitation. CONSULTANT'S maintenance of insurance as required by the agreement shall not be construed to limit the liability of the CONSULTANT to the coverage provided by such insurance, or otherwise limit the CITY'S recourse to any remedy available at law or in equity. A. Minimum Scope of Insurance Consultant shall obtain insurance of the types described below: 1. Automobile Liability insurance covering all owned, non-owned, hired and leased vehicles. Coverage shall be written on Insurance Services Office (ISO) form CA 00 01 or a substitute form providing equivalent liability coverage. If necessary, the policy shall be endorsed to provide contractual liability coverage; and, 2. Commercial General Liability insurance shall be written on ISO occurrence form CG 00 01 and shall cover liability arising from premises, operations, independent contractors, and personal injury and advertising injury. The City shall be named as an insured under the Consultant's Commercial General Liability insurance policy with respect to the work performed for the City; and, PW 0410_01 Professional Services Agreement Revised lD5112/OBJ Page 5 of 7 3. Workers' Compensation coverage as required by the Industrial Insurances laws of the State of Washington; and 4. Professional Liability insurance appropri,ate to the Consultant's profession. B. Minimum Amounts of Insurance Consultant shall maintain the following insurance limits: 1. Automobile Liability insurance with a minimum combined single limit for bodily injury and property damage of $1,000,000 per accident. 2. Commercial General liability insurance shall be written with limits no less than $1,000,000 each occurrence, $2,000,000 general aggregate. 3. Professional liability insurance shall be written with limits no less than $1,000,000 per claim and $1,000,000 policy aggregate limit. c. Other Insurance Provisions The insurance policies are to contain, or be endorsed to contain, the following provisions for Automobile Liability, Professional Liability and Commercial General Liability insurance: 1. The Consultant's insurance coverage shall be primary insurance as respect the City. Any insurance, self-insurance, or insurance pool coverage maintained by the City shall be excess of the Consultant's insurance and shall not contribute with it. 2. The Consultant's insurance shall be endorsed to state that coverage shall not be cancelled, suspended or materially changed by either party, except after thirty (30) days prior written notice by certified mail, return receipt requested. has been given to the City. 3. Any payment of deductible or self-insured retention shall be the sole responsibility of the CONSULTANT. 4. The CONSULTANT'S insurance shall contain a clause stating that coverage shall apply separately to each insured against whom claim is made or suit is brought. except with respects to the limits of the insurer's liability. D. I Acceptability of Insurers Insurance is to be placed with insurers with a current A.M. Best rating of not less than A:VII. E. Verification of Coverage Consultant shall furnish the City with original certificates and a copy of the amendatory endorsements, including but not necessarily limited to the additional insured endorsement, evidencing the insurance requirements of the Consultant before commencement of the work. . PW 0410_01 Professional Services Agreement Revlsed [05/12/06] Page 6 of 7 XVI APPLICABLE LAW This Agreement shall be construed and interpreted in accordance with the laws of the State of Washington, and in the event of dispute the venue of any litigation brought hereunder shall be Clallam County. XVII EXHIBITS AND SIGNATURES This Agreement, including its exhibits, constitutes the entire Agreement, supersedes all prior written or oral understandings, and may only be changed by a written amendment executed by both parties. The following exhibits are hereby made a part of this Agreement: Exhibit A - Scope of Work Exhibit B - Budget and Consultant Labor Costs for Each Task Exhibit C - Schedule for the Work IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first written above. CITY OF PORT ANGELES ~~N APPRJVED AS TO FORM: J,/lA~ ~ ~ WILLIAM E. BLOOR, CITY ATTORNEY CONSULTANT ATTEST: ~~' TITLE:J VJ 'vi G ,ret: I \ PW 0410_01 Professional S8fVices Agreement Revised [05112/06] Page 7 of 7 Exhibit A: Scope of Work The following scope of work has been prepared for the City's 2009 electric utility rate study. Task 8 - Data Collection CONSULTANT will establish the rate study foundation by conducting a structured data collection and analysis process. CONSULTANT will strive to uncover any data limitations, issues or concerns that will need to be addressed early in the process to ensure successful rate study completion. a. Detailed customer statistics and forecasts will be provided by the City in electronic format and will include individual rate class account information. b. The EXCEL spreadsheet prepared by HDR Engineering for the City's 2005 Comprehensive Electric Utility Rate Study shall be provided by the City and updated as applicable by the CONSULTANT. c. The Test-Year shall be developed using the City's 2008 actual expenses. The budget shall be used for 2009, and the budget for the 2010-2011 period shall be based on a forecast. Task 9 - Fiscal Policy Evaluation CONSULTANT will review City policies regarding reserve management requirements. This review will ensure maintenance of the minimum threshold for each fund, and the financial and rate impacts for establishing any new or revised reserves or target levels. a. The following reserves will be reviewed; cash (operating) reserves, capital-related reserves, debt reserves, light operations facility replacement reserves, and rate stabilization reserves, if applicable. Task 10 - Capital Funding Plan This task will define strategies for funding the Capital Improvement Programs over the 2010-2011 time horizon. The overall objective of the capital financial planning analysis is to determine the optimal mix of available resources from rate revenues, current connection fees, debt financing and use of accumulated capital reserves, to ensure financial health of the electric utility and to smooth the impacts on rate from capital funding needs. a. The analysis will also include assessing the capital and operating requirement impacts associated with deploying the Automatic Metering Infrastructure (AMI) technology now scheduled for 201 O. The AMI capital needs should identify the City's proposed capital funding approach and the resulting impacts to rates. City of Port Angeles Electric 2009-2011 Electric Utility Rate Study N:\PWKSIlIGHnPOWM\Cost of Servlce Studles\E1ectrlc 2009\2009 Electric COSA SOW (Appendix A).doc Task 11 - Multi-Year Operating Forecast (Revenue Requirement) This task forms a complete portrayal of the electric utility financial obligations and links directly with the system operational/capital drivers, ensuring that the electric utility's rates and charges can independently meet the needs for which they are established. a. Integrate cash, coverage and fund balance requirements from recommended fiscal policies (Task 9) and capital financing strategies (Task 10). b. Forecast annual operating expenditures and revenues for the planning horizon. Budget estimates will be used as a baseline for projecting future costs and revenues. Model impacts resulting from any operational cost additions or savings, known or anticipated changes to meet regulatory revenue requirements, as well as impacts of any new or enhanced program initiatives. c. Incorporate the City's existing debt issues and any anticipated new debt issues in the revenue requirement. Debt service coverage requirements will be monitored. d. Identify the full operating and capital costs for the electric utility and conduct a test of sufficiency that compares those needs against available rate and miscellaneous operating revenues, identifying any projected shortfalls over the forecast period. e. Use existing rate strategies to meet financial obligations for the 2010-2011 planning horizons. Task 12 - Cost of Service This evaluation will provide a defensible basis for assigning "cost shares" and establishing "equity" for electric utility customers with the development of a series of allocations, based on customer data, engineering/planning criteria, and judgment, to assign utility cost recovery to customers in proportion to their actual demands. a. All existing customer classes, including yard and area lighting, will be evaluated in the cost of service. b. Functionalize, classify and allocate costs to customer classes. A peer review will be provided to evaluate the existing cost classification approach used by the City for the electric utility. c. The cost of service analysis will provide a summary of the allocated costs by customer class. In addition, the unit cost for each major electric utility service function will also be calculated. d. Wholesale generation and transmission rates and costs shall be based on the BPA's current average embedded rate methodology. -2- City of Port Angeles Electric 2009-2011 Electric Utility Rate Study N:\PWKS\LIGHnPOWM\Cost of Service SludleslElectrlc 200912009 Electric COSA SOW (Appendix A).doc Task 13 - Rate Design This task includes updating the City's existing uniform and optional time-of-use rates based on the cost-of-service analysis in Task 5. The CONSULTANT shall also consider rate design modifications that encourage energy efficiency for each customer rate class as d~lineated under Section 532 of the Energy Independence Security Act of 2007 (EISA 2Q07). a. CONSULTANT will prepare a comparison of the impact of each rate structure (including the existing rate structure) on typical bills of representative customers from each customer class. Task 14 - Other Issues This task will evaluate a series of other issues impacting the electric utility and better define their importance and implementation strategies over the 2010-2011 time horizon. Following this review, CONSULTANT will revise the analyses conducted above, as appropriate, and finalize recommendations. a. Pole attachment fees as delineated under RCW 54.04.045 and 47 CFR ~~ 1.1401- 1.1408. The City will provide the pole attachment fee analysis previously prepared by EES Consulting that will be updated as applicable by the CONSULTANT. b. Electrical work permit and inspection fees. c. Line extension fees. Task 15 - Meetings/Presentations Prepare for and facilitate meetings with staff, senior management, the City's Utility Advisory Committee (UAC) and/or City Council to review findings, conclusions, and recommendations. Video teleconferencing will be used instead of personal travel with the City-provided epopcentral.com service and CONSULTANT will be required to have a webcam and broadband Internet connection. The City recommended webcam is a Logitech QuickCam Pro 9000 or equivalent. The CONSULTANT shall be reimbursed for any City-required travel. Following these reviews, CONSULTANT will revise the analyses, as appropriate, and finalize recommendations. a. Two (2) staff review teleconferences will be scheduled to discuss the preliminary results and incorporate changes/edits. One meeting to discuss the results of the revenue requirements and cost of service. The second meeting is to review the proposed structures based on the illustrative TRM rate designs. b. One (1) teleconference to discuss and present study findings, conclusions and recommendations with senior management. -3- City of Port Angeles Electric 2009-2011 Electric Utility Rate Study N:\PWKS\LIGHnPOWM\Cost of Service Studles\Electrlc 2009\2009 Electrlc COSA SOW (Appendix A).doc c. Two (2) teleconferences with the Utility Advisory Committee (UAC) and City Council to present the study findings and obtain feedback. Task 16 - Documentation K~y elements of the comprehensive rate study will be provided at the conclusion of the te$hnical analysis. , a. . All presentations will be provided to the City electronically. b. All EXCEL spreadsheet models will be provided electronically. -4- EXHIBIT B: Electric Rate Study Budget and Consultant Labor Costs for Each Task Consultant Bonn Study Technical Total TAQI: ~~pal ~~~!,;; Assistance ~~~ ,b-dmin. Estimated Labor . 10m 'PTnlcnn ~;;.~ KIII1"'" Hourly BiLUng Rates: $205 $180 $126 $120 $65 Task 8 - Data Collection - - - 4 - 4 $480 Task 9 - Fiscal Policy Evaluation - 4 - 8 - 12 1,680 Task 10 - Capital Funding Plan - 4 - 12 - 16 2,160 Task: 11 - Multi Year Operating Forecast 1 10 - 24 2 37 5,015 TaskI2-CostofS~ceAnal~s 2 24 - 46 2 74 10,380 Task 13 - Rate Design 2 8 - 22 2 34 4,620 Task 14 - Other Issues - 2 55 - 2 59 7,420 Subtotal Technical Analysis 5 52 55 116 8 236 $31,755 Task 15 - MeetingsIPresentations [1] - 16 - 12 4 32 4,580 Task 16 - Documentation - 8 - 16 4 28 3,620 Total 5 76 5S 144 16 296 39.955 [1] Presentations assume no onsite visits. Two (2) staff review teleconferences 2 hour.; each, One senior management teleconference 6 hours (4 presentation development and 2 hour.; meeting hme), two (2) teleconferences with the UAC I.S hour.; each and 2 hour for edits to presentation after senior management nm through Exhibit C - Schedule for the Work 2009 City of Port Angeles Electric Utility Cost of Service Study ESTIMATED PROJECT TIMELlNE - 2009 ~~~~~rmm~~... CD '" 0 '" 0 .... '" 0 .... '" 0 .... l() '" Ol '" Ol CD Ol ~ '" '" CD ~ '" '" CD ~ ~ '" ~ ~ <Xl ~ '" '" l() ~ ~ '" , , l() ~ Ol CD '" ~ '" '" CD '" 0 '" .... ..- :: <Xl l() '" l() '" '" Ol '" Ol '" '" CD ~ '" '" <Xl ~ '" * . Notice to Proceed Task 8. Data Collection Task 9 Fiscal Policy Evaluation Current SItuation Capital Faclhtles Plan Impacts Task 10. Capital Funding Plan Automallc Metenng InrraslTucture (AMI) Impacts Current SituatIOn Task 11. Operating Forecast - Revenue Requirement Current SituatIOn - ~ ~.. {; Task 12. Cost of Service Analysis Current SituatIOn I;~ ~V- -~ Sf- Task 13. Rate Design Current SituatIOn Task 14. Other Issues Task 15. Meetings/Presentations Internal ReVIew Meetmg/Conference Call- (2) Presentations Commlttees/Councll- (4) Task 16. Documentation (executive level report/memo) ~ ,. . . . Note Fmal results are dependant on date of Notice to Proceed and the timely scheduhng ofmeetmgs The above chart replesents esllmated IImmg only that will hl.ely evolve as the ploject plOceeds * Indicates Nollce to Proceed ,. IndICates mternal staff review of prehmmary results . Indicates presentatIOn to Pubhc Works & Ul1htles semor management, Utlhty AdVISOry Committee and City CounCil COSA09 Schedule