HomeMy WebLinkAboutHDR Engineering Inc; 2026-02-11; PSA26-4006UTILPSA26-4006UTIL
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AGREEMENT FOR UTILITIES FINANCIAL SERVICES
HDR ENGINEERING, INC.
THIS AGREEMENT (“Agreement”) is made and entered into as of the ______________ day of
___________________, 2026, by and between the Carlsbad Municipal Water District, a Public Agency
organized under the Municipal Water Act of 1911, and a Subsidiary District of the City of Carlsbad,
California, (“CMWD”), and HDR Engineering, Inc., a Nebraska corporation (“Contractor”).
RECITALS
A.CMWD requires the professional services of a consultant that is experienced in
professional services to perform financial studies for potable water, recycled water, and wastewater rates,
charges and fees.
B.Contractor has the necessary experience in providing professional services and advice
related to professional services to perform financial studies for potable water, recycled water, and
wastewater rates, charges and fees.
C.Contractor has submitted a proposal to CMWD under Request for Proposals No. RFP26-
3910UTIL and has affirmed its willingness and ability to perform such work.
NOW, THEREFORE, in consideration of these recitals and the mutual covenants contained in this
Agreement, CMWD and Contractor agree as follows:
1.SCOPE OF WORK
CMWD retains Contractor to perform, and Contractor agrees to render, those services (“Services”) that
are defined in attached Exhibit “A”, which is incorporated by this reference in accordance with this
Agreement’s terms and conditions.
2.STANDARD OF PERFORMANCE
While performing the Services, Contractor will exercise the reasonable professional care and skill
customarily exercised by reputable members of Contractor's profession practicing in the Metropolitan
Southern California area and will use reasonable diligence and best judgment while exercising its
professional skill and expertise.
3.TERM
The term of this Agreement will be effective for a period of two (2) years from the date first above written.
The Executive Manager may amend the Agreement to extend it for one (1) additional one (1) year period
or parts of a year. Extensions will be based upon a satisfactory review of Contractor's performance, CMWD
needs, and appropriation of funds by the CMWD Board of Directors. The parties will prepare a written
amendment indicating the effective date and length of the extended Agreement.
4.TIME IS OF THE ESSENCE
Time is of the essence for each and every provision of this Agreement.
5.COMPENSATION
The total fee payable for the Services to be performed during the initial Agreement term shall not exceed
two hundred fifty-three thousand three hundred ten dollars ($253,310) as defined in Exhibit “A”. No other
compensation for the Services will be allowed except for items covered by subsequent amendments to
this Agreement. If CMWD elects to extend the Agreement, the amount shall not exceed $100,000 per
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Agreement year. Payment terms are Net 30 unless otherwise provided in Exhibit “A” or agreed to in
writing by the parties. CMWD reserves the right to withhold a ten percent (10%) retention until CMWD
has accepted the work and/or Services specified in Exhibit “A”.
Incremental payments, if applicable, should be made as outlined in attached Exhibit “A”.
6. CONSTRUCTION MANAGEMENT SOFTWARE
Procore Project Management and Collaboration System. This project may utilize CMWD’s Procore
(www.procore.com) online project management and document control platform. The intent of utilizing
Procore is to reduce cost and schedule risk, improve quality and safety, and maintain a healthy team
dynamic by improving information flow, reducing non-productive activities, reducing rework and
decreasing turnaround times. Contractor is required to create a free web-based Procore user account(s)
and utilize web-based training / tutorials (as needed) to become familiar with the system. Unless the City
of Carlsbad City Engineer approves otherwise, Contractor shall process all project documents through
Procore because this platform will be used to submit, track, distribute and collaborate on project. If
unfamiliar or not otherwise trained with Procore, Contractor and applicable team members shall
complete a free training certification course located at http://learn.procore.com/procore-certification-
subcontractor. Contractor is responsible for attaining their own Procore support, as needed, either
through the online training or reaching out to the Procore support team. It will be the responsibility of
Contractor to regularly check Procore and review updated documents as they are added. There will be no
cost to the Contractor for use of Procore.
It is recommended that Contractor provide mobile access for Windows, iOS located at
https://apps.apple.com/us/app/procore-construction-management/id374930542 or Android devices
located at https://play.google.com/store/apps/details?id=com.procore.activities with the Procore App
installed to at least one on-site individual to provide real-time access to current posted drawings,
specifications, requests for information, submittals, schedules, change orders, project documents, as well
as any deficient observations or punch list items. Providing mobile access will improve communication,
efficiency, and productivity for all parties. The use of Procore for project management does not relieve
Contractor of any other requirements as may be specified in this Agreement.
7. STATUS OF CONTRACTOR
Contractor will perform the Services in Contractor's own way as an independent contractor and in pursuit
of Contractor's independent calling, and not as an employee of CMWD. Contractor will be under the
control of CMWD only as to the result to be accomplished but will consult with CMWD as necessary. The
persons used by Contractor to provide services under this Agreement will not be considered employees
of CMWD for any purposes.
The payment made to Contractor pursuant to this Agreement will be the full and complete compensation
to which Contractor is entitled. CMWD will not make any federal or state tax withholdings on behalf of
Contractor or its agents, employees or subcontractors. CMWD will not be required to pay any workers'
compensation insurance or unemployment contributions on behalf of Contractor or its employees or
subcontractors. Contractor agrees to indemnify CMWD and the City of Carlsbad within thirty (30) days for
any tax, retirement contribution, social security, overtime payment, unemployment payment or workers'
compensation payment which CMWD may be required to make on behalf of Contractor or any agent,
employee, or subcontractor of Contractor for work done under this Agreement. At CMWD’s election,
CMWD may deduct the indemnification amount from any balance owing to Contractor.
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8. SUBCONTRACTING
Contractor will not subcontract any portion of the Services without prior written approval of CMWD. If
Contractor subcontracts any of the Services, Contractor will be fully responsible to CMWD for the acts and
omissions of Contractor's subcontractor and of the persons either directly or indirectly employed by the
subcontractor, as Contractor is for the acts and omissions of persons directly employed by Contractor.
Nothing contained in this Agreement will create any contractual relationship between any subcontractor
of Contractor and CMWD. Contractor will be responsible for payment of subcontractors. Contractor will
bind every subcontractor and every subcontractor of a subcontractor by the terms of this Agreement
applicable to Contractor's work unless specifically noted to the contrary in the subcontract and approved
in writing by CMWD.
9. OTHER CONTRACTORS
CMWD reserves the right to employ other Contractors in connection with the Services.
10. INDEMNIFICATION
Contractor agrees to defend (with counsel approved by CMWD), indemnify and hold harmless CMWD and
the City of Carlsbad and its officers, elected and appointed officials, employees and volunteers from and
against all claims, damages, losses and expenses including attorney’s fees arising out of the performance
of the work described in this Agreement caused by any willful misconduct or negligent act or omission of
the Contractor, any subcontractor, anyone directly or indirectly employed by any of them or anyone for
whose acts any of them may be liable.
If Contractor’s obligation to defend, indemnify, and/or hold harmless arises out of Contractor’s
performance as a “design professional” (as that term is defined under California Civil Code Section
2782.8), then, and only to the extent required by California Civil Code Section 2782.8, which is fully
incorporated in this Agreement, Contractor’s indemnification obligation shall be limited to claims that
arise out of, pertain to, or relate to the negligence, recklessness, or willful misconduct of the Contractor,
and, upon Contractor obtaining a final adjudication by a court of competent jurisdiction. Contractor’s
liability for such claim, including the cost to defend, shall not exceed the Contractor’s proportionate
percentage of fault.
The parties expressly agree that any payment, attorney’s fee, costs or expense CMWD or the City of
Carlsbad incurs or makes to or on behalf of an injured employee under CMWD’s self-administered
workers’ compensation is included as a loss, expense or cost for the purposes of this section, and that this
section will survive the expiration or early termination of this Agreement.
11. INSURANCE
Contractor will obtain and maintain for the duration of the Agreement and any and all amendments,
insurance against claims for injuries to persons or damage to property which may arise out of or in
connection with performance of the services by Contractor or Contractor’s agents, representatives,
employees or subcontractors. The insurance will be obtained from an insurance carrier admitted and
authorized to do business in the State of California. The insurance carrier is required to have a current
Best's Key Rating of not less than “A-:VII”; OR with a surplus line insurer on the State of California’s List of
Approved Surplus Line Insurers (LASLI) with a rating in the latest Best’s Key Rating Guide of at least “A:X”;
OR an alien non-admitted insurer listed by the National Association of Insurance Commissioners (NAIC)
latest quarterly listings report.
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11.1 Coverages and Limits. Contractor will maintain the types of coverages and minimum limits
indicated below, unless the Risk Manager or Executive Manager approves a lower amount. These
minimum amounts of coverage will not constitute any limitations or cap on Contractor's indemnification
obligations under this Agreement. CMWD, its officers, agents and employees make no representation that
the limits of the insurance specified to be carried by Contractor pursuant to this Agreement are adequate
to protect Contractor. If Contractor believes that any required insurance coverage is inadequate,
Contractor will obtain such additional insurance coverage, as Contractor deems adequate, at Contractor's
sole expense. The full limits available to the named insured shall also be available and applicable to CMWD
as an additional insured.
11.1.1 Commercial General Liability (CGL) Insurance. Insurance written on an “occurrence”
basis, including personal and advertising injury, with limits no less than $2,000,000 per occurrence. If a
general aggregate limit applies, either the general aggregate limit shall apply separately to this
project/location or the general aggregate limit shall be twice the required occurrence limit.
11.1.2 Automobile Liability (If the use of an automobile is involved for Contractor's work for
CMWD). $2,000,000 combined single-limit per accident for bodily injury and property damage.
11.1.3 Workers' Compensation and Employer's Liability. Workers' Compensation limits as
required by the California Labor Code. Workers' Compensation will not be required if Contractor has no
employees and provides, to CMWD's satisfaction, a declaration stating this.
11.1.4 Professional Liability. Errors and omissions liability appropriate to Contractor’s
profession with limits of not less than $1,000,000 per claim. Coverage must be maintained for a period of
five years following the date of completion of the work.
11.2. Additional Provisions. Contractor will ensure that the policies of insurance required under this
Agreement contain, or are endorsed to contain, the following provisions:
11.2.1 CMWD will be named as an additional insured on Commercial General Liability
which shall provide primary coverage to CMWD.
11.2.2 Contractor will obtain occurrence coverage, excluding Professional Liability, which
will be written as claims-made coverage.
11.2.3 If Contractor maintains higher limits than the minimums shown above, CMWD
requires and will be entitled to coverage for the higher limits maintained by Contractor. Any available
insurance proceeds in excess of the specified minimum limits of insurance and coverage will be available
to CMWD.
11.2.4 This insurance will be in force during the life of the Agreement and any extensions
of it and will not be canceled without thirty (30) days prior written notice to CMWD sent by certified mail
pursuant to the Notice provisions of this Agreement.
11.3 Providing Certificates of Insurance and Endorsements. Prior to CMWD's execution of this
Agreement, Contractor will furnish certificates of insurance and endorsements to CMWD.
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11.4 Failure to Maintain Coverage. If Contractor fails to maintain any of these insurance coverages,
then CMWD will have the option to declare Contractor in breach or may purchase replacement insurance
or pay the premiums that are due on existing policies in order to maintain the required coverages.
Contractor is responsible for any payments made by CMWD to obtain or maintain insurance and CMWD
may collect these payments from Contractor or deduct the amount paid from any sums due Contractor
under this Agreement.
11.5 Submission of Insurance Policies. CMWD reserves the right to require, at anytime, complete and
certified copies of any or all required insurance policies and endorsements.
12. BUSINESS LICENSE
Contractor will obtain and maintain a City of Carlsbad Business License for the term of the Agreement, as
may be amended from time-to-time.
13. ACCOUNTING RECORDS
Contractor will maintain complete and accurate records with respect to costs incurred under this
Agreement. All records will be clearly identifiable. Contractor will allow a representative of CMWD during
normal business hours to examine, audit, and make transcripts or copies of records and any other
documents created pursuant to this Agreement. Contractor will allow inspection of all work, data,
documents, proceedings, and activities related to the Agreement for a period of four (4) years from the
date of final payment under this Agreement.
14. OWNERSHIP OF DOCUMENTS
All work product produced by Contractor or its agents, employees, and subcontractors pursuant to this
Agreement is the property of CMWD. In the event this Agreement is terminated, all work product
produced by Contractor or its agents, employees and subcontractors pursuant to this Agreement will be
delivered at once to CMWD. Contractor will have the right to make one (1) copy of the work product for
Contractor’s records.
15. COPYRIGHTS
Contractor agrees that all copyrights that arise from the services will be vested in CMWD and Contractor
relinquishes all claims to the copyrights in favor of CMWD.
16. NOTICES
The name of the persons who are authorized to give written notices or to receive written notice on behalf
of CMWD and on behalf of Contractor under this Agreement.
For CMWD For Contractor
Name Amanda L. Flesse Name Shawn Koorn
Title General Manager Title Associate Vice President
Department Utilities Department Address 555 110th Avenue NE Suite 1200
Carlsbad Municipal Water District Bellevue, WA 98004
Address 5950 El Camino Real Phone No. 425-633-4596
Carlsbad, CA 92008 Email skoorn@hdrinc.com
Phone No. 442-339-2356
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Each party will notify the other immediately of any changes of address that would require any notice or
delivery to be directed to another address.
17. CONFLICT OF INTEREST
Contractor shall file a Conflict of Interest Statement with the City Clerk in accordance with the
requirements of the CMWD Conflict of Interest Code. The Contractor shall report investments or interests
as required in the CMWD Conflict of Interest Code.
Yes ☐ No ☒
If yes, list the contact information below for all individuals required to file:
Name Email Phone Number
18. GENERAL COMPLIANCE WITH LAWS
Contractor will keep fully informed of federal, state and local laws and ordinances and regulations which
in any manner affect those employed by Contractor, or in any way affect the performance of the Services
by Contractor. Contractor will at all times observe and comply with these laws, ordinances, and
regulations and will be responsible for the compliance of Contractor's services with all applicable laws,
ordinances and regulations.
Contractor will be aware of the requirements of the Immigration Reform and Control Act of 1986 and will
comply with those requirements, including, but not limited to, verifying the eligibility for employment of
all agents, employees, subcontractors and consultants that the services required by this Agreement.
19. CALIFORNIA AIR RESOURCES BOARD (CARB) ADVANCED CLEAN FLEETS REGULATIONS
Contractor’s vehicles with a gross vehicle weight rating greater than 8,500 lbs. and light-duty package
delivery vehicles operated in California may be subject to the California Air Resources Board (CARB)
Advanced Clean Fleets regulations. Such vehicles may therefore be subject to requirements to reduce
emissions of air pollutants. For more information, please visit the CARB Advanced Clean Fleets webpage
at https://ww2.arb.ca.gov/our-work/programs/advanced-clean-fleets.
20. DISCRIMINATION, HARASSMENT, AND RETALIATION PROHIBITED
Contractor will comply with all applicable local, state and federal laws and regulations prohibiting
discrimination, harassment and retaliation.
21. DISPUTE RESOLUTION
If a dispute should arise regarding the performance of the Services the following procedure will be used
to resolve any questions of fact or interpretation not otherwise settled by agreement between the parties.
Representatives of Contractor or CMWD will reduce such questions, and their respective views, to writing.
A copy of such documented dispute will be forwarded to both parties involved along with recommended
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methods of resolution, which would be of benefit to both parties. The representative receiving the letter
will reply to the letter along with a recommended method of resolution within ten (10) business days. If
the resolution thus obtained is unsatisfactory to the aggrieved party, a letter outlining the disputes will
be forwarded to the Executive Manager. The Executive Manager will consider the facts and solutions
recommended by each party and may then opt to direct a solution to the problem. In such cases, the
action of the Executive Manager will be binding upon the parties involved, although nothing in this
procedure will prohibit the parties from seeking remedies available to them at law.
22. TERMINATION
In the event of the Contractor's failure to prosecute, deliver, or perform the Services, CMWD may
terminate this Agreement for nonperformance by notifying Contractor by certified mail of the
termination. If CMWD decides to abandon or indefinitely postpone the work or services contemplated by
this Agreement, CMWD may terminate this Agreement upon written notice to Contractor. Upon
notification of termination, Contractor has five (5) business days to deliver any documents owned by
CMWD and all work in progress to CMWD address contained in this Agreement. CMWD will make a
determination of fact based upon the work product delivered to CMWD and of the percentage of work
that Contractor has performed which is usable and of worth to CMWD in having the Agreement
completed. Based upon that finding CMWD will determine the final payment of the Agreement.
CMWD may terminate this Agreement by tendering thirty (30) days written notice to Contractor.
Contractor may terminate this Agreement by tendering ten (10) days written notice to CMWD. In the
event of termination of this Agreement by either party and upon request of CMWD, Contractor will
assemble the work product and put it in order for proper filing and closing and deliver it to CMWD.
Contractor will be paid for work performed to the termination date; however, the total will not exceed
the lump sum fee payable under this Agreement. CMWD will make the final determination as to the
portions of tasks completed and the compensation to be made.
23. COVENANTS AGAINST CONTINGENT FEES
Contractor warrants that Contractor has not employed or retained any company or person, other than a
bona fide employee working for Contractor, to solicit or secure this Agreement, and that Contractor has
not paid or agreed to pay any company or person, other than a bona fide employee, any fee, commission,
percentage, brokerage fee, gift, or any other consideration contingent upon, or resulting from, the award
or making of this Agreement. For breach or violation of this warranty, CMWD will have the right to annul
this Agreement without liability, or, in its discretion, to deduct from the Agreement price or consideration,
or otherwise recover, the full amount of the fee, commission, percentage, brokerage fees, gift, or
contingent fee.
24. CLAIMS AND LAWSUITS
By signing this Agreement, Contractor agrees that any agreement claim submitted to CMWD must be
asserted as part of the agreement process as set forth in this Agreement and not in anticipation of
litigation or in conjunction with litigation. Contractor acknowledges that if a false claim is submitted to
CMWD, it may be considered fraud and Contractor may be subject to criminal prosecution. Contractor
acknowledges that California Government Code Section 12650 et seq., the False Claims Act applies to this
Agreement and, provides for civil penalties where a person knowingly submits a false claim to a public
entity. These provisions include false claims made with deliberate ignorance of the false information or in
reckless disregard of the truth or falsity of information. If CMWD seeks to recover penalties pursuant to
the False Claims Act, it is entitled to recover its litigation costs, including attorney's fees. Contractor
acknowledges that the filing of a false claim may subject Contractor to an administrative debarment
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proceeding as the result of which Contractor may be prevented to act as a Contractor on any public work
or improvement for a period of up to five (5) years. Contractor acknowledges debarment by another
jurisdiction is grounds for CMWD to terminate this Agreement.
25. JURISDICTION AND VENUE
This Agreement shall be interpreted in accordance with the laws of the State of California without regard
to, or application of, choice of law rules or principles. Any action at law or in equity brought by either of
the parties for the purpose of enforcing a right or rights provided for by this Agreement will be tried in a
court of competent jurisdiction in the County of San Diego, State of California, and the parties waive all
provisions of law providing for a change of venue in these proceedings to any other county.
26. SUCCESSORS AND ASSIGNS
It is mutually understood and agreed that this Agreement will be binding upon CMWD and Contractor and
their respective successors. Neither this Agreement nor any part of it nor any monies due or to become
due under it may be assigned by Contractor without the prior consent of CMWD, which shall not be
unreasonably withheld.
27. THIRD PARTY RIGHTS
Nothing in this Agreement should be construed to give any rights or benefits to any party other than the
City and Contractor.
28. ENTIRE AGREEMENT
This Agreement, together with any other written document referred to or contemplated by it, along with
the purchase order for this Agreement and its provisions, embody the entire Agreement and
understanding between the parties relating to the subject matter of it. In case of conflict, the terms of the
Agreement supersede the purchase order. Neither this Agreement nor any of its provisions may be
amended, modified, waived or discharged except in a writing signed by both parties. This Agreement may
be executed in counterparts.
29. AUTHORITY
The individuals executing this Agreement and the instruments referenced in it on behalf of Contractor
each represent and warrant that they have the legal power, right and actual authority to bind Contractor
to the terms and conditions of this Agreement.
30. SEVERABILITY
If any term or portion of this Agreement is held to be invalid, illegal, or otherwise unenforceable by a court
of competent jurisdiction, the remaining provisions of this Agreement shall continue in full force and
effect.
[signatures on following page]
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CONTRACTOR CARLSBAD MUNICIPAL WATER DISTRICT, a Public
Agency organized under the Municipal Water Act
of 1911, and a Subsidiary District of the City of
Carlsbad
HDR ENGINEERING, INC., a Nebraska
corporation
By: By:
(sign here) KEITH BLACKBURN, President
Anna Y. Lantin, Vice President
(print name/title)
ATTEST:
By: SHERRY FREISINGER, Secretary
(sign here) By:
. Assistant Secretary
(print name/title)
If required by CMWD, proper notarial acknowledgment of execution by contractor must be attached. If a
corporation, Agreement must be signed by one corporate officer from each of the following two groups.
Group A Group B
Chairman, Secretary,
President, or Assistant Secretary,
Vice-President CFO or Assistant Treasurer
Otherwise, the corporation must attach a resolution certified by the secretary or assistant secretary under
corporate seal empowering the officer(s) signing to bind the corporation.
APPROVED AS TO FORM:
CINDIE K. McMAHON, General Counsel
By:
Assistant General Counsel
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EXHIBIT A
SCOPE OF SERVICES AND FEE
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City of Carlsbad – Carlsbad Municipal Water District 1
Utilities Financial Services – Scope of Work
CITY OF CARLSBAD-CARLSBAD MUNICPAL WATER DISTRICT
UTILITES FINANCIAL SERVICES FOR POTABLE WATER,
RECYCLED WATER, AND WASTEWATER RATES AND
CONNECTION FEES –
SCOPE OF WORK
Introduction
The following scope of work was developed by HDR to provide the Carlsbad Municipal Water
District (CMWD) and the City of Carlsbad (City) technical and professional services to perform a
study related to potable water, recycled water, and wastewater rates, as well as potable water
and wastewater connection fees (the Study). The Study will be developed in two phases. Phase I
will be a review of the existing rate and connection fee models, development of the updated rate
models for each utility, and the development and update of the potable water and wastewater
connection fees. Phase II will update the rate models developed in Phase I for each utility and
develop cost-based and proportional rates for adoption through the Proposition 218 process.
Task 1 Project Management (Jan 2026 – July 2027)
This task applies to both phases of the Study and includes the general project management
activities that are required to complete the project on time and within budget. This includes
allocating the appropriate labor resources to the project and working with the CMWD and City
to schedule project meetings (monthly Teams meetings and as a part of the tasks listed below)
and provide monthly invoices and progress reports. HDR will develop a Project Management Plan
(PMP) including an executive summary, project scope and deliverables, project schedule, project
team with responsibilities, communication management, and cost and quality management
component. HDR will coordinate with the CMWD and City to schedule an electronic kick-off
meeting.
Expected CMWD and City Staff Support for Task 1:
•Coordination with the HDR project manager
•Participation in monthly progress meetings
•Participation in an electronic kick-off meeting
•Monthly review and process invoices
Deliverables as a Result of Task 1:
•Coordination with the CMWD and City
•Up to two HDR staff attend monthly Teams meetings with agendas and minutes
•Virtual kick-off meeting attended by up to three HDR staff and meeting minutes
•Monthly progress reports and invoices
•Project management plan
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City of Carlsbad – Carlsbad Municipal Water District 2
Utilities Financial Services – Scope of Work
Task 2 Phase I Activities (Jan 2026 – July 2026)
Task 2.1 Data Collection and Review
HDR will develop a written data request identifying the operational, customer, and financial data
that will be needed in the preparation of the Study. Upon receiving the responses to the initial
data request, HDR will review and compile clarifications on the provided data and as needed a
secondary data request. HDR will work with CMWD and City personnel to minimize the burden
of data collection and develop acceptable or reasonable proxies for data where necessary.
However, there may be certain data points that are critical, which require specific additional data
collection efforts. A key component of this task will be the review of prior studies and approaches
for the utilities rates and fees.
Expected CMWD and City Staff Support for Task 2.1:
• Gather and provide to HDR the requested data and information
• Provide, as needed, data clarification and additional data specific to the development of
the Study
Deliverables as a Result of Task 2.1:
• Written data request detailing the needed data and information
• Identification of outstanding data needs, clarification of data, or additional data needs
• Review of prior studies and approaches used to establish the current rates and fees for
the utilities
Task 2.2 Review Reserve Policies
The CMWD and City have requested a review and evaluation of the current reserve policies. This
review is critical to the Study since it provides the policy basis for certain financial planning targets
(e.g., minimum reserves). HDR will review the existing policies regarding reserves to comply with
those policies during the Study. HDR will develop and recommend, as appropriate, policies and
areas to simplify for consideration by the CMWD and City for possible adoption.
Expected CMWD and City Staff Support for Task 2.2:
• Provide current reserve policies and requested clarification of current practices
• Participate in a one-hour virtual project meeting to review and discuss reserve policies
Deliverables as a Result of Task 2.2:
• As appropriate, recommend changes/additions to the current policies
• Lead a one-hour virtual project meeting with agenda and meeting minutes
Task 2.3 Development of the Rate Models
This task will develop the updated rate models for each utility. This includes the development of
the revenue requirement, cost of service, and rate design analyses to support the cost basis and
proportionality of the rates for each utility. Given the discussion and review in the prior tasks,
the model for each utility will be developed on a stand alone basis, that is a separate rate model
for each utility. The methodology and approach used to develop the rate models is based on
industry standard approaches (e.g., AWWA, WEF) and each utility’s system and customer
characteristics. The basis for establishing rates for each utility that are proportional, cost based,
and defendable has traditionally rested on cost of service principles and methodologies.
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Utilities Financial Services – Scope of Work
The revenue requirement analyses is the first major analytical portion of the rate study process.
The revenue requirement will be developed for a multi-year (i.e., ten-year) projected period for
each utility using the cash basis methodology, which is the typical methodology used by
municipal utilities such as the CMWD and City.
The next step in the development of the rate models for each utility is the cost of service analysis.
A cost of service analysis proportionally distributes the revenue requirement of each utility
between the customer classes of service - or rate schedules - of each utility. For the initial model
development, the customer classes of service and cost distribution approach will need to be
determined so that the revenue requirement is allocated to the appropriate cost component(s)
and customers of each utility.
The final step in the development of the rate models for each utility is the rate design analysis.
This task will develop the status quo rate design analysis in the rate model and develop the
outline of up to two alternative rate structures for each customer class of service for each utility.
This will include a bill comparison to evaluate customer impacts at different levels of
consumption/usage. HDR will collaborate with CMWD and the City to identify other local and
regional utilities and begin to outline and develop a regional bill comparison.
At the completion of the draft model development, a half-day in-person meeting will be held to
review and discuss the model development for the three utilities. Based on the review, the final
rate models will be developed for each utility. At that time, it is proposed that up to two, two-
hour, virtual project meetings be held to finalize the model development for each utility.
Expected CMWD and City Staff Support for Task 2.3:
• Work collaboratively with HDR in the development of the rate models for each utility
• Provide as needed data clarification and additional data needs to support the
development of the rate models
• Review and discuss the appropriate customer classes of service for each utility
• Work collaboratively with HDR to outline rate structure alternatives
• Identification of comparable agencies for bill comparison purposes
• Participate in a half day in person project meeting to review the draft revenue
requirement analyses and model development
• Participate in two virtual meetings to review the final model development
Deliverables as a Result of Task 2.3:
• Development of the rate models for each of the utilities
• A revenue requirement analysis for a ten year projected time period
• A cost of service analysis which identifies the customer classes of service and proportional
distribution of the revenue requirement
• A rate design analysis and rate structure alternatives
• Identification of comparable agencies for bill comparison purposes
• A half-day in person project meeting to review the draft model development
• Two, two-hour, virtual project meetings to review the development of the final rate
models
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City of Carlsbad – Carlsbad Municipal Water District 4
Utilities Financial Services – Scope of Work
Task 2.4 Development of Potable Water and Wastewater Connection Fees
Connection fees are a type of capacity or capital recovery fee that is established as one-time
charges assessed to developers or new customers connecting to the system as a way to recover
all or a part of the cost of additional system capacity constructed for their use. A connection fee
is established based on the value of each utility’s capacity and the amount of capacity needed to
serve new customers. The objective of a connection fee is to maintain parity between existing
and new customers. The development of cost-based connection fees is also important from the
perspective of the overall financial stability of the utilities. Connection fee revenue is used to
contribute to funding growth-related infrastructure. As a general philosophy, most utilities prefer
to have “growth pay for growth.” This statement implies the development and implementation
of cost-based connection fees for each utility.
Industry approaches outline a number of different methodologies that may be used to establish
cost-based connection fees. We will utilize our foundational understanding of these different
methodologies and apply the appropriate methodology based on the specific circumstances of
the potable water and wastewater utilities (e.g., available excess capacity, no excess
capacity/expansion needed). This task will review the methodology and approach used to
establish the CMWD and City’s current connection fees. HDR will then update the connection fee
for the potable water and wastewater utilities to reflect current costs and the appropriate
methodology that best reflects each utility’s current condition and situation. More specifically,
HDR will update the connection fees using each utility’s assets, capital improvement needs, and
financing approach to determine cost-based connection fees. Additionally, the connection fees
will be developed to comply with applicable California legislative requirements. Draft connection
fee results will be reviewed with CMWD and City staff and finalized based on input received. Once
the Study is completed, each utility’s connection fee model will be electronically provided to the
CMWD and City. At the completion of the connection fee analyses, written documentation will
be provided that summarizes the approach, methodology, and recommendations of the
connection fee analyses.
Expected CMWD and City Staff Support for Task 2.4:
• Review and discuss the methodology and approach for the current connection fees
• Discuss the development of the appropriate connection fee methodology with HDR given
each system’s current capacity and expansion needs
• Provide the future capital improvements related to providing new or additional capacity
for each system
• Participate in a half day in person project meeting to review the draft connection fee
analyses for each utility
• Participate in two one-hour virtual project meetings to review and discuss the connection
fee analyses for each utility
• Review the draft connection fee analyses and reports and provide comments
Deliverables as a Result of Task 2.4:
• Development of the cost-based potable water and wastewater connection fee analyses
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Utilities Financial Services – Scope of Work
• A half day in person project meeting to review and discuss the draft connection fee
analyses for each utility
• Two one-hour virtual project meetings to review and discuss the connection fee analyses
for each utility
• Electronic draft and final reports detailing the development of the potable water and
wastewater connection fee analysis
• An electronic copy of the potable water and wastewater connection fee models
Task 3 Phase II Activities (September 2026 – July 2027)
Task 3.1 Data Collection and Review
HDR will develop a written data request identifying the updated information necessary to
develop the proposed potable water, recycled water, and wastewater rates for Proposition 218
purposes and adoption. Upon receiving the responses to the initial data request, HDR will review
and compile clarifications on the provided data and as needed a secondary data request. HDR
will work with CMWD and City personnel to minimize the burden of data collection and develop
acceptable or reasonable proxies for data where necessary. However, to meet the requirements
of Proposition 218, there may be certain data points that are critical, which require specific
additional data collection efforts.
Expected CMWD and City Staff Support for Task 3.1:
• Gather and provide to HDR the requested data and information
• Provide, as needed, data clarification and additional data specific to the development of
the proposed rates
Deliverables as a Result of Task 3.1:
• Written data request detailing the needed data and information
• Identification of outstanding data needs, clarification of data, or additional data needs
Task 3.2 Phase II Kick-Off Meeting
A two-hour virtual kick-off meeting will be held to discuss the schedule, approach, and analyses
to update to develop cost-based and proportional potable water, recycled water, and
wastewater rates. Given the Phase I analyses, a discussion of changes or revisions to the analyses
will also be documented.
Expected CMWD and City Staff Support for Task 3.2:
• Coordinate the date and time of the virtual meeting with HDR
• Participate in a two-hour virtual project meeting
Deliverables as a Result of Task 3.2:
• Two HDR staff participate in a two-hour virtual project meeting
• Summary meeting minutes provided electronically
Task 3.3 Update of the Revenue Requirement Analyses
This task will develop the final revenue requirement for each utility to establish the cost basis for
the proposed potable water, recycled water, and wastewater rates. This portion of the Study
entails reviewing the sources of funds (revenues) and comparing them to the applications of
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Utilities Financial Services – Scope of Work
funds (expenses), while considering the prudent and proper funding for annual O&M and capital
expenditures of each utility. The analysis results in the determination of the balance or deficiency
for each utility and ultimately the need for future rate revenue adjustments.
The revenue requirement analysis for each utility will be developed based on generally accepted
rate-setting methodologies (i.e., AWWA, WEF) for a multi-year (i.e., ten-year) projected period
using the cash basis methodology. The cash basis methodology is the typical methodology used
by municipal utilities such as the CMWD and City. The operational costs are projected from
budgeted and actual expenses, using historical escalation (inflationary) factors, and adjusted for
known changes (e.g., additional personnel, growth/expansion). The starting point will be the
most recent operating and capital budgets for each utility. HDR will collaborate with the CMWD
and City regarding historical and projected customer growth, sales volumes, and changes in usage
characteristics for each utility.
At the completion of the draft revenue requirement analysis, a half-day in-person meeting will
be held to review and discuss the draft revenue requirement for the three utilities in tandem
with Task 3.4 cost of service analysis project meeting. Based on the review, the draft final revenue
requirement will be developed for each utility. At that time, it is proposed that a two-hour virtual
project meeting be held to finalize the revenue requirement analyses.
Expected CMWD and City Staff Support for Task 3.3:
• Work collaboratively with HDR in the development of the revenue requirement analysis
for each utility
• Participate in a half day in person project meeting to review the draft revenue
requirement analyses and model development
• Participate in a virtual meeting to review the results of the final revenue requirement
analyses and model development
Deliverables as a Result of Task 3.3:
• Development of the revenue requirement for each utility for a ten-year period
• A half-day in person project meeting to review the development of the revenue
requirement analysis for each utility in tandem with Task 3.4 project meeting
• Assist the CMWD and City’s management teams in the development of rate transition
plans to “phase in” needed rate adjustments for each utility
• Review and provide recommendations regarding key financial indicators (debt service
coverage, capital replacement, reserve levels, etc.)
• A two-hour virtual project meeting to review the development revenue requirement
analyses
Task 3.4 Update of the Cost of Service Analyses
The next step in the development of the Study is the cost of service analysis. A cost of service
analysis proportionally distributes the revenue requirement of each utility between the customer
classes of service - or rate schedules - of each utility. An important component of the cost of
service analysis will be the determination of customer class of service for each utility. The cost
distribution to each class of service provides the proportionality for the proposed rate designs.
The basis for establishing rates for each utility that are proportional, cost based, and defendable
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Utilities Financial Services – Scope of Work
has traditionally rested on cost of service principles and methodologies. Therefore, the classes of
service used within the cost of service should be reflective of the classes of service to be used for
final rate designs (i.e., rate schedules).
The cost allocation approach will need to be determined so that the revenue requirement is
allocated to the appropriate cost component(s) of each utility. For a potable water utility (and
similarly for recycled water), typically cost components are related to average day, peak day, fire
protection, and customer related. For a wastewater utility, it is generally reflective of volume,
strength, and customer related components. Once the revenue requirement is allocated for each
utility, it is distributed proportionally to each customer classes of service based on distribution
factors. A distribution factor is developed for each of the allocation cost components. In this way,
the cost of service reviews the impact each customer class places on the system given the
facilities and costs required to provide service based on the customer characteristics.
At the completion of the draft cost of service analyses for each utility, a half-day project meeting
will be held to review and discuss the cost of service analysis developed as part of the model
development in tandem with Task 3.3. At the completion of the review, the cost of service
analysis will be finalized and a two-hour virtual project meeting will be held to review the final
cost of service analyses. The cost of service analysis also provides average unit costs which
become the basis for the proposed rates in the first year of implementation.
Expected CMWD and City Staff Support for Task 3.4:
• Review and discuss the appropriate customer classes of service and rate schedules for
each utility
• Coordinate with CMWD and City legal counsel during the development of the cost of
service analysis
• Work collaboratively with HDR to develop the cost of service analysis for each utility
• Participate in a half-day project meeting at the CMWD or City’s offices to discuss the draft
cost of service analyses in tandem with Task 3.3
• Participate in a virtual meeting to review the draft final cost of service analysis results and
recommendations for each utility
Deliverables as a Result of Task 3.4:
• Collaborate with the CMWD and City to determine the appropriate customer classes of
service for each utility
• A proportional distribution of the revenue requirement to the customer classes of service
for each utility
• Review the cost of service analyses and provide revisions and recommendations to
CMWD and City staff
• A half-day in person project meeting at the CMWD or City’s offices to review the draft
cost of service analyses in tandem with Task 3.3
• A virtual meeting to review the final approach, summary, and recommendations of the
cost of service analysis for each utility
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Utilities Financial Services – Scope of Work
Task 3.5 Proposed Rate Design Analyses
The previous tasks addressed the overall cost basis (revenue requirement) and proportionality
(cost of service) of the current potable water, recycled water, and wastewater rates. Proposed
utility rates will be developed for each utility and each of the customer classes of service
identified in the cost of service analysis for up to a five-year period. HDR will develop up to two
alternative rate structures as part of the Study for each utility based on discussion with the
CMWD and City. For each proposed rate alternative, a bill comparison will be developed to show
the impact to customers based on the proposed utility rates. A virtual meeting with the CMWD
and City will be held to review and discuss the development of the proposed rates for each utility.
As part of the rate design analyses, HDR will review and compare the proposed rates to up to 15
comparable jurisdictions and will develop a comparison graph for single family residential
customers based on average usage for the CMWD and another comparison graph for single
family residential wastewater billings.
Expected CMWD and City Staff Support for Task 3.5:
• Discuss with HDR the CMWD and City’s rate design goals and objectives
• Collaborate with HDR on the rate structure alternatives for each utility
• Review the draft proposed utility rates and provide the preferred structure for each utility
• Participate in a virtual meeting to discuss the proposed potable water, recycled water,
and wastewater rates
Deliverables as a Result of Task 3.5:
• Collaborate with the CMWD and City to outline the rate structure alternatives for model
development
• Development of up to two proposed rate structures for up to a five-year period for each
utility
• Development of bill comparisons for each of the proposed rate structures developed as
part of this task
• A two-hour virtual project meeting to review the proposed rates for each utility
• Update the summary comparison of current and proposed rates to up to 15 other similar
utilities for each utility
Task 3.6 Written Documentation
At the conclusion of the technical analyses discussed in the prior tasks, HDR will develop written
reports summarizing the analyses for each utility. The reports will summarize the findings,
conclusions, and recommendations for each utility. Each report will include a technical appendix
that includes the exhibits developed to support the proposed potable water, recycled water, and
wastewater rates. HDR will provide an electronic copy of the draft reports to the CMWD and City
for review and comment. A two-hour virtual project meeting will be held to review the draft
reports. Comments, suggestions, or corrections from the CMWD and City concerning the draft
reports will be incorporated into the final reports. HDR will provide an electronic version of the
final reports to the CMWD.
Expected CMWD and City Staff Support for Task 3.6:
• Review the potable water, recycled water, and wastewater draft written reports
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Utilities Financial Services – Scope of Work
• Participate in a virtual meeting to discuss the draft written reports
Deliverables as a Result of Task 3.6:
• Electronic copy of the draft written reports
• A virtual project meeting to review the draft reports
• Electronic copy of the final written reports
Task 3.7 Rate Models
At the completion of the Study, HDR will provide the CMWD and City with the models used to
develop the potable water, recycled water, and wastewater rate and connection fee analyses
which are developed in Microsoft Excel. A half-day training session will be provided to CMWD
and City staff led by two HDR project team members.
Expected CMWD and City Staff Support for Task 3.7:
• Input on model design and features
Deliverables as a Result of Task 3.7:
• Copy of the Microsoft Excel models used to develop the Study technical analyses
• A half-day training session provided by two HDR staff
Optional Task 4 Public Presentations (April – June 2027)
To effectively communicate the results of the Study, HDR recommends at least two public
meetings. This includes a presentation on the draft results including the findings, conclusions,
and recommendations of the Study that would set the public hearing date in compliance with
Proposition 218. The final presentation will include the public hearing on the proposed potable
water, recycled water, and wastewater rates. HDR will prepare the presentation materials (i.e.,
PowerPoint) and Shawn Koorn will be present to provide the presentations. It is assumed that
both meetings will be attended in person. Should additional public meetings or presentations be
requested, they will be provided on a time and material basis with prior approval of the CMWD
and City.
Expected CMWD and City Staff Support for Task 4:
• Review and comment on the proposed handouts for the public meetings
Deliverables as a Result of Task 4:
• Up to two in person public presentations to present the finding, conclusions, and
recommendations of the Study
Estimated Project Schedule
Provided on the following page is a summary of the estimated project schedule based on the
scope presented above.
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City of Carlsbad – Carlsbad Municipal Water District 10
Utilities Financial Services – Scope of Work
Kick-Off Meeting Project Meeting Monthly Progress Meetings Optional Public Presentations
Jun-26 Sep-26 Dec-26Jul-26 Aug-26 Oct-26 Nov-26
Project Management
Apr-26 May-26
Data Collection and Review
Review Reserve Policies
Development of the Rate Models
Development of the Connection Fees
Update Revenue Requirement Analysis
Data Collection and Review
Phase II Kick-Off
Mar-26
Optional Public Presentations
Written Documentation
Jan-26 Feb-26
Rate Models
Update Cost of Service
Rate Design Analysis
Jul-27Jan-27 Feb-27 Mar-27 Apr-27 May-27 Jun-27
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Estimated Project Fee
Provided below is a summary of the project fee estimate based on the above scope of services.
Rate Schedule
HDR Staff
Role Staff Hourly Rate
Principal Dean Gipson $445.00
Project Manager Shawn Koorn $360.00
Technical Lead Josiah Close $240.00
Quality Reviewer Kevin Lorentzen $280.00
Financial Analyst Sara Anderson $150.00
Accounting TBD $150.00
Project Coordinator TBD $150.00
Expenses
Description Cost % Markup
Airfare $600.00/round trip 0%
Mileage $0.70/mile 0%
Car Rental $90.00/day 0%
Car Rental Fuel $25.00/day 0%
Parking $45.00/day 0%
Meals $75.00/day 0%
Hotel/Lodging $225.00/day 0%
Fee Estimate
On the following page is a detailed summary of the proposed project fee estimate.
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City of Carlsbad – Carlsbad Municipal Water District 12
Utilities Financial Services – Scope of Work
No.Description Principal Project Manager Quality Reviewer Financial Analyst Technical Lead Project Coordinator Accountant Total Labor Labor Direct Costs Total TOTAL1Client Billing Rates $445 $360 $280 $150 $240 $150 $150 $220 Calc Calc -11Project Management1.1 Subtask Name 5 33 0 19 33 17 41 148 $33,575 $25 $33,600
Subtotal 1 | Project Management 5 33 0 19 33 17 41 148 $33,575 $25 $33,600 $33,600
2.1 Data Collection and Review
2.1.1 Analysis 3 8 5 16 $3,480 $0 $3,4802.1.2 QA/QC 2 2 $560 $0 $560Subtotal 2.1 | Data Collection and Review 0 3 2 8 5 0 0 18 $4,040 $0 $4,040 $4,0402.2 Review Reserve Policies
2.2.1 Analysis 4 19 11 34 $6,930 $0 $6,9302.2.2 QA/QC 2 4 6 $1,840 $0 $1,8402.2.3 Virtual Project Meeting 1 1 1 3 $750 $0 $750Subtotal 2.2 | Review Reserve Policies 0 7 4 20 12 0 0 43 $9,520 $0 $9,520 $9,5202.3 Development of the Rate Models2.3.1 Analysis 11 65 25 101 $19,710 $0 $19,710
2.3.2 QA/QC 9 9 $2,520 $0 $2,5202.3.3 In Person Project Meeting 6 1 4 6 17 $4,480 $2,361 $6,8412.3.4 Virtual Project Meetings 4 1 4 4 13 $3,280 $0 $3,280Subtotal 2.3 | Development of the Rate Models 0 21 11 73 35 0 0 140 $29,990 $2,361 $32,351 $32,3502.4 Development of the Connection Fees2.4.1 Analysis 17 115 41 173 $33,210 $0 $33,210
2.4.2 QA/QC 17 17 $4,760 $0 $4,7602.4.3 Virtual Project Meeting 4 4 4 12 $3,000 $0 $3,0002.4.4 In Person Project Meeting 6 1 4 6 17 $4,480 $2,476 $6,956Subtotal 2.4 | Development of the Connection Fees 0 27 18 123 51 0 0 219 $45,450 $2,476 $47,926 $47,9303.1 Data Collection and Review
3.1.1 Analysis 3 7 5 15 $3,330 $0 $3,3303.1.2 QA/QC 2 2 $560 $0 $560Subtotal 3.1 | Data Collection and Review 0 3 2 7 5 0 0 17 $3,890 $0 $3,890 $3,8903.2 Phase II Kick-Off
3.2.1 Meeting prep 1 2 2 5 $1,140 $0 $1,1403.2.2 QA/QC 2 2 $560 $0 $5603.2.3 Virtual Meeting 2 2 2 6 $1,500 $0 $1,500Subtotal 3.2 | Phase II Kick-Off 0 3 2 4 4 0 0 13 $3,200 $0 $3,200 $3,2003.3 Update Revenue Requirement Analysis
3.3.1 Analysis 8 37 18 63 $12,750 $0 $12,7503.3.2 QA/QC 7 7 $1,960 $0 $1,9603.3.3 In Person Project Meeting 6 4 6 16 $4,200 $2,361 $6,5613.3.4 Virtual Project Meeting 2 2 2 6 $1,500 $0 $1,500Subtotal 3.3 | Update Revenue Requirement Analysis 0 16 7 43 26 0 0 92 $20,410 $2,361 $22,771 $22,7703.4 Update Cost of Service
3.4.1 Analysis 11 37 19 67 $14,070 $0 $14,0703.4.2 QA/QC 9 9 $2,520 $0 $2,5203.4.3 In Person Project Meeting 6 4 6 16 $4,200 $2,361 $6,5613.4.4 Virtual Project Meeting 2 2 2 6 $1,500 $0 $1,500Subtotal 3.4 | Update Cost of Service 0 19 9 43 27 0 0 98 $22,290 $2,361 $24,651 $24,6503.5 Rate Design Analysis
3.5.1 Analysis 13 49 25 87 $18,030 $0 $18,0303.5.2 QA/QC 7 7 $1,960 $0 $1,9603.5.3 Virtual Project Meeting 2 2 2 6 $1,500 $0 $1,500Subtotal 3.5 | Rate Design Analysis 0 15 7 51 27 0 0 100 $21,490 $0 $21,490 $21,4903.6 Written Documentation3.6.1 Analysis 61 17 78 $13,230 $0 $13,2303.6.2 QA/QC 11 19 30 $9,280 $0 $9,2803.6.3 Virtual Project Meeting 2 2 2 6 $1,500 $0 $1,500Subtotal 3.6 | Written Documentation 0 13 19 63 19 0 0 114 $24,010 $0 $24,010 $24,010
3.7 Rate Models
3.7.1 Analysis 5 11 8 24 $5,370 $0 $5,3703.7.2 QA/QC 4 5 9 $2,840 $0 $2,8403.7.3 Model Training 8 8 16 $3,120 $2,361 $5,481Subtotal 3.7 | Rate Models 0 9 5 19 16 0 0 49 $11,330 $2,361 $13,691 $13,6904Optional Public Presentations
4.1 Analysis 11 5 16 $2,850 $0 $2,8504.2 QA/QC 3 3 $840 $0 $8404.3 In Person Presentations 17 17 $6,120 $2,361 $8,481Subtotal 4 | Optional Public Presentations 0 17 3 11 5 0 0 36 $9,810 $2,361 $12,171 $12,170
TOTAL, hours 5 186 89 484 265 17 41 1,087
TOTAL, dollars $239,005 $14,306 $253,311 $253,310
FEELEVEL OF EFFORTTASKS
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