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HomeMy WebLinkAboutItem 11e - Water and Sewer Cost of Service Study DATE: July 16, 2024 TO: Honorable Mayor and City Council FROM: Paul Cranmer, Public Works Services Director By: Janessa Kalanjian, Management Analyst SUBJECT: PROFESSIONAL SERVICES AGREEMENT WITH RAFTELIS FINANCIAL CONSULTANTS, INC. FOR THE WATER AND SEWER COST OF SERVICE STUDY IN THE AMOUNT OF $89,977 CEQA: Not a Project Recommendation: Approve SUMMARY The Fiscal Year 2024-25 Capital Improvement Program includes the Water and Sewer Cost of Service Study (“Cost Study”). The primary objective of the Cost Study is to develop and establish a rate structure for water and sewer service that would ensure financial stability to meet ongoing operational costs, capital improvement costs, and costs of purchasing imported water. The Cost Study will ensure that the City’s water and sewer rates are fair and equitable among customers, while also compliant with regulatory requirements. The Cost Study will recommend a new five-year water and sewer rate adjustment for Fiscal Years 2025-26 through 2029-30. To make sure that the City is receiving the highest quality of service and most competitive pricing for the Cost Study, the Public Works Services Department (“PWSD”) solicited a formal Request for Proposals (“RFP”). Based on the evaluated proposals, it is recommended that the City Council authorize and direct the City Manager to execute a Professional Services Agreement with Raftelis Financial Consultants, Inc. for the Water and Sewer Cost of Service Study in the amount of $89,977, and approve a 10% contingency. BACKGROUND The City provides water and sewer service to more than 56,000 residents. Utility rates fund the operations, maintenance, and capital improvements of the water and sanitary sewer systems to provide quality services to Arcadia residents and businesses. Comprehensive water and sewer rate studies are necessary to determine if water and sewer rate increases are needed to fund ongoing operations and maintenance budgets, and the Capital Improvement Program. Additionally, rate studies are also needed to Professional Services Agreement Water & Sewer Cost of Service Study July 16, 2024 Page 2 of 4 maintain an adequate Reserve Fund balance in case of a natural disaster or emergency. Comprehensive water and sewer cost of service studies not only develop rate schedules that ensure the City can continue to fund all operating and maintenance costs, but also verify that any costs associated with these utilities are defensible and comply with Proposition 218 requirements. In February 2014, the City Council awarded a Professional Services Agreement (“PSA”) to Carollo Engineers (“Carollo”) for the preparation of the Water and Sewer Cost of Service Study. The PSA also included the development of a financial model that would determine how best to recover projected ongoing operational costs, capital improvements to water and sewer infrastructure, and costs for imported water over a five-year period. The PWSD and Carollo gathered and analyzed data on the City’s water and sanitary sewer operations, and established a seasonal tiered water rate structure that would meet the City’s primary objectives of providing revenue stability, while encouraging water use efficiency. In January 2016, the City Council adopted a seasonal tiered water rate structure and approved a five-year water and sewer rate adjustment schedule for calendar years 2016 through 2020, based on the study. In July 2019, the City Council approved a PSA with Carollo to complete an update to the 2015 Cost Study and to recommend a new five-year water and sewer rate adjustment schedule. Based on the Cost Study Update, the City Council adopted a five-year water and sewer rate adjustment schedule for the calendar years 2021 through 2025. The PWSD annually reviews water and sewer operating budgets, revenues, expenditures, and reserve fund balances to determine whether the approved water and sewer maximum rate adjustments are necessary. The final rate adjustment will go to City Council in November 2024 to be effective for the 2025 calendar year. The City of Arcadia’s water and sewer rates continue to be among the lowest in the area and have remained so even with previously approved rate adjustments; however, the City’s water and sewer reserves have been reduced significantly in the past five years as costs have outpaced the adopted revenue structures. Specifically, the cost of replacement water has risen and water replenishment surcharges were adopted regionally that were not originally anticipated. This will need to be addressed in future rate structures. DISCUSSION Due to changes in water use trends, increases in costs to purchase water, and increases in capital improvement costs, a new Cost Study is necessary to ensure that future utility rates sufficiently cover operational expenditures. A Notice Inviting Proposals was published in accordance with City Council Resolution No. 7483, and Request for Proposal packages were provided to several firms that provide cost of service studies. On June 11, 2024, the City Clerk received two proposals. The proposals received were evaluated based on experience, qualifications, clarity on Arcadia’s needs, proposed approach, and cost. The results of the evaluation with each company’s ranking and proposed cost are as follows: Professional Services Agreement Water & Sewer Cost of Service Study July 16, 2024 Page 3 of 4 RANK COMPANY LOCATION COST 1. Raftelis Financial Consultants, Inc. Los Angeles, CA $ 89,977 2. Bartle Wells Associates Berkley, CA $ 107,120 Staff contacted firms that received the RFP to find out why they did not submit a proposal. The responses indicated that firms did not have the ability to complete the City’s Cost Study at this time due to staff constraints. After careful review and consideration of each proposal, it was determined that Raftelis Financial Consultants, Inc. (“Raftelis”) is the most qualified consultant to provide the Cost Study. Raftelis has demonstrated extensive experience in providing cost studies to local agencies such as the Cities of Pasadena, South Pasadena, El Monte, and the Valley County Water District. Additionally, Raftelis has extensive knowledge of Proposition 218 requirements, which is essential to providing a detailed and defensible Water and Sewer Rate framework. Raftelis will provide the City with a comprehensive Water and Sewer Rate Study that creates a financial plan that ensures sufficient revenues to meet operating and capital expenditures, and provides adequate financial sustainability. City staff will work with Raftelis to develop a rate structure that best serves Arcadia’s water and sewer customers, while also providing Arcadia with the revenue necessary to continue funding water and sewer operations. The water and sewer rates that are developed will comply with all applicable laws and regulations. In addition to creating a five-year water and sewer rate structure that meets the City’s requirements and are equitable for the City’s various customer classes, Raftelis will provide the City with a user- friendly financial model that will show how changes to Operating and Capital Improvement Program Budgets will impact rates and revenues. City staff will present the Cost Study findings and the proposed water and sewer rates to the City Council during a study session, before taking the rates to a City Council Meeting. At which time, the City Council will authorize staff to continue with the Proposition 218 process. These actions will likely occur in the 2025 calendar year, well before any new rates would go into effect. ENVIRONMENTAL ANALYSIS The proposed action does not constitute a project under the California Environmental Quality Act (“CEQA”), and it can be seen with certainty that it will have no impact on the environment. Professional Services Agreement Water & Sewer Cost of Service Study July 16, 2024 Page 4 of 4 FISCAL IMPACT Sufficient funds have been budgeted in the Fiscal Year 2024-25 Capital Improvement Program for the Cost Study, with the cost shared by both Water and Sewer Funds. All work performed will be on a time and materials basis and the consultant will only be paid for work performed up to a not-to-exceed amount of $89,977, plus a 10% contingency. RECOMMENDATION It is recommended the City Council determine that this action does not constitute a project under the California Environmental Quality Act (“CEQA”); and authorize and direct the City Manager to execute a Professional Services Agreement with Raftelis Financial Consultants, Inc. for the Water and Sewer Cost of Service Study in the amount of $89,977 and approve a 10% contingency. Attachment: Proposed Professional Services Agreement 1 24347.00006\30493020.2 CITY OF ARCADIA PROFESSIONAL SERVICES AGREEMENT WATER AND SEWER RATE STUDY This Agreement is made and entered into as of ________________, 2024 by and between the City of Arcadia, a municipal corporation organized and operating under the laws of the State of California with its principal place of business at 240 West Huntington Drive, Arcadia, California 91066 (“City”), and Raftelis Financial Consultant, Inc., a California Corporation, with its principal place of business at 445 S. Figueroa Street, Suite 1925, Los Angeles, CA 90071 (hereinafter referred to as “Consultant”). City and Consultant are sometimes individually referred to as “Party” and collectively as “Parties” in this Agreement. RECITALS A. City is a public agency of the State of California and is in need of professional services for the following project: Water and Sewer Rate Study (hereinafter referred to as “the Project”). B. Consultant is duly licensed and has the necessary qualifications to provide such services. C. The Parties desire by this Agreement to establish the terms for City to retain Consultant to provide the services described herein. AGREEMENT NOW, THEREFORE, IT IS AGREED AS FOLLOWS: 1. Services. Consultant shall provide the City with the services described in the Scope of Services attached hereto as Exhibit “A.” 2. Compensation. a. Subject to paragraph 2(b) below, the City shall pay for such services in accordance with the Schedule of Charges set forth in Exhibit “B.” b. In no event shall the total amount paid for services rendered by Consultant under this Agreement exceed the sum of Eighty-Nine Thousand, Nine Hundred Seventy- Seven Dollars and No Cents ($89,977.00). This amount is to cover all printing and related costs, and the City will not pay any additional fees for printing expenses. Periodic payments shall be made within 30 days of receipt of an invoice which includes a detailed description of the work performed. Payments to Consultant for work performed will be made on a monthly billing basis. 3. Additional Work. If changes in the work seem merited by Consultant or the City, and informal consultations with the other party indicate that a change is warranted, it shall be processed in the following manner: a letter outlining the changes shall be forwarded to the City by Consultant with a statement of estimated changes in fee or time schedule. An amendment to this Agreement shall be prepared by the City and executed by both Parties before performance of such services, or 2 24347.00006\30493020.2 the City will not be required to pay for the changes in the scope of work. Such amendment shall not render ineffective or invalidate unaffected portions of this Agreement. 4. Maintenance of Records. Books, documents, papers, accounting records, and other evidence pertaining to costs incurred shall be maintained by Consultant and made available at all reasonable times during the contract period and for four (4) years from the date of final payment under the contract for inspection by City. 5. Term. The term of this Agreement shall be for one year from the date of execution, unless earlier terminated as provided herein. The Parties may, by mutual, written consent, extend the term of this Agreement if necessary to complete the Project. Consultant shall perform its services in a prompt and timely manner within the term of this Agreement and shall commence performance upon receipt of written notice from the City to proceed (“Notice to Proceed”). The Notice to Proceed shall set forth the date of commencement of work. 6. Delays in Performance. a. Neither City nor Consultant shall be considered in default of this Agreement for delays in performance caused by circumstances beyond the reasonable control of the non- performing party. For purposes of this Agreement, such circumstances include but are not limited to, abnormal weather conditions; floods; earthquakes; fire; epidemics; war; riots and other civil disturbances; strikes, lockouts, work slowdowns, and other labor disturbances; sabotage or judicial restraint. b. Should such circumstances occur, the non-performing party shall, within a reasonable time of being prevented from performing, give written notice to the other party describing the circumstances preventing continued performance and the efforts being made to resume performance of this Agreement. 7. Compliance with Law. a. Consultant shall comply with all applicable laws, ordinances, codes and regulations of the federal, state and local government, including Cal/OSHA requirements. b. If required, Consultant shall assist the City, as requested, in obtaining and maintaining all permits required of Consultant by federal, state and local regulatory agencies. c. If applicable, Consultant is responsible for all costs of clean up and/ or removal of hazardous and toxic substances spilled as a result of his or her services or operations performed under this Agreement. 8. Standard of Care Consultant’s services will be performed in accordance with generally accepted professional practices and principles and in a manner consistent with the level of care and skill ordinarily exercised by members of the profession currently practicing under similar conditions, as of the time and at the location the services are provided. In providing the services hereunder, 3 24347.00006\30493020.2 Consultant may rely on all data and information provided by or on behalf of the City without additional investigation. 9. Assignment and Subconsultant Consultant shall not assign, sublet, or transfer this Agreement or any rights under or interest in this Agreement without the written consent of the City, which may be withheld for any reason. Any attempt to so assign or so transfer without such consent shall be void and without legal effect and shall constitute grounds for termination. Subcontracts, if any, shall contain a provision making them subject to all provisions stipulated in this Agreement. Nothing contained herein shall prevent Consultant from employing independent associates, and subconsultants as Consultant may deem appropriate to assist in the performance of services hereunder. 10. Independent Contractor Consultant is retained as an independent contractor and is not an employee of City. No employee or agent of Consultant shall become an employee of City. The work to be performed shall be in accordance with the work described in this Agreement, subject to such directions and amendments from City as herein provided. 11. Insurance. Consultant shall not commence work for the City until it has provided evidence satisfactory to the City it has secured all insurance required under this section. In addition, Consultant shall not allow any subcontractor to commence work on any subcontract until it has secured all insurance required under this section. a. Commercial General Liability (i) The Consultant shall take out and maintain, during the performance of all work under this Agreement, in amounts not less than specified herein, Commercial General Liability Insurance, in a form and with insurance companies acceptable to the City. (ii) Coverage for Commercial General Liability insurance shall be at least as broad as the following: (1) Insurance Services Office Commercial General Liability coverage (Occurrence Form CG 00 01) or exact equivalent. (iii) Commercial General Liability Insurance must include coverage for the following: (1) Bodily Injury and Property Damage (2) Personal Injury/Advertising Injury (3) Premises/Operations Liability (4) Products/Completed Operations Liability (5) Aggregate Limits that Apply per Project (6) Explosion, Collapse and Underground (UCX) exclusion deleted (7) Contractual Liability with respect to this Agreement (8) Property Damage (9) Independent Consultants Coverage 4 24347.00006\30493020.2 (iv) The policy shall contain no endorsements or provisions limiting coverage for (1) contractual liability; (2) cross liability exclusion for claims or suits by one insured against another; (3) products/completed operations liability; or (4) contain any other exclusion contrary to the Agreement. (v) The policy shall give City, its officials, officers, employees, agents and City designated volunteers additional insured status using ISO endorsement forms CG 20 10 10 01 and 20 37 10 01, or endorsements providing the exact same coverage. (vi) The general liability program may utilize either deductibles or provide coverage excess of a self-insured retention, subject to written approval by the City, and provided that such deductibles shall not apply to the City as an additional insured. b. Automobile Liability (i) At all times during the performance of the work under this Agreement, the Consultant shall maintain Automobile Liability Insurance for bodily injury and property damage including coverage for owned, non-owned and hired vehicles, in a form and with insurance companies acceptable to the City. (ii) Coverage for automobile liability insurance shall be at least as broad as Insurance Services Office Form Number CA 00 01 covering automobile liability (Coverage Symbol 1, any auto). (iii) The policy shall give City, its officials, officers, employees, agents and City designated volunteers additional insured status. (iv) Subject to written approval by the City, the automobile liability program may utilize deductibles, provided that such deductibles shall not apply to the City as an additional insured, but not a self-insured retention. c. Workers’ Compensation/Employer’s Liability (i) Consultant certifies that he/she is aware of the provisions of Section 3700 of the California Labor Code which requires every employer to be insured against liability for workers’ compensation or to undertake self-insurance in accordance with the provisions of that code, and he/she will comply with such provisions before commencing work under this Agreement. (ii) To the extent Consultant has employees at any time during the term of this Agreement, at all times during the performance of the work under this Agreement, the Consultant shall maintain full compensation insurance for all persons employed directly by him/her to carry out the work contemplated under this Agreement, all in accordance with the “Workers’ Compensation and Insurance Act,” Division IV of the Labor Code of the State of California and any acts amendatory thereof, and Employer’s Liability Coverage in amounts indicated herein. Consultant shall require all subconsultants to obtain and maintain, for the period required by this Agreement, workers’ compensation coverage of the same type and limits as specified in this section. d. Professional Liability (Errors and Omissions) At all times during the performance of the work under this Agreement the Consultant shall 5 24347.00006\30493020.2 maintain professional liability or Errors and Omissions insurance appropriate to its profession, in a form and with insurance companies acceptable to the City and in an amount indicated herein. This insurance shall be endorsed to include contractual liability applicable to this Agreement and shall be written on a policy form coverage specifically designed to protect against acts, errors or omissions of the Consultant. “Covered Professional Services” as designated in the policy must specifically include work performed under this Agreement. The policy must “pay on behalf of” the insured and must include a provision establishing the insurer's duty to defend. e. Minimum Policy Limits Required (i) The following insurance limits are required for the Agreement: Combined Single Limit Commercial General Liability $1,000,000 per occurrence/$2,000,000 aggregate for bodily injury, personal injury, and property damage Automobile Liability $1,000,000 per occurrence for bodily injury and property damage Employer’s Liability $1,000,000 per occurrence Professional Liability $1,000,000 per claim and aggregate (errors and omissions) (ii) Defense costs shall be payable in addition to the limits. (iii) Requirements of specific coverage or limits contained in this section are not intended as a limitation on coverage, limits, or other requirement, or a waiver of any coverage normally provided by any insurance. Any available coverage shall be provided to the parties required to be named as Additional Insured pursuant to this Agreement. f. Evidence Required Prior to execution of the Agreement, the Consultant shall file with the City evidence of insurance from an insurer or insurers certifying to the coverage of all insurance required herein. Such evidence shall include original copies of the ISO CG 00 01 (or insurer’s equivalent) signed by the insurer’s representative and Certificate of Insurance (Acord Form 25-S or equivalent), together with required endorsements. All evidence of insurance shall be signed by a properly authorized officer, agent, or qualified representative of the insurer and shall certify the names of the insured, any additional insureds, where appropriate, the type and amount of the insurance, the location and operations to which the insurance applies, and the expiration date of such insurance. g. Policy Provisions Required (i) Consultant shall provide the City at least thirty (30) days prior written notice of cancellation of any policy required by this Agreement, except that the Consultant shall provide at least ten (10) days prior written notice of cancellation of any such policy due to non-payment of premium. If any of the required coverage is cancelled or expires during the term of this Agreement, the Consultant shall deliver renewal certificate(s) including the General 6 24347.00006\30493020.2 Liability Additional Insured Endorsement to the City at least ten (10) days prior to the effective date of cancellation or expiration. (ii) The Commercial General Liability Policy and Automobile Policy shall each contain a provision stating that Consultant’s policy is primary insurance and that any insurance, self-insurance or other coverage maintained by the City or any named insureds shall not be called upon to contribute to any loss. (iii) The retroactive date (if any) of each policy is to be no later than the effective date of this Agreement. Consultant shall maintain such coverage continuously for a period of at least three years after the completion of the work under this Agreement. Consultant shall purchase a one (1) year extended reporting period A) if the retroactive date is advanced past the effective date of this Agreement; B) if the policy is cancelled or not renewed; or C) if the policy is replaced by another claims-made policy with a retroactive date subsequent to the effective date of this Agreement. (iv) All required insurance coverages, except for the professional liability coverage, shall contain or be endorsed to waiver of subrogation in favor of the City, its officials, officers, employees, agents, and volunteers or shall specifically allow Consultant or others providing insurance evidence in compliance with these specifications to waive their right of recovery prior to a loss. Consultant hereby waives its own right of recovery against City, and shall require similar written express waivers and insurance clauses from each of its subconsultants. (v) The limits set forth herein shall apply separately to each insured against whom claims are made or suits are brought, except with respect to the limits of liability. Further the limits set forth herein shall not be construed to relieve the Consultant from liability in excess of such coverage, nor shall it limit the Consultant’s indemnification obligations to the City and shall not preclude the City from taking such other actions available to the City under other provisions of the Agreement or law. h. Qualifying Insurers (i) All policies required shall be issued by acceptable insurance companies, as determined by the City, which satisfy the following minimum requirements: (1) Each such policy shall be from a company or companies with a current A.M. Best's rating of no less than A:VII and admitted to transact in the business of insurance in the State of California, or otherwise allowed to place insurance through surplus line brokers under applicable provisions of the California Insurance Code or any federal law. i. Additional Insurance Provisions (i) The foregoing requirements as to the types and limits of insurance coverage to be maintained by Consultant, and any approval of said insurance by the City, is not intended to and shall not in any manner limit or qualify the liabilities and obligations otherwise assumed by the Consultant pursuant to this Agreement, including but not limited to, the provisions concerning indemnification. (ii) If at any time during the life of the Agreement, any policy of insurance required under this Agreement does not comply with these specifications or is 7 24347.00006\30493020.2 canceled and not replaced, City has the right but not the duty to obtain the insurance it deems necessary and any premium paid by City will be promptly reimbursed by Consultant or City will withhold amounts sufficient to pay premium from Consultant payments. In the alternative, City may cancel this Agreement. (iii) The City may require the Consultant to provide complete copies of all insurance policies in effect for the duration of the Project. (iv) Neither the City nor any of its officials, officers, employees, agents or volunteers shall be personally responsible for any liability arising under or by virtue of this Agreement. j. Subconsultant Insurance Requirements. Consultant shall not allow any subcontractors or subconsultants to commence work on any subcontract until they have provided evidence satisfactory to the City that they have secured all insurance required under this section. Policies of commercial general liability insurance provided by such subcontractors or subconsultants shall be endorsed to name the City as an additional insured using ISO form CG 20 38 04 13 or an endorsement providing the exact same coverage. If requested by Consultant, City may approve different scopes or minimum limits of insurance for particular subcontractors or subconsultants. 12. Indemnification. a. Consultant shall indemnify and hold the City, its officials, officers, employees and volunteers free and harmless from all claims, demands, causes of action, costs, expenses, liability, loss, damage or injury of any kind, in law or equity, to property or persons, including wrongful death, to the extent caused by the negligent acts, errors or omissions, or willful misconduct of Consultant, its officials, officers, employees, subcontractors, consultants or agents in the performance of the Consultant’s services, the Project or this Agreement, including without limitation the payment of all actual and out-of-pocket damages and attorney’s fees incurred by City. Consultant's obligation to indemnify shall not be restricted to insurance proceeds, if any, received by Consultant, the City, its officials, officers, employees, agents, or volunteers. b. To the extent required by Civil Code section 2782.8, which is fully incorporated herein, Consultant’s obligations under the above indemnity shall be limited to claims to the extent caused by the negligence, recklessness, or willful misconduct of the Consultant, but shall not otherwise be reduced. If Consultant’s obligations to defend, indemnify, and/or hold harmless arise out of Consultant’s performance of “design professional services” (as that term is defined under Civil Code section 2782.8), then upon Consultant obtaining a final adjudication that liability under a claim is caused by the comparative active negligence or willful misconduct of the City, Consultant’s obligations shall be reduced in proportion to the established comparative liability of the City and shall not exceed the Consultant’s proportionate percentage of fault. c. In no event shall Consultant have any obligation to indemnity City or any other indemnified person against liability for claims by a third party for failure to comply with its obligations under Article XIII D of the California Constitution (Proposition 218). 13. California Labor Code Requirements. a. Consultant is aware of the requirements of California Labor Code Sections 1720 et seq. and 1770 et seq., which require the payment of prevailing wage rates and the performance of other requirements on certain “public works” and “maintenance” projects 8 24347.00006\30493020.2 (“Prevailing Wage Laws”). If the services are being performed as part of an applicable “public works” or “maintenance” project, as defined by the Prevailing Wage Laws, and if the total compensation is $15,000 or more for maintenance or $25,000 or more for construction, alteration, demolition, installation, or repair, Consultant agrees to fully comply with such Prevailing Wage Laws. Consultant shall defend, indemnify and hold the City, its officials, officers, employees and agents free and harmless from any claims, liabilities, costs, penalties or interest arising out of any failure or alleged failure to comply with the Prevailing Wage Laws. It shall be mandatory upon the Consultant and all subconsultants to comply with all California Labor Code provisions, which include but are not limited to prevailing wages (Labor Code Sections 1771, 1774 and 1775), employment of apprentices (Labor Code Section 1777.5), certified payroll records (Labor Code Sections 1771.4 and 1776), hours of labor (Labor Code Sections 1813 and 1815) and debarment of contractors and subcontractors (Labor Code Section 1777.1). b. If the services are being performed as part of an applicable “public works” or “maintenance” project and if the total compensation is $15,000 or more for maintenance or $25,000 or more for construction, alteration, demolition, installation, or repair, then pursuant to Labor Code Sections 1725.5 and 1771.1, the Consultant and all subconsultants performing such services must be registered with the Department of Industrial Relations. Consultant shall maintain registration for the duration of the Project and require the same of any subconsultants, as applicable. This Project may also be subject to compliance monitoring and enforcement by the Department of Industrial Relations. It shall be Consultant’s sole responsibility to comply with all applicable registration and labor compliance requirements. c. This Agreement may also be subject to compliance monitoring and enforcement by the Department of Industrial Relations. It shall be Consultant’s sole responsibility to comply with all applicable registration and labor compliance requirements. Any stop orders issued by the Department of Industrial Relations against Consultant or any subcontractor that affect Consultant’s performance of services, including any delay, shall be Consultant’s sole responsibility. Any delay arising out of or resulting from such stop orders shall be considered Consultant caused delay and shall not be compensable by the City. Consultant shall defend, indemnify and hold the City, its officials, officers, employees and agents free and harmless from any claim or liability arising out of stop orders issued by the Department of Industrial Relations against Consultant or any subcontractor. 14. Verification of Employment Eligibility. By executing this Agreement, Consultant verifies that it fully complies with all requirements and restrictions of state and federal law respecting the employment of undocumented aliens, including, but not limited to, the Immigration Reform and Control Act of 1986, as may be amended from time to time, and shall require all subconsultants and sub-subconsultants to comply with the same. 15. City Material Requirements. Consultant is hereby made aware of the City’s requirements regarding materials, as set forth in Request for Proposal #PWS 06-11-2024, which are deemed to be a part of this Agreement. 9 24347.00006\30493020.2 16. Laws and Venue. This Agreement shall be interpreted in accordance with the laws of the State of California. If any action is brought to interpret or enforce any term of this Agreement, the action shall be brought in a state or federal court situated in the County of Los Angeles, State of California. 17. Termination or Abandonment a. City has the right to terminate or abandon any portion or all of the work under this Agreement by giving ten (10) calendar days written notice to Consultant. In such event, City shall be immediately given title and possession to all original field notes, drawings and specifications, written reports and other documents produced or developed for that portion of the work completed and/or being abandoned. City shall pay Consultant the reasonable value of services rendered for any portion of the work completed prior to termination. If said termination occurs prior to completion of any task for the Project for which a payment request has not been received, the charge for services performed during such task shall be the reasonable value of such services, based on an amount mutually agreed to by City and Consultant of the portion of such task completed but not paid prior to said termination. City shall not be liable for any costs other than the charges or portions thereof which are specified herein. Consultant shall not be entitled to payment for unperformed services, and shall not be entitled to damages or compensation for termination of work. b. Consultant may terminate its obligation to provide further services under this Agreement upon thirty (30) calendar days’ written notice to City only in the event of substantial failure by City to perform in accordance with the terms of this Agreement through no fault of Consultant. 18 Documents. Except as otherwise provided in “Termination or Abandonment,” above, written reports, Drawings and Specifications and other documents, produced or developed for the Project, in each case to the extent identified as a deliverable in the Scope of Services attached hereto as Exhibit “A” shall, upon payment in full for the services described in this Agreement, be furnished to and become the property of the City. Nothing in this Agreement shall be deemed or construed as a waiver, release, transfer, assignment or divestiture by Consultant of any of its intellectual property, know-how or trade secrets. 19. Organization Consultant shall assign John Wright, CPA, as Project Manager. The Project Manager shall not be removed from the Project or reassigned without the prior written consent of the City. 20. Limitation of Agreement. This Agreement is limited to and includes only the work included in the Project described above. 21. Notice Any notice or instrument required to be given or delivered by this Agreement may be given or delivered by depositing the same in any United States Post Office, certified mail, return receipt requested, postage prepaid, addressed to: 10 24347.00006\30493020.2 CITY: City of Arcadia 240 West Huntington Drive Arcadia, CA 91066 Attn: Paul Cranmer, Public Works Services Director CONSULTANT: Raftelis Financial Consultant, Inc. 445 S. Figueroa Street, Suite 1925 Los Angeles, CA 90071 Attn: John Wright, CPA, Project Manager and shall be effective upon receipt thereof. 22. Third Party Rights Nothing in this Agreement shall be construed to give any rights or benefits to anyone other than the City and the Consultant. 23. Equal Opportunity Employment. Consultant represents that it is an equal opportunity employer and that it shall not discriminate against any employee or applicant for employment because of race, religion, color, national origin, ancestry, sex, age or other interests protected by the State or Federal Constitutions. Such non-discrimination shall include, but not be limited to, all activities related to initial employment, upgrading, demotion, transfer, recruitment or recruitment advertising, layoff or termination. 24. Entire Agreement This Agreement, with its exhibits, represents the entire understanding of City and Consultant as to those matters contained herein, and supersedes and cancels any prior or contemporaneous oral or written understanding, promises or representations with respect to those matters covered hereunder. Each party acknowledges that no representations, inducements, promises or agreements have been made by any person which are not incorporated herein, and that any other agreements shall be void. This Agreement may not be modified or altered except in writing signed by both Parties hereto. This is an integrated Agreement. 25. Severability The unenforceability, invalidity or illegality of any provision(s) of this Agreement shall not render the provisions unenforceable, invalid or illegal. 26. Successors and Assigns This Agreement shall be binding upon and shall inure to the benefit of the successors in interest, executors, administrators and assigns of each party to this Agreement. However, Consultant shall not assign or transfer by operation of law or otherwise any or all of its rights, burdens, duties or obligations without the prior written consent of City. Any attempted assignment without such consent shall be invalid and void. 11 24347.00006\30493020.2 27. Non-Waiver None of the provisions of this Agreement shall be considered waived by either party, unless such waiver is specifically specified in writing. 28. Time of Essence Time is of the essence for each and every provision of this Agreement. 29. City’s Right to Employ Other Consultants City reserves its right to employ other consultants, including engineers, in connection with this Project or other projects. 30. Prohibited Interests Consultant maintains and warrants that it has not employed nor retained any company or person, other than a bona fide employee working solely for Consultant, to solicit or secure this Agreement. Further, Consultant warrants that it has not paid nor has it agreed to pay any company or person, other than a bona fide employee working solely for Consultant, any fee, commission, percentage, brokerage fee, gift or other consideration contingent upon or resulting from the award or making of this Agreement. For breach or violation of this warranty, City shall have the right to rescind this Agreement without liability. For the term of this Agreement, no director, official, officer or employee of City, during the term of his or her service with City, shall have any direct interest in this Agreement, or obtain any present or anticipated material benefit arising therefrom. [SIGNATURES ON FOLLOWING PAGE] 12 24347.00006\30493020.2 SIGNATURE PAGE FOR PROFESSIONAL SERVICES AGREEMENT BETWEEN THE CITY OF ARCADIA AND RAFTELIS FINANCIAL CONSULTANT, INC. IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first written above. CITY OF ARCADIA RAFTELIS FINANCIAL CONSULTANT, INC. By: By: Dominic Lazzaretto City Manager Title: Printed Name: ATTEST: By: Title: By: City Clerk Printed Name: APPROVED AS TO FORM: CONCUR: By: ___________________________________ Michael J. Maurer Paul Cranmer City Attorney Public Works Services Director 13 24347.00006\30493020.2 EXHIBIT A Scope of Services The Scope of Services for the Water and Sewer Rate Study, in response to the RFP No. PWS- 06-11-2024, shall include but not limited to the following and is incorporated into this Agreement herewith: Scope of Services Consultant shall analyze the current rate structure, utility operations, and capital needs and provide recommendations on a rate structure. In addition, the firm/consultant will provide a rate modeling program with a dashboard to be used by City staff for subsequent years. The following criteria shall apply to each of the rate studies: • Evaluate the existing rate structure for conformance with existing statutory regulations and make recommendations for any changes that are necessary to achieve compliance. • Evaluate current and future cost of providing services in conformance with established or anticipated changes to standards and regulations. • Develop an understanding of the existing rate structures and the assumptions underlying cost distribution of the various categories. • Quantify the expected impacts that will occur with implementation of the City’s capital improvement plans and master plans. • Provide justifications for the recommended rate structures. • Demonstrate that the costs from any proposed rate structures are equitable and defensible. • Recommend rate structures that will be planned for at least five years and that will provide a predictable and stable revenue stream. • Develop a rate modeling program that can forecast rates up to 30 years based on expected cost increases over time including increases in the cost of water. The modeling program should have the ability to run capital improvement project scenarios and quickly show the impact on rates. • Reserve analysis must be a part of the model. • The model must have a user-friendly dashboard with interactive graphics that automatically produces a suite of reports and graphs as inputs are changed. • Provide training to staff in running scenarios that will allow staff to fully understand how the model operates and how results of various future recommendations may be proposed and illustrated. In addition to the items described above, the following criteria will apply for the study of water and sewer rates: Study of Water Rates • Assess the interaction between the water conservation elements of the recommended rates and their impacts on the ability to fund water operations, as well as their impact on the economic well-being of the community. 14 24347.00006\30493020.2 • Evaluate how drought conditions would impact water sales, water costs and overall revenue stream and recommend a drought impact fee structure or surcharge in order to continue to fund water operations and capital projects during times of reducing water sales and potential increased water costs. • Assess the impact on a rate structure due to drought, loss of supply, or other water shortage factors. • Evaluate revenue and cash flow under drought scenarios. Study of Sewer Rates • Assess the interaction between the water conservation elements of the recommended rates and their impacts on the ability to fund sewer operations, as well as their impact on the economic well-being of the community. • Assess the impacts from ADUs. The City shall consider additional recommendations from the consultant. The scope of services shall consist of working directly with City staff to establish a potential schedule of water and sewer rates that will fulfill the above-mentioned objectives. The proposed rate structures shall be based on the full cost of service and shall be sufficient to meet the short and long-term revenue requirements to maintain the water and sewer systems. Proposed Water and Sewer Rate Study shall consider the following: • Current and projected water demands and sewer connections. • Current and future costs of purchasing water. • Fixed and variable costs of providing water and sewer services in accordance with current and foreseeable standards and regulations. • Supply availability (seasonal and long-term availability). • Ability of rates to fully fund operations and maintenance costs plus capital improvements and equipment replacements. • Review reserve policies and set rates to adequately fund reserves to react to catastrophic events. • Recommendations to modify the rate structures in response to changing costs, customer demand patterns, and new regulations. PROJECT ELEMENTS The reports for the proposed water and sewer rate structures for residential single-family and multi-family customers shall include the following: 1. An assessment of the current rate structure for comparing recommended changes; and 2. An assessment of the equity of the proposed rates for all types of property ownership and/or customer classes; and 3. An assessment of the interaction between the proposed rate structure and water conservation and the impact on funding and the economic well-being of the community; and 15 24347.00006\30493020.2 4. A comprehensive summary of the proposed water and sewer rate structures and an assessment of the performance of the recommended structures against the current rate structure; and 5. Development of a rate calculation worksheet to be used to calculate future rates. SERVICES TO BE PROVIDED BY THE CONSULTANT • Conduct a review of the existing water and sewer rates and status of the overall water and sewer funds. • Identify all necessary records, data, and statistics to be supplied by the City of Arcadia. • Meet with City staff as needed and attend evening meetings with the City Council (study sessions, and/or public hearings) to present and discuss results of the Project. • Conduct analysis as described in the scope of services. • Provide water demand analysis and review of current tiered methodologies for appropriate customer classes and seasonal tiered rate structures for Single-Family, Multi-Family, and Non-Residential classifications. • Provide a preliminary report containing sufficient background and explanation of the project goals and elements, the proposed rate structures, and an electronic rate model which can be used by the City to calculate future water and sewer rates. The electronic model should be easy to use for future rate setting. • Provide a final report incorporating changes and recommendations of the preliminary report in a form sufficient to be used by the Public Works Services Director for presentation to the City Council. 16 24347.00006\30493020.2 EXHIBIT B Schedule of Charges/Payments Consultant will invoice City on a monthly cycle. Consultant will include with each invoice a detailed progress report that indicates the amount of budget spent on each task. Consultant will inform City regarding any out-of-scope work being performed by Consultant. This is a time-and-materials contract. Compensation shall be based on time and materials spent in accordance with the following tasks, not to exceed the total compensation listed below: The schedule of prices is attached as attachment “A” to this Exhibit “B”. Water and Sewer Rate Study - $89,977.00 Total Compensation - $89,977.00 The total compensation shall not exceed the total listed without written authorization in accordance with Section 2 (b) of the agreement. The project timeline is attached as attachment “B” to this Exhibit “B”. 17 24347.00006\30493020.2 EXHIBIT C Activity Schedule All work shall be completed in accordance with the following schedule: The term of this Agreement shall be for one (1) year from the date of execution. All tasks under Exhibit “A” shall be adhered to and executed accordingly.