Loading...
HomeMy WebLinkAbout2018-12-18; Municipal Water District; ; Professional Services Agreement with Carollo Engineers, Inc., to complete the 2019 Utilities Cost of Service StudyMeeting Date: To: From: Staff Contact: Subject: Dec. 18,2018 Mayor/President and City Council/Board Scott Chadwick, City Manager Ligeia Heagy, Management Analyst Ligeia.heagy@Carlsbadca.gov or 760-438-2722 CAReview fZt{__ Professional Services Agreement with Carollo Engineers, Inc., to complete the 2019 Utilities Cost of Service Study. Recommended Action Adopt a resolution approving a professional services agreement with Carollo Engineers, Inc., in an amount not-to-exceed $168,685 to complete the 2019 Utilities Cost of Service Study (COSS) for wastewater, potable and recycled water. Executive Summary Staff seeks Carlsbad Municipal Water District (District) Board of Directors' (Board's) approval for execution of a pr?fessional services agreement with Carollo Engineers, Inc., to complete the 2019 COSS. In accordance with industry standards, the City of Carlsbad and CMWD conduct wastewater, potable and recycled water cost of service studies every three to five years to ensure integrity of the rate structure, legal compliance and accurate representation of costs to provide these services. The Carlsbad Municipal Code requires the Board to be the awarding authority for procurement of services and professional services for which the cost is more than $100,000 per agreement year, and therefore approval ofthis agreement is subject to this requirement. Discussion The city provides wastewater service to an approximately 30-square-mile service area in and around city limits. In fiscal year 2017-18, there were over 23,900 wastewater connections within the service area. The District supplies potable and recycled water to an approximately 32-square-mile service area in and around city limits. In fiscal year 2017-18, there were over 30,000 potable and recycled water connections within the service area with an annual demand projected at 15,500 acre-feet (AF) for potable water and 4,500 AF for recycled water. On Oct. 10, 2018, CMWD advertised on its website a Request for Proposals (RFP) for the 2019 Utilities COSS. On Oct. 29, 2018, four proposals were received and a selection committee composed of city staff reviewed and evaluated submittals. The proposals were evaluated based on the quality of each consulting firm's experience related to the COSS-specific elements, performance of similar work, ability to provide the services and quality of the written response. December 18, 2018 Item #6 Page 1 of 19 Based on a review of the proposals and subsequent negotiation of an acceptable scope of work and fee in accordance with the city's Purchasing Policies and Procedures Manual, staff recommends awarding an agreement for preparation of the 2019 Utilities COSS to Carollo Engineers in a not-to-exceed amount of $168,685. Fiscal Analysis Funding is available in the Fiscal Year 2018-19 Operating budgets for wastewater, potable and recycled water. Therefore, the city has already authorized funding for the wastewater portion of the Utilities COSS. The District will execute the agreement with Carollo on behalf of both agencies. Next Steps Toward the end of calendar year 2019, staff will return to City Council and the District Board during a public hearing for approval of the completed 2019 Utilities COSS and presentation of recommendations for calendar year 2020 utilities rates for wastewater, potable and recycled water. Environmental Evaluation (CEQA) Pursuant to Public Resources Code Section 21065, this action does not constitute a "project" within the meaning of California Environmental Quality Act (CEQA) in that it has no potential to cause either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment, and therefore does not require environmental review. Public Notification This item was noticed in accordance with the Ralph M. Brown Act and was available for public viewing and review at least 72 hours prior to the scheduled meeting date. Exhibits 1. CMWD Board Resolution. December 18, 2018 Item #6 Page 2 of 19 RESOLUTION NO. 1611 A RESOLUTION OF THE BOARD OF DIRECTORS OF THE CARLSBAD MUNICIPAL WATER DISTRICT BOARD (CMWD) OF THE CITY OF CARLSBAD, AUTHORIZING EXECUTION OF A PROFESSIONAL SERVICES AGREEMENT WITH CAROLLO ENGINEERS, INC. IN A NOT-TO-EXCEED AMOUNT OF $168,685 FOR THE 2019 UTILITIES COST OF SERVICE STUDY. EXHIBIT I WHEREAS, the Carlsbad Municipal Water District (CMWD) Board of Directors (Board) ofthe City of Carlsbad, California (city) has determined that it is necessary, desirable and in the public interest to complete the 2019 Utilities Cost of Service Study (Study); and WHEREAS, the city and CMWD solicited responses to its 2019 Utilities Cost of Service Study Request for Proposals (RFP) and received four responses; and WHEREAS, subsequent to a staff evaluation of the proposals, Carollo Engineers, Inc., has been identified as the most qualified consultant for the study; and WHEREAS, staff and Carollo Engineers, Inc., have negotiated the scope of work and associated fee in an amount not to exceed $168,685 to provide professional services for the study; and WHEREAS, the city and Board agree that the professional services for the Study will be performed via an agreement between CMWD and the consultant. WHEREAS, funding for the study has previously been appropriated in the fiscal year 2018-19 operating budget. NOW, THEREFORE, BE IT RESOLVED by the CMWD Board of the City of Carlsbad, California, as follows: 1. That the above recitations are true and correct. 2. That the president of the Board is hereby authorized and directed to execute the professional services agreement with Carollo Engineers, Inc., in an amount not to exceed $168,685 attached hereto as Attachment A. December 18, 2018 Item #6 Page 3 of 19 EXHIBIT I PASSED, APPROVED AND ADOPTED at a Special Meeting of the Carlsbad Municipal Water District Board of Directors of the City of Carlsbad on the 18th day of December, 2018, by the following vote, to wit: AYES: NOES: ABSENT: M. Hall, K. Blackburn, P. Bhat-Patel, C. Schumacher, B. Hamilton. None. None. (SEAL) December 18, 2018 Item #6 Page 4 of 19 PSA 19-675UTIL AGREEMENT FOR 2019 UTILITIES COST OF SERVICE STUDY SERVICES CAROLLO ENGINEERS, INC. THIS AGREEMENT is made and entered into as of the :2oti11 day of \)e~\p.ev:' , 2018, 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, ("CMWD"), and CAROLLO ENGINEERS, INC., a Delaware corporation, ("Contractor"). RECITALS A. CMWD requires the professional services of a consultant that is experienced in water, recycled water and wastewater cost of service studies. B. Contractor has the necessary experience in providing professional services and advice related to water, recycled water and wastewater cost of services. C. Contractor has submitted a proposal to CMWD and has affirmed its willingness and ability to perform such work. NOW, THEREFORE, in consideration of these recitals and the mutual covenants contained herein, CMWD and Contractor agree as follows: 1. SCOPE OF WORK CMWD retains Contractor to perform, and Contractor agrees to render, those services (the "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 from the date first above written and expire on January 31, 2020. 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 one hundred sixty-eight thousand six hundred eighty-five dollars ($168,685). No other compensation for the Services will be allowed. 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. 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 control of CMWD only as to the result to be accomplished, but will consult with CMWD General Counsel Approved Version 6/12/18 1 December 18, 2018 Item #6 Page 5 of 19 PSA 19-675UTIL 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 the 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. 7. 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. 8. OTHER CONTRACTORS CMWD reserves the right to employ other Contractors in connection with the Services. 9. INDEMNIFICATION Contractor agrees to indemnify and hold harmless CMWD and the City of Carlsbad, their officers, 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 herein caused by any negligence, recklessness, or willful misconduct 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. 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 the their 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. 10. 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. General Counsel Approved Version 6/12/18 2 December 18, 2018 Item #6 Page 6 of 19 PSA 19-675UTIL 10.1 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. 10.1.1 Commercial General Liability (CGL) Insurance. Insurance written on an "occurrence" basis, including personal & 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. 10.1.2 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. 10.1.3 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. 10.1.4 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. 10.2. Additional Provisions. Contractor will ensure that the policies of insurance required under this Agreement contain, or are endorsed to contain, the following provisions: 10.2.1 CMWD will be named as an additional insured on Commercial General Liability which shall provide primary coverage to CMWD. 10.2.2 Contractor will obtain occurrence coverage, excluding Professional Liability, which will be written as claims-made coverage. 10.2.3 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. 10.3 Providing Certificates of Insurance and Endorsements. Prior to CMWD's execution of this Agreement, Contractor will furnish certificates of insurance and endorsements to CMWD. 10.4 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. General Counsel Approved Version 6/12/18 3 December 18, 2018 Item #6 Page 7 of 19 PSA 19-675UTIL 10.5 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. 11. 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. 12. 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 three (3) years from the date of final payment under this Agreement. 13. 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. 14. 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. 15. 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. ForCMWD Name Ligeia Heagy Title Management Analyst Carlsbad Municipal Water District Address 5950 El Camino Real Cansbad,CA 92008 Phone 760-438-2722 x7110 For Contractor Name Jennifer Ivey Title Vice President/Principal-In-Charge Address 5355 Mira Sorrento Place, Suite 270 San Diego, CA 92121 Phone E-mail 858-505-1020 jivey@carollo.com 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. 16. CONFLICT OF INTEREST Contractor shall file a Conflict of Interest Statement with the City Clerk in accordance with the requirements of the City of Carlsbad Conflict of Interest Code. The Contractor shall report investments or interests in all categories. Yes~ No D General Counsel Approved Version 6/12/18 4 December 18, 2018 Item #6 Page 8 of 19 PSA 19-675UTI L 17. 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. 18. DISCRIMINATION AND HARASSMENT PROHIBITED Contractor will comply with all applicable local, state and federal laws and regulations prohibiting discrimination and harassment. 19. 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 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. 20. 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. Either party upon tendering thirty (30) days written notice to the other party may terminate this Agreement. In this event 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. General Counsel Approved Version 6/12/18 5 December 18, 2018 Item #6 Page 9 of 19 PSA 19-675UTIL 21. 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. 22. 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 sections 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 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. 23. JURISDICTION AND VENUE 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. 24. 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. 25. 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. Ill Ill Ill Ill General Counsel Approved Version 6/12/18 6 December 18, 2018 Item #6 Page 10 of 19 PSA19-675UTIL 26. 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. CONTRACTOR CAROLLO ENGINEERS, INC., a Delaware corporation (sign here) -:r~+:r Wc.·.~~c...e-. ~~-v~c&:: Pri:.-~.~--t"' (print name/title) (sign here) CARLSBAD MUNICIPAL WATER DISTRICT, a Public Agency organized under the Municipal Water Act of 1911, and a Subsidiary District of the ity of Carlsbad By: President ATTEST: Jf~Ftt!zy 7j,<f)/2.tv0-P,<2r_ <./.c 6 /¾c;,ob.JT 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 Chairman, President, or Vice-President Group B Secretary, Assistant Secretary, 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: General Counsel Approved Version 6/12/18 7 December 18, 2018 Item #6 Page 11 of 19 EXHIBIT "A" C c;:,,,..,,.. 2019 CMWD Water, Wastewater, and Recycled Water COSS Scope of Work The proposed scope of work outlines our proposed approach for undertaking the Water, Wastewater, and Recycled Water Cost of Service Study (Study). This scope builds on the study requirements as delineated within the request for qualifications, incorporating CMWD's specific requirements in to a project task plan. The tasks below differ from the project attribute numbering system in the RFQ. Task 1: Project Kick-Off and Data Collection Carollo will hold a project kick-off meeting with CMWD staff. The meeting will outline key objectives, determine priorities, and, if necessary, modify the scope of service. The meeting will also serve as a review point for the study data. In advance of the kick-off meeting, Carollo will submit a detailed data request. While Carollo envisions this project as a collaborative process with CMWD and City staff, our goal is to provide a management plan that streamlines the process to adhere to the project schedule and to minimize time requirements placed on staff. Task 2: Model Development Based on the collected data and feedback from the kick-off and subsequent meetings, Carollo will prepare three tailored models to fit CMWD's expressed needs for each program. The water and recycled water models will be within one excel file, and the wastewater model will be in a separate excel file. We will discuss the needs and preferences of the financial models with CMWD staff. The three major components of each model will consist of the following: 1. Pro-Forma: Carollo will tailor this specifically around the CMWD's budget, which will include but not be limited to customer class data, operations and maintenance, CIP, and debt. We will use the previous financial models and discuss with CMWD any additional needs and preferences. 2. Functional Allc,cation: As addressed in Task 4.1, a cost allocation module will be built within the model to allocate costs specific to the utility, which will then be used to form the rate structures. 3. Rate Design: The current rate structure will be reviewed and revised as outlined in Task 6. The model will include a graphic user interface to facilitate ongoing use by staff after the completion of the Study. We will provide a training workshop via WebEx for CMWD staff to understand the models and allow CMWD staff to perform in-house analyses in years following completion of the Study. Task 3: Revenue Requirements Analysis Carollo will develop a revenue requirement analysis and forecast for the water utility. Page 1 December 18, 2018 Item #6 Page 12 of 19 EXHIBIT "A" C c;:,r,..•111·, Potable water, recycled water, and wastewater will be evaluated independently to equitably and accurately recover costs from the respective system customers. These analyses will then be aggregated to evaluate the overall fiscal health of the water enterprise fund. Task 3.1 -Policy Review: Fiscal policies are an essential building block for any effective utility financial plan and rate study. Moreover, in presenting any proposed rate plan to the District Board, it will be critical to provide context for rate increases based on sound fiscal policies. We will discuss policy objectives and potential rate impacts. These policies will include, but will not be limited to, appropriate reserve requirements to be maintained on an annual basis for operations, capital projects, emergencies, and rate stabilization. We will provide a comparison of these policies and strategies to industry standards to provide context as CMWD considers how possible policy enhancements or changes would benefit the utility's stakeholders and customers. Task 3.2 -Financial Needs Forecast: At the heart of any utility rate study is a revenue requirement, which uses projected cash flows and debt service requirements to project potential revenue shortfalls. We will incorporate data elements collected throughout the study process to develop a long-range financial forecast that projects operating expenditures; repair, replacement, and other capital needs; and offsetting revenues. The analysis will focus primarily on revenue sufficiency over the next 5 and 10 years based on CMWD's projected operating, capital, policy, regulatory, and asset management needs. Our evaluation of financial plans will consider the overall funding strategy including near- and long-term capital and operational needs, as well as potential impacts on customer usage due to modifications to the rate structures. The results of the revenue requirement will define what levels of rate increases are necessary to fund ongoing expenditures and to meet CMWD's policy goals. The revenue forecast will evaluate the impacts of water supply alternatives such as desalinated seawater, groundwater, surface water, and expanded recycled water. The analysis will also consider various power purchase tariff rates applicable to pumping water, including potential cost increases and the benefits of the proposed collective power purchase agreement through the Water Authority. Task 4: Cost-of-Service Analysis/Proposition 218 Review The calculated revenue requirements will be allocated to each customer class based on the calculated capacity and treatment requirements by billable constituent (customer service, base water demand, and peak water demand). All proposed rate structures will adhere to Proposition 218 requirements and sound cost-of-service ratemaking principles. Task 4.1 -Allocation of Costs to Functional Categories: Carollo will develop a cost allocation based on CMWD's unique system and consider the American Water Works Association (AWWA) and Water Environment Federation (WEF) methodologies. These allocations will build on the existing allocation for rate consistency and incorporate CMWD's current asset and accounting records. Line-item expenditures for water and recycled water will be allocated to customer service, base water usage, and peak water usage. For wastewater, costs will first be allocated to each unit process (e.g., interceptor, headworks, primaries, etc.) and then to flow, BODs, and TSS based on the capacity and treatment parameters of each respective unit process. An on-site meeting will be held with CMWD Page 2 December 18, 2018 Item #6 Page 13 of 19 EXHIBIT "A" C c;,r,.••11·, staff to discuss the solids treatment costs and understand the potential impacts of the projected loads from new customers and how to recover costs from Encina Wastewater Authority. Additionally, costs will be assigned to fixed and variable categories to develop defensible meter charges. Task 4.2 -Customer Data Analysis: Carollo will revisit and update CMWD's water demand forecast. Carollo will conduct a statistical analysis of CMWD's past three years of historical customer data and consumption records. Due to the variable nature of CMWD's water rates, it is important to evaluate a multi-year trend and determine potential revenue lulls during low-usage years. We will use SPSS statistical software to quickly analyze customer billing records and provide usable information, such as consumption breakpoints used in evaluating different rate structures and conservation incentives. We will examine the usage data and calibrate billing records against actual rate revenues to prevent over-or underestimation of CMWD's customer base. This is a critical step in setting appropriate and sufficient rates. In addition, we will perform a sensitivity analysis related to continued water demand reduction and potential demand rebounds. These results will flow through the revenue requirements and funding analysis to determine potential impacts to revenues and overall revenue stability. Task 5: Connection Fee Analysis Carollo will meet with CMWD staff and review the current connection fee analysis being completed as part of the master plans, which includes, but is not limited to, capital improvements plan (CIP), growth projections, and fixed asset register. Carollo will work with CMWD staff to determine the appropriate methodology (buy-in, incremental, or hybrid), if this has not already been completed through the master plans. Using the selected methodology, Carollo will calculate the maximum connection fees for each system. Task 6: Rate Design Analysis Rates will be evaluated and designed to generate sufficient revenues, while meeting CMWD's key study objectives. We will meet with CMWD staff to review and evaluate potential rate structure alternatives that promote an equitable allocation of costs among customer groups. Based on our past rate experience with CMWD and comparable water agencies, we will guide CMWD through this review to identify key features likely to promote policy objectives while retaining equitable cost recovery. Carollo will develop a matrix that outlines: • Advantages and disadvantages of each rate structure alternative. • Nexus between each rate structure and system costs and overall equity between customer classes. • Effect of rate structures on revenue stability. • Ability and effectiveness of rate structures to meet CMWD's policy objectives. • Administrative ease. • Ability to respond to future fluctuations in water purchase costs. The rate structure will comply with Proposition 218 and case law requirements. For each Page 3 December 18, 2018 Item #6 Page 14 of 19 EXHIBIT "A" C c;:,r,.••,.., proposed rate structure, the matrix will illustrate both qualitative and quantitative advantages, including achievement of policy objectives and revenue risk. This approach allows CMWD staff to choose the rate structures that best meet its objectives and is critical in explaining the recommendations to the Board. Carollo will present CMWD staff with no more than three different methodologies for implementing a recycled wholesale water rate. It is assumed that a rate will not be designed as part of this scope of work. Finally, Carollo will re-evaluate the existing drought rate surcharge and update CMWD's drought rates. Several different rate structures will be presented and considered. The drought rates and non-drought rates will evaluate appropriate water tier levels based on current and projected water usage levels. In general, due to the new water consumption patterns by CMWD water customers, it will be important to evaluate and potentially change the current residential water usage tiers. Task 7: Study Report A draft and final version of a summary report will be prepared to present the methodology, assumptions, process, and findings of the rate study and its recommendations. This report will document the need for rate increases, multi-year revenue requirements, and the proposed structure to support the Proposition 218 process. Comments on the draft report will be incorporated into a final report. Carollo will update the previous rate comparison surveys for the water, recycled water, and wastewater rates charged by other comparable municipality water utilities in the San Diego area, southern Orange County, and southern Riverside County. Task 8: Meetings and Presentations Carollo will hold structured reviews with CMWD staff during the project. Carollo will also present the study findings to CMWD staff at the conclusion of the Study. It is assumed that CMWD will present the findings to the Board of Directors, with Carollo providing support as needed. Page 4 December 18, 2018 Item #6 Page 15 of 19 Carlsbad Municipal Water District 2019 Water and Wastewater Cost of Service Study Proposal Due October 29, 2018 Title Name Scope of Services Task 1 -Pl'Ofecl Kickoff and Data CoHecllon Task 2 -Model Development Task 2.2 • Water Model Task 2 3 -Recycled Water Model Task 2 4 -Wastewater Model Task 3 -Revenue Requirement Analysis Task 4 -Cost of Service Analysis Task 5 • ConnectJon Fee Analysis Task 6 -Rate Design Analysis Task 7 · Study Report Task 8 -Meetings Total Hours 2019 Carlsbad COSS-Budget Hours Schedule 110718.xlsx Budget and Hours PIG Jenntfer Ivey 10 2 2 2 4 4 4 4 8 28 68 EXHIBIT "A" C c;,,,.••11 Engineers ... Working Wonder:s W~h Water • Appendix B: Hours Pro~ Team jHours1 Technical PM Asst PM Analysts Support Support& Alex Clencal Bugbee Kevin Tice Jeff/Inga Staff Total Hours 12 12 16 50 8 8 40 2 60 8 8 40 2 60 8 8 40 2 60 16 16 80 4 120 16 16 80 4 120 8 8 40 2 62 16 16 80 116 16 16 80 2 20 142 28 28 4 88 136 136 496 22 20 878 December 18, 2018 Item #6 Page 16 of 19 Titte Name Hourly Rate Scope of Services Task 1 -Protect Kickoff and Data CollectJon Task 2 -Model Development Task 2.2-Water Model Task 2 3 · Recycled Water Model Task 2.4 -Wastewater Model Task 3 -Revenue Requirement Analysis Task 4 -Cost of Service Analysis Task 5 -Connection Fee Analysis Task 6 -Rate Design Analysis Task 7 -Study Report Task 8 -Meetirigs Total Labor Dollars Total Hours 2019 Carlsbad COSS-Budget Hours Schedule 110718.xlsx Budget and Hours Attachment 1: Cost Proposal Pro~ Tum !Cost) PIC PM AntPM Analysts Jennifer Alex Kevin 1v2 B!!ibee Tice $273 $194 S194 $150 $2,730 $2,328 $2,328 $2,400 $546 $1,552 $1,552 $6,000 $546 $1,552 $1,552 $6,000 $546 $1,552 $1,552 $6,000 $1,092 $3.104 $3,104 $12,000 $1,092 $3,104 $3,104 $12,000 $1,092 $1,552 $1,552 $6,000 $1,092 $3,104 $3,104 $12,000 $2,184 $3,104 $3104 $12,000 $7,644 $5,432 $5,432 $0 $18,564 $26,384 $26,384 $74,400 68 136 136 496 EXHIBIT"A" C c;:,r,all~ Engineers ... Wor1c,nq Wonders With Water • Technical Sueport Support& Clerical Jeff/l!!i! Staff PECE S230 S106 Labor Costs $11.70 Expe-Total $0 $0 $9,786 $585 $1,500 $11.871 $460 so $10,110 $702 $10,812 $460 so $10,110 $702 $10.812 $460 $0 $10,110 $702 $10,812 $920 so $20,220 $1,404 $21.624 $920 $0 $20,220 $1,404 $21,624 $460 $0 $10,656 $725 $11.381 so so $19,300 $1.357 $20,657 $460 $2.120 $22.972 $1,661 $24.633 $920 $0 $19,428 $1,030 $4,000 $24,458 $5,060 $2,120 $152,912 $10,273 $5,500 $168,685 22 20 878 Total Proposed Fee: $168,685 December 18, 2018 Item #6 Page 17 of 19 CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT CIVIL CODE§ 1189 A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. State of California ) County of ~,,..,, '~1 e5 4 before me,~/ /2 ./4:{,::-7 On /Z~~/"l' Date /I Here Insert Name and Title of personally appeared f°' e#~ ½ /-r v(/:2--/.r .#CL-=,,,,-~ ,,,vO ~..,e...?~$ r Name(s) of Signer(s) /4Y--c ,<.-./ -11~7 who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) jg/are subscribed to the within instrument and acknowledged to me that hetsRe/they executed the same in hisAmr/their authorized capacity(ies), and that by hjsfher/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. 'a ROBiR;~ VAS;·, _ ' ... , COMM. trJ.2.42777 , I • . NOTARY PUBLlc-cAUFORNIA ~ SAN DIEGO COUNTY I I My Comm, ex:-. J\JNE 11. ~ .sos a C Place Notary Sea/ Above I certify under PENAL TY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS:~~~ S1gna ____ _ Signature of Notary Public ---------------oPTIONAL--------------- Though this section is optional, completing this information can deter alteration of the document or fraudulent reattachment of this form to an unintended document. . , Description of Attached Document-4,..,.......,-r ,--o-; ZA '9 q,'""r-,ew c•,if, e> ~ ,,: r · ,/ k :"""P-,,u· J C,.,., e-/ / .lltJ Title or Type of Docu~t:;:.r,,u-c,.. .f"tju-~,~ (A/4/t'-Document Date: /2-/1/~a Number of Pages: / Signer(s) Other Than Named Above: ____________ _ Capacity(ies) Claimed by s· ner(s) ✓ Signer's Name: -J&re ttk--1~#,tNr · /Signer's Name: 1'i«,...~:i /c_. f?rA;~/V;!f~#, $-corporate Officer -Title(s)-r:' =.,,,_:,,c(,,,=-::...c....__-!,_/~=-=· J:_,_;_p,,.../ ~porate Officer -Title(s):v?G<-~.-(JI p t',.;./ r • Partner -• Limited • General • Partner -• Limited • General • Individual • Attorney in Fact • Individual • Attorney in Fact • Trustee • Guardian or Conservator • Trustee • Guardian or Conservator • Other: • Other: _____________ _ Signer Is Representing: Signer Is Representing: ________ _ • ©2014 National Notary Association• www.NationalNotary.org • 1-800-US NOTARY (1-800-876-6827) Item #5907 December 18, 2018 Item #6 Page 18 of 19 Engineers ... Working Wonders With Water" CERTIFICATION This is to certify that the undersigned, Michael W. Barnes, as Corporate Secretary and General Counsel for Carollo Engineers, Inc., is authorized to state and certify: That by corporate policy approved by the Board of Directors on 0210712011, Jeffrey R. Thornbury, Vice President, and Jeffrey A. Weishaar, Associate Vice President, are authorized to execute engineering service agreements for the usual and customary engineering business of the company. Dated: November 29, 2018 Michael W. Barnes Corporate Secretary & General Counsel 2700 Ygnacio Valley Road, Suite 300, Walnut Creek, California 94598 P. 925.932.1710 F. 925.930.0208 cavlo.com December 18, 2018 Item #6 Page 19 of 19